INFINITY NATURAL RESOURCES, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS INFINITY NATURAL RESOURCES, INC. Report of Independent Registered Public Accounting Firm (PCAOB ID No 34) 67 Balance Sheets as of December 31, 2024 and May 15, 2024 68 Notes to Consolidated Financial Statements 69 INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm (PCAOB ID:34) 71 Consolidated Balance Sheets as of December 31, 2024 and 2023 72 Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 73 Consolidated Statements of Members’ Equity as of December 31, 2024, 2023 and 2022 74 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 75 Notes to Consolidated Financial Statements 76 66 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholder and the Board of Directors of Infinity Natural Resources, Inc: Opinion on the Financial Statements We have audited the accompanying balance sheets of Infinity Natural Resources, Inc (the “Company”) as of December 31, 2024 and May 15, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and May 15, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Pittsburgh, Pennsylvania March 28, 2025 We have served as the Company’s auditor since 2024. 67 Table of Contents INFINITY NATURAL RESOURCES, INC. Balance Sheets December 31, 2024 May 15, 2024 Assets Total assets $ —  $ —  Liabilities and Stockholder’s Equity Total liabilities —  —  Subscription receivable from INR Holdings (100 ) (100 ) Common stock, $0.001 par value; 1,000 shares authorized, issued and outstanding 100 100 Total stockholder’s equity —  —  Total liabilities and stockholder’s equity $ —  $ —  The accompanying notes are an integral part of these unaudited balance sheets. 68 Table of Contents INFINITY NATURAL RESOURCES, INC. Notes to Balance Sheets (audited) 1 – Nature of Operations Infinity Natural Resources, Inc. (“Infinity”) was incorporated in the state of Delaware on May 15, 2024 in anticipation of a potential initial public offering (“IPO”) and related reorganization transactions. Following the IPO and the transactions related thereto, Infinity will be a holding company whose sole material asset will consist of membership interests in Infinity Natural Resources, LLC (“INR Holdings”). After the consummation of the IPO and related reorganization transactions, Infinity will be the managing member of INR Holdings and will control and be responsible for all operational, management and administrative decisions relating to INR Holdings’ business and will consolidate the financial results of INR Holdings and its subsidiaries. 2 – Summary of Significant Accounting Policies Basis of Accounting and Presentation The accounts are maintained and the balance sheets have been prepared in accordance with accounting principles generally accepted in the United States of America. Separate statements of operations, changes in stockholders’ equity and cash flows have not been presented because Infinity has had no operations to date. 3 – Stockholder’s Equity Infinity is authorized to issue 1,000 shares of common stock with a par value of $0.001 per share. INR Holdings had yet to fund its $100 initial capitalization as of December 31, 2024, and thus, Infinity has presented this amount as a subscription receivable within stockholders’ equity. 4 – Subsequent Events Initial Public Offering. In February 2025, Infinity completed its IPO of 15,237,500 shares of its Class A common stock (including 1,987,500 shares pursuant to an over-allotment option) at a price to the public of $20.00 per share. The aggregate gross proceeds of the IPO were $304.8 million. After subtracting underwriting discounts and commissions of $18.3 million, we received net proceeds of $286.5 million. We contributed all of the net proceeds from the IPO to INR Holdings in exchange for 15,237,500 INR Units. INR Holdings used all of the net proceeds from the IPO after paying certain offering expenses to repay borrowings outstanding under its revolving credit facility. In connection with the closing of the IPO, all outstanding performance-based incentive units of INR Holdings vested. Consequently, INR Holdings will recognize $126.1 million of non-recurring, non-cash compensation expense related to these awards in the first quarter of 2025, in accordance with the guidance provided by ASC 710. Corporate Reorganization. Prior to the completion of the IPO on February 3, 2025, Infinity undertook certain reorganization transactions (the “Corporate Reorganization”) such that Infinity is now a holding company whose sole material asset consists of membership interests in INR Holdings. INR Holdings owns all of the outstanding membership interests in each of INR Operating, INR Ohio, INR Midstream, Block Island and Cheat Mountain, the operating subsidiaries through which INR Holdings operates its assets. As part of the Corporate Reorganization, (a) the membership interests of the Legacy Owners in INR Holdings were recapitalized into a single class of units (the “INR Units”), and, in exchange for their existing membership interests, the Legacy Owners received INR Units and an equal number of shares of Class B common stock; and (b) Infinity contributed the net proceeds of the IPO to INR Holdings in exchange for newly issued INR Units and a managing member interest in INR Holdings. After giving effect to the Corporate Reorganization and the IPO, Infinity owns an approximate 25.0% interest in INR Holdings and the Legacy Owners own an approximate 75.0% interest in INR Holdings. Infinity is the managing member of INR Holdings and controls and is responsible for all operational, management and administrative decisions relating to INR Holdings’ business and upon reorganization consolidates the financial results of INR Holdings and reports non-controlling interests in its consolidated financial statements related to the INR Units that the Legacy Owners own in INR Holdings. Based on its ownership in INR Holdings, Infinity has a variable interest in INR Holdings and INR Holdings is a variable interest entity (“VIE”). Infinity has an approximate 25.0% interest in INR Holdings through which it will absorb the risks created and distributed by 69 Table of Contents INR Holdings. As the managing member of INR Holdings based on the terms of the INR Holdings LLC Agreement, Infinity has the sole power to direct the activities that most significantly impact the entity’s economic performance, with the remaining INR Unit Holders having no substantive kick-out or participating rights. As such, Infinity determined that INR Holdings is a VIE and that Infinity is the primary beneficiary of INR Holdings. To make this determination, Infinity determined that its economic interest give it both the power to direct the activities of INR Holdings that most significantly impact INR Holdings’ economic performance, as well as the obligation to absorb losses or the right to receive benefits that could potentially be significant to INR Holdings. In making this determination, Infinity considered the total economics of INR Holdings and whether its share of the economics through its ownership of INR Units will be significant, using qualitative and quantitative factors, where applicable. Accordingly, Infinity as the primary beneficiary of INR Holdings will include INR Holdings in its consolidated financial statements. The portion of the consolidated INR Holdings that is owned by the INR Unit Holders and any related activity will be eliminated through non-controlling interests in the consolidated balance sheets and income attributable to non-controlling interests in the consolidated statements of operations of Infinity. In connection with the Corporate Reorganization, INR Holdings and Infinity entered into the Second Amended and Restated Limited Liability Company Agreement of INR Holdings (the “INR Holdings LLC Agreement”). Pursuant to the INR Holdings LLC Agreement, holders of INR Units (other than INR) are entitled to exchange their INR Units, and surrender of an equivalent number of shares of Class B common stock, for a number of shares of Class A common stock on a one-for-one basis or, at our option, the receipt of an equivalent amount of cash. Under the INR Holdings LLC Agreement, Infinity has the right to determine when distributions will be made to Infinity and the INR Unit Holders and the amount of any such distributions. If Infinity authorizes a distribution, such distribution will be made to the INR Unit Holders and Infinity on a pro rata basis in accordance with the respective percentage ownership of INR Units. In connection with the Corporate Reorganization, INR Holdings and Infinity entered into a Tax Receivable Agreement with the Legacy Owners. This agreement generally provides for the payment by Infinity to the Legacy Owners of 85% of the net cash savings, if any, in U.S. federal, state and local income tax that Infinity (a) actually realizes with respect to taxable periods ending after this offering or (b) is deemed to realize in the event of a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations and certain changes to the composition of Infinity’s board of directors) or the Tax Receivable Agreement terminates early (at Infinity’s election or as a result of Infinity’s breach) with respect to any taxable periods ending on or after such change of control or early termination event, in each case, as a result of (i) the tax basis increases resulting from the exchange of INR Units and the corresponding surrender of an equivalent number of shares of Class B common stock by the Legacy Owners for a number of shares of Class A common stock on a one-for-one basis or, at Infinity’s option, the receipt of an equivalent amount of cash pursuant to the INR Holdings LLC Agreement and (ii) deductions arising from imputed interest deemed to be paid by Infinity as a result of, and additional tax basis arising from, any payments Infinity makes under the Tax Receivable Agreement. Infinity will retain the benefit of the remaining 15% of these cash savings, if any. 70 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Members and the Board of Directors of Infinity Natural Resources, LLC: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Infinity Natural Resources, LLC and subsidiaries (the “Company”) as of December 31, 2024 and December 31, 2023, the related consolidated statements of operations, members’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Pittsburgh, Pennsylvania March 28, 2025 We have served as the Company’s auditor since 2023. 71 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Consolidated Balance Sheets ( amounts in thousands ) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 2,203 $ 1,504 Accounts receivable: Oil and natural gas sales, net 39,314 23,491 Joint interest and other, net 32,229 20,605 Prepaid expenses and other current assets 11,822 2,354 Commodity derivative assets, short term —  22,054 Total current assets $ 85,568 $ 70,008 Oil and natural gas properties, full cost method (including $86.5 million and $37.2 million as of December 31, 2024 and 2023, respectively excluded from amortization) 933,228 652,645 Midstream and other property and equipment 40,053 33,542 Less: Accumulated depreciation, depletion, and amortization (153,233 ) (79,561 ) Property and equipment, net $ 820,048 $ 606,626 Operating lease right-of-use assets, net 1,389 758 Other assets 8,461 4,944 Commodity derivative assets, long-term —  6,173 Total assets $ 915,466 $ 688,509 Liabilities and Members’ Equity Current liabilities: Accounts payable $ 51,370 $ 37,737 Royalties payable 23,129 17,575 Accrued liabilities 45,903 1,015 Notes payable 101 124 Operating lease liabilities 247 105 Commodity derivative liabilities, short-term 12,596 6 Total current liabilities $ 133,346 $ 56,562 Line-of-credit 259,347 170,964 Notes payable, long-term 59 153 Operating lease liabilities, net of current portion 1,142 652 Asset retirement obligations 2,988 970 Commodity derivative liabilities, long-term 10,342 752 Total liabilities $ 407,224 $ 230,053 Commitments and contingencies (Note 14) Members’ equity $ 508,242 $ 458,456 Total liabilities and members’ equity $ 915,466 $ 688,509 The accompanying notes are an integral part of these consolidated financial statements. 72 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Consolidated Statements of Operations ( amounts in thousands ) Year Ended December 31, 2024 2023 2022 Revenues: Oil, natural gas, and natural gas liquids sales $ 257,706 $ 159,532 $ 142,600 Midstream activities 1,316 2,198 555 Total revenues $ 259,022 $ 161,730 $ 143,155 Operating expenses: Gathering, processing, and transportation 49,290 31,097 15,673 Lease operating 28,154 18,371 8,256 Production and ad valorem taxes 1,071 886 719 Depreciation, depletion, and amortization 73,726 53,796 18,336 General and administrative 13,045 4,885 4,712 Total operating expenses $ 165,286 $ 109,035 $ 47,696 Operating income $ 93,736 $ 52,695 $ 95,459 Other income (expense): Interest, net (21,529 ) (11,910 ) (2,574 ) (Loss) gain on derivative instruments (22,047 ) 45,322 (24,820 ) Other (expense) income (874 ) 565 64 Net income $ 49,286 $ 86,672 $ 68,129 The accompanying notes are an integral part of these consolidated financial statements. 73 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Consolidated Statements of Members’ Equity ( amounts in thousands ) Class A Class B Total Balance as of December 31, 2021 $ 81,377 —  $ 81,377 Contributions —  —  —  Net income 68,129 —  68,129 Balance as of December 31, 2022 149,506 —  149,506 Contributions —  222,278 222,278 Net income 41,100 45,572 86,672 Balance as of December 31, 2023 190,606 267,850 458,456 Contributions —  500 500 Net income 14,210 35,076 49,286 Balance as of December 31, 2024 $ 204,816 $ 303,426 $ 508,242 The accompanying notes are an integral part of these consolidated financial statements. 74 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Consolidated Statements of Cash Flows ( amounts in thousands ) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 49,286 $ 86,672 $ 68,129 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion, and amortization 73,726 53,796 18,336 Amortization of debt issuance costs 1,957 778 194 (Gain) loss on derivative instruments 22,047 (45,322 ) 24,820 Cash received (paid) on settlement of derivative instruments 28,360 19,438 (37,888 ) Non-cash lease expense 203 98 63 Changes in operating assets and liabilities: Accounts receivable (27,447 ) (21,775 ) (9,068 ) Prepaid expenses and other assets 143 (1,770 ) (214 ) Accounts payable 16,367 7,565 (2,156 ) Royalties payable 5,554 6,390 3,119 Accrued and other expenses 11,776 703 687 Other assets and liabilities (4,306 ) (98 ) (1,046 ) Net cash provided by operating activities $ 177,666 $ 106,475 $ 64,976 Cash flows from investing activities: Additions to oil and gas properties (249,545 ) (145,979 ) (84,092 ) Acquisitions of oil and gas properties —  (278,967 ) —  Additions to midstream and other property and equipment (6,573 ) (11,740 ) (11,569 ) Net cash used in investing activities $ (256,118 ) $ (436,686 ) $ (95,661 ) Cash flows from financing activities: Borrowings under revolving credit facility 411,456 203,864 127,636 Payments on revolving credit facility (323,073 ) (90,800 ) (97,686 ) Proceeds from contributions from issuance of Class B interests 500 222,278 —  Payments of debt issuance costs (5,200 ) (4,256 ) (908 ) Payments of deferred offering costs (4,415 ) —  —  Payments on notes payable (117 ) (110 ) (45 ) Net cash provided by financing activities $ 79,151 $ 330,976 $ 28,997 Net increase (decrease) in cash and cash equivalents 699 765 (1,688 ) Cash and cash equivalents at beginning of period 1,504 739 2,427 Cash and cash equivalents and restricted cash at end of period $ 2,203 $ 1,504 $ 739 The accompanying notes are an integral part of these consolidated financial statements 75 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 1 – Description of the Business and Basis of Presentation Description of Business . Infinity Natural Resources, LLC, together with its subsidiaries (collectively referred to as “INR Holdings,” the “Company,” “we,” “our,” or “us”) is an oil and natural gas exploration and production company engaged in the acquisition, exploration, and development of properties for the production of oil, natural gas, and natural gas liquids (“NGLs”) from underground reservoirs. INR Holdings was organized as a Delaware limited liability company (“LLC”) on June 6, 2017. Our operations are located in the Appalachian Basin in the northeastern United States. Basis of Accounting and Presentation. The consolidated financial statements present the financial position, results of operations, and cash flows of INR Holdings in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany balances and transactions are eliminated upon consolidation. Note 2 – Summary of Significant Accounting Policies Use of Estimates. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. INR Holdings evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods it considers reasonable in the particular circumstances. Actual amounts could differ from these estimates, and changes in these estimates are recorded when known. Estimates significant to our consolidated financial statements include the following: • proved reserves used in calculating depletion; • estimates of accrued revenues and unbilled costs; • future cash flows from proved oil and natural gas reserves used in the impairment assessment; • derivative financial instruments; and • asset retirement obligations. Cash and Cash Equivalents . We consider all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of these investments. Interest earned on cash equivalents is included as a reduction of interest expense, net. We maintain cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limits; however, we have not experienced any significant losses from such investments. Commodity Derivative Financial Instruments. Our results of operations and operating cash flows are affected by changes in market prices for crude oil, natural gas and NGLs. To manage a portion of our exposure to price volatility from producing crude oil and natural gas we enter into commodity derivative contracts to protect against price declines in future periods. We have elected not to designate any of our commodity derivative instruments as cash flow hedges; therefore, these instruments do not qualify for hedge accounting. Accordingly, realized gains and losses from the settlement of commodity derivatives and unrealized gains and losses from changes in the fair value of remaining unsettled commodity derivatives are presented as a component of revenues in the consolidated statements of operations. Under applicable accounting standards, the fair value of each derivative instrument is recorded as either an asset or liability on the consolidated balance sheet. We measure the fair value of our commodity derivative instruments based upon a pricing model that utilizes market-based inputs, including, but not limited to, contractual price of the underlying position, current market prices, crude oil and natural gas forward curves, discount rates, volatility factors and nonperformance risk. See note 10. Deferred Offering Costs. On May 15, 2024, INR Holdings formed Infinity Natural Resources, Inc. (“Infinity”), a Delaware corporation, in anticipation of a potential initial public offering (“IPO”) and related reorganization transactions. Following the completion of the IPO and the transactions related thereto in February 2025, Infinity is a holding company whose sole material asset consists of membership interests in INR Holdings. Accordingly, INR Holdings has incurred direct incremental costs during the year ended December 31, 2024, related to the IPO which primarily consist of legal, accounting, and other fees and expenses. These costs are capitalized as of December 31, 2024, and were offset against the IPO proceeds received in February 2025, see note 16. Deferred offering costs of $9.6 million were included within prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2024. INR Holdings did not have any deferred offering costs recorded for the years ended December 31, 2023 and 2022. 76 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Accounts Receivable and Allowance for Expected Credit Losses . Accounts receivable consist of receivables from the sales of oil, natural gas, and NGL production delivered to purchasers and from joint interest owners on properties INR Holdings operates. Accounts receivable are stated at the amount due, net of an allowance for expected losses as estimated by INR Holdings when applicable. Most payments for accounts receivable are received within 30 to 60 days. INR Holdings typically has the ability to withhold future revenue disbursements to recover any non-payment of joint interest accounts receivable from joint interest owners outstanding longer than the contractual payment terms are considered past due. As of December 31, 2024, 2023 and 2022, INR Holdings’ allowances for credit losses were not material. Drilling Advances . The Company participates in the drilling of crude oil and natural gas wells with other working interest owners. Due to the capital intensive nature of crude oil and natural gas drilling activities, the working interest owner responsible for conducting the drilling operations may request advance payments from other working interest owners for their share of the costs. The following table shows advance drilling request within accounts receivable-other and accrued liabilities on the audited balance sheet for the years ended 2024 and 2023: For the Year Ended December 31,  2024   2023  Drilling Advance Receivable $ 12,502 $ 14,803 Drilling Advance Deposits $ 6,188 $ —  Concentrations of Credit Risk . We are exposed to credit risk in the event of nonpayment by counterparties. We sell production to a relatively small number of customers, as is customary in our business. The table below summarizes the purchasers that accounted for 10% or more of INR Holdings’ total revenues from the sale of commodities for the periods presented: For the Year Ended December 31, 2024 2023 2022 Marathon Oil Company 55 % 49 % 38 % BP America 17 % 28 % 46 % Blue Racer Midstream 10 % 13 % 15 % During these periods, no other purchaser accounted for 10% or more of INR Holdings’ total commodity sales revenues. As of December 31, 2024, INR Holdings’ accounts receivable balance related to oil and gas sales was comprised of amounts due from various purchasers, including amounts due from Marathon Oil Company and BP America comprising 49% and 25%, respectively, of the total balance. As of December 31, 2023, INR Holdings’ accounts receivable balance related to oil and gas sales was comprised of amounts due from Marathon Oil Company, BP America, and Ergon, which accounted for 56%, 24%, and 11%, respectively, of the total balance. By using derivative instruments to economically hedge exposures to changes in commodity prices, INR Holdings also exposes itself to credit risk. When the fair value of a derivative contract is positive, the counterparty owes INR Holdings, which creates credit risk. We minimize the credit risk in derivative instruments by: (i) limiting our exposure to any single counterparty; and (ii) only entering into hedging arrangements with counterparties that are also participants in our credit agreement, all of which have investment-grade credit ratings. Oil and Gas Properties Oil and Natural Gas Properties. The Company uses the full cost method of accounting for its oil and natural gas properties. Accordingly, all costs directly associated with the acquisition, exploration, and development of oil, natural gas, and NGL reserves for both productive and nonproductive properties are capitalized into a full cost pool. Capitalized costs also include the costs of unproved properties and internal costs (i.e. salaries and benefits attributed to production activities of a well) directly related to the Company’s acquisition, exploration, and development activities. All general and administrative corporate costs unrelated to drilling activities are expensed as incurred. 77 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Under the full cost method of accounting, total net capitalized costs of proved oil and natural gas properties may not exceed the ceiling limitation determined based on the estimated future net revenues of our proved reserves discounted at 10%. The future net revenues are estimated using the average of the first day of the month trailing 12-month price as of the period end date in accordance with guidance provided by the Securities and Exchange Commission (“SEC”), adjusted for basis or location differentials, held constant over the life of the proved reserves. A ceiling limitation calculation is performed at the end of each quarter. If the ceiling limitation is exceeded, a write-down or impairment of the full cost pool is required. A write-down of the carrying value of the full cost pool is a non-cash charge that reduces earnings and impacts members’ equity and typically results in lower depletion expense in future periods. Once incurred, a write-down cannot be reversed at a later date. The Company did not have a ceiling test impairment for the years ended December 31, 2024, 2023 and 2022. See note 5. The costs associated with unproved properties are primarily the costs to acquire unproved acreage. Costs associated with unproved properties are excluded from the full cost pool until we have made a determination as to the existence of proved reserves. We review our unproved properties at the end of each quarter to determine whether the costs incurred should be transferred to the full cost pool and thereby subject to amortization. We also may capitalize interest on expenditures made in connection with bringing unproved properties to their intended use. INR Holdings determines capitalized interest, when applicable, by multiplying our weighted-average borrowing cost on our revolving credit facility by the average amount of qualifying costs incurred that were excluded from the full cost pool; however, capitalized interest cannot exceed the amount of gross interest expense incurred in any given period. The following table represents our capitalized internal costs and interest shown within our oil and gas properties on the audited balance sheet for the years ended 2024, 2023 and 2022: For the Year Ended December 31, in thousands 2024 2023 2022 Capitalized Internal Costs $ 5,612 $ 2,238 $ 1,582 Capitalized Interest Costs $ 41 $ —  $ —  Capitalized costs of proved properties are computed on a units-of-production basis based on estimated proved reserves, whereby the depletion rate is determined by dividing the total unamortized cost base plus future development costs by estimated proved reserves on a net equivalent basis at the beginning of the period. The depletion rate is multiplied by total production for the period to compute depletion expense. The following table shows our years ended 2024, 2023 and 2022 depletion expense related to oil and gas properties and average depletion rate per Boe: For the Year Ended December 31, in thousands 2024 2023 2022 Depletion of Proved Oil and Natural Gas Properties $ 71,553 $ 52,075 $ 17,478 Average Depletion Rate per BOE $ 8.10 $ 7.17 $ 5.41 Unproved Property Impairment. The Company assesses properties excluded from the full cost pool. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the full cost ceiling test limitation. The Company did not have impairment on unproved properties for the years ended December 31, 2024, 2023 and 2022. Midstream and Other Property and Equipment . Other property and equipment includes midstream assets, vehicles, furniture, fixtures, office equipment, and leasehold improvements, all of which are recorded at cost. These assets are depreciated using the straight-line method over their estimated useful lives which range between three and 25 years. Equipment upgrades and improvements are capitalized while expenditures for maintenance and repairs are expensed as incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from the accounts and a gain or loss is recorded in the consolidated statements of operations as needed. See note 5. Leases . At contract inception, INR Holdings determines whether or not an arrangement contains a lease in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification Topic 842, Leases (“ASC 842”). A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Upon determination that a contract meets the definition of a lease subject to ASC 842, a right-of-use asset and related lease liability are 78 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements recorded based on the present value of the future lease payments over the lease term. Right-of-use assets represent INR Holdings’ right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make future lease payments arising from the lease. Since the implicit rate in the lease is generally not available, INR Holdings utilizes its incremental borrowing rate as the discount rate for determining the present value of lease payments. See note 7. Asset Retirement Obligations . We accrue a liability for the estimated future costs associated with the plugging and abandonment of our oil and natural gas properties. For oil and natural gas wells, the fair value of our plugging and abandonment obligations is recorded at the time the obligation is incurred, which is typically at the time the well is spud. The fair value of the liability recognized is based on the present value of the estimated future cash outflows associated with our plugging and abandonment obligations. Revisions typically occur due to changes in estimated abandonment costs or the remaining lives of our wells, or if federal or state regulators enact new requirements regarding the abandonment of wells. We deplete the amount added to the costs of proved oil and natural gas properties and recognize an expense in connection with the accretion of the discounted liability over the remaining estimated economic lives of the respective oil and natural gas properties. Accretion expense is included within depreciation, depletion, and amortization in the consolidated statements of operations. See note 8. Revenue Recognition . INR Holdings derives revenue primarily from the sale of produced oil, natural gas, and NGLs. Revenue is recognized when a performance obligation is satisfied by transferring control of the produced oil, natural gas, or NGLs to the customer. For all commodity products, we record revenue in the month production is delivered to the customer based on the amount of production delivered to the customer and the price we will receive. Payments are generally received between 30 and 60 days after the date of production. See note 3. Reportable Segment . INR Holdings operates in only one reportable segment that is the exploration and production segment. All of our operations are conducted in one geographic area within the Appalachian Basin, primarily in Pennsylvania and Ohio, in the United States. See note 15. Income Taxes . As a limited partnership, we are not a taxpaying entity for federal income tax purposes. As such, we have not recorded federal income tax expense. Our limited partners are responsible for federal income taxes on their respective share of taxable income. We file federal income tax returns in the United States. In certain circumstances, we are subject to state taxes on income arising in or derived from the state tax jurisdictions in which we operate. Adoption of New Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which updates reportable segment disclosure requirements primarily by enhancing disclosures about significant segment expenses and information used to assess segment performance. Additionally, ASU 2023-07 enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and provides new segment disclosure requirements for entities with a single reportable segment. The amendments are effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We adopted this ASU and applied the amendments retrospectively to all prior periods presented in our consolidated financial statements. Refer to Note 15 - Segment Information for additional discussion. Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires that certain information in a reporting entity’s tax rate reconciliation be disaggregated and provides additional requirements regarding income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on INR Holdings’ disclosures. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements subsequent to the IPO transaction in February 2025. In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718). This ASU illustrates how to apply the scope guidance to determine whether a profits interest award should be accounted for as a share-based payment arrange under Accounting Standards Codification (“ASC”) 718 or another accounting standard. The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2024. As of December 31, 2024 this is ASU is not applicable to the company due no stock compensation expense. The Company is in the process of assessing the impact of this ASU on its consolidated financial statements subsequent to the IPO transaction in February 2025. 79 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements In November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories within the footnotes, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) DD&A recognized as part of oil- and gas-producing activities or other depletion expenses. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance . We considered the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable or not material upon adoption. Note 3 – Revenues Crude oil, natural gas, and NGL sales are recognized at the point that control of the product is transferred to the customer. Virtually all of INR Holdings’ contract pricing provisions are tied to a market index, with certain adjustments based on, among other factors, transportation costs to an active spot market and quality differentials. Commodity sales revenues presented within the consolidated statements of operations relate to the sale of oil, natural gas, and NGLs as shown below: For the Year Ended December 31, 2024 2023 2022 (in thousands) Oil revenues $ 161,514 $ 85,276 $ 54,631 Natural gas revenues 51,157 49,617 66,048 NGL revenues 45,035 24,639 21,921 Oil, natural gas, and natural gas liquids sales $ 257,706 $ 159,532 $ 142,600 Oil Sales Our crude oil sales contracts are generally structured whereby oil is delivered to the customer at a contractually agreed-upon delivery point. This delivery point is usually at the wellhead or at the inlet of a transportation pipeline. Revenue is recognized when control transfers to the customer at the delivery point based on the net price received from the customer. Any downstream transportation or marketing costs incurred by purchasers of our crude oil are reflected in the price we receive and are presented as a net reduction to oil sales revenues. Natural Gas and NGL Sales Under INR Holdings’ natural gas processing contracts, liquids rich natural gas is delivered to a midstream gathering and processing entity at an agreed upon delivery point. The midstream entity gathers and processes the raw gas and then remits proceeds to INR Holdings. For these contracts, INR Holdings evaluates when control of the residue gas and NGLs is transferred in order to determine whether revenues should be recognized on a gross or net basis. Where INR Holdings elects to take its residue gas and/or NGL production “in-kind” at the plant tailgate, fees incurred prior to transfer of control at the outlet of the plant are presented as gathering, processing, and transportation expense within the consolidated statements of operations. Where INR Holdings does not take its residue gas and/or NGL production “in-kind”, transfer of control typically occurs at the inlet of the midstream entity’s gas gathering system such that any fees incurred subsequent to the delivery point are reflected as a net reduction to natural gas and NGL revenues presented in the table above and as included within oil, natural gas, and natural gas liquids sales within the consolidated statements of operations. Performance Obligations INR Holdings commodity sales contracts do not originate until production occurs and, therefore, are not considered to exist beyond each day’s production. Therefore, there are no remaining performance obligations under any of its commodity sales contracts. Under our revenue agreements, each delivery generally represents a separate performance obligation; therefore, future volumes delivered are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. 80 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements For all commodity products, we record revenue in the month production is delivered to the purchaser. Settlement statements for crude oil are generally received within 30 days following the date that production volumes are delivered, but for natural gas and NGL sales, statements may not be received for 30 to 60 days after delivery has occurred. However, payment is unconditional once the performance obligations have been satisfied. At such time, the volumes delivered and sales prices can be reasonably estimated and amounts due from customers are accrued in Accounts receivable – oil and natural gas sales, net in the consolidated balance sheets. As of December 31, 2024 and 2023, such receivable balances were $39.3 million and $23.5 million, respectively. The Company has certain gathering service agreements that are structured with minimum volume commitments (“MVCs”), which specify minimum quantities that the customer will be charged regardless of whether such quantities are gathered. Revenue is recognized for MVCs when the performance obligation has been met, which is the earlier of when the gas is gathered or when the likelihood that the customer will be able to meet its MVC is remote. If a customer fails to meet its MVC for a specified period, the customer is obligated to pay a contractually-determined fee based on the shortfall between actual volume gathered and the MVC. Note 4 – Acquisition Ohio Utica Acquisition On August 7, 2023, Wolf Run Operating, LLC (“Wolf Run”), a wholly-owned subsidiary of INR Holdings, entered into a definitive purchase and sale agreement to acquire working interests in certain oil and gas assets from Utica Resource Ventures, LLC and Utica Resource Operating, LLC (collectively, “URV”), and Providence Energy Operating Ohio, LLC (“PEO,” and together with URV, the “Sellers”) for $306.4 million, subject to customary purchase price adjustments (the “Ohio Utica Acquisition”). The transaction closed on October 4, 2023, for $279.0 million (including transaction costs that were capitalized as part of the asset acquisition) and was financed through a combination of $222.3 million that was raised from the issuance by INR Holdings of new Class B interests as well as borrowings of $56.7 million under our amended and restated credit agreement. As part of the Ohio Utica Acquisition, we assumed control of approximately 36,783 net acres across Washington, Morgan, Noble, and Guernsey counties in Ohio along with 54 producing horizontal laterals, related surface equipment located on various pad locations and a deep inventory of premium drilling locations located within the volatile oil window of the Utica and Point Pleasant plays in eastern Ohio. The $280.7 million was recorded to proved properties with no value attributed to unproved leasehold acreage acquired. In accordance with ASC 805, Business Combinations (“ASC 805”), we performed an initial screen test as of the transaction close date in order to determine whether the acquired set should be accounted for as an asset acquisition or business combination. Based on our assessment of the fair values of the gross assets acquired, we determined that the Ohio Utica Acquisition did not meet the definition of a business combination in accordance with ASC 805, and as such, have accounted for the transaction as an asset acquisition. Note 5 – Property, Plant, and Equipment Oil and Natural Gas Properties We utilize the full cost method of accounting for costs related to the exploration, development, and acquisition of oil and natural gas properties. Our capitalized costs of oil and natural gas properties and the related accumulated depreciation, depletion, and amortization as of December 31, 2024 and 2023 are as follows: December 31, 2024 December 31, 2023 (in thousands) Oil and natural gas properties: Proved properties $ 846,738 $ 615,456 Unproved properties 86,490 37,189 Gross oil and natural gas properties 933,228 652,645 Less: accumulated depreciation, depletion, and amortization (148,638 ) (77,085 ) Oil and natural gas properties, net $ 784,590 $ 575,560 In July 2024 we closed on approximately 5,705 net acres within Salt Fork State Park for $58.5 million or approximately $10,250 per acre. The $58.5 million was recorded to unproved leasehold properties. 81 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements In December 2024, we closed on a lease with Muskingum Watershed Conservancy District for approximately 1,900 acres in Guernsey and Noble Counties, Ohio. Capitalized costs of oil and natural gas properties are subject to a ceiling test that limits such pooled costs, net of applicable deferred taxes, to the aggregate of the present value of future net revenues attributable to proved oil, natural gas, and NGL reserves discounted at 10%. Any costs in excess of the ceiling are written off as a non-cash expense. The expense may not be reversed in future periods, despite commodity price increases which subsequently increase the ceiling. Companies using the full cost method are required to use the average quoted price from the first day of each month from the previous 12 months, including the impact of derivatives designated for hedge accounting, to calculate the ceiling value of reserves. Historically, we have not designated any of our derivative contracts as cash flow hedges. Prices used to calculate the ceiling value of reserves were as follows: For the Year Ended December 31,  2024   2023  Oil (per barrel) $ 75.48 $ 78.22 Natural gas (per MMBtu) $ 2.13 $ 2.64 NGLs (per barrel) $ 25.48 $ 26.87 Using the average quoted prices above, adjusted for market differentials, the net book value of INR Holdings’ oil and natural gas properties did not exceed the ceiling amount at December 31, 2024 or 2023. We had no derivative positions that were designated for hedge accounting as of and for the years ended December 31, 2024 and 2023. Future decreases in market prices, as well as changes in production rates, levels of reserves, evaluation costs excluded from amortization, future development costs and production costs may result in future non-cash impairments to INR Holdings’ oil and natural gas properties. Costs associated with unproved properties are excluded from the amortization base until the properties are evaluated or impairment is indicated. The costs associated with unproved leasehold acreage and related seismic data, wells currently drilling and related capitalized interest are initially excluded from the amortization base. Leasehold costs are either transferred to the amortization base with the costs of drilling a well on the lease or are assessed at least annually for possible impairment or reduction in value. Our decision to exclude costs from amortization and the timing of the transfer of those costs into the amortization base involves judgment and may be subject to changes over time based on numerous factors, including drilling plans, availability of capital, project economics, and drilling results from adjacent acreage. Costs of unproved properties excluded from amortization consist of leasehold acreage and relate to properties which are not individually significant for which the evaluation process has not been completed. The timing and amount of property acquisition and seismic costs included in the amortization computation will depend on the location and timing of drilling wells, results of drilling, and other assessments. Therefore, we are unable to estimate when these costs will be included in the amortization computation. Other Property and Equipment Our other property and equipment consists of the following assets that are recorded at cost and depreciated on a straight-line basis over the respective estimated useful lives. December 31, 2024 2023 (in thousands) Midstream assets $ 36,880 $ 31,338 Vehicles 1,815 1,392 Furniture, fixtures, and office equipment 751 260 Leasehold improvements 607 552 Gross midstream and other property and equipment 40,053 33,542 Less: Accumulated depreciation (4,595 ) (2,476 ) Total midstream and other property and equipment, net $ 35,458 $ 31,066 82 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements The estimated useful lives of other property and equipment depreciated on a straight-line basis are as follows: Midstream assets 5 – 25 years Vehicles 5 years Furniture, fixtures, and office equipment 3 – 10 years Leasehold improvements 5 years The carrying value of long-lived assets that are not part of INR Holdings’ full cost pool are evaluated for recoverability whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Should an impairment exist, the impairment loss would be measured as the amount that the asset’s carrying value exceeds its fair value. We did not recognize any impairment during the years ended December 31, 2024 and 2023. Total depreciation expense for the years ended December 31, 2024 and 2023 totaled approximately $2.1 million and $1.7 million, respectively. Note 6 – Accrued Liabilities INR Holdings’ accrued liabilities as of December 31, 2024 and December 31, 2023 consisted of the following amounts: December 31, 2024 December 31, 2023 (in thousands) Accrued interest expense $ 261 $ 396 Accrued capital expenditures 27,234 —  Accrued lease operating expenses 1,898 —  Accrued offering costs 4,849 —  Accrued general and administrative expenses 3,293 —  Accrued severance and ad valorem taxes 1,263 619 JIB advance deposits 6,188 —  Other accrued liabilities 917 —  Total accrued liabilities $ 45,903 $ 1,015 Note 7 – Leases At contract inception, INR Holdings determines whether or not an arrangement contains a lease in accordance with ASC 842. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Upon determination that a contract meets the definition of a lease subject to ASC 842, a right-of-use asset and related lease liability are recorded based on the present value of the future lease payments over the lease term. Right-of-use assets represent INR Holdings’ right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make future lease payments arising from the lease. Since the implicit rate in the lease is generally not available, INR Holdings utilizes its incremental borrowing rate as the discount rate for determining the present value of lease payments. Right-of-use assets also include any lease payments made prior to commencement, excluding any lease incentives received. We may enter into lease agreements for various purposes including drilling rig contracts, wellhead and surface equipment, rights-of-way and easements, and office space and equipment. For agreements that contain both lease and non-lease components, we have elected to combine and account for these as a single lease component. As of December 31, 2024, our lease agreements have remaining lease terms ranging from one month to 15 years; some of our agreements include options to extend the lease term and some of our agreements include options to early terminate at our sole discretion. These options are considered in determining the lease term and are included in the present value of future payments that are recorded for leases when INR Holdings is reasonably certain to exercise the option. None of our lease agreements contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for operating leases recorded on our consolidated balance sheets is recognized on a straight-line basis over the lease term. Variable lease payments for leases that are not recorded on our consolidated balance sheets are recognized in the period in which they are incurred, which primarily relate to our office space and equipment leases. The following table provides additional information related to INR Holdings’ lease right-of-use assets and liabilities: For the Year Ended December 31, 2024 2023 2022 Weighted-average discount rate 9.0 % 9.1 % 5.8 % Weighted-average remaining lease term (years) 9.4 13.0 13.1 83 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements For the years ended December 31, 2024, 2023 and 2022, lease expense, including operating leases related to our office space, of $0.3 million, $0.2 million and $0.1 million, respectively, was included within general and administrative expenses within our consolidated statements of operations. Payments due under INR Holdings’ long-term operating lease liabilities by fiscal year as of December 31, 2024, are as follows: Operating Leases (in thousands) 2025 $ 360 2026 275 2027 275 2028 220 2029 183 Thereafter 796 Total lease payments 2,109 Less: imputed interest (720 ) Present value of lease liabilities $ 1,389 Note 8 – Asset Retirement Obligations December 31, 2024 2023 (in thousands) Asset retirement obligations, beginning of period $ 970 $ 760 Liabilities assumed in mergers and acquisitions —  150 Liabilities incurred 87 34 Liabilities settled (10 ) —  Accretion expense 101 70 Revision to estimated cash flows 1,840 (44 ) Asset retirement obligations, end of period $ 2,988 $ 970 An asset retirement obligation represents a legal obligation associated with the retirement of a tangible long-lived asset in which the timing and/or method of settlement may or may not be conditional on a future event that may or may not be within INR Holdings’ control. The liability is initially measured as the present value of the estimated future costs associated with plugging and abandonment of oil and natural gas wells and other equipment removal, and land restoration activities. Upon initially recognizing the liability, INR Holdings capitalizes the estimated cost of retiring the asset as part of the carrying amount of the related long-lived asset. Over time, the liability is adjusted to its present value each period through accretion expense and the capitalized cost is depleted over the units-of-production method as part of the full cost pool. Accretion expense is included as part of depreciation, depletion, and amortization in the consolidated statements of operations. Inherent in the fair value calculation of asset retirement obligations are numerous estimates and assumptions including plugging and abandonment settlement amounts, inflation rates, credit-adjusted risk-free rates, and the timing of settlement. Asset retirement obligations incurred in the current period were Level 3 fair value measurements as the inputs used to measure the fair value are unobservable. During 2024, the Company recorded changes in estimates attributable primarily to increased plugging costs. During 2023, the Company recorded changes in estimates attributable primarily to inflation on estimated plugging costs. Note 9 – Debt On September 25, 2024, INR Holdings entered into an Amended and Restated Credit Facility with a syndicate of financial institutions. Borrowings under the credit facility are subject to borrowing base limitations based upon the discounted net present value of our oil and gas properties and are subject to semi-annual redeterminations. The credit facility is guaranteed by our subsidiaries and is secured by first priority security interests on substantially all of our consolidated assets, including a mortgage on at least 85% of the total value of the proved properties evaluated in the most recently delivered reserve report, including any engineering report relating to the crude oil and natural gas properties of our restricted domestic subsidiaries, subject to customary exceptions. Borrowings under the Amended and Restated Credit Facility may be base rate loans or Secured Overnight Financing Rate (“SOFR”) loans. Base rate loans bear interest at a rate per annum equal to the greater of: (i) the administrative agent bank’s prime rate; (ii) the 84 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements federal funds effective rate plus 50 basis points; or (iii) the adjusted Term SOFR rate (as defined in the Amended and Restated Credit Facility agreement) for a one-month interest period plus 100 basis points, plus an applicable margin, depending on the percentage of the borrowing base utilized, plus an additional basis point credit spread. SOFR loans bear interest at SOFR plus an applicable margin, depending on the percentage of the borrowing base utilized, plus an additional basis point credit spread. We also pay a commitment fee on unused elected commitment amounts under our credit facility, which is also dependent on the percentage of the borrowing base utilized. Interest is payable quarterly for base rate loans and at the end of the applicable interest period for SOFR loans. The Amended and Restated Credit Facility matures in September 2028. As of December 31, 2024, INR Holdings’ reserves supported a $325.0 million credit facility of which $259.3 million was outstanding leaving $65.7 million of unused capacity. For the year ended December 31, 2024, 2023 and 2022, total interest expense on our credit facility was $19.1 million, $10.1 million and $2.2 million, respectively. We capitalized interest expense for the year ended December 31, 2024 of $0.04 million. We did not capitalize any interest expense for the year ended December 31, 2023. For the year ended December 31, 2024, 2023 and 2022, INR Holdings’ weighted-average interest rate was 8.3%, 9.1% and 5.8%, respectively. Debt issuance costs associated with our credit facility are capitalized and presented as other assets within the unaudited condensed consolidated balance sheets. Because debt issuance costs are related to a line of credit, they are presented as an asset, rather than an offset to the corresponding liability. Debt issuance costs are amortized using the straight-line method over the term of the related agreement. We capitalized additional debt issuance costs related to the Amended and Restated Credit Facility of $5.8 million and expensed $0.3 million of previous capitalized debt issuance costs related to the extinguishment of the prior credit facility. Capitalized debt issuance costs were approximately $7.9 million and $4.7 million for the years ended December 31, 2024 and 2023, respectively. Amortization of debt issuance costs, which is included within interest expense in the consolidated statements of operations, was approximately $2.4 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively. The Amended and Restated Credit Facility also requires INR Holdings to maintain compliance with financial ratios including a current ratio of not less than 1.0 to 1.0 and a leverage ratio no greater than 3.0 to 1.0, each of which is defined within the terms of the Amended and Restated Credit Agreement. INR Holdings is in compliance with the covenants and financial ratios under the Amended and Restated Credit Facility described above through the date these unaudited condensed consolidated financial statements were available to be issued. Other Long-Term Debt Other long-term debt principally relates to car loans associated with INR Holdings’ car fleet to support service and maintenance of our operated wells. Payments due by fiscal year related to other long-term debt as of December 31, 2024 are as follows: Notes Payable (in thousands) 2025 $ 101 2026 45 2027 14 2028 —  2029 —  Total payments $ 160 Note 10 – Derivatives and Risk Management INR Holdings is exposed to volatility in market prices and basis differentials for oil, natural gas, and NGLs, which impacts the predictability of our cash flows related to the sale of those commodities. The overall objective of INR Holdings’ hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices, which we do by using various derivative instruments including fixed price swaps, basis swaps, and collars. As a result of our hedging activities, we may realize prices that are greater or less than the market prices that we would have otherwise received. We typically enter into over the counter (OTC) derivative contracts with financial institutions and regularly monitor the creditworthiness of all counterparties. Certain of our hedging arrangements are with counterparties that are also lenders (or affiliates of lenders) under our revolving credit facility. As of December 31, 2024, we did not have any cash or letters of credit posted as collateral for our derivative financial instruments. 85 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements INR Holdings does not designate any of its derivative instruments as cash flow hedges; therefore, all changes in fair value of our derivative instruments are recognized in other income within the consolidated statements of operations. We recognize all derivative instruments as either assets or liabilities at fair value within the consolidated balance sheets, subject to netting arrangements with our counterparties that permit net settlement of gross commodity derivative assets against gross commodity derivative liabilities. Contracts that result in physical delivery of a commodity expected to be sold by INR Holdings in the normal course of business are generally designated as normal purchases and normal sales and are exempt from derivative accounting. Contracts that result in the physical receipt or delivery of a commodity but are not designated or do not meet all of the criteria to qualify for the normal purchase and normal sale scope exception are subject to derivative accounting. The following tables provide information about INR Holdings’ derivative financial instruments. The tables present the notional amount, the weighted average contract prices and the fair values by expected maturity dates as of December 31, 2024. Volume Weighted Average Price Fair Value as of December 31, 2024 Oil (in MBbls) ($ per Bbl) (in thousands) Fixed price swaps 2025 1,510 $ 71.62 $ 2,449 2026 519 $ 69.58 1,465 2027 35 $ 68.04 88 2028 —  $ —  —  Total 2,064 $ 4,002 Volume Weighted Average Price Fair Value as of December 31, 2024 Natural gas (in MMBtu) ($ per MMBtu) (in thousands) Fixed price swaps 2025 28,530 $ 3.39 $ (2,093 ) 2026 30,780 $ 3.71 (6,555 ) 2027 14,005 $ 3.78 (1,731 ) 2028 1,070 $ 4.25 (109 ) Total 74,385 $ (10,488 ) Volume Basis Differential Fair Value as of December 31, 2024 Natural gas (in MMBtu) ($ per MMBtu) (in thousands) Basis swaps 2025 42,565 $ (1.03 ) $ (10,113 ) 2026 37,345 $ (1.00 ) (3,172 ) 2027 14,005 $ (0.92 ) 22 2028 1,070 $ (0.83 ) (0 ) Total 94,985 $ (13,263 ) Volume Weighted Average Price Fair Value as of December 31, 2024 Ethane (in gallons) ($ per gallon) (in thousands) Fixed price swaps 2025 10,915,000 $ 0.25 $ (57 ) 2026 6,063,500 $ 0.28 67 2027 435,000 $ 0.30 (1 ) 2028 —  $ —  —  Total 17,413,500 $ 9 86 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Volume Weighted Average Price Fair Value as of December 31, 2024 Propane (in gallons) ($ per gallon) (in thousands) Fixed price swaps 2025 15,940,000 $ 0.71 $ (995 ) 2026 8,080,500 $ 0.70 (143 ) 2027 577,000 $ 0.72 6 2028 —  $ —  —  Total 24,597,500 $ (1,132 ) Volume Weighted Average Price Fair Value as of December 31, 2024 Isobutane (in gallons) ($ per gallon) (in thousands) Fixed price swaps 2025 3,372,000 $ 0.86 $ (632 ) 2026 1,667,500 $ 0.83 (131 ) 2027 114,000 $ 0.82 (6 ) 2028 —  $ —  —  Total 5,153,500 $ (769 ) Volume Weighted Average Price Fair Value as of December 31, 2024 Normal butane (in gallons) ($ per gallon) (in thousands) Fixed price swaps 2025 5,267,500 $ 0.82 $ (932 ) 2026 2,686,000 $ 0.81 (141 ) 2027 192,000 $ 0.81 (3 ) 2028 —  $ —  —  Total 8,145,500 $ (1,076 ) Volume Weighted Average Price Fair Value as of December 31, 2024 Pentane (in gallons) ($ per gallon) (in thousands) Fixed price swaps 2025 4,329,000 $ 1.41 $ (224 ) 2026 2,168,500 $ 1.38 2 2027 149,000 $ 1.35 1 2028 —  $ —  —  Total 6,646,500 $ (221 ) Derivative assets and liabilities are presented below as gross assets and liabilities, without regard to master netting arrangements, which are considered in the presentation of derivative assets and liabilities in the accompanying balance sheets. 87 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements The following table summarizes the gross fair value of our derivative assets and liabilities and the effect of netting as of December 31, 2024 and 2023: December 31, 2024 Balance Sheet Classification Gross Amounts Netting Adjustment Net Amounts Presented on Balance Sheet (in thousands) Assets Commodity derivative assets, short-term $ 6,089 $ (6,089 ) $ —  Commodity derivative assets, long-term 2,647 (2,647 ) —  Total assets $ 8,736 $ (8,736 ) $ —  Liabilities Commodity derivative liabilities, short-term $ 18,685 $ (6,089 ) $ 12,596 Commodity derivative liabilities, long-term 12,989 (2,647 ) 10,342 Total liabilities $ 31,674 $ (8,736 ) $ 22,938 December 31, 2023 Balance Sheet Classification Gross Amounts Netting Adjustment Net Amounts Presented on Balance Sheet (in thousands) Assets Commodity derivative assets, short-term $ 26,176 $ (4,122 ) $ 22,054 Commodity derivative assets, long-term 8,046 (1,873 ) 6,173 Total assets $ 34,222 $ (5,995 ) $ 28,227 Liabilities Commodity derivative liabilities, short-term $ 4,128 $ (4,122 ) $ 6 Commodity derivative liabilities, long-term 2,625 (1,873 ) 752 Total liabilities $ 6,753 $ (5,995 ) $ 758 Our total derivative gains and losses for the years ended December 31, 2024, 2023 and 2022 were as follows: For the Year Ended December 31, (in thousands) 2024 2023 2022 Realized gain (loss) on derivative instruments $ 28,360 $ 19,438 $ (37,888 ) Unrealized gain (loss) on derivative instruments (50,407 ) 25,884 13,068 Total gain (loss) on derivative instruments $ (22,047 ) $ 45,322 $ (24,820 ) Note 11 – Fair Value Measurements Certain of INR Holdings’ assets and liabilities are measured at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. 88 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements The carrying values of cash and cash equivalents, including accounts receivable, other current assets, accounts payable and other current liabilities on the consolidated balance sheets approximate fair value because of their short-term nature. Additionally, the carrying value of outstanding borrowings under our revolving credit facility approximates fair value because the interest rates are variable and reflective of market rates. We consider the fair value of our revolving credit facility to be a Level 2 measurement on the fair value hierarchy, as discussed further below. The carrying value of borrowings under our revolving credit facility approximate fair value as interest rates applicable to our borrowings outstanding are based on prevailing market rates. We follow ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows: • Level 1: Quoted Prices in Active Markets for Identical Assets - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2: Significant Other Observable Inputs - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets (other than quoted prices included within Level 1), and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3: Significant Unobservable Inputs - inputs to the valuation methodology are unobservable but should reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk (consistent with the fair value measurement objective). Recurring Fair Value Measurements The following table presents, for each applicable level within the fair value hierarchy, INR Holdings’ net derivative assets and liabilities, including both current and noncurrent portions, measured at fair value on a recurring basis. December 31, 2024 Level 1 Level 2 Level 3 Fair Value (in thousands) Assets Fixed price swaps $ —  $ 4,012 $ —  $ 4,012 Basis swaps —  —  —  —  Liabilities Fixed price swaps —  (13,685 ) —  (13,685 ) Basis swaps —  (13,263 ) —  (13,263 ) Total $ —  $ (22,938 ) $ —  $ (22,938 ) December 31, 2023 Level 1 Level 2 Level 3 Fair Value (in thousands) Assets Fixed price swaps $ —  $ 31,047 $ —  $ 31,047 Basis swaps —  —  —  —  Liabilities Fixed price swaps —  (742 ) —  (742 ) Basis swaps —  (2,836 ) —  (2,836 ) Total $ —  $ 27,469 $ —  $ 27,469 89 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Derivative assets and liabilities are categorized within the above fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. We have classified our derivative instruments into levels depending upon the data utilized to determine their fair values. INR Holdings uses industry-standard models that consider various assumptions including current market and contractual prices for the underlying instruments, implied market volatility, time value, nonperformance risk, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument and can be supported by observable data. As such, we use Level 2 inputs to measure the fair value of commodity derivative contracts. Nonrecurring Fair Value Measurements Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include asset retirement obligations when incurred and other long-lived assets that are written down to fair value when they are impaired. INR Holdings did not record any impairment charge related to these assets and liabilities for the years ended December 31, 2024 and December 31, 2023. Note 12 – Members’ Equity On June 6, 2017, holders of INR Holdings’ equity interests approved the INR Holdings Limited Liability Company Agreement to, among other things, authorize the issuance of approximately $102.7 million of Class A interests. Subsequently INR Holdings received $90.3 million of contributions in exchange for Class A interests, with the additional contributions received through 2021 up to the total commitment amount of $102.7 million. On August 4, 2023, holders of INR Holdings’ Class A interests approved the INR Holdings Amended and Restated Limited Liability Company Agreement (as amended, the “Amended and Restated LLC Agreement”) to, among other things, authorize the issuance of approximately $23.0 million of Class B interests upon the signing of the purchase and sale agreement for the Ohio Utica Acquisition. The Amended and Restated LLC Agreement became effective on October 4, 2023. Upon the closing of the Ohio Utica Acquisition, INR Holdings issued an additional $199.3 million of Class B interests, the proceeds of which were used to fund a portion of the purchase consideration for the Ohio Utica Acquisition. In March 2024, we issued an additional $0.5 million of Class B interests. As of December 31, 2024, INR Holdings was managed by a board of managers comprised of seven managers including two managers that are executives of INR Holdings, four managers that are representatives of Pearl Energy Investment Management, LLC, and one manager that is a representative of NGP Energy Capital Management, L.L.C. Each manager has one vote on any company matter decided by vote and each matter requires a majority vote, with the exception of certain matters (including the appointment or removal of any manager) that require a super majority vote. As of December 31, 2024, affiliates of Pearl Energy Investment Management, LLC and NGP XI US Holdings, L.P., an affiliate of NGP Energy Capital Management, L.L.C., owned 73.6% and 24.5 %, respectively, of our Class A and Class B interests. Profits and losses for both Class A and Class B interests are determined and allocated among each equity interest holder in a manner such that the adjusted capital account of each equity interest holder is as nearly as possible equal to the distributions that would be made to such equity interest holder if certain transactions occur based on each equity interest holders proportionate ownership interest in INR Holdings. In connection with the issuance of the Class A and Class B interests, pursuant to the Amended and Restated LLC Agreement, INR Holdings also issued non-voting, performance-based incentive units to certain members of management. As of December 31, 2024, no liability or compensation expense was recognized as the likelihood of distributions to the award was not considered probable. These awards are forfeited upon termination and are similar to a cash bonus plan under ASC 710 whereby costs associated with the award are accrued over the relevant service period when distributions that the holder is entitled to receive are probable and reasonably estimable. Distributions to Class A interests, Class B interests and incentive units are made in accordance with the Amended and Restated LLC Agreement, which are provided first to holders of Class A Units and then to Class B Units. Distributions to holders of Incentive Units are made upon the occurrence of each respective incentive unit Tier’s Payout as defined in the Amended and Restated LLC Agreement per each respective Incentive Unit Tier. Once an Incentive Unit Tier’s Payout is achieved, the holders of that Incentive Unit Tier’s units receive a pro rata percentage of the distribution according to their ownership percentage. The overall amount of distribution allocated to each Incentive Unit Tier is subject to a predetermined percentage, as outlined in the Amended and Restated LLC Agreement. For the years ended December 31, 2024 and 2023, INR Holdings did not pay any distributions to holders of the Class A interests, the Class B interests, or the Incentive Units. 90 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Dividends INR Holdings did not declare or pay any dividends during the years ended December 31, 2024, 2023 and 2022. Note 13 – Supplemental Cash Flow Information The following table provides additional information concerning non-cash activities and cash paid for interest, net of amounts capitalized, for the years ended December 31, 2024, 2023 and 2022: For the Year Ended December 31, 2024 2023 2022 (in thousands) Supplemental disclosure of non-cash transactions: Adjustment required upon adoption of ASC 842 $ —  $ —  $ 652 Right-of-use assets and lease liabilities 834 18 249 Additions of asset retirement obligations 77 34 27 Assumed asset retirement obligations in acquisitions —  150 —  Revisions of asset retirement obligations 1,840 (44 ) 18 Property and equipment financed through notes payable —  139 251 Debt issuance in accrued liabilities 645 —  —  Deferred offering costs included in accounts payable and accrued liabilities 5,196 —  —  Additions to oil and natural gas properties included in accounts payable and accrued liabilities 50,052 25,453 32,190 Additions to other property and equipment included in accounts payable 769 831 5,312 Supplemental disclosure of cash flow information Interest paid $ 19,200 $ 10,136 $ 2,181 Capitalized Interest $ 41 $ —  $ —  Note 14 – Commitments and Contingencies South Bend Utica Farmout Agreement . On March 2, 2018, INR Holdings entered into an Exploration and Development Agreement and Farm Out Agreement (collectively, the “South Bend Utica Development Agreements”) with Dominion Energy Transmission, Inc. (“Dominion”) covering approximately 11,000 acres in Armstrong and Indiana Counties, Pennsylvania targeting the Utica Shale horizon. This acreage underpins our acreage position at South Bend for Utica development. The South Bend Utica Development Agreements had an initial term of 15 years and require the drilling of one (1) seven thousand foot lateral into the Utica formation. As of December 31, 2024, INR Holdings had yet to satisfy that obligation and has approximately 9 years remaining to meet its obligation. Firm Transportation . The Company has entered into long-term physical gas sales with BP to move volumes at South Bend. The terms of the agreement supported 25,000 decatherm per day through March 2029. Maximum Daily Quantity . The Company has commitments from an existing contract with Eureka Midstream for guaranteed pipeline capacity up to a maximum daily quantity (MDQ) of 15,000 decatherm per day expiring October 2025. In connection with this contract we have a minimum reservation fee and gathering fee based on the MDQ of 15,000 decatherm per day. Minimum Volume Commitment . The Company has minimum volume commitments under an existing contract with Ohio Gathering Company. The terms of the agreement supported an average of 10,600 decatherm per day through 2030. 91 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements The following table summarizes our future commitments related to these oil and natural gas transportation and gathering agreements as of December 31, 2024: As of December 31, 2024 2025 2026 2027 2028 2029 and thereafter Total (in thousands) Firm Transportation $ 894 894 894 894 225 $ 3,801 Maximum Daily Quantity 726 —  —  —  —  726 Minimum Volume Commitment 5,937 8,964 8,964 8,988 15,743 48,596 Total minimum future commitments $ 7,557 9,858 9,858 9,882 15,968 $ 53,123 Drilling Rig Service Commitments . We entered into a second amendment to our September 2023 drilling contract with Patterson-UTI Energy, Inc. (“Patterson”) in August 2024 to drill nine (9) horizontal laterals. INR has drilled seven (7) wells as of December 31, 2024 associated with this contract. In the event that we elected to not drill the remaining two (2) wells under that amendment, INR would have a minimum payment of $0.9 million. Lease Commitments . Refer to Note 7 – Leases for details on INR Holdings’ operating lease agreements. We do not have any finance lease obligations. Litigation . From time to time, INR Holdings is party to various legal and/or regulatory proceedings arising in the ordinary course of business. While the ultimate outcome and impact to us cannot be predicted with certainty, we believe that all such matters are without merit and involve amounts which, if resolved unfavorably, either individually or in the aggregate, will not have a material effect on our financial condition, results of operations or cash flows. When it is determined that a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at the time. INR Holdings discloses contingencies where an adverse outcome may be material, or in the judgment of management, the matter should otherwise be disclosed. Note 15 – Segment Information The Company has one reportable segment, which is engaged in the acquisition, exploration, development and production of crude oil and natural gas in the United States. All of the Company’s oil and natural gas sales come from customers in the United States. The segment’s revenues are primarily derived from our interests in the sales of crude oil and natural gas production. The Company’s chief operating decision maker (“CODM”) is our chief executive officer, who manages the Company’s business activities as a single operating and reporting segment. The accounting policies of the one reportable segment are the same as those described in the summary of significant accounting policies. The CODM uses net income, as reported in our statement of operations, to measure segment profit or loss, assess performance, and make strategic capital resources allocations. The measure of segment assets is reported on our balance sheet as total assets. The significant expense categories regularly provided to the CODM are the expenses as noted on the face of the statements of operations. The following table provides information about the Company’s one reportable segment and includes the reconciliation to consolidated net income: Year Ended December 31, 2024 2023 2022 Total revenues 259,022 161,730 143,155 Less: Gathering, processing, and transportation 49,290 31,097 15,673 Lease operating 28,154 18,371 8,256 Production and ad valorem taxes 1,071 886 719 Depreciation, depletion, and amortization 73,726 53,796 18,336 General and administrative 13,045 4,885 4,712 Other segment (income)/expenses (1) 44,450 (33,977 ) 27,330 Segment income $ 49,286 $ 86,672 $ 68,129 (1) Other segment (income) / expenses are comprised of net interest expense of $21,529, $11,910 and $2,574 for December 31, 2024, 2023 and 2022, respectively, gain/(loss) on derivative instruments of ($22,047), 45,322 and (24,820) for December 31, 2024, 2023 and 2022, respectively and other income/(loss) of (874), 565 and 64 for December 31, 2024, 2023 and 2022, respectively. 92 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 16 – Subsequent Events INR Holdings has evaluated subsequent events through March 26, 2024, the date on which the consolidated financial statements were available to be issued, noting the following relevant transactions. Initial Public Offering . In February 2025, Infinity completed its IPO of 15,237,500 shares of its Class A common stock (including 1,987,500 shares pursuant to an over-allotment option) at a price to the public of $20.00 per share. The aggregate gross proceeds of the IPO were $304.8 million. After subtracting underwriting discounts and commissions of $18.3 million, we received net proceeds of $286.5 million. We contributed all of the net proceeds from the IPO to INR Holdings in exchange for 15,237,500 INR Units. INR Holdings used all of the net proceeds from the IPO after paying certain offering expenses to repay borrowings outstanding under its revolving credit facility. In connection with the closing of the IPO, all outstanding performance-based incentive units of INR Holdings vested. Consequently, INR Holdings will recognize $126.1 million of non-recurring, non-cash compensation expense related to these awards in the first quarter of 2025, in accordance with the guidance provided by ASC 710. Corporate Reorganization . Prior to the completion of the IPO on February 3, 2025, Infinity undertook certain reorganization transactions (the “Corporate Reorganization”) such that Infinity is now a holding company whose sole material asset consists of membership interests in INR Holdings. INR Holdings owns all of the outstanding membership interests in each of INR Operating, INR Ohio, INR Midstream, Block Island and Cheat Mountain, the operating subsidiaries through which INR Holdings operates its assets. As part of the Corporate Reorganization, (a) the membership interests of the Legacy Owners in INR Holdings were recapitalized into a single class of units (the “INR Units”), and, in exchange for their existing membership interests, the Legacy Owners received INR Units and an equal number of shares of Class B common stock; and (b) Infinity contributed the net proceeds of the IPO to INR Holdings in exchange for newly issued INR Units and a managing member interest in INR Holdings. After giving effect to the Corporate Reorganization and the IPO, Infinity owns an approximate 25.0% interest in INR Holdings and the Legacy Owners own an approximate 75.0% interest in INR Holdings. Infinity is the managing member of INR Holdings and controls and is responsible for all operational, management and administrative decisions relating to INR Holdings’ business and upon reorganization consolidates the financial results of INR Holdings and reports non-controlling interests in its consolidated financial statements related to the INR Units that the Legacy Owners own in INR Holdings. Based on its ownership in INR Holdings, Infinity has a variable interest in INR Holdings and INR Holdings is a variable interest entity (“VIE”). Infinity has an approximate 25.0% interest in INR Holdings through which it will absorb the risks created and distributed by INR Holdings. As the managing member of INR Holdings based on the terms of the INR Holdings LLC Agreement, Infinity has the sole power to direct the activities that most significantly impact the entity’s economic performance, with the remaining INR Unit Holders having no substantive kick-out or participating rights. As such, Infinity determined that INR Holdings is a VIE and that Infinity is the primary beneficiary of INR Holdings. To make this determination, Infinity determined that its economic interest give it both the power to direct the activities of INR Holdings that most significantly impact INR Holdings’ economic performance, as well as the obligation to absorb losses or the right to receive benefits that could potentially be significant to INR Holdings. In making this determination, Infinity considered the total economics of INR Holdings and whether its share of the economics through its ownership of INR Units will be significant, using qualitative and quantitative factors, where applicable. Accordingly, Infinity as the primary beneficiary of INR Holdings will include INR Holdings in its consolidated financial statements. The portion of the consolidated INR Holdings that is owned by the INR Unit Holders and any related activity will be eliminated through non-controlling interests in the consolidated balance sheets and income attributable to non-controlling interests in the consolidated statements of operations of Infinity. In connection with the Corporate Reorganization, INR Holdings and Infinity entered into the Second Amended and Restated Limited Liability Company Agreement of INR Holdings (the “INR Holdings LLC Agreement”). Pursuant to the INR Holdings LLC Agreement, 93 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements holders of INR Units (other than INR) are entitled to exchange their INR Units, and surrender of an equivalent number of shares of Class B common stock, for a number of shares of Class A common stock on a one-for-one basis or, at our option, the receipt of an equivalent amount of cash. Under the INR Holdings LLC Agreement, Infinity has the right to determine when distributions will be made to Infinity and the INR Unit Holders and the amount of any such distributions. If Infinity authorizes a distribution, such distribution will be made to the INR Unit Holders and Infinity on a pro rata basis in accordance with the respective percentage ownership of INR Units. In connection with the Corporate Reorganization, INR Holdings and Infinity entered into a Tax Receivable Agreement with the Legacy Owners. This agreement generally provides for the payment by Infinity to the Legacy Owners of 85% of the net cash savings, if any, in U.S. federal, state and local income tax that Infinity (a) actually realizes with respect to taxable periods ending after this offering or (b) is deemed to realize in the event of a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations and certain changes to the composition of Infinity’s board of directors) or the Tax Receivable Agreement terminates early (at Infinity’s election or as a result of Infinity’s breach) with respect to any taxable periods ending on or after such change of control or early termination event, in each case, as a result of (i) the tax basis increases resulting from the exchange of INR Units and the corresponding surrender of an equivalent number of shares of Class B common stock by the Legacy Owners for a number of shares of Class A common stock on a one-for-one basis or, at Infinity’s option, the receipt of an equivalent amount of cash pursuant to the INR Holdings LLC Agreement and (ii) deductions arising from imputed interest deemed to be paid by Infinity as a result of, and additional tax basis arising from, any payments Infinity makes under the Tax Receivable Agreement. Infinity will retain the benefit of the remaining 15% of these cash savings, if any. Note 17 – Supplemental Information on Oil and Natural Gas Producing Activities (Unaudited) Capitalized Costs The aggregate amounts of costs capitalized for oil and gas exploration and development activities and the related amounts of accumulated depreciation, depletion, and amortization are shown below: December 31, 2024 2023 2022 (in thousands) Proved properties (1) $ 846,738 $ 615,456 $ 191,887 Unproved properties 86,490 37,189 40,718 Total proved and unproved properties 933,228 652,645 232,605 Accumulated depreciation, depletion, and amortization (148,638 ) (77,085 ) (25,010 ) Net capitalized costs $ 784,590 $ 575,560 $ 207,595 (1) Includes asset retirement costs of $2.7 million, $0.8 million and $0.6 million as of December 31, 2024, 2023 and 2022, respectively. Costs Incurred for Oil and Natural Gas Producing Activities Our capital costs incurred for acquisition and development activities are shown below: December 31, 2024 2023 2022 (in thousands) Acquisition costs: Proved properties $ 19,172 $ 274,732 $ 2,066 Unproved properties 89,174 1,047 —  Development costs 165,795 144,121 108,544 Exploration costs —  —  —  $ 274,141 $ 419,900 $ 110,610 Estimated Quantities of Proved Oil and Gas Reserves The reserve estimates presented below and included herein conform to the definitions prescribed by the SEC. INR Holdings retained Wright & Co, Inc., an independent petroleum engineering firm, to prepare the estimates of all of its proved reserves as of December 31, 2024, 2023, and 2022 and their related pre-tax future net cash flows. The individuals performing reserves estimates possess professional qualifications and demonstrate competency in reserves estimation and evaluation. The estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development, price changes and other factors. 94 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements Reserve estimates are based on an unweighted arithmetic average of commodity prices during the 12-month period, using the closing prices on the first day of each month, as defined by the SEC. As of December 31, 2024, all of INR Holdings’ oil and gas reserves are attributable to properties within the United States. The table below presents a summary of changes in quantities of proved oil and gas reserves in INR Holdings’ estimated proved reserves: Crude Oil (MBbls) Natural Gas (MMcf) Natural Gas Liquids (MBbls) Total (MBoe) Total proved reserves: December 31, 2021 5,846 237,646 10,450 55,904 Extensions 1,574 160,098 3,999 32,256 Revisions to previous estimates (867 ) (27,821 ) 359 (5,145 ) Purchases of reserves in place —  —  —  —  Production (640 ) (11,585 ) (656 ) (3,227 ) December 31, 2022 5,913 358,337 14,152 79,788 Extensions 7,443 168,704 9,015 44,575 Revisions to previous estimates 252 (118,920 ) (4,501 ) (24,069 ) Purchases of reserves in place 18,636 128,110 8,207 48,194 Production (1,205 ) (27,506 ) (1,112 ) (6,901 ) December 31, 2023 31,038 508,725 25,762 141,587 Extensions 9,997 127,429 4,782 36,018 Revisions to previous estimates (1,301 ) 9,152 1,335 1,559 Purchases of reserves in place —  —  —  —  Production (2,380 ) (28,291 ) (1,723 ) (8,818 ) December 31, 2024 37,354 617,015 30,156 170,346 Proved developed reserves: December 31, 2022 2,995 143,632 6,132 33,066 December 31, 2023 13,172 252,832 12,644 67,954 December 31, 2024 14,577 248,634 12,856 68,872 Proved undeveloped reserves: December 31, 2022 2,918 214,706 8,020 46,723 December 31, 2023 17,866 255,893 13,118 73,633 December 31, 2024 22,777 368,382 17,300 101,474 Notable changes in proved reserves for the year ended December 31, 2022 included the following: • Extensions . In 2022, total extensions to previous estimates increased proved reserves by 32.3 MMBoe. These extensions primarily related to the addition of 13 PUD locations to be developed by 2027 (as that year entered the 5-year development window) which added 21.2 MMBoe of proved reserves. Other extensions included converting 11.0 MMBoe of unproved reserves to proved developed reserves by drilling five (5) wells during 2022, two of which were producing as of December 31, 2022. During 2022, our drilling program was focused on adding locations primarily in the various Utica / Point Pleasant formation in Ohio and the Marcellus shale formation in Pennsylvania. • Revisions to previous estimates . In 2022, total revisions to previous estimates reduced proved reserves by 5.1 MMBoe. These downward revisions primarily consisted of 5.5 MMBoe of downward revisions to PUD reserves, which were comprised of downward revisions of 10.9 MMBoe in PUDs from 2021 to 2022 due to changes to our development plan that resulted in 11 PUD locations being reclassified as they were outside the 5 year development window while we perform further technical refinements and analysis to evaluate well spacing assumptions. These downward revisions were partially offset by upward revisions of 5.4 MMBoe due to well performance. Our proved developed producing properties had upward revisions of 0.4 MMBoe related to increases in commodity prices which impacted the estimated timing and performance of these wells. Notable changes in proved reserves for the years ended December 31, 2023 included the following:  • Extensions . In 2023, total extensions to previous estimates increased proved reserves by 44.6 MMBoe. These extensions primarily related to the addition of 21 proved undeveloped (“PUD”) locations to be developed by 2028 (as that year entered the 5-year development window) which added 32.5 MMBoe of proved reserves. Other extensions included converting 12.0 95 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements MMBoe of unproved reserves to proved developed reserves by drilling six wells during 2023, two of which were producing as of December 31, 2023. During 2023, our drilling program was focused on adding locations primarily in the various Utica and Point Pleasant formations in Ohio and the Marcellus shale formation in Pennsylvania. • Revisions to previous estimates . In 2023, total revisions to previous estimates reduced proved reserves by 24.1 MMBoe. These downward revisions primarily consisted of 20.8 MMBoe of revisions to PUD reserves, which were comprised of 1.2 MMBoe of positive revisions related to increases in working interest, increased lateral length, and improvement in type curve, offset by downward revisions of 0.9 MMBoe in PUDs from 2022 to 2023 due to decreases in prices during the year ended December 31, 2023, as well as downward revisions of 21.1 MMBoe due to changes to our development plan that resulted in 18 PUD locations being reclassified as they were outside the 5 year development window while the Company performs further technical refinements and analysis to evaluate well spacing assumptions. Additionally, our proved developed producing properties had downward revisions of 3.3 MMBoe related to decreases in commodity prices which impacted the estimated timing and performance of these wells. • Purchases of reserves in place . In 2023, 48.2 MMBoe of proved reserves were added primarily from properties acquired in the Ohio Utica Acquisition on October 4, 2023, including 20.4 MMBoe of proved developed reserves and 27.8 of proved undeveloped locations. Notable changes in proved reserves for the year ended December 31, 2024 included the following: • Extensions . In 2024, total extensions to previous estimates increased proved reserves by 36.0 MMBoe. These extensions primarily related to the addition of 27 PUD locations to be developed by 2029 (as that year entered the 5-year development window) which added 35.3 MMBoe of proved reserves. Other extensions included converting 0.7 MMBoe of unproved reserves to proved developed reserves by drilling eighteen (18) wells during 2024, two of which were producing as of December 31, 2024. During 2024, our drilling program was focused on adding locations primarily in the various Utica and Point Pleasant formations in Ohio and the Marcellus shale formation in Pennsylvania. • Revisions to previous estimates . In 2024, total revisions to previous estimates increased proved reserves by 1.5 MMBoe. These revisions primarily consisted of 5.2 MMBoe of downward revisions to PDNP reserves based on decreases in pricing for the year ended December 31, 2024, combined with changes to our development plan, resulting in reclassifying 8 PUD locations that were determined to be outside of the 5-year development window as further technical refinement is performed for well spacing assumptions. Additionally, our proved developed producing properties had upward revisions of 6.5 MMBoe and PUD reserves had upward revisions of 0.2 MMBoe related to decreases in capitalized costs which impacted the estimated performance of these wells. Standardized Measure of Discounted Future Net Cash Flows The standardized measure of discounted future net cash flows (the “Standardized Measure”) relating to proved oil and gas reserves has been prepared in accordance with FASB ASC Topic 932, Extractive Activities – Oil and Gas (“ASC 932”). Future cash inflows as of December 31, 2024, 2023 and 2022 have been computed by applying average fiscal year prices (calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month periods ended December 31, 2024, 2023, 2022, respectively) to estimated future production. Future production and development costs are computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves, based on year-end costs and assuming the continuation of existing economic conditions. The Standardized Measure also includes costs for future dismantlement, abandonment, and rehabilitation obligations. Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows relating to proved oil and natural gas reserves, less the tax basis of properties involved. Future income tax expenses give effect to permanent differences, tax credits and loss carryforwards relating to the proved oil and natural gas reserves. Future net cash flows are discounted at a rate of 10% annually to derive the Standardized Measure. This calculation does not necessarily result in an estimate of the fair value of INR Holdings’ oil and gas properties. 96 Table of Contents INFINITY NATURAL RESOURCES, LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements The following table presents INR Holdings’ Standardized Measure of discounted future net cash flows: December 31, 2024 2023 2022 (in thousands) Future cash inflows $ 4,181,440 $ 3,865,302 $ 3,116,373 Future development costs (1) (652,135 ) (545,803 ) (273,522 ) Future production costs (1,548,957 ) (1,281,802 ) (535,779 ) Future net cash flows 1,980,348 2,037,697 2,307,072 Discounted future income tax expense —  —  —  10% discount to reflect timing of cash flows (1,007,830 ) (1,099,313 ) (1,289,464 ) Standardized measure of discounted future net cash flows $ 972,518 $ 938,384 $ 1,017,607 (1) Future development costs include costs associated with the future abandonment of proved properties, including proved undeveloped locations. The following summarizes the principal sources of change in the Standardized Measure of discounted future net cash flows and such changes have been computed in accordance with ASC 932: For the Year Ended December 31, 2024 2023 2022 (in thousands) Beginning of period $ 938,384 $ 1,017,607 $ 327,139 Sales of oil, natural gas, NGLs, net of production costs (176,822 ) (109,179 ) (117,952 ) Acquisitions of reserves —  534,927 —  Extensions, net of future development costs 200,954 199,378 422,418 Net change in price and production costs (264,003 ) (643,905 ) 420,633 Previously estimated development costs incurred 140,274 68,412 15,659 Change in estimated future development costs (7,170 ) 4,734 (13,664 ) Revisions of previous quantity estimates 45,803 (224,318 ) (40,869 ) Accretion of discount 93,838 101,761 32,714 Net change in income taxes —  —  —  Net change in timing of production and other 1,260 (11,034 ) (28,470 ) End of period $ 972,518 $ 938,384 $ 1,017,607 Future net revenues included in the Standardized Measure relating to proved oil and natural gas reserves incorporate weighted average sales prices (inclusive of adjustments for transportation, quality, and basis differentials) for each of the periods indicated below as follows: December 31, 2024 2023 2022 Oil (per Bbl) $ 67.98 $ 73.73 $ 88.67 Natural gas (per MMBtu) $ 1.42 $ 1.74 $ 5.61 NGL (per Bbl) $ 25.48 $ 26.87 $ 41.21 97 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.