Executive Summary / Key Takeaways

• Radical Strategic Transformation: Houston American Energy Corp. (HUSA) is undergoing a profound shift from a struggling oil and gas explorer to a technology solutions company focused on converting waste plastics into low-carbon fuels and chemicals, driven by the acquisition of Abundia Global Impact Group (AGIG).
• Nascent Technology with Significant Potential: AGIG possesses a "commercially-ready solution" utilizing proprietary technologies to produce valuable products like pyrolysis oil, recycled diesel, and bio-sustainable aviation fuels, positioning HUSA in the high-growth energy transition sector.
• Financial Strain Amidst Transition: HUSA's traditional oil and gas revenues are declining, and the company reported a net loss of $2.83 million for the first six months of 2025, significantly impacted by professional fees related to the AGIG acquisition and AGIG's own history of losses and negative working capital.
• Critical Capital Infusion and Development: The company has secured a $100 million equity line of credit and a $5.43 million convertible note, with proceeds funding the acquisition of a 25-acre development hub in Cedar Port Industrial Park, Texas, for AGIG's plastics recycling facility.
• Substantial Risks and Execution Imperative: HUSA faces "substantial doubt" about its ability to continue as a going concern, significant shareholder dilution from the AGIG acquisition, material weaknesses in internal controls, and the inherent challenges of scaling a new technology in a developing, competitive market.

A Legacy Transformed: From Hydrocarbons to Circular Economy

Houston American Energy Corp. has long been an independent oil and gas company, primarily focused on exploration and production in the U.S. Permian Basin and Louisiana Gulf Coast. However, this traditional path has been fraught with challenges, marked by continuous losses since 2011 and an accumulated deficit reaching $88.00 million by June 30, 2025. Recognizing the imperative for change and the evolving energy landscape, HUSA embarked on a radical strategic pivot in November 2024. A new management team was brought in to diversify the company's portfolio, specifically targeting opportunities in renewable energy and energy transition technologies. This strategic reorientation culminated in the pivotal acquisition of Abundia Global Impact Group, LLC (AGIG) on July 1, 2025, fundamentally reshaping HUSA's identity and future trajectory.

The broader energy industry is experiencing a profound transformation, driven by increasing demand for sustainable solutions and a global push towards decarbonization. While traditional energy sources like oil and gas continue to play a vital role, the rapid growth in renewable energy and energy transition technologies presents immense opportunities. This shift is further amplified by trends such as the increasing energy demands from AI and data centers, which, while potentially supporting some traditional energy, also underscore the need for diversified, low-carbon power sources. HUSA's strategic pivot positions it directly within this burgeoning energy transition, aiming to capture value in the circular economy.

AGIG: The Technological Core of HUSA's New Vision

At the heart of HUSA's transformation is Abundia Global Impact Group, LLC. AGIG is a technology-driven platform with a "commercially-ready solution for converting waste into valuable fuels and chemicals." This proprietary technology specifically targets waste plastics, transforming them into high-value, low-carbon products. AGIG's offerings include crude pyrolysis oil from waste plastic, recycled diesel, recycled naphtha, recycled waxes and lubricant feedstocks, and bio-fuel products, including bio-sustainable aviation fuels.

The tangible benefits of AGIG's technology lie in its ability to address the growing global waste crisis while simultaneously producing essential energy and chemical feedstocks with a lower carbon footprint. While specific quantitative performance metrics (e.g., energy yield, cost advantage per unit) for AGIG's technology are not publicly detailed, the company emphasizes its "proprietary technologies and key industry partnerships" as foundational strengths. The strategic intent is clear: to capitalize on the increasing demand for sustainable alternatives to fossil-derived products. To accelerate this vision, HUSA acquired a 25-acre site in Cedar Port Industrial Park, Baytown, Texas, for approximately $8.5 million in July 2025. This site is designated as a "plastics to fuels development hub," which will include "research and development facilities, storage, roads and other related infrastructure." The recent appointment of Nexus PMG as the engineering and service provider for this facility is expected to "accelerate the project's development," signaling a tangible step towards commercialization. For investors, AGIG's technology is not merely an add-on; it is the critical engine for HUSA's future growth, offering a pathway to participate in the high-growth low-carbon fuels and chemicals sector.

A Dual Competitive Landscape: Old Battles, New Frontiers

HUSA now operates in a dual competitive environment, straddling its legacy oil and gas operations and its new waste-to-fuels venture. In its traditional oil and gas segment, HUSA is a smaller player, focusing on niche exploration in regions like the Permian Basin and the U.S. Gulf Coast. Compared to industry giants such as EOG Resources (EOG), ConocoPhillips (COP), and Devon Energy (DVN), HUSA's historical operations have qualitatively lagged in scale, operational efficiency, and technological advancement. For instance, EOG, with a 2024 gross profit margin of 0.76 and a P/S ratio of 2.97, demonstrates robust profitability and market valuation driven by efficient, large-scale shale development. Similarly, COP (2024 gross profit margin of 0.29, P/S of 2.14) and DVN (2024 gross profit margin of 0.60, P/S of 1.28) exhibit significantly stronger financial health and operational execution. HUSA's smaller scale has historically limited its access to capital and its ability to invest in advanced drilling technologies, making it less competitive in a capital-intensive industry dominated by these larger, more diversified players.

The new waste-to-fuels market, where AGIG operates, is a "relatively new and competition is still developing." AGIG's "commercially-ready solution" offers a potential early-mover advantage, but the market is characterized by numerous smaller competitors and the looming threat of larger entities entering or acquiring existing players. These larger, better-resourced competitors could "respond more quickly and effectively than AGIG to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition." Furthermore, AGIG's business model relies heavily on governmental programs incentivizing low-carbon fuels, making it vulnerable to policy changes. The challenge of competing with established fossil fuel-derived products, which often have more stable pricing and supply chains, adds another layer of complexity. HUSA's strategic positioning in this new arena is one of high potential but also significant competitive pressure, where successful execution and technological leadership will be paramount.

Financial Performance: The Cost of Transformation

HUSA's financial performance for the three and six months ended June 30, 2025, vividly illustrates the costs associated with its strategic transformation. Oil and gas revenues continued their decline, decreasing 4.53% to $110,557 in Q2 2025 and 19.20% to $212,902 for the six months ended June 30, 2025, compared to the prior year periods. This reduction was primarily attributed to one well being shut down and the natural decline in production. Concurrently, lease operating expenses surged 60% in Q2 2025 to $228,226, largely due to repair costs for the offline well.

The most striking financial impact stems from the AGIG acquisition. General and administrative expenses skyrocketed to $1.61 million in Q2 2025 and $2.66 million for the six months, a 310% increase year-over-year, predominantly due to professional fees related to the transaction. Furthermore, other income significantly decreased as HUSA relinquished its interest in Hupecol Meta LLC, eliminating a previous revenue stream. These factors collectively led to a substantial net loss of $1.79 million in Q2 2025 and $2.83 million for the six-month period, a stark contrast to the much smaller losses in the prior year. AGIG itself reported a net loss of $2.12 million and negative working capital of $6.75 million for the six months ended June 30, 2025, highlighting the capital-intensive nature of its early-stage development. HUSA's TTM financial ratios, including a gross profit margin of -78.61% and a net profit margin of -2146.55%, underscore the deep unprofitability of its current state, a stark divergence from the robust profitability of its traditional O&G peers. The extremely high TTM Price-to-Sales ratio of 547.56 suggests that the market is valuing HUSA based on the anticipated future potential of AGIG, rather than its current financial performance.

Bolstering Liquidity for the Future

Despite the operational losses, HUSA has significantly bolstered its liquidity to fund the strategic pivot. The company's cash balance increased to $6.95 million at June 30, 2025, from $2.96 million at December 31, 2024, with working capital rising to $7.23 million from $3.07 million. This improvement was primarily driven by successful equity raises in January and June 2025, generating approximately $3.80 million and $3.15 million in net proceeds, respectively.

Post-period, HUSA secured further crucial financing. On July 10, 2025, it established a 24-month committed equity financing facility (ELOC) of up to $100 million with an institutional investor. Concurrently, HUSA issued a $5.43 million senior secured convertible note, yielding $5 million in gross proceeds. These funds were immediately deployed to acquire the 25-acre Cedar Port Industrial Park site for $8.5 million, a critical step for AGIG's development hub. This aggressive capital-raising strategy is essential for HUSA to fund its growth, strategic acquisitions, and the scaling of AGIG's operations, though the ability to draw down on the ELOC and secure additional capital remains paramount.

Outlook and the Path to Commercialization

HUSA's outlook is entirely centered on the successful commercialization and scaling of AGIG's waste-to-fuels technology. While no specific quantitative guidance for future revenues or profitability has been provided, the company's strategy is clear: to invest heavily in AGIG's capabilities. AGIG is expected to incur "continuing losses while it commercializes and scales its business" and does "not expect to be profitable for the foreseeable future." The Cedar Port development hub, with its planned research and development facilities, storage, and infrastructure, represents the foundational buildout for this new business. The appointment of Nexus PMG is a tangible step towards accelerating this development.

The long-term vision is to capitalize on the "growing demand for all forms of energy and untapped opportunities in oil and gas, renewable energy, and energy transition technologies." HUSA's future hinges on its ability to effectively manage this transition, execute on its development plans, and bring AGIG's proprietary technologies to full commercial scale, thereby transforming waste into high-value, low-carbon fuels and chemicals.

Significant Risks and the Investor's Calculus

Investing in HUSA at this juncture involves substantial risks, primarily stemming from its radical transformation and the early stage of its new business. The company faces "substantial doubt about its ability to continue as a going concern," a concern amplified by its accumulated deficit and AGIG's own history of losses and negative working capital. The success of the new strategy is heavily dependent on HUSA's ability to draw down on its ELOC and secure additional capital, which is not guaranteed.

The AGIG acquisition resulted in a significant change of control, with AGIG Unitholders now holding 94% of the voting power, leading to substantial dilution for existing HUSA stockholders and the company operating as a "controlled company" under NYSE American rules, potentially exempting it from certain corporate governance requirements. AGIG itself has identified "material weaknesses in its internal controls over financial reporting," a critical operational risk that could impact financial accuracy and investor confidence. Furthermore, the commercialization of AGIG's technology is subject to numerous operational risks, including managing rapid growth, scaling production, securing consistent and affordable waste-based feedstocks, potential construction delays and cost overruns for new facilities, and navigating complex regulatory and environmental compliance. The nascent bio-mass to liquid fuel market also presents competitive challenges, intellectual property risks, and reliance on governmental incentives that could be repealed or curtailed. These factors collectively underscore a high-risk, high-reward investment profile.

Conclusion

Houston American Energy Corp. is at a pivotal inflection point, having shed its identity as a struggling oil and gas explorer to embrace a future in the circular economy through its acquisition of Abundia Global Impact Group. This audacious pivot to waste-to-fuels technology represents a high-stakes bet on the burgeoning energy transition market. The investment thesis for HUSA is fundamentally a wager on AGIG's "commercially-ready solution" and the new management team's ability to execute a complex, capital-intensive commercialization strategy.

While the company has secured vital financing and commenced the foundational buildout of its plastics-to-fuels hub, significant financial and operational hurdles remain. The "going concern" warning, the substantial dilution, and the inherent risks of scaling a new technology in a developing competitive landscape demand careful consideration. HUSA's journey from a legacy hydrocarbon producer to a leader in low-carbon fuels is ambitious, and its success will hinge on disciplined execution, effective capital management, and the ability to overcome the substantial challenges inherent in transforming waste into a profitable, sustainable energy source. For investors, HUSA represents a compelling, albeit speculative, opportunity to participate in the energy transition, provided the company can successfully navigate its transformative path and realize the promise of its innovative technology.