Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the
period covered by this Annual Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were not effective because of certain material weaknesses in our internal control over
financial reporting, as further described below.
Managements Annual Report on Internal Control Over Financial Reporting
This Annual Report does not include a report of managements assessment regarding internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or an attestation report of our registered public accounting firm due to a transition period established by rules
of the SEC for newly public companies. Additionally, our independent registered accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer
an emerging growth company as defined in the JOBS Act.
A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.
In connection with the preparation and audit of our consolidated financial statements as of December 31, 2023, and for the year then
ended, our management identified deficiencies, either individually or in the aggregate, that represented material weaknesses in our internal control over financial reporting. These material weaknesses relate to:
Segregation of duties We did not design and implement processes which allowed for appropriate segregation
of duties, including our process of reviewing and approving journal entries.
Risk assessment We did not design and implement an effective risk assessment based on the criteria
established in the COSO framework.
Control activities We did not design and implement effective control activities based on the criteria
established in the COSO framework, including those over information technology.
Formal accounting policies and procedures We have not formalized a comprehensive accounting policies and
procedures memo in accordance with US GAAP.
Accounting and financial reporting resources We did not maintain a sufficient complement of accounting and
financial reporting resources commensurate with our financial reporting requirements.
Remediation Measures
In order to remediate these material weaknesses, we have hired a third-party partner and have made progress in the following actions, among
others:
Continued hiring of additional qualified accounting and financial reporting personnel to support division of
responsibilities;
Design and implement formal accounting policies and procedures in accordance with US GAAP;
Design and implement control activities with clear and distinct segregation of duties including our process for
reviewing and approving journal entries;
Implementation of additional review controls and processes over account reconciliations and analysis to ensure
they are performed timely and accurately;
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Design and implement risk assessment processes that considers the criteria in the COSO framework; and
Design and implement information technology general controls to manage access and program changes across our
information technology systems.
We will not be able to fully remediate these material weaknesses until these steps have
been completed and have been operating effectively for a sufficient period of time. At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing these remediation efforts; however, these remediation
efforts will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources. Furthermore, we cannot assure you that the measures we have taken to date, and actions we
may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. Our
current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the
future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a
restatement of our financial statements for prior periods.
Changes in Internal Control Over Financial Reporting
Except for the identification of the material weaknesses and the related remediation efforts described above, there were no changes during the
quarter ended December 31, 2024 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
Rule
10b5-1 Trading Arrangements
From time to time, our officers (as defined in Rule 16a1(f))
and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of
Regulation S-K). During the three months ended December 31, 2024, none of our officers or directors adopted or terminated any such trading arrangements.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The
following table sets forth the names, ages and titles of our directors and executive officers as of March 21, 2025:
Name
Age
Title
Zack Arnold
42
President, Chief Executive Officer and Director
David Sproule
45
Executive Vice President, Chief Financial Officer and Director
Raleigh Wolfe
38
General Counsel and Secretary
Steven D. Gray
65
Chairman
Steven Cobb
36
Director
Katherine M. Gallagher
41
Director
Scott Gieselman
61
Director
Sarah James
42
Director
David Poole
63
Director
William J. Quinn
54
Director
Brian Seline
35
Director
Zack Arnold has served as our President and Chief Executive Officer since June 2017, a member of
our board of directors since May 2024, and a member of the board of managers of INR Holdings from 2017 until January 2025. From 2014 to 2017, Mr. Arnold acted as the General Manager of Operations at Northeast Natural Energy (NNE).
Prior to joining NNE, Mr. Arnold held various roles at Chesapeake Energy Corp. (Nasdaq: CHK) including Drilling Engineer, Completions Superintendent and Operations Manager. Mr. Arnold began his career as a Production Engineer with Chevron
Corporation (NYSE: CVX) in Bakersfield, CA where he was exposed to the safety culture, operational excellence and the process-oriented mindset of a major energy company. Mr. Arnold is a graduate of Marietta College where he holds a degree in
petroleum engineering. Mr. Arnolds extensive industry background and deep knowledge of our business make him a valuable resource to our board of directors.
David Sproule has served as our Executive Vice President and Chief Financial Officer since June 2017, a member of our board of
directors since May 2024, and a member of the board of managers of INR Holdings from 2017 until January 2025. Prior to joining Infinity Natural Resources, from July 2015 to June 2017, Mr. Sproule acted as a consultant advising exploration and
production companies operating within the Appalachian Basin. Prior to that, Mr. Sproule was a director at Tudor Pickering, Holt & Co. advising exploration and production companies predominantly within the Appalachian Basin on strategic
M&A and capital raising activities. Mr. Sproule is a graduate of Yale University where he holds a B.A. in History. Mr. Sproules extensive industry background and deep knowledge of our business make him a valuable resource to our
board of directors.
Raleigh Wolfe has served as our General Counsel since June 2024 and Secretary since January 2025.
Mr. Wolfe previously served as an attorney at Vinson & Elkins L.L.P. from October 2013 to June 2024, most recently in the role of Counsel, where he represented public and private companies in capital markets offerings and mergers and
acquisitions, primarily in the oil and natural gas industry. Mr. Wolfe holds a Bachelor of Science degree from Clemson University, a Master of Business Administration from Louisiana State University and a Juris Doctor from Louisiana State
University.
Steven D. Gray has served as the Chairman of our board of directors since January 2025. Mr. Gray served as
Co-founder, Director, and Chief Executive Officer of RSP Permian Inc. from 2010 until its merger with Concho Resources (Concho) in 2018. After the merger with Concho, he joined Conchos Board
of Directors and served until Concho was acquired by ConocoPhillips (NYSE: COP) in 2021. Prior to forming RSP Permian, Mr. Gray founded several successful oil and gas ventures spanning nearly 20 years in partnerships with Natural Gas
Partners, a Dallas, Texas based private equity firm. Before that, Mr. Gray spent 11 years employed in the oil and gas industry in various capacities as a petroleum engineer. Mr. Gray currently serves as Chairman of the Board of
Directors of Permian Resources Corporation (NYSE: PR), as well as a Director on the Texas Tech Foundation Advisory Board. Mr. Gray previously served as a Director on the Board of Directors of Range Resources Corporation (NYSE: RRC) from October
2018 to October 2024. Mr. Gray holds a Bachelor of Science in Petroleum Engineering degree from Texas Tech University. Mr. Gray brings extensive experience as an executive for numerous upstream oil and gas companies, including as CEO, as
well as prior public board service to our board of directors.
Steven Cobb has served as a member of our board of directors
since October 2024 and was a member of the board of managers of INR Holdings from 2017 until January 2025. Mr. Cobb is also a Partner of Pearl Energy Investments and has held
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such role since January 2025, and prior to that he was a Managing Director since August 2015. As a member of Pearls investment team, Mr. Cobb is involved in portfolio management,
firm strategy, business development, LP relations and fundraising. Prior to joining Pearl, from August 2011 to August 2015, Mr. Cobb was employed at Pioneer Natural Resources, where he served as an Operations Engineer, Reservoir Engineer, and
most recently, Supervisor of Investor Relations. Steven holds a B.S. in Petroleum Engineering from the University of Oklahoma and an M.B.A. in finance from Southern Methodist University. Mr. Cobb was designated to continue serving on our
board of directors by Pearl and its affiliates pursuant to the rights granted to Pearl in the Charter. Mr. Cobb brings deep industry and investing experience to our board of directors.
Katherine M. Gallagher has served as a member of our board of directors since January 2025. Ms. Gallagher currently serves
as Co-President of the Board of Magdalene House Austin, and as a board member of the White Star Ranch Homeowners Association. Ms. Gallagher previously served as a Corporate Regulatory Advisor for
Pioneer Natural Resources from September 2014 to May 2017. Prior to that, Ms. Gallagher served in various roles for Pioneer Natural Resources from September 2007 to September 2014, including as a Field Operations Manager, Operations Engineering
Supervisor, Special Project Engineer and Senior Operations Engineer. Before that, Ms. Gallagher served as a Materials Engineer for Chevron Corp. from June 2005 to September 2007. Ms. Gallagher holds a Bachelor of Science degree in
Metallurgical and Materials Engineering, with a minor in Economics, from the Colorado School of Mines, and a Master of Science degree in Petroleum Engineering from Texas A&M University. Ms. Gallagher brings deep experience and intimate
knowledge of the oil, gas and energy industry to our board of directors.
Scott Gieselman has served as a member of our
board of directors since January 2025. Mr. Gieselman was a Partner for NGP Energy Capital Management until 2023, a position he held since April 2007. Mr. Gieselman served as a director of certain private and public NGP portfolio companies.
Prior to joining NGP, Mr. Gieselman served in various positions in the investment banking energy group of Goldman Sachs & Co. LLC, where he became a partner in 2002. Mr. Gieselman served as a director for Switchback II Corporation
from December 2020 until the closing of its business combination with Bird Rides, Inc. in November 2021, Switchback Energy Acquisition Corporation from May 2019 until the closing of its business combination with ChargePoint Holdings, Inc. (NYSE:
CHPT) in February 2021, HighPoint Resources Corporation from March 2018 until the closing of its merger with Bonanza Creek Energy, Inc. in April 2021, WildHorse Resource Development Corporation from September 2016 until it was acquired by Chesapeake
Energy Corporation (NASDAQ: CHK) in February 2019, Chesapeake Energy Corporation from May 2019 to November 2019, Rice Energy, Inc. from January 2014 until April 2017, Memorial Resource Development Corp. from June 2014 until it was acquired by Range
Resources Corporation (NYSE: RRC) in September 2016, and Memorial Production Partners GP LLC from December 2011 until March 2016. Mr. Gieselman holds a Master of Business Administration degree and a Bachelor of Science degree from Boston
College. Mr. Gieselman brings deep experience and an intimate knowledge of the oil, gas and energy industry to our board of directors.
Sarah James has served as a member of our board of directors since January 2025. Ms. James is currently
a partner at Penvest Holdings, a private investment holding company. Ms. James served as Chief Financial Officer for Beard Energy Transition Acquisition Corporation (NYSE: BRD) from November 2021 to December 2023. From March 2020
to July 2021, Ms. James served as Chief Financial Officer for Alussa Energy Acquisition Corporation (NYSE: ALUS). From February 2013 to April 2020, Ms. James served as a vice president of finance and business development at
Caelus Energy Alaska, LLC, a private company specializing in oil and gas exploration and production. Ms. James oversaw the companys business development strategy, debt and equity fundraising and ongoing financial reporting functions. From
January 2008 to August 2010, she served as a private equity associate at Riverstone Holdings, an energy, power and infrastructure-focused private equity firm. Prior to that, Ms. James served as an analyst at JPMorgan Securities, Inc.,
in the diversified industrials and natural resources group. Ms. James currently serves on the board of directors and audit committee of North American Helium Inc as well as the board of directors and nominating and governance committee of
Stronghold Digital Mining, Inc. (Nasdaq: SDIG). Ms. James holds a Bachelor of Arts degree in Economics and English from Duke University and a Master of Business Administration and Master of Science: School of Earth Sciences from Stanford
University. Ms. James brings financial expertise and prior public company executive experience to our board of directors.
David Poole has served as a member of our board of directors since January 2025. Mr. Poole is currently Of Counsel at the
law firm of Wick Phillips LLP. Mr. Poole previously served as General Counsel and Corporate Secretary of Range Resources Corporation (NYSE: RRC) from June 2008 until March 2023. Prior to joining Range, Mr. Poole was with TXU Corp.
(TXU) in its legal department from 2004 to 2008, serving most recently as General Counsel. Prior to joining TXU, Mr. Poole spent 16 years at the law firm of Hunton & Williams LLP, most recently as a Partner. Mr. Poole
holds a Bachelor of Science degree in Petroleum Engineering from Texas Tech University and a Juris Doctor degree from the Texas Tech School of Law. Mr. Poole brings deep industry and legal knowledge and prior experience in public oil, gas and
energy companies to our board of directors.
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William J. Quinn has served as a member of our board of directors since
October 2024 and was a member of the board of managers of INR Holdings from 2017 until January 2025. Mr. Quinn is also a Founder and Managing Partner of Pearl Energy Investments. Prior to founding Pearl in 2015, Mr. Quinn served as
Managing Partner of Natural Gas Partners. In his capacity as Managing Partner, he co-managed NGPs investment portfolio and played an active role in the full range of NGPs investment process. Mr. Quinn also serves on the boards
of directors of a number of Pearl companies and their affiliates. Mr. Quinn currently serves on the board of directors of Permian Resources Corporation (NYSE: PR), a position he has held since September 2022. From September 2021 until May 2022,
he served as a director and Chairman of the board of directors of Spring Valley Acquisition Corporation, which is now called NuScale Power Corporation (NYSE: SMR) following the companys business combination in May 2022. Mr. Quinn holds a
Master of Business Administration degree from the Stanford University Graduate School of Business and a Bachelor of Science degree in Economics, with honors, from the Wharton School of the University of Pennsylvania with a concentration in Finance.
Mr. Quinn was designated to continue serving on our board of directors by Pearl and its affiliates pursuant to the rights granted to Pearl in the Charter. Mr. Quinn brings deep industry and investing experience to our board of directors.
Brian Seline has served as a member of our board of directors since January 2025. Mr. Seline is a Partner at NGP where
he concentrates on the firms efforts in sourcing new investments, acquisition evaluation and serving on the boards of several private oil and gas investments. Mr. Seline joined NGP in July 2013 and has over a decade of experience in the
energy industry. In his time with NGP, Mr. Seline has worked directly with over 20 upstream and midstream companies across the investment lifecycle. Prior to NGP, Mr. Seline was an Investment Banking Analyst with Barclays Capitals
Natural Resources Group in Houston from June 2011 to July 2013, where he focused on financing and merger and acquisition transactions in the oil and gas industry. Mr. Seline received a B.B.A. in Finance and a B.A. in Economics and minor in
Government in 2011 from The University of Texas at Austin, where he graduated with Honors and was a member of the Phi Beta Kappa scholastic honor society. Mr. Seline was designated to serve on our board of directors by NGP pursuant to the
rights granted to NGP in the Charter. Mr. Seline brings deep industry experience and financial expertise to our board of directors.
Family
Relationships
There are no family relationships among any of our executive officers or directors.
Corporate Governance
Board of Directors and
Director Independence
The number of members of our board of directors is determined from time-to-time by resolution of the board of directors. Our board of directors currently consists of ten members. Our board of directors has determined that Messrs. Cobb, Gieselman, Gray, Poole, Quinn and
Seline and Mses. Gallagher and James are each independent under NYSE Listing Rule 303A.02. In making these independence determinations, our board of directors has reviewed and discussed information provided by the directors to us with regard to each
directors business and personal activities and relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by each non-employee director
or entities with which they are affiliated. In addition to determining whether each director satisfies the director independence requirements set forth in the NYSE listing requirements, in the case of members of our audit committee, our board of
directors has also made an affirmative determination that members satisfy the separate independence requirements under the NYSE and SEC rules for such members.
In evaluating a director candidates qualifications, we will assess whether such a candidate possesses the integrity, judgment,
knowledge, experience, skills and expertise that are likely to enhance our ability to manage and direct our affairs and business, including our board of directors committees. Our directors hold office until the earlier of their death,
resignation, retirement, disqualification or removal or until their successors have been duly elected and qualified.
Board of Directors Leadership
Structure
The board of directors conducts an annual assessment of its leadership structure to determine the structure that is the
most appropriate for the company at the time. The board of directors currently maintains a leadership structure whereby the Chairperson of the board is an independent director. The board of directors believes that having a chair who is independent
of management provides strong leadership for the board of directors and helps ensure critical and independent thinking with respect to our strategy and performance. Our CEO is also a member of the board of directors and the board of directors
anticipates that our CEO will be nominated annually to serve on the board of directors. We believe this is important to make information and insight directly available to the directors in their deliberations. The board of directors believes that its
current leadership structure provides an appropriate, well-functioning balance between non-management and management directors that combines experience, accountability and effective risk oversight.
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Under our Corporate Governance Guidelines, the Chairperson of the board and the CEO role may
be filled by the same individual. In the event the Chairperson of the board is not independent, the board of directors will select a lead independent director who will have authority to, among other things, serve as liaison between the Chairperson
of the board of directors and the independent directors, lead executive sessions of the board of directors, call meetings of the independent directors, and approve meeting agendas, schedules and information sent to the board of directors.
Director Nominations
Our Charter
provides Pearl with the right to nominate a majority of the members of our board of directors so long as it and its affiliates beneficially own more than 50% of the voting power of the Class A common stock and Class B common stock
(together, the common stock) entitled to vote generally in the election of directors. When Pearl, together with its affiliates, beneficially owns less than 50% but more than 30% of the voting power of the common stock entitled to vote
generally in the election of directors, Pearl will have the right to nominate a number of individuals to the board of directors proportionate to Pearls beneficial ownership of the voting power of the common stock entitled to vote generally in
the election of directors, rounded up to the nearest whole number, which shall not be less than three (3). When Pearl, together with its affiliates, beneficially owns less than 30% but more than 20% of the voting power of the common stock entitled
to vote generally in the election of directors, Pearl will have the right to nominate a number of individuals to the board of directors proportionate to Pearls beneficial ownership of the voting power of the common stock entitled to vote
generally in the election of directors, rounded up to the nearest whole number, which shall not be less than two (2). When Pearl, together with its affiliates, beneficially owns less than 20% but at least 10% of the voting power of the common stock
entitled to vote generally in the election of directors, Pearl will have the right to nominate one member to the board of directors. Furthermore, our Charter provides NGP with the right to nominate one (1) individual to our board of directors
so long as it and its affiliates beneficially own at least 10% of the voting power of the common stock entitled to vote generally in the election of directors. As of March 21, 2025, Pearl and NGP are entitled to nominate five and one members of
our board of directors, respectively.
Audit Committee and Audit Committee Financial Expert
Our audit committee consists of Mses. Gallagher and James and Mr. Gieselman, with Ms. James serving as the audit committee chair. The
audit committee must consist solely of independent directors, subject to the phase-in exceptions, as required by the rules of the SEC and listing standards of the NYSE. Our board of directors has affirmatively
determined that each of Mses. Gallagher and James and Mr. Gieselman meet the definition of independent director for purposes of serving on the audit committee under the NYSE rules and the independence standards under Rule 10A-3 of the Exchange Act. Each member of our audit committee meets the financial literacy requirements of the NYSE rules. In addition, our board of directors has determined that Ms. James qualifies as an
audit committee financial expert, as such term is defined in Item 407(d)(5) of Regulation S-K.
The audit committee oversees, reviews, acts on and reports on various auditing and accounting matters to our board of directors, including:
the selection of our independent accountants, the scope of our annual audits, fees to be paid to them, their performance and our accounting practices. In addition, the audit committee oversees our compliance programs relating to legal and regulatory
requirements. Our board of directors has adopted a written charter for the audit committee, which is available on our website at ir .infinitynaturalresources.com .
Compensation Committee
Our
compensation committee consists of Messrs. Gieselman, Gray and Poole, with Mr. Gieselman serving as the compensation committee chair. The compensation committee must consist solely of independent directors, subject to the phase-in exceptions, as required by the rules of the SEC and listing standards of the NYSE. Our board of directors has affirmatively determined that each of Messrs. Gieselman, Gray and Poole meet the definition of
independent director for purposes of serving on the compensation committee under the NYSE rules and the independence standards under Rule 10C-1 of the Exchange Act.
The compensation committee establishes salaries, incentives and other forms of compensation for officers and other employees. Our compensation
committee also administers our incentive compensation and benefit plans. Our board of directors has adopted a written charter for the compensation committee, which is available on our website at ir .infinitynaturalresources.com .
Nominating, Governance and Sustainability Committee
Our nominating , governance and sustainability committee (NGS committee) consists of
Mses. Gallagher and James and Mr. Poole, with Mr. Poole serving as the committee chair. The NGS committee must consist solely of independent directors, subject to the phase-in exceptions, as
required by the rules of the SEC and listing standards of the NYSE. Our board of directors has affirmatively determined that each of Mses. Gallagher and James and Mr. Poole meet the definition of independent director for
purposes of serving on the NGS committee under the NYSE rules.
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The NGS committee identifies, evaluates and recommends qualified nominees to serve on our
board of directors; develops and oversees our internal corporate governance processes; and maintains a management succession plan. Our board of directors has adopted a written charter for the NGS committee, which is available on our website at
ir .infinitynaturalresources.com .
Executive Sessions of our Board of Directors
Our non-management directors meet regularly in executive sessions to facilitate candid discussion among
such directors.
Risk Oversight
As an oil and gas exploration and production company, we encounter a variety of risks, including, among others, commodity price volatility and
supply and demand risks, risks associated with rising costs of doing business, legislative and regulatory risks, availability of capital and financing, risks associated with our development, acquisition and production activities, environmental and
weather-related risks, cybersecurity risks and risks associated with political instability. We encourage you to read a discussion of the risks we face in Item 1A. Risk Factors of this Annual Report.
Our senior management is responsible for the day-to-day
management of the risks we face. Management periodically reports significant risk exposures to the board of directors or one or more of its committees.
Our board of directors, directly and through its committees, oversees our management of risk exposures. Specifically, our board of directors
is responsible for ensuring that the risk management processes designed and implemented by management are adequate to address the risks we face and function as intended. The board of directors has delegated certain risk oversight responsibility to
its committees. The audit committee is charged with oversight of the integrity of our financial statements, our system of internal controls, related party transactions, cybersecurity and risks relating to legal and regulatory compliance. The
compensation committee is charged with oversight of risks related to compensation arrangements, including whether incentive compensation arrangements encourage excessive risk-taking, and other risks related to our human capital. The NGS committee is
charged with oversight of our corporate governance processes, board and committee structure, succession planning and ESG matters.
Code of Ethics
We have a written code of ethics that applies to our directors, officers, and employees, including our principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code of ethics is posted under the Governance section of our website at ir.infinitynaturalresources.com. In
addition, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K or the NYSE rules concerning any amendments to, or waivers from, any provision of the code of ethics by posting such
information under the Governance section of on our website. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a
part of this Annual Report.
Insider Trading Policy
We have adopted an Insider Trading Policy that governs the purchase, sale, and/or other disposition of our securities by our directors,
officers, and employees that is designed to promote compliance with insider trading laws, rules, and regulations, and any listing standards applicable to us. A copy of our Insider Trading Policy, as amended to date, is filed as Exhibit 19.1 to this
Annual Report.
Corporate Governance Guidelines
Our board of directors has adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE, which are
available on our website at ir .infinitynaturalresources.com .
ITEM 11. EXECUTIVE COMPENSATION
We are currently considered an emerging growth company within the meaning of the Securities Act for purposes of the SECs
executive compensation disclosure rules. In accordance with those rules, we are required to provide a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year End Table, as well as limited narrative disclosures regarding executive
compensation for our last completed fiscal year. Further, our reporting obligations extend only to our Named Executive Officers, who are our principal executive officer and our next two other most highly compensated executive
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officers at the end of the fiscal year ending December 31, 2024 (the 2024 Fiscal Year). Accordingly, our Named Executive Officers for the 2024 Fiscal Year are:
Name
Principal Position
Zack Arnold
President & Chief Executive Officer
David Sproule
Executive Vice President & Chief Financial Officer
Raleigh Wolfe
General Counsel and Secretary (1)
(1)
Mr. Wolfe was appointed as General Counsel of the Company on June 24, 2024 and Secretary of the
Company in January 2025.
2024 Summary Compensation Table
The following table summarizes the compensation awarded to, earned by or paid to our Named Executive Officers for the 2024 Fiscal Year and the
fiscal year ended December 31, 2023.
Name and Principal Position
Year
Salary (1)
Bonus (2)
Option
Awards (3)
All Other
Compensation (4)
Total
Zack Arnold
2024
$
350,000
$
200,000
$
0
$
22,641
$
572,641
Chief Executive Officer
2023
$
281,250
$
141,000
$
30,796
$
453,046
David Sproule
2024
$
350,000
$
200,000
$
0
$
22,713
$
572,713
Executive Vice President & Chief Financial Officer
2023
$
281,250
$
141,000
$
33,000
$
455,250
Raleigh Wolfe
2024
$
155,738
$
156,000
$
311,738
General Counsel and Secretary
(1)
Amounts in this column reflect the base salary earned by each Named Executive Officer in the 2024 Fiscal Year.
Mr. Wolfes annual base salary for the 2024 Fiscal Year was $300,000.
(2)
Amounts in this column reflect for each of Messrs. Arnold, Sproule and Wolfe, (i) discretionary spot and
holiday bonuses and (ii) a bonus for the 2024 Fiscal Year. Mr. Wolfes bonus for the 2024 Fiscal Year was a guaranteed bonus amount, subject to his continued employment, pursuant to the terms of the Wolfe Offer Letter (as defined in
the section titled Narrative Disclosure to Summary Compensation TableWolfe Offer Letter and Non-Disclosure Agreement). The bonuses for Messrs. Arnold and Sproule for the 2024 Fiscal Year were
discretionary bonuses earned by Messrs. Arnold and Sproule with respect to services performed during the 2024 Fiscal Year.
(3)
In the 2024 Fiscal Year, Messrs. Arnold and Sproule were awarded 2024 Incentive Units (as defined in the
section titled Narrative Disclosure to Summary Compensation TableLong-Term Equity Incentive Compensation) that are intended to constitute profits interests for U.S. federal income tax purposes. Despite the fact that the 2024
Incentive Units do not require the payment of an exercise price, they are most similar economically to stock options. Accordingly, they are classified as options under the definition provided in Item 402(a)(6)(i) of Regulation S-K as an instrument with an option-like feature. The amounts in this column represent the aggregate grant date fair value of the 2024 Incentive Units granted to Messrs. Arnold and Sproule as computed in
accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The amounts reported in this column reflect the accounting cost for the 2024 Incentive Units and do not correspond to the actual economic value that
may be received by Messrs. Arnold and Sproule in respect of the 2024 Incentive Units. See the section titled Narrative Disclosure to Summary Compensation TableLong-Term Equity Incentive Compensation below for additional details on
the 2024 Incentive Units.
(4)
Amounts in this column reflect (i) for each of Messrs. Arnold and Sproule, employer-paid 401(k) plan
matching contributions equal to $17,250, respectively, (ii) for each of Messrs. Arnold and Sproule, a health insurance premium subsidy equal to $4,676 and (iii) for Messrs. Arnold and Sproule, the Companys payment of their life
insurance policy premiums equal to $715 and $787, respectively.
Narrative Disclosure to Summary Compensation Table
Confidentiality and Non-Compete Agreements
Messrs. Arnold and Sproule have not entered into any employment agreements with the Company (or any of its subsidiaries or affiliates).
However, on June 6, 2017, Messrs. Arnold and Sproule each entered into a confidentiality and non-compete agreement (Confidentiality Agreement) with INR Holdings in connection with the
commencement of his employment. The Confidentiality Agreements provide for the following restrictive covenants: (i) non-competition during
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employment and for a certain period (up to 24 months) following termination (as described further below), (ii) non-solicitation of employees or service
providers during employment and for 24 months following termination, (iii) perpetual non-disclosure of confidential information, and (iv) assignment of intellectual property. The non-competition provisions in the Confidentiality Agreements are effective for either (a) the 24-month period following the termination of the executives employment
for Cause (as defined in the Confidentiality Agreements), voluntary resignation, or breach of the Confidentiality Agreement, or (b) up to a 24-month period during which INR Holdings (or any of its
subsidiaries or affiliates) makes severance payments to the executive following the termination of the executives employment without Cause, subject to the executives compliance with the Confidentiality Agreement. Any severance payments
payable pursuant to the Confidentiality Agreements, if made at the discretion of INR Holdings (or any of its subsidiaries or affiliates) for purposes of enforcing the applicable non-competition provisions, are
cash payments equal to the current monthly salary of the executive, payable in equal monthly installments for a period of up to 24 months following termination.
Wolfe Offer Letter and Non-Disclosure Agreement
Mr. Wolfe has not entered into any employment agreement with the Company (or any of its subsidiaries or affiliates). In connection with
the commencement of his employment, Mr. Wolfe entered into an offer letter (the Wolfe Offer Letter) with the Company. The Wolfe Offer Letter provides for an annual base salary, an annual bonus opportunity (including a guaranteed
bonus of $150,000 for the 2024 Fiscal Year) and eligibility to participate in the Companys benefit plans and programs.
In addition,
on June 24, 2024, Mr. Wolfe entered into a confidentiality and non-disclosure agreement with the Company in connection with the commencement of his employment, which provides for the non-disclosure of confidential information and assignment of intellectual property.
Long-Term Equity Incentive
Compensation
We granted long-term equity incentive awards to Messrs. Arnold and Sproule in the form of membership interests in INR
Holdings on July 17, 2024 (the 2024 Incentive Units) and in 2017 (the 2017 Incentive Units, and together with the 2024 Incentive Units, the Incentive Units), that are intended to constitute profits interests
for U.S. federal income tax purposes. The Incentive Units are subject to time- and performance-based vesting requirements. The 2024 Incentive Units that are subject to time-based vesting requirements all remain unvested as of December 31, 2024.
The 2017 Incentive Units that are subject to time-based vesting became fully vested prior to December 31, 2024. The Incentive Units that are subject to performance-based vesting all remain unvested as of December 31, 2024 and were not
subject to any accelerated vesting provisions as of December 31, 2024.
Mr. Wolfe has not received any long-term equity
incentive awards (including any Incentive Units) as of December 31, 2024.
Outstanding Equity Awards at 2024 Fiscal
Year-End
The following table reflects information regarding outstanding equity-based awards
held by our Named Executive Officers as of December 31, 2024.
Name (1)
Option Awards (2)
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable (3)
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable (4)
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#) (5)
Option
Exercise
Price ($)
Option
Expiration
Date
Zack Arnold
253,500
N/A
N/A
760,500
N/A
N/A
260,000
N/A
N/A
780,000
N/A
N/A
David Sproule
253,500
N/A
N/A
760,500
N/A
N/A
260,000
N/A
N/A
780,000
N/A
N/A
(1)
As of December 31, 2024, Mr. Wolfe does not hold any outstanding equity-based awards.
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(2)
Awards in this table represent Incentive Units, which are intended to constitute profits interests for U.S.
federal income tax purposes. Despite the fact that the Incentive Units do not require the payment of an exercise price or have an expiration date, they are most similar economically to stock options. Accordingly, they are classified as
options under the definition provided in Item 402(a)(6)(i) of Regulation S-K as an instrument with an option-like feature. In connection with the completion of the IPO, all Incentive
Units, including those that were unvested immediately prior to the closing of the IPO, were recapitalized into INR Units. Messrs. Arnold and Sproule received 1,796,588 and 1,796,581 INR Units, respectively, as a result of the recapitalization of
their Incentive Units.
(3)
Awards in this column represent Incentive Units that have vested in accordance with their terms.
(4)
Awards in this column represent Incentive Units that are unvested as of December 31, 2024 and
(i) vest on an annual basis over a five-year period following July 17, 2024 (with vesting between such anniversaries after the first anniversary occurring pro rata) and (ii) accelerate and vest in full upon the occurrence of a
Fundamental Change (as defined and discussed in the section titled Additional Narrative DisclosurePotential Payments Upon Termination or Change in Control).
(5)
Awards in this column represent Incentive Units that become vested when the members of INR Holdings who have
contributed capital to INR Holdings receive cash distributions from INR Holdings equal to certain multiples of their capital contributions.
Additional Narrative Disclosure
Employee and
Retirement Benefits
We currently provide broad-based health and welfare benefits, including health, life, vision, and dental
insurance, to our full-time employees, including our Named Executive Officers. In addition, we currently make available a retirement plan intended to provide benefits under Section 401(k) of the Code, pursuant to which employees (including our
Named Executive Officers) may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan. Pre-tax contributions are allocated
to each participants individual account and are then invested in selected investment alternatives according to the participants directions. We match 100% of elective deferrals up to a maximum per participant per calendar year equal to 5%
of the participants eligible compensation, in addition to making non-elective employer contributions. Employer-paid non-elective contributions pursuant to the
401(k) plan for the 2024 Fiscal Year, if any, have not yet been determined as of the date of this Annual Report. Matching contributions to our 401(k) plan are not subject to vesting requirements. All contributions under our 401(k) plan are subject
to certain annual dollar limitations in accordance with applicable laws, which are periodically adjusted for changes in the cost of living. Other than the 401(k) plan, we do not provide any qualified or
non-qualified retirement or deferred compensation benefits to our employees, including our Named Executive Officers.
Potential Payments Upon Termination or Change in Control
Under the INR Holdings LLC Agreement, upon the occurrence of a Fundamental Change (as defined below), any then-unvested Incentive
Units subject to time-based vesting requirements will automatically vest. See Actions Taken in Connection with the IPOTreatment of Incentive Units in Connection with the IPO below for more information.
For this purpose, the term Fundamental Change generally means the occurrence of any of the following events: (i) (a) INR
Holdings merges with an unrelated party, (b) the holders of outstanding interests of INR Holdings sell such interests in a transaction (or series of transactions) to an unrelated party or (c) INR Holdings sells all or substantially all of
its assets to an unrelated party, and, in the case of any transaction described in this clause (i), our directors immediately before the consummation of such transaction are not at least a majority of the members of the managing body of the relevant
entity immediately following the completion of such transaction; (ii) without approval of the board of INR Holdings, an unrelated party acquires 50% or more of the total voting power of all the then outstanding voting securities of INR
Holdings; or (iii) INR Holdings is dissolved and liquidated.
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Other than as described above and in the section entitled Narrative Disclosure to
Summary Compensation TableConfidentiality and Non-Compete Agreements, the Named Executive Officers were not eligible to receive any other potential payments upon a termination of employment or in connection with a change in control for
the 2024 Fiscal Year.
Director Compensation
We did not pay any compensation, make any equity awards or non-equity awards to, or pay any other
compensation to, any of the non-employee members of our board of directors for the 2024 Fiscal Year.
In connection with the closing of the IPO, we adopted a non-employee director compensation policy (the
Director Compensation Policy), pursuant to which our non-employee directors are eligible to receive compensation for their services on our board of directors. Pursuant to the Director Compensation
Policy, our non-employee directors will receive the following annual retainers: $65,000 for service as a member of our board of directors, $20,000 for service as the chair of the Audit Committee, $15,000 for
service as the chair of the Compensation Committee and $10,000 for service as the chair of the Nominating, Governance and Sustainability Committee. Our non-employee directors may elect to receive their annual
retainers in the form of additional restricted stock units (which will be subject to the same vesting schedule as the annual restricted stock unit grants described below) or in cash. If paid in cash, the retainers will be paid in four equal
quarterly installments in arrears. In addition to the annual retainers, our non-employee directors will each receive an annual grant of restricted stock units with a grant date value of $160,000 and such award
will vest on the earlier of (i) the date of the first annual stockholder meeting following the date of grant and (ii) the one-year anniversary of the date of grant, in each case, subject to the non-employee directors continued service on our board of directors through the applicable vesting date. In addition, the non-executive chair of our board of directors,
if any, will receive additional restricted stock units with a grant date value (as determined by our board of directors) equal to approximately $75,000. The non-employee directors who are employees of Pearl
Energy Investments, L.P., NGP Energy Capital Management, L.L.C. or any of their respective affiliates are not eligible to receive compensation for their services on our board of directors.
Actions Taken in Connection with the IPO
Treatment
of Incentive Units in Connection with the IPO
In connection with the completion of the IPO, all of the outstanding
(i) unvested Incentive Units automatically vested and (ii) vested Incentive Units, including those that were unvested immediately prior to the closing of the IPO as contemplated by the foregoing clause (i), were recapitalized into INR
Units. Messrs. Arnold and Sproule received 1,796,588 and 1,796,581 INR Units, respectively, as a result of the recapitalization of their Incentive Units. See Item 1. BusinessCorporate Reorganization for additional details regarding
the treatment of outstanding Incentive Units in connection with the closing of the IPO. Following the closing of the IPO, there is no further liability with respect to the Incentive Units and any long-term incentive compensation will be awarded to
our Named Executive Officers pursuant to the Omnibus Plan (as defined below) that our board of directors adopted in connection with the consummation of the IPO, as described in the paragraph below.
Omnibus Incentive Plan
In
connection with the closing of the IPO, our board of directors adopted the Infinity Natural Resources, Inc. Omnibus Incentive Plan (the Omnibus Plan) for employees, consultants and directors. Our Named Executive Officers are eligible to
participate in the Omnibus Plan, which became effective upon the consummation of the IPO. The Omnibus Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend
equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of service providers, including our Named Executive Officers, with those of our stockholders.
Securities to be Offered
Subject to
adjustment in the event of certain transactions or changes of capitalization in accordance with the Omnibus Plan, 5,888,889 shares of Class A common stock ( i.e. , 10% of the number of shares of Class A common stock outstanding at the
closing of the IPO (on a fully diluted basis)) (the Share Reserve) were reserved for issuance pursuant to awards under the Omnibus Plan and registered on a registration statement on Form S-8 (File No. 333-284674) filed with the SEC on February 3, 2025. No more than the Share Reserve may be issued pursuant to incentive stock options. Shares of Class A common stock
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subject to an award that expires or is canceled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to
satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the Omnibus Plan.
Administration
The Omnibus Plan will be
administered by the compensation committee of our board of directors. The compensation committee has broad discretion to administer the Omnibus Plan, including the power to determine the eligible individuals to whom awards will be granted, the
number and type of awards to be granted and the terms and conditions of awards. The compensation committee may also accelerate the vesting or exercise of any award and make all other determinations and to take all other actions necessary or
advisable for the administration of the Omnibus Plan. To the extent the Omnibus Plan administrator is not the compensation committee, our board of directors will retain the authority to take all actions permitted by the administrator under the
Omnibus Plan. Additionally, our board of directors retains the right to exercise the authority of the compensation committee to the extent consistent with applicable law.
Eligibility
Our employees, consultants
and non-employee directors, and employees and consultants of our affiliates, are eligible to receive awards under the Omnibus Plan.
Non-Employee Director Compensation Limits
Under the Omnibus Plan, in a single fiscal year, a non-employee director may not be granted awards for
such individuals service on our board of directors having a value, taken together with any cash fees paid to such non-employee director, in excess of $750,000 (except that, for any year in which a non-employee director (i) first commences service on our board of directors, (ii) serves on a special committee of our board of directors or (iii) serves as lead director or non-executive chair of our board of directors, such limit is increased to $1,000,000).
Types of Awards
Stock Options . We may grant stock options to eligible persons, except that incentive stock options may only be granted to persons who
are our employees or employees of one of our subsidiaries, in accordance with Section 422 of the Code. The exercise price of a stock option generally cannot be less than 100% of the fair market value of a share of Class A common stock on
the date on which the stock option is granted and the stock option must not be exercisable for longer than 10 years following the date of grant. In the case of an incentive stock option granted to an individual who owns (or is deemed to own) at
least 10% of the total combined voting power of all classes of our equity securities, the exercise price of the option must be at least 110% of the fair market value of a share of Class A common stock on the date of grant and the option must
not be exercisable more than five years from the date of grant.
Stock Appreciation Rights . A stock appreciation right
(SAR) is the right to receive an amount equal to the excess of the fair market value of one share of Class A common stock on the date of exercise over the grant price of the SAR. The grant price of a SAR generally cannot be less
than 100% of the fair market value of a share of Class A common stock on the date on which the SAR is granted. The term of a SAR may not exceed 10 years. SARs may be granted in connection with, or independent of, other awards. The compensation
committee has the discretion to determine other terms and conditions of a SAR award.
Restricted Stock Awards . A restricted stock
award is a grant of shares of Class A common stock subject to the restrictions on transferability and risk of forfeiture imposed by the compensation committee. Unless otherwise determined by the compensation committee and specified in the
applicable award agreement, the holder of a restricted stock award has rights as a stockholder, including the right to vote the shares of Class A common stock subject to the restricted stock award or to receive dividends on the shares of
Class A common stock subject to the restricted stock award during the restriction period. In the discretion of the compensation committee or as set forth in the applicable award agreement, dividends distributed prior to vesting may be subject
to the same restrictions and risk of forfeiture as the restricted stock with respect to which the distribution was made.
Restricted
Stock Units . A restricted stock unit (RSU) is a right to receive cash, shares of Class A common stock or a combination of cash and shares of Class A common stock at the end of a specified period equal to the fair market
value of one share of Class A common stock on the date of vesting. RSUs may be subject to the restrictions, including a risk of forfeiture, imposed by the compensation committee. If the compensation committee so provides, a grant of RSUs may
provide a participant with the right to receive dividend equivalents.
Performance Awards . A performance award is an award that
vests and/or becomes exercisable or distributable subject to the achievement of certain performance goals during a specified performance period, as established by the compensation
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committee. Performance awards (which include performance stock units) may be granted alone or in addition to other awards under the Omnibus Plan, and may be paid in cash, shares of common stock,
other property or any combination thereof, in the sole discretion of the compensation committee.
Stock Awards . A stock award is a
transfer of unrestricted shares of Class A common stock on terms and conditions, if any, determined by the compensation committee.
Dividend Equivalents . Dividend equivalents entitle a participant to receive cash, shares of Class A common stock, other awards or
other property equal in value to dividends or other distributions paid with respect to a specified number of shares of Class A common stock. Dividend equivalents may be granted on a free-standing basis or in connection with another award (other
than stock options, SARs, restricted stock or stock awards).
Other Stock-Based Awards . Other stock-based awards are awards
denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, the value of our shares of Class A common stock.
Cash Awards . Cash awards may be granted on terms and conditions, including vesting conditions, and for consideration, including no
consideration or minimum consideration as required by applicable law, as the compensation committee determines in its sole discretion.
Substitute Awards . In connection with an entitys merger or consolidation with the Company or the Companys acquisition of an
entitys property or stock, awards may be granted in substitution for any other award granted before the merger or consolidation by such entity or its affiliates.
Certain Transactions
If any change is
made to our capitalization, such as a share split, share combination, share dividend, exchange of shares or other recapitalization, merger or otherwise, that results in an increase or decrease in the number of outstanding shares of Class A
common stock, appropriate adjustments will be made by the compensation committee in the shares subject to an award under the Omnibus Plan. The compensation committee also has the discretion to make certain adjustments to awards in the event of a
change in control, such as accelerating the vesting or exercisability of awards, requiring the surrender of an award, with or without consideration, or making any other adjustment or modification to the award that the compensation committee
determines is appropriate in light of such transaction.
Clawback
All awards granted under the Omnibus Plan are subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar
action in accordance with our clawback policy or any similar policy or any applicable law related to such actions. In connection with the IPO, we adopted a Clawback Policy in compliance with the SEC rules and NYSE listing standards to recover any
excess incentive-based compensation from current and former executive officers after an accounting restatement.
Plan Amendment and Termination
Our board of directors or the compensation committee may amend or terminate any award, award agreement or the Omnibus Plan at any
time; however, stockholder approval will be required for any amendment to the extent necessary to comply with applicable law. Stockholder approval will be required to make amendments that (i) increase the aggregate number of shares that may be
issued under the Omnibus Plan or (ii) change the classification of individuals eligible to receive awards under the Omnibus Plan. The Omnibus Plan will remain in effect for a period of 10 years (unless earlier terminated by our board of
directors).
Equity Grants
In
connection with the IPO, we granted awards under the Omnibus Plan to our employees with respect to a total of approximately 162,500 shares of Class A common stock, including awards with respect to 62,500 shares to Mr. Wolfe. These awards
were granted in the form of time-vested restricted stock units and will cliff vest on the one-year anniversary of the date of grant, subject to such employees continued service through such vesting date.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serve on the board of directors or compensation committee of another public company that has an executive
officer that serves on our board of directors or compensation committee. No member of our board is an executive officer of another public company in which one of our executive officers serves as a member of the board of directors or compensation
committee of that company.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance Under Equity Compensation Plans
As of December 31, 2024, we had no equity compensation plans or individual compensation arrangements under which our equity securities
were authorized for issuance. See Item 11. Executive Compensation, which is incorporated herein by reference for information about our equity compensation plans and compensation arrangements in existence as of the closing of the IPO.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our common stock by:
each person known to us to beneficially own more than 5% of any class of our outstanding common stock;
each of our Named Executive Officers;
each member of our board of directors; and
all of our directors, director nominees and executive officers as a group.
The percentage of beneficial ownership set forth below is based on 15,237,500 shares of Class A common stock and 45,638,889 shares of
Class B common stock outstanding as of March 21, 2025. Beneficial ownership is determined in accordance with the rules of the SEC. In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to
securities and includes shares issuable pursuant to exchange or conversion rights that are exercisable within 60 days of March 21, 2025.
Except as otherwise noted, the person or entities listed below have sole voting and investment power with respect to all shares of our common
stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the directors or Named Executive Officers, as the case may be.
Shares of Class A
Common Stock
Beneficially Owned
Shares of Class B
Common Stock
Beneficially Owned
Total
Common Stock
Beneficially Owned
Name of Beneficial Owner (1)
Number
Percentage
Number
Percentage
Number
Percentage
5% Stockholders:
Investment Funds managed by Pearl Energy Investments, L.P. (2)
28,894,732
63.3
%
28,894,732
47.5
%
Investment Funds managed by NGP (3)
9,631,441
21.1
%
9,631,441
15.8
%
Westwood Management Corp /TX (4)
1,462,327
9.6
%
1,462,327
2.4
%
Named Executive Officers, Directors and Director Nominees:
Zack Arnold
1,796,588
3.9
%
1,796,588
3.0
%
David Sproule
1,796,581
3.9
%
1,796,581
3.0
%
Steven Cobb
William J. Quinn (5)
28,894,732
63.3
%
28,894,732
47.5
%
Katherine M. Gallagher
Scott Gieselman
50,000
*
50,000
*
Steven D. Gray (6)
15,000
*
232,439
*
247,439
*
Sarah James
2,500
*
2,500
*
David Poole
12,500
*
12,500
*
Brian Seline
Raleigh Wolfe
Executive Officers, Directors and Director Nominees as a Group (11 persons)
80,000
*
32,720,340
71.7
%
32,800,340
53.9
%
*
Less than 1%.
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(1)
Unless otherwise noted, the address for each beneficial owner listed below is 2605 Cranberry Square,
Morgantown, WV 26508.
(2)
Represents the shares of common stock held by PEI INR Holdings, L.P., Pearl Energy Investments III, L.P., PEI Infinity-S, LP and PEI INR Co-Invest-B Corp (the Pearl Funds). Pearl Energy Investments controls the investment decisions
of the Pearl Funds and has management control over the Pearl Funds and accordingly may be deemed to share beneficial ownership of the shares of common stock held by the Pearl Funds. The Pearl Funds are controlled by William J. Quinn, the founder and
managing partner of Pearl Energy Investments. The principal address for each of the above referenced entities is 2100 McKinney Ave, Suite 1675, Dallas, TX 75201.
(3)
Represents the shares of common stock held by NGP XI US Holdings, L.P. (the NGP Fund). NGP XI
Holdings GP, L.L.C. is the sole general partner of the NGP Fund, and NGP Natural Resources XI, L.P. is the sole member of NGP XI Holdings GP, L.L.C. G.F.W. Energy XI, L.P. is the sole general partner of NGP Natural Resources XI, L.P., and GFW XI,
L.L.C. is the sole general partner of G.F.W. Energy XI, L.P. GFW XI, L.L.C. has delegated full power and authority to manage the NGP Fund to NGP Energy Capital Management, L.L.C. Chris Carter, Craig Glick, Philip Deutch and Jill Lampert serve on the
Executive Committee of NGP Energy Capital Management, L.L.C. The principal address for each of the above referenced entities is 2850 N. Harwood Street, 19 th Floor, Dallas, TX 75201.
(4)
Based solely on Schedule 13G filed February 7, 2025. Westwood Management Corp /TX has sole voting power
and dispositive power with respect to 1,462,327 shares of Class A common stock. The principal address for Westwood Management Corp /TX is 200 Crescent Court, Suite 1200, Dallas, TX 75201.
(5)
Includes 28,894,732 shares of common stock held of record by the Pearl Funds. The Pearl Funds are controlled by
William J. Quinn, the founder and managing partner of Pearl Energy Investments, L.P. Each of the Pearl Funds and Mr. Quinn may be deemed to have beneficial ownership of the shares of common stock held by the Pearl Funds. Mr. Quinn
disclaims beneficial ownership of the shares held by the Pearl Funds except to the extent of his pecuniary interest therein. The principal address for Mr. Quinn is 2100 McKinney Ave, Suite 1675, Dallas, TX 75201.
(6)
Includes (i) 38,244 shares of common stock held by Steven D. Gray and (ii) 209,195 shares of common stock held
by the SD Gray Family Partnership LP (SD Gray Family Partnership), over which Mr. Gray has control. Mr. Gray controls the investment decisions of the SD Gray Family Partnership and has management control over the SD Gray
Management Co., which is the general partner of the SD Gray Family Partnership, and accordingly may be deemed to share beneficial ownership of the shares of common stock held by the SD Gray Family Partnership. The principal address for the SD Gray
Family Partnership is 6440 Cherry Hills Dr, Frisco, TX 75036.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with Related Persons
In connection with our Corporate Reorganization, we engaged in transactions with certain affiliates and certain of the Legacy Owners.
Information about related party transactions we entered into in connection with our Corporate Reorganization is incorporated herein by reference to Item 1. Business of Part I of this Annual Report. See Item 1.
BusinessCorporate Reorganization for additional information.
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, we have the right to determine when distributions will be
made to us and the INR Unit Holders and the amount of any such distributions. If we authorize a distribution, such distribution will be made to the INR Unit Holders and us on a pro rata basis in accordance with our respective percentage ownership of
INR Units.
We and the INR Unit Holders will generally incur U.S. federal, state and local income taxes on our proportionate share of any
taxable income of INR Holdings and will be allocated our proportionate share of any taxable loss of INR Holdings. Net profits and net losses of INR Holdings generally will be allocated to us and the INR Unit Holders on a pro rata basis in accordance
with our respective percentage ownership of INR Units, except that certain non-pro rata adjustments will be required to be made to reflect built-in gains and losses and
tax depreciation, depletion and amortization with respect to such built-in gains and losses. The INR Holdings LLC Agreement provides, to the extent cash is available, for pro rata tax distributions to us and
the INR Unit Holders in an amount at least sufficient to allow us to pay our taxes and make payments under the Tax Receivable Agreement.
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The INR Holdings LLC Agreement provides that, except as otherwise determined by us, at any
time we issue a share of our Class A common stock or any other equity security (other than pursuant to an incentive plan, shareholders rights plan or to a member in connection with redemption of INR Units by such member), the net proceeds
received by us with respect to such issuance, if any, shall be concurrently contributed to INR Holdings, and INR Holdings shall issue to us one INR Unit or other economically equivalent equity interest. Conversely, if at any time, any shares of our
Class A common stock are redeemed, repurchased or otherwise acquired, INR Holdings shall redeem, repurchase or otherwise acquire an equal number of INR Units held by us, upon the same terms and for the same price, as such shares of our
Class A common stock are redeemed, repurchased or otherwise acquired.
Under the INR Holdings LLC Agreement, the members have agreed
that any member and/or its affiliates will be permitted to engage in business activities or invest in or acquire businesses which may compete with our business.
INR Holdings will be dissolved only upon the first to occur of (a) approval of its dissolution by the managing member and a vote in favor
of dissolution by at least two-thirds of the holders of its INR Units, (b) a change of control transaction that is not approved by at least two-thirds of the
holders of its INR Units, (c) such time as there are no remaining members of INR Holdings or (d) entry of a judicial order to dissolve INR Holdings. Upon dissolution, INR Holdings will be liquidated and the proceeds from any liquidation
will be applied and distributed in the following manner (subject to establishing cash reserves for contingent liabilities): (i) first, to all expenses incurred in liquidation, (ii) second, to creditors in satisfaction of all debts,
liabilities and obligations of INR Holdings and (iii) third, to the members in proportion to the number of INR Units owned by each of them.
Our
Charter
Our Charter provides Pearl with the right to nominate a majority of the members of our board of directors so long as it and
its affiliates beneficially own more than 50% of the voting power of the common stock entitled to vote generally in the election of directors. When Pearl, together with its affiliates, beneficially owns less than 50% but more than 30% of the voting
power of the common stock entitled to vote generally in the election of directors, Pearl will have the right to nominate a number of individuals to the board of directors proportionate to Pearls beneficial ownership of the voting power of the
common stock entitled to vote generally in the election of directors, rounded up to the nearest whole number, which shall not be less than three. When Pearl, together with its affiliates, beneficially owns less than 30% but more than 20% of the
voting power of the common stock entitled to vote generally in the election of directors, Pearl will have the right to nominate a number of individuals to the board of directors proportionate to Pearls beneficial ownership of the voting power
of the common stock entitled to vote generally in the election of directors, rounded up to the nearest whole number, which shall not be less than two. When Pearl, together with its affiliates, beneficially owns less than 20% but at least 10% of the
voting power of the common stock entitled to vote generally in the election of directors, Pearl will have the right to nominate one member to the board of directors. Furthermore, our Charter provides NGP with the right to nominate one
(1) individual to our board of directors so long as it and its affiliates beneficially own at least 10% of the voting power of the common stock entitled to vote generally in the election of directors. As of March 21, 2025, Pearl and NGP
are entitled to nominate five and one members of our board of directors, respectively.
Each share of Class B common stock entitles
its holder to one vote on all matters to be voted on by our stockholders. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or
approval, except as otherwise required by applicable law or by our Charter. The only shares of Class B common stock outstanding are held by the Legacy Owners.
Registration Rights Agreement
On
February 3, 2025, we entered into a registration rights agreement with Pearl Energy Investments, L.P., Pearl Energy Investments III, L.P., PEI Infinity-S, L.P., PEI INR Co-Invest-B, Corp., PEI INR Holdings, L.P., NGP US Holdings, L.P. and the Legacy Owners (the registration rights agreement). Subject to certain conditions, the registration rights agreement
provides Pearl and NGP with rights to demand registrations. Under the registration rights agreement, all holders of registrable securities party thereto are provided with customary piggyback registration rights, with certain
exceptions. The registration rights agreement also provides that we will pay certain expenses of these holders relating to such registrations and indemnify them against certain liabilities which may arise under the Securities Act.
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Tax Receivable Agreement
We entered into a Tax Receivable Agreement with the Legacy Owners. This agreement generally provides for the payment by us to the Legacy Owners
of 85% of the net cash savings, if any, in U.S. federal, state and local income tax that we (a) actually realize with respect to taxable periods ending after this offering or (b) are 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 our board of directors) or the Tax Receivable Agreement terminates early
(at our election or as a result of our 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 our 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 us as a result of, and additional tax basis arising from, any payments we make under the Tax Receivable Agreement. We will retain the benefit of the remaining 15% of these cash savings, if any. If we experience a change
of control or the Tax Receivable Agreement terminates early, we could be required to make substantial, immediate lump-sum payments in the amount of approximately $134.3 million as of February 3,
2025, including approximately $6.8 million to each of the Chief Executive Officer and Chief Financial Officer, approximately $80.9 million to Pearl, approximately $27.0 million to NGP and the remainder to other members of management.
Directed Share Program
As part of
the IPO, the representatives of the underwriters allocated and sold 97,425 shares of Class A common stock at the public offering price per share of $20.00 to certain of our directors, officers and employees through a directed share program.
Indemnification of our Directors and Officers
We have entered into indemnification agreements with each of our directors and officers. The indemnification agreements and our governing
documents require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. Subject to certain limitations, the indemnification agreements and our governing documents also require us to advance expenses incurred by
our directors and officers. We have also purchased directors and officers liability insurance.
Policies and Procedures for Approval of
Related Party Transactions
Our board of directors adopted a written related party transaction policy, made effective upon the closing
of the IPO, setting forth the policies and procedures for the review and approval or ratification of related person transactions. This policy is administered by the audit committee and covers, with certain exceptions set forth in Item 404 of
Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where
the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the
Related Person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. A Related Person means:
any person who is, or at any time during the period was, one of our executive officers or one of our directors;
any person who is known by us to be the beneficial owner of more than 5% of our common stock;
any immediate family member of any of the foregoing persons, which means any child, stepchild, parent,
stepparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our common stock, and
any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our common stock; and
any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a
similar position or in which such person has a 10% or greater beneficial ownership interest.
In reviewing and approving
any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arms length transaction
and the extent of the related persons interest in the transaction. All of the transactions described in this section occurred prior to the adoption of this policy. We believe that the terms of such agreements are as favorable as those we
could have obtained from parties not related to us.
Director Independence
For information related to the independence of our directors, see Item 10. Directors, Executive Officers and Corporate Governance,
which is incorporated herein by reference.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Deloitte & Touche LLP (PCAOB ID No. 34) has served as our independent registered public accounting firm since 2023. The following
table summarizes the fees, including out-of-pocket costs, billed to us for each of the last two fiscal years for audit services and other services by Deloitte &
Touche LLP, our independent registered public accounting firm:
For the Years Ended December 31,
2024
2023
Audit Fees (1)
$
2,642,219
$
317,463
Audit-Related Fees
90,000
Tax Fees
33,425
774,473
All Other Fees
2,674
61,598
Total Fees
$
2,678,318
$
1,243,534
Audit Fees. This category consists of the annual audit of our consolidated financial statements
and the interim reviews of the quarterly consolidated financial statements and services rendered in connection with registration statements, including comfort letters and consents.
Audit-Related Fees. This category consists of fees billed for professional services provided in connection with assurance and
related services that are reasonably related to the performance of the audit or review of our financial statements and that are not reported under Audit Fees.
Tax Fees. This category includes all fees associated with tax compliance, tax advice, and tax planning work.
All Other Fees. This category consists of fees for all other services that are not reported above.
Audit Committee Pre-Approval of Audit and Non-Audit Services
Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (the PCAOB) regarding auditor
independence, our Audit Committee is responsible for the appointment, compensation and oversight of the work of our independent registered public accounting firm. In recognition of this responsibility, our Audit Committee has established a policy
for the pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit
services, audit-related services, tax services and other services.
We did not have an Audit Committee in 2023 or 2024. In connection with
the consummation of the IPO, our board of directors approved the provision of certain audit services by Deloitte & Touche LLP and concluded that such services were compatible with the maintenance of that firms independence in the
conduct of its auditing functions, which services were ratified by the Audit Committee. The Audit Committee expects to adopt a pre-approval policy that will provide for the
pre-approval of audit, audit-related and tax services specifically described by the audit committee on an annual basis, and unless a type of service is pre-approved
under the policy, it will require separate pre-approval by the Audit Committee if it is to be provided by the independent registered public accounting firm. The policy will authorize the Audit Committee to
delegate to one or more of its members pre-approval authority with respect to permitted services.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) and (a)(2) Financial statements and financial statement schedules filed as part of this Annual Report are listed in the index included in
Item 8. Financial Statements and Supplementary Data of Part II of this Annual Report. All valuation and qualifying accounts schedules have been omitted because they are either not material, not required, not applicable or the
information required to be presented is included in our combined and consolidated financial statements and related notes.
(a)(3) See Exhibits list below.
(b) See Exhibits list below.
(c) None.
Incorporated by Reference
Exhibit
Number
Description
Form
Exhibit
Number
Filing Date
3.1
Amended and Restated Certificate of Incorporation of Infinity Natural Resources, Inc.
8-K
3.1
February 3,
2025
3.2
Amended and Restated Bylaws of Infinity Natural Resources, Inc.
8-K
3.2
February 3,
2025
4.1
Registration Rights Agreement, dated February
3, 2025, by and among the Company and each of the other signatories from time to time party thereto.
8-K
4.1
February 3,
2025
4.2*
Description of Capital Stock.
10.1+
Second Amended and Restated Limited Liability Company Agreement of Infinity Natural Resources, LLC, dated as of January
30, 2025, by and among the Company and the other signatories parties thereto .
8-K
10.1
February 3,
2025
10.2
Tax Receivable Agreement, dated as of January
30, 2025, by and among the Company and the TRA Parties (as defined in the Tax Receivable Agreement).
8-K
10.2
February 3,
2025
10.3
Credit Agreement, dated as of September
25, 2024, by and among, Infinity Natural Resources, LLC, the lenders from time to time party thereto and Citibank, N.A., as the administrative agent and an issuing bank.
S-1
10.1
October 4,
2024
10.4
Form of Indemnification Agreement.
S-1
10.2
October 4,
2024
10.5
Infinity Natural Resources, Inc. Omnibus Incentive Plan.
8-K
10.3
February 3,
2025
10.6
Infinity Natural Resources, Inc. Executive Change in Control and Severance Plan.
8-K
10.4
February 3,
2025
10.7
Form of Participation Agreement pursuant to Infinity Natural Resources, Inc. Executive Change in Control and Severance Plan.
8-K
10.5
February 3,
2025
10.8
Form of RSU Grant Notice and Award Agreement (Non-Employee Director) pursuant to Infinity Natural Resources,
Inc. Omnibus Incentive Plan.
S-8
99.1
February 3,
2025
10.9
Form of RSU Grant Notice and Award Agreement (Employee) pursuant to Infinity Natural Resources, Inc. Omnibus Incentive Plan.
S-8
99.2
February 3,
2025
19.1*++
Infinity Natural Resources, Inc. Insider Trading Policy.
21.1*
List of Subsidiaries of Infinity Natural Resources, Inc.
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23.1*
Consent of Deloitte & Touche LLP (Infinity Natural Resources, Inc.).
23.2*
Consent of Deloitte & Touche LLP (Infinity Natural Resources, LLC).
23.3*
Consent of Wright & Company, Inc.
31.1*
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1**
Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.
32.2**
Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.
97.1*
Clawback Policy of Infinity Natural Resources, Inc.
99.1*
Wright & Company, Inc. Summary of Reserves at December 31, 2024.
99.2
Wright & Company, Inc. Summary of Reserves at December 31, 2023.
S-1
99.1
October 4, 2024
*
Filed herewith.
**
Furnished herewith.
+
Certain portions of this document that constitute confidential information have been redacted in accordance
with Regulation S-K, Item 601(b)(10). The Company hereby agrees to furnish a copy of any omitted portion to the SEC upon request.
++
Certain personally identifiable information has been omitted from this exhibit pursuant to Item 601(a)(6) under
Regulation S-K.
Certain of the schedules and exhibits to the agreement have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the SEC upon request.
Management contract of compensatory plan or agreement.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused
this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized .
INFINITY NATURAL RESOURCES, INC.
Date: March 28, 2025
By:
/s/ Zack Arnold
Zack Arnold
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report has been
signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ Zack Arnold
Zack Arnold
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 28, 2025
/s/ David Sproule
David Sproule
Executive Vice President, Chief Financial Officer and Director
(Principal Financial Officer and Principal Accounting Officer)
March 28, 2025
/s/ Steven Gray
Steven Gray
Chairman
March 28, 2025
/s/ Steven Cobb
Steven Cobb
Director
March 28, 2025
/s/ Katherine M. Gallagher
Katherine M. Gallagher
Director
March 28, 2025
/s/ Scott Gieselman
Scott Gieselman
Director
March 28, 2025
/s/ Sarah James
Sarah James
Director
March 28, 2025
/s/ David Poole
David Poole
Director
March 28, 2025
/s/ William J. Quinn
William J. Quinn
Director
March 28, 2025
/s/ Brian Seline
Brian Seline
Director
March 28, 2025
118