Q2 2024 HNR Acquisition Corp Earnings Call

August 21, 2024

Yeah.

Operator: Greetings.

Unnamed Speaker: Greetings.

Speaker Change: Greetings welcome to the conference call of H&R acquisition Corp concerning financial and earning results for the second quarter ended June 30th 2024.

Operator: Welcome to the conference call of HNR Acquisition Court concerning financial and erding results for the second quarter and at June 30, 2024. At this time, all participants run a listen-only mode.

Operator: Welcome to the conference call of HNR Acquisition Corp. concerning financial and earning results for the second quarter ended June 30, 2024.

Operator: At this time, all participants are on a listen-only mode.

Operator: Thank you for your participation.

Operator: At this time, all participants are on a listen-only mode.

Operator: the conference over to your host, Michael Porter, Investor Relations for the company.

Michael Porter: Thank you, Matt.

Speaker Change: At this time all participants are in a listen only mode.

Operator: A question and answer session will follow the formal presentation.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.

Speaker Change: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: If anyone should require operator assistance during the conference, please press star zero, on your telephone keypad.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: Please note this conference is being recorded.

Speaker Change: Please note this conference is being recorded.

Michael Porter: I will now turn the conference over to your host, Michael Porter, Investor Relations for the company. You may begin.

Speaker Change: I'll now turn the conference over to your host Michael Porter Investor Relations for the company you may begin.

Operator: I'll now turn the conference over to your host, Michael Porter, and best relations for the company.

Operator: You may begin.

Operator: I'll now turn

Michael Porter: You may begin.

Michael Porter: Good afternoon, ladies and gentlemen.

Michael Porter: Thank you, Matt.

Operator: Thank you.

Michael Porter: First of all, I'd like

Michael Porter: Good afternoon, ladies and gentlemen. First, the forward-looking statement. This conference call includes forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainty that could cause actual results to differ materially from what is expected. Words such as expect-believe, anticipate, and tense, estimate, seeks, may, might, plan, possible, should, and variations in similar words and expressions are intended to identify such forward-looking statements. But the absence of these words does not mean that a statement is not forward-looking. Included in the availability of all the material that you received that is listed with the Securities and Exchange Commission and can be looked under www.sec.gov.

Thank you, Matt good afternoon, ladies and gentlemen.

Speaker Change: First the forward looking statements. This conference call includes forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95 that involves risks and uncertainty that could cause actual results to differ materially from what is expected words, such as expect believe anticipate and <unk>.

Michael Porter: Good afternoon, ladies and gentlemen.

Michael Porter: First, a forward-looking statement.

Michael Porter: This conference call includes forward-looking statements within the meeting of the Private, Securities Litigation Reform Act of 1995 that involves risks and uncertainty that could cause actual results to differ materially from what is expected.

Michael Porter: Words such as expect, believe, anticipate, intend, estimate, seek, may, might, plan, possible, should, and variations in similar words and expressions are intended to identify such forward-looking statements.

Speaker Change: <unk> estimates seeks may might plan, possibly should and variations and similar words and expressions are intended to identify such forward looking statements, but the absence of these words does not mean that a statement is not forward looking.

Michael Porter: But the absence of these words does not mean that a statement is not forward-looking.

Speaker Change: Included in the availability of all the material that you received that is listed with the Securities and Exchange Commission and can be done there under Ww Dot FCC Dot Gov.

Michael Porter: Included, in the availability of all the material that you received, it is listed with the Securities and Exchange Commission and can be looked under www.sec.gov.

Speaker Change:

Michael Porter: It is except as expressly required by applicable security law. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events, or otherwise.

Speaker Change: It is except as expressly required by applicable security law, the company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information further events or otherwise I would now like to introduce you all to our C E O.

Michael Porter: It is, except as expressly required by applicable security law, the company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events, or otherwise.

Michael Porter: I'd now like to introduce you all to our CEO, Dante.

Michael Porter: I now like to introduce you all to our CEO, Dante. The call is yours.

Speaker Change: Hey.

Speaker Change: The call is yours.

Michael Porter: The call is yours.

Dante: Thank you, Mike. I really appreciate that. Thank you all who are for dialing in. Those who are investors in the 8th and R.A. stock and those who are looking at us to potentially invest in us.

Speaker Change: Thank you Mike I really appreciate that.

Mike: Thank you all for dialing in for those who are investors in H&R, aged stock and those who are looking at us to potentially invest with us. So for the next 30 minutes, you're gonna ear from myself.

Dante: Thank you, Mike.

Dante: So, for the next 30 minutes, you're going to hear from myself. You're going to hear from Mitch Trotter, RCFO, and then you're going to hear from Jesse Allen, our Vice President of Operations.

Dante: Really appreciate that.

On the ear for Mitch Trotter, our CFO, and then Youre going to hear from Jesse Allen, Our Vice President of operations.

Dante: Thank you all for dialing in, those who are investors in HNRA stock and those who are looking at us to potentially invest in us.

Dante: First of all, I'd like to just say the analysts are pegging our stock value at $4 to $7 a share. And those of you that are able to look on their screen, you can see our stock isn't at that level yet. So, we think it's a tremendous value at today's pricing level.

Mike: First of all.

Mike: Bob.

Dante: So, for the next 30 minutes, you're going to hear from myself, you're going to hear from Mitch Trotter, our CFO, and then you're going to hear from Jesse Allen, our Vice President of Operations.

Mike: I'd like to just say you know the.

Mike: Analysts are pegging, our stock value at four to $7 a share and those of you that.

Dante: First of all,

Speaker Change: Are you able to look on their screen, you're going to see our stock is at that level. Yet. So we think it's a tremendous value at today's pricing levels. So I had to get that commercial.

Dante: I'd like to just say, you know, the analysts are pegging our stock value at $4 to $7 a share.

Dante: So, I had to get that commercial. Q2 was much better than Q1. However, we did not deliver a profit, but it was a much smaller loss. And just like in your household budgeting, we have two choices. We can make more money or spend less money to get from profitability, and we plan to do both.

Dante: And those of you that are able to look on their screen, you can see our stock isn't at that level, yet.

Speaker Change: Q2 was much better than Q1, however, we did not deliver a profit but it was a much smaller loss and just like in your household budgeting. We have two choices, we can make more money or spend less money to get profitability and we plan to do both.

Dante: So, we think it's a tremendous value at today's pricing level.

Dante: So, our top line goal is to increase oil production. And we've got a lot of optimism about what we've been doing, and I'm going to cheat a little bit and update you a little bit beyond Q2 to tell you what's going on. So, first of all, we issued a press release this morning about a test pilot of low-cost chemical acid treatments that, on average, have doubled production in the wells we did that with. You're going to get all those details coming out from Jesse. And those treatments, on average, cost about 5,500 to wealth. And we've done normally 24 wells.

Speaker Change: So our our our topline goal is to increase oil production. We've got a lot of optimism about what we've been doing and I'm going to I'm going to cheat a little bit and update you a little bit beyond Q2 to tell you what's going on.

Dante: So, I had to give that commercial.

Speaker Change: So first of all we issued a press release. This morning about a test pilot of low cost chemical acid treatments that on average a double production in the wells, we did that with you're going to get all of those details coming coming at you from Jesse and those treatments on average cost about 5500 a week.

Speaker Change: And we've done normally 24 wells, we've got 342 total wells. So simple math would tell you we've got a long way to go.

Dante: We've got 342 total wells. So, simple math would tell you we've got a long way to go. We also developed field-specific track procedures that cost half of what the previous owner was spending on these, without any compromise on the sustainability or the maximum production that those will make.

Speaker Change: We also developed field specific frac procedures, the cost out, but what the previous owner was spending on day, one without any compromise on the sustainability or the maximum production that those will make again, you're going to hear about that from from Jess Yeah Ali.

Dante: Again, you're going to hear about that from Jesse Allen. Q2 had a substantial reduction in op-ex, and we spent a lot of capex on repairing and improving our field infrastructure. On average, we spent a million and a half in Q1 and another million and a half in Q2. These things together position us to increase oil production without interruption. We also negotiated with the seller a credit that also impacted our Q2 financials substantially.

Dante: Q2 was much better than Q1.

Speaker Change: Q2 had a substantial reduction in Opex and we spent a lot of of of Capex.

Speaker Change: One repairing and improving our field infrastructure on average we spend a million a half Q1 and another.

Speaker Change: In Q2, these things together position us to increase oil production without interruption.

Speaker Change: We also negotiated with the seller.

Speaker Change: Credit that also impacted our our Q.

Speaker Change: Q2, our financial substantially you're going to hear about that for a minute.

Dante: You're going to hear about that from Mitch. You're going to you saw suppress releases. I'll just bring them up. They all fit the theme of improved infrastructure. This was improvements to our electrical system, improvements to mechanical, purchase of a hot oil machine. All these things help us with our run time, so we're not down due to well-plugging or flow line plugging. In the end, what everybody wants is certainly what all of us in the management team want, and our board want, is uninterrupted oil production that we sell each month on an increasing basis.

Speaker Change: Ah you're going to you saw some press releases I'll just bring them up they all fit the theme of improved infrastructure. This was improvements to our electrical system improvements to mechanical purchase are the hot oil machine and all of them.

Speaker Change: These things help us with our run time, so we're not down due to well plugging or flow line plugging and in the end what you what everybody wants is certainly what all of us and the management team and our board want is uninterrupted auto production that we sell each month on an increasing basis and I'm happy to report.

Dante: However, we did not deliver a profit, but it was a much smaller loss. And just like in your household budgeting, we have two choices. We can make more money or spend less money to get profitability, and we plan to do both.

Dante: I'm happy to report the numbers are moving out.

Speaker Change: The numbers are moving up.

Dante: So now I'm going to talk about the outlook for Q3 and Q4. Half our story in Q3 and Q4 is going to be about improving our financials by cleaning up the overhang from the acquisition. We have a lot of professional charges from legal, from accounting, from auditing. Those are one-time costs, and we've just got to pay them off. Our plan to pay those off is from increased production. The second part of what we see in Q3 and Q4 is increased oil production. And I just want to give an example of what increased oil production means to us.

Speaker Change: So now I'm going to talk about the outlook for Q3 and Q4.

Dante: So, our top-line goal is to increase oil production, and we've got a lot of optimism about what we've been doing.

Speaker Change: Our story in Q3, and Q4 is going to about be about improving our financials by cleaning up the overhang from the acquisition. We have a lot of professional charges for legal from accounting from ordering it was yes. Those those are one time costs and we've just got it.

Dante: And I'm going to cheat a little bit and update you a little bit beyond Q2 to tell you what's going on.

Speaker Change: We've just got to pay them off and our plan to pay those off as from the increased production.

Speaker Change: The second part of what we see in Q3 and Q4 has increased oil production.

Speaker Change: And I just wanted to give an example, what increased oil production means to us if.

Dante: If we increase oil production by 100 barrels a day, if you assume $70 oil and our NRI of 74%, that's $157,000 a month. If we increase it by 300 barrels a day, that's about a half million dollars a month to our net, our net gain. And if we increase it by 500 barrels a day, we're at 787,000 a month to our good. We've just these little 24 pilot tests, chemical acid jobs, increased our production by about 100 barrels a day. And so we're just beginning, but I'm telling you we're looking forward to a major impact to our bottom line.

Speaker Change: If we increase oil production by a 100 barrels a day, if you assume $70 oil and our NRI of 74% that's $157000 a month.

Speaker Change: If we increase it by 300 barrels a day, that's about a half million dollars a month to our net our debt.

Speaker Change: And then if we increase it by 500 barrels a day.

Speaker Change: We're at 787000, a month to our to our good we've just these little 24.

Dante: So, first of all, we issued a press release this morning about a test pilot of low-cost chemical, acid treatments that, on average, have double production in the wells we did that with.

Speaker Change: A pilot test chemical acid jobs increased our production by about 100 barrels a day.

Speaker Change: And so we're just beginning but I'm, telling you we're looking forward to a major impact to our bottom line.

Dante: You're going to get all those details coming at you from Jesse.

Dante: If we went beyond Q3 and Q4 into 2025, we see 100 to 200 re-completions at a cost of about 100,000 each, at an average contribution of about 50 barrels a day. and none of that involves a drill bit where the costs were just jumped to a million dollars a well.

Speaker Change: Yeah.

Speaker Change: Q3, and Q4 into 2020 five we see 102 hundred re completions.

Speaker Change: Cost of about 100000, each at a at an average contribution of about 50 barrels a day.

Speaker Change: And.

Speaker Change: And none of that involves the drill bit where the costs were just <unk>.

Speaker Change: Just jumped to a million dollars of well so we're probably in the late 'twenty slide we're really 26 before we need to drill because we see so much opportunity just laying on the ground.

Dante: And those treatments, on average, cost about $5,500 a well, and we've done nominally 24 wells.

Dante: So we're probably in the late 25 or early 26 before we need a drill because we see so much opportunity just laying on the ground.

Mitch Trotter: Now, with that, I'm going to turn it over to Mitch to cover the financials.

Dante: We've got 342 total wells.

Speaker Change: Now with that I'm going to turn it over to Mitch to cover the financials.

Mitch Trotter: Thank you, Dante. Again a Mitch trotter and we have caught a minute view in the past earnings calls and a lot of you individually. So I want to thank you for attending again today. We will drill down into Q2 a little bit, and as Dante had stated, it is better. It's about what we had projected on the base cost when we did Q1.

Mitch: Thank you Dante.

Dante: So, simple math would tell you we've got a long way to go.

Mitch: Again, I'm, Mitch Trotter and we've talked to many of you in the past earnings calls and a lot of you individually. So I want to thank you for attending again today.

Dante: We also developed field specific frac procedures that cost half of what the previous owner was spending on these without any compromise on the sustainability or the maximum production that those will make.

Dante: Again, you're going to hear about that from Jesse Allen.

We will drill down into Q2, a little bit and as Don stated it is better it's about what we had.

Speaker Change: Projected oh on the base cost when we when we did Q1.

Mitch Trotter: But in this call, I want to give a little bit more insight into the results and operations of H&RA. So you understand the company a little bit better. This will roll into a little bit later Jesse how he'll explain these results are leading to increasing production. So I will have in a minute three areas, and we'll focus on the revenue component. The drill down into lease operating expenses and capital expenditures and then, like I did before, a little bit of insight onto non-cash expenses impacting our financials. Like we've stated in the past, if you need a deeper dive and you know, since it is a conference call with a lot of people, please feel free to reach out to Mike Porter and find his name on our website.

Speaker Change: But in this call I want to give a little bit more insight into the results and operations with H&R right. So you understand the company a little bit better this will roll into little bit later, Jesse how he'll explain these results are leading to increasing production.

Dante: Q2 had a substantial reduction in OPEX and we spent a lot of CAPEX on repairing and improving our field infrastructure.

Speaker Change: So it will have in a minute three areas, we'll focus on the revenue component the drill down into lease operating expenses and capital expenditures.

Speaker Change: And then like I did before a little bit of insight onto noncash expenses impacting our financials.

Speaker Change: Like we've stated in the past if you need a deeper dive in you know ever since it is a conference calls a lot of people. Please feel free to reach out to Mike Porter. He signed his name on our website.

Mitch Trotter: And he'll schedule 101. We've done this several times with many people in the past.

Speaker Change: And he'll schedule one on one we've done this several times with many people in the past.

Mitch Trotter: So please advance the revenue slide. So the sales for Q1 and Q2 for oil and gas were very similar, generating five million cash each quarter. Steady production and little change in the average prices brought in the five million both times. Now there wasn't that difference between the two quarters because of the derivative non-cash impact. Q1 had a non-cash gap expense of two million that I explained in Q1, and Q2 was basically minimal as the price oil had little change. So what is this non-cash impact? It's the hedge derivatives liability, and it's a contingent liability calculated at the end of each quarter.

Speaker Change: So please advance to the revenue slide.

Speaker Change: So the sales for Q1, and Q2 for oil gas or very similar.

Dante: On average, we spent a million and a half in Q1 and another million and a half in Q2.

Dante: These things together position us to increase oil production without interruption.

Speaker Change: Generating 5 million of cash each quarter.

Speaker Change: Steady production and little change in the average prices brought in the 5 million both times now.

Dante: We also negotiated with the seller a credit that also impacted our Q2 financials substantially.

Dante: You're going to hear about that from Mitch.

Dante: You saw suppressed releases.

Speaker Change: No there wasn't that difference between the two quarters because of the derivative noncash impact.

Speaker Change: Q1 had a non cash GAAP expense of 2 million to that explained in Q1, and Q2 was basically minimal as the.

Speaker Change: Price of oil had little change.

Speaker Change: So what is this noncash impact it.

Speaker Change: It's the hedge derivative liability.

Speaker Change: And it's a contingent liability calculated at the end of each quarter.

Mitch Trotter: So it's not something that you pay. It's just over the next two years. So the market price change does have an inverse impact on the income statement. So if oil goes up, we get a negative hit, and vice versa. If oil price goes down, we have a positive. On Q1, oil price went up significantly, so hence the theoretical expense. So, in short, that's good for the company because we made more money. You know final note I want to hit on oil prices. If it drops dramatically, we responsibly hedged to protect the company, to cover debt service and base operating expenses.

Speaker Change: So it's not something that you pay it's just over the next two years.

Speaker Change: So the market price change does have an inverse impact on the income statement. So oil goes up we get a negative hit.

Speaker Change: And vice versa, if oil price goes down we have a positive on Q1 oil price went up significantly so hence the theoretical expense.

Speaker Change: So in short that's good for the company because we made more money.

Speaker Change: A final note I want to hit on oil prices, if it dropped dramatically we responsibly hedged to protect the company to cover debt service and base operating expenses.

Mitch Trotter: We have 70% plus or minus, hedged over $70 all the way through the end of 2025.

Speaker Change: 70% plus or minus hedged over $70 all the way through the end of 2025.

Mitch Trotter: that I want to drill into the next slide, which is the lease operating expenses and the LOE CAPEX. In Q1, we did have a reduction of 824,000 of LOE from what we presented before. The earnings have been restated for Q1 and year-to-date, and you'll see that in the 10-Q that was filed. So why does restatement? Well, the LOE calls seemed out of line with the efforts, and, you know, it had 80% LOE and only 20% CAPEX. Management did a deep review, and we restated it, and both quarters are very similar to what our efforts versus feel of a 60% LOE effort and the 40% CAPEX.

Speaker Change: I don't want to drill into the next slide which is the lease operating expenses.

Speaker Change: And the low capex.

In Q1, we did have a reduction of 824000.

Speaker Change: L O a from what we presented before.

The earnings have been restated for Q1 and year to date and you'll see that in the 10-Q that was filed so why this restatement well Delaware costs seem out of line with the efforts and.

Speaker Change: No.

Speaker Change: It had 80% L O and only 20% Capex.

Speaker Change: Management did a deep review and we restated it and both quarters are very similar to what our efforts versus feel almost 60% L O effort and a 40% capex.

Speaker Change: Yeah.

Mitch Trotter: So why did that happen? Well, the systems we inherited were not adequate for our needs, or it's adequate for the processor. And hence, we have rectified that, and we have a good review process. It will all happen again. Lastly, on Q1 versus Q2, it does show a Q2 had an improvement of 85, excuse me, 65,000 per month as we really focused a little bit longer in Q2 on the long-term benefits in the CAPEX since it drove it down some, and it also drove down the LOE cost per BOE or the lift cost and the 29 range.

Speaker Change: So why did that happen well the systems, we inherited were not adequate for iron ore is adequate for the predecessor.

Speaker Change: And hence we have rectified that and we have a good review process it will not happen again.

Speaker Change: Lastly on Q1 versus two two.

Speaker Change: It does show a Q2 had an improvement of 85 excuse me 65000 per month, as we really focused a little bit longer in Q2 on the long term.

Speaker Change: Benefits in the Capex since it drove it down some and then also drive down the L O <unk> costs per Boe or the lift cost and the 29 range now we're taking actions to further reduce cost and our target is 19 by the end of the year beginning of next year as we've always stated that's where we want to get too.

Mitch Trotter: Now, we're taking actions to further reduce cost, and our target is 19 by the end of the year, beginning of next year. As we've always stated, that's where we want to get to.

Speaker Change: Yeah.

Speaker Change: With that let's drill down.

Mitch Trotter: With that, let's drill down into the non-cash expenses. So, the answer slide, yeah. Just like in Q1, I want to talk about a few things. If you look to the right, the table has the numbers right out of Q2. They come from the file tin. I put them there with some reference numbers so that you can follow along. I'm not going to hit them all. Had number one, the hedging derivative we've already touched. In number two, the GNA, it does include non-cash, 574,000 in Q1 and 360,000 in Q2, for fees that we paid and stock.

Speaker Change: And two the non cash expenses or advance the slide yeah.

Speaker Change: Just like in Q1, I want to talk about a few things if you look to the right. The table has the numbers right out of Q2, they come from the file to me.

Speaker Change: I put them there was some reference numbers. So that you can follow along.

Speaker Change: I'm not go hit them all.

Speaker Change: Number one the hedging derivatives, where we've already touched.

Speaker Change: And number two the G&A. It does include noncash 574000 in Q1 and 360000 in Q2 for fees that we paid in stock.

Mitch Trotter: And these were on existing agreements. They were just cleaning up a little bit. It better positions the company going forward, and ultimately improves our cash and balance sheet positions. I'm going to group number three and four together. The warrant and the Ford purchase agreement liability. They get assessed at the end of each quarter. The results were a pick up this time of 277,000 in the warrant liability and 24,000 in the FPA liability in Q2. If you'll note, Q1 both had big expenses. That's a very positive. I'm just going to go to the last one. Dante's already hit on it.

Speaker Change: And these were an existing agreement there were just cleaning up a little bit it better positions the company going forward and ultimately improves our cash and balance sheet positions.

Speaker Change: The group number three and four together the warrant and the forward purchase agreement liability.

Speaker Change: They get assessed at the end of each quarter the results are.

Speaker Change: We're.

Pick up this time of 277000 in <unk>.

Speaker Change: Hum.

Speaker Change: The warrant liability and 24000 in the F. P. A liability in Q2 and if you'll note Q1, both had big expenses. So that's.

Speaker Change: That's a very positive.

Speaker Change: And I'm just go to the last one Don so he's already hit on it.

Mitch Trotter: It's a gain from an extinguishment of liabilities, forgiveness of debt. This is a one-time gain of a million, two. It happened in Q2. We had a settlement that removed a million, seven of payables from our balance sheet to help us.

Speaker Change: It's a gain from extinguishment of liabilities a forgiveness of debt and this was a one time gain of 1 million too.

Don: Happened in Q2, we had a settlement that removed a million seven of payables from our balance sheet to help us clean up.

Mitch Trotter: and that's all I really want to talk about and goes again safe you need a deeper dive feel free to reach out to Mike Porter you know with this I want to pass it on to Jesse to tell you a lot more about what's going on in the field it's advanced to that next slide please yes I'm Jesse Allen good afternoon I'm the VP of operations and first and foremost the operate safety briefly we have no reportable incidents no OSHA reportable incidents so far this year and that's a good thing our field employees do an excellent job of working safely we want each of them to be to go home every evening I'm going to talk a little bit about our production trans they're increasing and note the chart there on the right first quarter we averaged about nine sixty three second quarter it was down a little bit but currently and as Dante has alluded to we've been doing some work to get that production up and currently we're about a thousand fifty five girls all the day and also field improvements work continually optimizing our producing wells optimization of our injection wells and our water flood and as it has been mentioned by Dante our infrastructure upgrades to help us maintain we're getting the old out of the ground we want to make talk about our development plan which is our targeted seven rivers workovers and then workovers to exploit the potential reserves in the the Queen the Greyberg and the Sinanders next slide our production trans as I've said production is increasing my focus in my field teams focus is to increase our daily all production that's our number one goal besides working safely and how have we done that well over the toward the end of the second quarter and as we were getting into the third quarter here we started doing some chemical acid stimulations and what these do is remove scale build up that restricts flow around the well bore we did a pilot program of 24 wells which we've completed we're now evaluating and we've seen an 80 to 100 barrel per or per day increase about two X increase over the before the first phase that we're going to move ahead with the the next phase of the project where we'll probably do anywhere from 50 to 100 additional wells obviously will monitor those closely to make sure we we continue to increase production and then as I mentioned our artificial lift optimization and upgrades are an ongoing program for us use of our pump up the controllers to make sure we're running the wells and getting every drop of all we can out of each of the producing wells we've done several pump upgrades where we converted a well to sucker rod lift to a progressive cavity pump very successful there we ended up going from about 10 barrels all the day to 35 to 40 barrels all the day on the first one we did and we continually make sure that we're putting the water we want to in the areas of the field and our injection wells to optimize our water flood in the 7 rivers formation and notice the curve there you can see as we've gotten into the end of the second quarter into the third quarter our production is definitely increased Next slide please.

Don: And that's all I really want to talk about on those I didn't say, if you need a deeper dive feel free to reach out to Mike border.

This I'm going to pass it on to Jesse to tell you a lot more about what's going on in the field.

Don: Yeah.

Don: It's advanced to that next slide please yes, I'm Jessie Alan good afternoon, I'm, the VP of operations.

Dante: I'll just bring them up. They all fit the theme of improved infrastructure. This was improvements to our electrical system, improvements to mechanical, purchase of a hot oil machine. All these things help us with our run time so we're not down due to well plugging or flow line plugging.

Dante: In the end, what everybody wants and certainly what all of us in the management team want and our board want is uninterrupted oil production that we sell each month on an increasing basis.

And our first and foremost.

Dante: I'm happy to report the numbers are moving up.

Jessie Alan: They operate safely we had no reportable incidents no offshore reportable incidents.

Jessie Alan: So far this year and that's a good thing our field employees do an excellent job of working safely.

Speaker Change: We want each of them to be yet to go home.

Speaker Change: Every evening.

Dante: Now I'm going to talk about the outlook for Q3 and Q4. Half our story in Q3 and Q4 is going to be about improving our financials by cleaning up the overhang from the acquisition. We have a lot of professional charges from legal, from accounting, from auditing. Those are one-time costs and we've just got to pay them off.

Speaker Change: Talk a little bit about our production trends they are increasing and note. The chart there on the right first.

Dante: Our plan to pay those off is from increased production.

Speaker Change: First quarter, we averaged about 963 second quarter, it was down a little bit, but currently and as Don has alluded to we've been doing some work to get that production up and currently we were about.

Don: 55 barrels oil a day.

Don: And also field improvements.

Don: We're continually optimizing our producing wells optimization of our injection wells in our waterflood and as has been mentioned by Dante our infrastructure upgrades are too.

Dante: To help us maintain our if we're getting the oil out of the ground we want to make.

Dante: We've talked about our development plan, which is.

Speaker Change: Our targeted seven rivers Workovers, and then workovers to exploit the.

Speaker Change: Some potential reserves and the Queen.

Dante: Queen the Gray Bergen the San Andres.

Dante: Next slide please.

Dante: Yeah.

Speaker Change: Our production trends as I've said production is increasing my focus and my field team's focus is to increase our daily oil production. That's our number one goal.

Dante: The second part of what we see in Q3 and Q4 is increased oil production.

Dante: I just want to give an example what increased oil production means to us.

Dante: If we increase oil production by 100 barrels a day, if you assume $70 oil and our NRI of 74%, that's $157,000 a month.

Dante: If we increase it by 300 barrels a day, that's about a half million dollars a month to our net gain.

Speaker Change: Besides working safely and.

Speaker Change: And how it really done that well over that.

Dante: If we increase it by 500 barrels a day, we're at $787,000 a month to our good. Just these little 24 pilot tests, chemical acid jobs increased our production by about 100 barrels a day.

Speaker Change: Towards the end of the second quarter and as we were getting into.

Speaker Change: The third quarter here, and we started doing some chemical asset stimulations and what they used to do is remove scale buildup that restricts flow around the Wellbore. We did a pilot program of 24 wells, which we've completed the work.

Speaker Change: Now evaluating and we've seen an 80 to 100 barrel per.

Operator: Greetings.

Operator: Greetings. Welcome to the conference call of HNR Acquisition Court concerning financial and erding results for the second quarter and at June 30, 2024. At this time, all participants run a listen-only mode.

Speaker Change: Oil per day increased about two X increase over that before.

Speaker Change: The first phase so we'll we're going to move ahead with the next phase of the project, where we will probably do anywhere from 50 to 100 additional wells, obviously, we'll monitor those closely to make sure where we continue to increase production and then as I mentioned, our artificial lift optimization and.

Dante: We're just beginning, but I'm telling you we're looking forward to a major impact to our bottom line. If we went beyond Q3 and Q4 into 2025, we see 100 to 200 recompletions at a cost of about $100,000 each at an average contribution of about 50 barrels a day, and none of that involves a drill bit where the cost would just jump to a million dollars a well.

Dante: So, we're probably in the late 25, early 26 before we need a drill because we see so much, opportunity just laying on the ground.

Operator: A question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: Please note this conference is being recorded.

Michael Porter: I will now turn the conference over to your host, Michael Porter, investor relations for the company.

Michael Porter: I will now turn the conference over to your host, Michael Porter, investor relations for the company. You may begin. Good afternoon, ladies and gentlemen.

Speaker Change: Grades are an ongoing program for us our use of our pump off controllers to make sure we're running the wells and getting every drop of all we can out of each of the producing wells. We've done several pump upgrades, where we converted a world of sucker rod lift to a progressive cavity pump very successful there we ended up going from about 10 barrels.

Michael Porter: You may begin.

Michael Porter: Good afternoon, ladies and gentlemen.

Michael Porter: First, the forward-looking statement.

Michael Porter: First, the forward-looking statement. This conference call includes forward-looking statements within the meeting of the private securities litigation reform act of 1995 that involves risks and uncertainty that could cause actual results to differ material from what is expected. Words such as expect-believe, anticipate, and tense, estimate seeks may, might, plan, possible should, and variations in similar words and expressions are intended to identify such forward-looking statements. But the absence of these words does not mean that a statement is not forward-looking.

Michael Porter: This conference call includes forward-looking statements within the meeting of the private securities litigation reform act of 1995 that involves risks and uncertainty that could cause actual results to differ material from what is expected.

Speaker Change: All the day to 35 to 40 barrels of oil a day on the first one we did and we continually.

Speaker Change: Make sure that we're putting in the water we want to in the areas of the field and our injection wells to optimize our waterflood in the seven rivers formation and noticed the curve. There you can see as we've gotten into the <unk>.

Michael Porter: Words such as expect-believe, anticipate, and tense, estimate seeks may, might, plan, possible should, and variations in similar words and expressions are intended to identify such forward-looking statements. But the absence of these words does not mean that a statement is not forward-looking.

Speaker Change: End of the second quarter into the third quarter, our production is definitely increasing.

Dante: Now with that, I'm going to turn it over to Mitch to cover the financials.

Speaker Change: Next slide please.

Michael Porter: Included in the availability of all the material that you received that is listed with the Securities and Exchange Commission and can be looked under under www.scc.gov.

Michael Porter: Included in the availability of all the material that you received that is listed with the Securities and Exchange Commission and can be looked under under www.scc.gov. It is except as expressly required by applicable security law. The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, further events, or otherwise.

Speaker Change: Yeah.

Jesse Allen: Next I'm going to talk about our field improvements today. One of the key items was upgrading our well-test facilities so that we knew what each of our wells are testing. In other words, are we increasing production with the work we're doing? So it's important to upgrade our well-test facilities, which we've done to troubleshoot a lot more easily. We also purchased two portable well-test units, which we can move around the field well-to-well related bases as needed. In addition, we've upgraded the flow lines on some of our producing wells. We've identified 20 producing wells initially, and we've completed about half of those, so those wells now are back on production.

Speaker Change: Next I'm going to talk about our field improvements today.

One of the key items was upgrading our web test facilities. So that we knew what each of our wells are.

Mitch Trotter: Thank you, Dante.

Michael Porter: It is except as expressly required by applicable security law.

Mitch Trotter: Again, I'm Mitch Trotter, and we have talked to many of you in the past earnings calls, and a lot of you individually, so I want to thank you for attending again today.

Speaker Change: Our our testing in other words.

Mitch Trotter: We will drill down into Q2 a little bit, and as Dante had stated, it is better, it's about, what we had projected on the base cost when we did Q1, but in this call, I want to give a little bit more insight into the results and operations of HNRA so you understand the company a little bit better.

Michael Porter: The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, further events, or otherwise.

Speaker Change: Are we increasing production with the work we're doing so it was important to upgrade our well test facilities, which we've done.

Mitch Trotter: This will roll into a little bit later, Jesse, how he'll explain these results are leading, to increasing production.

Speaker Change: Troubleshoot a lot more easily we all purchased two portable well test units, which we can move around the field well to well.

Dante: I now like to introduce you all to our CEO, Dante.

Dante: The call is yours.

Dante: The call is yours. Thank you, Mike. I really appreciate that. Thank you all who are for dialing in. Those who are investors in the 8th and R.A, stock and those who are looking at us to potentially invest in us. So, for the next 30 minutes, you're going to hear from myself. You're going to hear from Mitch Trotter, RCFO, and then you're going to hear from Jesse Allen, our Vice President of Operations.

Dante: Thank you, Mike.

Speaker Change: Related basis as needed in addition, we've.

Dante: I really appreciate that.

Dante: Thank you all who are for dialing in.

Speaker Change: We've upgraded our flow lines on some of our producing wells, we'd identified 20, producing wells initially and we've completed about half of those so those wells now are back on prescription and then one of our waterflood.

Dante: Those who are investors in the 8th and R.A, stock and those who are looking at us to potentially invest in us.

Dante: So, for the next 30 minutes, you're going to hear from myself.

Jesse Allen: And then one of our water flood stations on the Skelly Unit. When we took over, the main trunk line was inoperable. We've now replaced that trunk line, and we're installing connections as necessary to revive our water station on the Skelly Unit. We've been hauling that water to one of the other water stations, and that's been costing us roughly $30,000 a month, so we'll be eliminating that expense in the near future. In addition, we had to do some electrical upgrades, which meant upgrading transformers on our Russell Turner water station. We weren't able to run the pumps at 100% capacity because of a wheat transformer.

Speaker Change: Stations on the scale of unit when.

Dante: You're going to hear from Mitch Trotter, RCFO, and then you're going to hear from Jesse Allen, our Vice President of Operations.

Speaker Change: When we took over the main trunk line was inoperable, we've now replace that that trunk line.

Dante: First of all, I'd like to just say, the analysts are pegging our stock value at $4 to $7 a share.

Dante: First of all, I'd like to just say, the analysts are pegging our stock value at $4 to $7 a share. And those of you that are able to look on their screen, you can see our stock isn't at that level yet. So, we think it's a tremendous value at today's pricing level.

Speaker Change: And we're installing our connections as necessary to revive our water station on the scale of unit, we've been hauling that water to one or the other water stations and thats been causing us roughly $30000 a month. So we will be eliminating that expenses in the near future in.

Dante: And those of you that are able to look on their screen, you can see our stock isn't at that level yet.

Dante: So, we think it's a tremendous value at today's pricing level.

Speaker Change: In addition, we had to do some electrical upgrades, which meant upgrading transformers on a Russell Turner water station, we weren't able to run the pumps at a 100% capacity because of the weak transformer former has arrived during the process of installing now we will.

Dante: So, I had to get that commercial.

Dante: So, I had to get that commercial. Q2 was much better than Q1. However, we did not deliver a profit, but it was a much smaller loss.

Dante: Q2 was much better than Q1.

Dante: And just like in your household budgeting, we have two choices. We can make more money or spend less money to get from profitability and we plan to do both. So, our top line goal is to increase oil production.

Jesse Allen: This former has arrived during the process of installing now. We will also upgrade our lightning protection. We've had some downtime as a result of substandard lightning protection, which we will be upgrading. And then in addition, once we get the transformer installed, we'll be able to install a second H pump, which will increase our injection capacity, which, of course, is very important to our water flood in seven rivers. And finally, we purchased a hot oil truck and unit, and we use a hot oil over every day, and so it made sense to purchase one, which we've done, and it mitigates downtime, having our own unit there in the field at 100% availability.

Speaker Change: Also upgrade our lightning protection, we've had some downtime as a result of sub standard life and protection, which we will be upgrading and then in addition, once we get the transformer install will be able to install a second age pump which hill.

Dante: So, our top line goal is to increase oil production.

Dante: And we've got a lot of optimism about what we've been doing and I'm going to cheat a little bit and update you a little bit beyond Q2 to tell you what's going on.

Dante: And we've got a lot of optimism about what we've been doing and I'm going to cheat a little bit and update you a little bit beyond Q2 to tell you what's going on. So, first of all, we issued a press release this morning about a test pilot of low-cost chemical acid treatments that on average have double production in the wells we did that with. You're going to get all those details coming out from Jesse.

Speaker Change: Increase our injection capacity, which of course is very important to our waterflood and seven rivers.

Dante: So, first of all, we issued a press release this morning about a test pilot of low-cost chemical acid treatments that on average have double production in the wells we did that with.

Dante: And those treatments on average cost about 5,500 to wealth. And we've done normally 24 wells. We've got 342 total wells. So, simple math would tell you we've got a long way to go. We also developed field-specific track procedures that cost half of what the previous owner was spending on these without any compromise on the sustainability or the maximum production that those will make. Again, you're going to hear about that from from Jesse Allen.

Speaker Change: And finally, we purchased a hot oil trucks and unit <unk>.

Speaker Change: And.

Speaker Change: We use a hot all her everyday and so it made sense to purchase one which we've done.

Speaker Change: And it mitigates downtime are having our own unit there in the field.

Dante: You're going to get all those details coming out from Jesse.

Dante: And those treatments on average cost about 5,500 to wealth.

Speaker Change: At 100% availability in the past, sometimes we had downtime just waiting on getting somebody out there.

Jesse Allen: In the past, sometimes we had downtime just waiting on getting somebody out there.

Dante: And we've done normally 24 wells.

Dante: We've got 342 total wells.

Jesse Allen: And so we estimated at the end of the day, that's going to save us about $110,000 per year.

Speaker Change: And so we estimated at the end of the day, that's going to save us about $110000 per year.

Dante: So, simple math would tell you we've got a long way to go.

Dante: We also developed field-specific track procedures that cost half of what the previous owner was spending on these without any compromise on the sustainability or the maximum production that those will make.

Speaker Change: Next slide please.

Jesse Allen: Next slide, please.

Mitch Trotter: So, I will have in a minute three areas I'm going to focus on, the revenue component, the drill down into lease operating expenses and capital expenditures, and then like I did before, a little bit of insight onto non-cash expenses impacting our financials.

Speaker Change: Yeah.

Jesse Allen: Next, I'll be talking about our development plan, providing a little bit of detail there for the audience here. Our main zone that we're going after is the Seven Rivers on. And if you look to the right there, there is the geologic column there and you can see that the HMRA zones that we have access to the seven rivers between the Greyberg and the 100 plus recompletions to do, anticipate we'll do 20 by the end of the year. That'll develop an additional 15 million barrels of proven reserve. It's an Android zone. You'll notice it's the deepest of the intervals there.

Speaker Change: Next I'll be talking about our development plan, providing a little bit of detail there for the audience here.

Mitch Trotter: Like we've stated in the past, if you need a deeper dive, and since it is a conference, call with a lot of people, please feel free to reach out to Mike Porter, you can find his name on our website, and he'll schedule a one-on-one.

Mitch Trotter: We've done this several times with many people in the past.

Speaker Change:

Mitch Trotter: So please advance to the revenue slide.

Speaker Change: Our main zone that we're going after is the seven rivers on and if you look to the right. There there is the geologic.

Dante: Again, you're going to hear about that from from Jesse Allen.

Speaker Change: Column, there and you can see that the HR as zones that where we have access to is seven years Queen the gray Bergen sent Angus.

Dante: Q2 had a substantial reduction in op-ex and we spent a lot of of of capex on repairing and improving our field infrastructure. On average, we spent a million and a half in Q1 and another million and a half in Q2. These things together position us to increase oil production without interruption. We also negotiated with the seller a credit that also impacted our Q2 financial substantially.

Speaker Change: In seven rivers, we have 100.

Plus our re completions to do anticipate a little due 'twenty by the end of the year that will develop.

Speaker Change: Additional 15 million barrels of proven reserves.

And Andrew Sone, you'll notice is that the deepest of the intervals there.

Jesse Allen: We have bypass pay and under perforated pay in a lot of wells out there. I anticipate 20 of those by the end of the year that will help us develop 34 million barrels of potential reserves. In addition, as Dante mentioned, I'm going to talk a little bit about our improved well evaluation and stimulation techniques. One of the things we've done is hired a petrophysic physicist and well-log analysts. Anybody who's worked at Permian Basin, it's a tough area, and you really need to know your petrophysics in order to perforate zones that are truly productive. We're now using state-of-the-art well-log analysis software, which our petrophysicist is using.

Speaker Change: We have bypass pay or number of perforated pay in a lot of wells out there.

Speaker Change: Dissipate 20 of those by the end of the year.

Dante: You're going to hear about that from Mitch.

Speaker Change: That will help us develop 34 million barrels of potential reserves.

Speaker Change: In addition, as Dante mentioned I'm going to talk a little bit about our improved well evaluation and stimulation techniques.

Dante: You're going to you saw suppress releases.

Dante: You're going to you saw suppress releases. I'll just bring them up. They all fit the theme of improved infrastructure. This was improvements to our electrical system improvements to mechanical purchase of a hot oil machine. All these things help us with our run time so we're not down due to well-plugging or flow line plugging.

Dante: I'll just bring them up. They all fit the theme of improved infrastructure.

Dante: One of the things we've done is hired up our Petro physics, consistent well log analysts.

Dante: This was improvements to our electrical system improvements to mechanical purchase of a hot oil machine. All these things help us with our run time so we're not down due to well-plugging or flow line plugging.

Speaker Change: Anybody who's worked Permian basin, it's a tough area and you really need to know you Petro physics in order to perforate zones that are truly productive and we're using we're now using state of the art well log analysis software, which our Petro physicists is.

Dante: In the end, what everybody wants is certainly what all of us in the management team want and our board want is uninterrupted oil production that we sell each month on an increasing basis.

Dante: In the end, what everybody wants is certainly what all of us in the management team want and our board want is uninterrupted oil production that we sell each month on an increasing basis. I'm happy to report the numbers are moving out.

Speaker Change: Is using and so it results in targeted folks focus on perforating the right zones, both in our producers and injectors in the seven rivers, which ultimately ends up increasing production and the cost to perform these re completions, depending on the complexity and what we encountered in the well.

Jesse Allen: It results in targeted focus on perforating the right zones both in our producers and injectors in the seven rivers, which ultimately ends up increasing production, and the cost to perform these reconpletions dependent on the complexity and what we encounter in the well. Our chemical treatments are chemical acidizing treatments. As Dante said, this is around $5,500. We're seeing 2X production increase, pay back in less than 30 days on those, some even faster, dependent on the increase. Our seven rivers completion, we're going to be in the range of $150,000. Potential a little higher depending on the number of stages we do, and we expect an average increase of 50 barrels all day, pay out less than 60 days.

Dante: I'm happy to report the numbers are moving out.

Dante: So now I'm going to talk about the outlook for Q3 and Q4. Half our story in Q3 and Q4 is going to be about improving our financials by cleaning up the overhang from the acquisition. We have a lot of professional charges from legal, from accounting, from auditing. Those are one-time costs and we've just got to pay them off. Our plan to pay those off is from increased production. The second part of what we see in Q3 and Q4 is increased oil production.

Dante: Our plan to pay those off is from increased production.

Speaker Change: Our chemical treatments or chemical advertising treatments as Dante said this are around 5050 $500. We're seeing two X production increase payback in less than 30 days on those somebody even faster.

Speaker Change: Depending on the increase or seven rivers completion, we're going to be in the range of 100 $150000 potential a little hired on the number of stages, we do and we expect average increase of 50 barrels oil a day payouts of less than 60 days.

Dante: The second part of what we see in Q3 and Q4 is increased oil production.

Dante: And I just want to give an example what increased oil production means to us. If we increase oil production by 100 barrels a day, if you assume $70 oil and our NRI of 74%, that's $157,000 a month. If we increase it by 300 barrels a day, that's about a half million dollars a month to our net, our net gain. And if we increase it by 500 barrels a day, we're at 787,000 a month to our good.

Jesse Allen: So, with that, let's go to the next slide, and I turn the presentation back over to Dante, our CEO.

Speaker Change: So with that let's go to the next slide and I turn the presentation back over to Dante our CEO.

Dante: Yeah, thanks, Jesse.

Dante: Yeah, Thanks, Jesse I'm going to wrap this up.

Dante: I'm going to wrap this up. The top bullet to take away from today is that we're a responsible operator. Safety is our number one priority. We want to make sure everybody goes home the same way they came. We also want to take care of the land that we're there that we're entrusted with by New Mexico, and we're happy that we're keeping all the regulatory bodies that are involved happy.

Dante: The.

Dante: Top bullet to take away from today is that we're a responsible operator safety is our number one priority we want to make sure everybody goes home. The same way. They came we also wanted to take care of the land that we're there we're entrusted with by our new Mexico, and where we're we're happy that we're yeah.

Dante: If we increase it by 300 barrels a day, that's about a half million dollars a month to our net, our net gain. And if we increase it by 500 barrels a day, we're at 787,000 a month to our good.

Speaker Change: We're we're keeping all the regulatory bodies that are involved happy I want to go back to Jessie slide for just a second you know, we're not saying two to all our investors. We have 300 wells, we only did 24 and we picked up a 100 barrels a day so what would you get.

Dante: We've just these little 24 pilot tests, chemical acid jobs, increased our production by about 100 barrels a day.

Dante: We've just these little 24 pilot tests, chemical acid jobs, increased our production by about 100 barrels a day. And so we're just beginning, but I'm telling you we're looking forward to a major impact to our bottom line.

Dante: I want to go back to Jesse's slide for just a second. We're not saying to all our investors, we have 300 wells; we only did 24, and we picked up 100 barrels a day. So what would you get if you did another 300 wells like those 24? We think everybody can do the simple math. We just can't believe it would be that easy, and then nothing's been that easy yet. On these workovers that Jesse talked about, we're using a lot of science with some high-powered petroleum and geologic experts here telling us, yeah, you're going to get 50 barrels a day.

Dante: And so we're just beginning, but I'm telling you we're looking forward to a major impact to our bottom line. If we went beyond Q3 and Q4 into 2025, we see 100 to 200 re-completions at a cost of about 100,000 each at an average contribution of about 50 barrels a day, and none of that involves a drill bit where the costs were just just jumped to a million dollars a well.

Dante: So we're probably in the late 25 or early 26 before we need a drill because we see so much opportunity just laying on the ground.

Dante: If we went beyond Q3 and Q4 into 2025, we see 100 to 200 re-completions at a cost of about 100,000 each at an average contribution of about 50 barrels a day, and none of that involves a drill bit where the costs were just just jumped to a million dollars a well. So we're probably in the late 25 or early 26 before we need a drill because we see so much opportunity just laying on the ground.

Speaker Change: If you did another 300 wells like those 24, we we think everybody can do the simple math. We just we just can't believe it would be that easy and then nothing has been that easy yet on these workovers suggests you talked about.

Speaker Change: Yeah, where we're using a lot of science with some high powered petroleum and geologic experts here, telling us yeah, you're gonna get 50 barrels a day well again 50 barrels a day times 100 wells I don't want to do that complicated math for the folks on the call, but my goodness you know.

Dante: Well, again, 50 barrels a day times 100 wells. I don't want to do that complicated math for the folks on the call, but my goodness, you know, that's why we're bullish on Q3 and Q4. We're not ready to plant the flag and take a victory lap, but we're saying it's sort of looking good. So we need to do a lot more field testing and make sure that we can multiply 300 times a few wells and 300 times 24 wells to say what this field will do. But we can say there's a bright light getting brighter at the end of Q3 and Q4.

Speaker Change: That's why we're that's why we're bullish on Q3 and Q4, we're not ready to plant the flag and take a victory lap, but we're saying it's sort of looking good. So we need to do a lot more field testing and make sure that that we can multiply 300 times times a few wells.

Mitch Trotter: Now with that I'm going to turn it over to to Mitch to cover the financials.

Mitch Trotter: Now with that I'm going to turn it over to to Mitch to cover the financials. Thank you Dante. Again a Mitch trotter and we have caught a minute view in the past earnings calls and a lot of you individually.

Mitch Trotter: Thank you Dante.

Mitch Trotter: Again a Mitch trotter and we have caught a minute view in the past earnings calls and a lot of you individually.

Mitch Trotter: So I want to thank you for attending again today.

Mitch Trotter: So I want to thank you for attending again today. We will drill down into Q2 a little bit and as Dante had stated it is better. It's about what we had projected on the base cost when we did Q1. But in this call I want to give a little bit more insight into the results and operations of H&RA. So you understand the company a little bit better. This will roll into a little bit later Jesse how he'll explain these results are leading to increasing production.

Mitch Trotter: We will drill down into Q2 a little bit and as Dante had stated it is better.

Speaker Change: Mm 300 times 24 wells to say, what this field will do but we cant say there is a bright light getting brighter at the end of Q3 and Q4, we already talked about Q1 and Q2 that they were impacted by so many you know, it's really $3 million spent to improve.

Mitch Trotter: It's about what we had projected on the base cost when we did Q1.

Mitch Trotter: But in this call I want to give a little bit more insight into the results and operations of H&RA. So you understand the company a little bit better.

Dante: We already talked about Q1 and Q2 that they were impacted by so many, you know, it's really $3 million spent to improve our field condition. And in the boring, mundane world of flow line replacement, electrical transformer replacement, you know, satellite, you know, tank and valve replacement, those kind of things.

Mitch Trotter: So the sales for Q1 and Q2 for oil and gas were very similar, generating $5 million in, cash each quarter. Steady production and little change in the average prices brought in the $5 million both, times.

Mitch Trotter: Now, there was a net difference between the two quarters because of the derivative non-cash, impact. Q1 had a non-cash gap expense of $2 million that I explained in Q1, and Q2 was basically, minimal as the price of oil had little change.

Mitch Trotter: So what is this non-cash impact? It's the hedge derivative liability, and it's a contingent liability calculated at the end, of each quarter.

Mitch Trotter: So it's not something that you pay, it's just over the next two years.

Mitch Trotter: This will roll into a little bit later Jesse how he'll explain these results are leading to increasing production.

Speaker Change: Our field condition and in the boring mundane world of flow line replacement electrical transformer replacement you know satellite you know taken valve replacement those kind of things. So I go down to the last bullet here what are the actions we're going.

Mitch Trotter: So I will have in a minute three areas and we'll focus on the revenue component.

Mitch Trotter: So I will have in a minute three areas and we'll focus on the revenue component. The drill down into lease operating expenses and capital expenditures and then like I did before a little bit of insight onto non cash expenses impacting our financials. Like we've stated in the past if you need a deeper dive and you know since it is a conference call with a lot of people please feel free to reach out to Mike Porter and find his name on our website.

Mitch Trotter: The drill down into lease operating expenses and capital expenditures and then like I did before a little bit of insight onto non cash expenses impacting our financials.

Mitch Trotter: So the market price change does have an inverse impact on the income statement. So if oil goes up, we get a negative hit, and vice versa.

Dante: So I go down to the last bullet here, what are the actions we're going to do for the most part? I mean, we have a billion barrels in place down, down hole. That's almost for us, for our little company, that's almost an infinite supply. So we, as we attempt to unlock how to get more oil out of each one of these wells, are declaring some victory on these chemical treatments and expect at least 250 barrels a day of sustained production increase by the end of the year, and you're going to see this thing go higher, but it's going to decline a bit.

Mitch Trotter: If oil price goes down, we have a positive.

Mitch Trotter: On Q1, oil price went up significantly, so hence the theoretical expense.

Due for the most part I mean, we have a billion barrels in place down downhole that's almost.

Mitch Trotter: Like we've stated in the past if you need a deeper dive and you know since it is a conference call with a lot of people please feel free to reach out to Mike Porter and find his name on our website.

Speaker Change: For us for our little company, that's almost an infinite supply so as we as we attempt to unlock how to get more oil out of each one of these wells we are declaring some victory on these chemical treatments and expect at.

Mitch Trotter: And he'll schedule 101.

Mitch Trotter: And he'll schedule 101. We've done this several times with many people in the past. So please advance the revenue slide. So the sales for Q1 and Q2 for oil and gas were very similar generating five million cash each quarter. Steady production and little change in the average prices brought in the five million both times. Now there wasn't that difference between the two quarters because of the derivative non cash impact. Q1 had a non cash gap expense of two million that I explained in Q1 and Q2 was basically minimal as the price oil had little change.

Mitch Trotter: We've done this several times with many people in the past.

Speaker Change: At least 250 barrels a day of sustained production increase by the end of the year, you're going to see this thing go higher but it's going to decline a bit. So we're still trying to understand that the infrastructure improvements they're coming to an end we still have a few things on our chore list with electrical and mechanical.

Mitch Trotter: So please advance the revenue slide.

Mitch Trotter: So the sales for Q1 and Q2 for oil and gas were very similar generating five million cash each quarter. Steady production and little change in the average prices brought in the five million both times.

Dante: So we're still trying to understand that.

Dante: The infrastructure improvements; they're coming to an end. We still have a few things on our chore list with electrical and mechanical, but the big nuts behind us, the seven rivers in the San Andreas, low-cost, recompletions. These acid jobs are crazy cheap, 5,500, and we don't even use a rig. We just moved into the well, we put chemical down the backside, we let it set, we circulate it out, we put a little more chemical down, we circulate it out. Within five days, we can see what happened, and we're 23 for 24. Any boxer that wins 23 out of 24 fights is a pretty good boxer.

Speaker Change: But the the big nuts behind us the seven rivers in the San Andreas low cost re completions these asset jobs or crazy cheap 5500, and we don't even use a rig we just moved into the well we put chemical down the backside, we let it set we circulate it out we put a little more.

Mitch Trotter: Now there wasn't that difference between the two quarters because of the derivative non cash impact. Q1 had a non cash gap expense of two million that I explained in Q1 and Q2 was basically minimal as the price oil had little change.

Speaker Change: Chemical down we circulate it out within five days, we can see what happened and where were twenty-three for 'twenty for any box are the wins 23 out of 24 fights he's a pretty good boxer. So we're thinking we're pretty good on these asset things we need to do the same with these re completions that they cost more money there.

Mitch Trotter: So what is this non cash impact? It's the hedge derivatives liability and it's a contingent liability calculated at the end of each quarter.

Mitch Trotter: So what is this non cash impact? It's the hedge derivatives liability and it's a contingent liability calculated at the end of each quarter. So it's not something that you pay. It's just over the next two years. So the market price change does have an inverse impact on the income statement. So if oil goes up we get a negative hit and vice versa. If oil price goes down we have a positive. On Q1 oil price went up significantly so hence the theoretical expense.

Mitch Trotter: So it's not something that you pay. It's just over the next two years.

Dante: So we're thinking we're pretty good on these acid things.

Dante: We need to do the same with these recompletions, that they cost more money; they're 100 grand to 125, and finally, they're the last bullet. We want to prove up the 34 million barrels that are behind pipe, and we can't do that without perforating existing well-bores and stimulating that.

Mitch Trotter: So the market price change does have an inverse impact on the income statement. So if oil goes up we get a negative hit and vice versa.

Speaker Change: Grant to 125, and finally, they're the last bullet we want to prove up the 34 million barrels that are behind pipe that we can't do that without perforating existing well bores and stimulating that.

Mitch Trotter: If oil price goes down we have a positive.

Mitch Trotter: On Q1 oil price went up significantly so hence the theoretical expense.

Michael Porter: So with that, that's pretty much a wrap for what we have. I'll turn it back over to Mike for Q&A.

Mitch Trotter: So in short, that's good for the company because we made more money.

Speaker Change: So with that that's pretty much or a wrap for what we have I'll turn it back over to Mike for Q&A.

Mitch Trotter: So in short that's good for the company because we made more money.

Mitch Trotter: So in short that's good for the company because we made more money. You know final note I want to hit on oil prices. If it drops dramatically we responsibly hedged to protect the company, to cover debt service and base operating expenses. We have 70% plus or minus, hedged over $70 all the way through the end of 2025, that I want to drill into the next slide, which is the lease operating expenses and the LOE CAPEX.

Mitch Trotter: Final note, I want to hit on oil prices. If it drops dramatically, we responsibly hedged to protect the company, to cover debt service, and base operating expenses. We have 70% plus or minus hedged over $70 all the way through the end of 2025.

Mitch Trotter: That I want to drill into the next slide, which is the Lease Operating Expenses and, the LOE CapEx.

Mitch Trotter: In Q1, we did have a reduction of $824,000 of LOE from what we presented before.

Mitch Trotter: You know final note I want to hit on oil prices.

Mitch Trotter: The earnings have been restated for Q1 and year-to-date, and you'll see that in the 10-Q that was filed.

Mitch Trotter: So why this restatement? Well, the LOE cost seemed out of line with the efforts, and it had 80% LOE and only 20% CapEx.

Mitch Trotter: Management did a deep review, and we restated it, and both quarters are very similar to what our efforts versus feel of a 60% LOE and a 40% CapEx.

Speaker Change: Certainly at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Mitch Trotter: If it drops dramatically we responsibly hedged to protect the company, to cover debt service and base operating expenses.

Mitch Trotter: We have 70% plus or minus, hedged over $70 all the way through the end of 2025, that I want to drill into the next slide, which is the lease operating expenses and the LOE CAPEX.

Speaker Change: Confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two if you'd like to remove your question from the Q4.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, we do ask that participants. Please ask one question and one follow up then reenter the queue.

Operator: We do ask that participants please ask one question and one follow-up, then re-enter the queue. Once again, if you have any questions or comments, please press Star 1 on your phone. One moment please, while we poll for questions.

Mitch Trotter: So why did that happen?

Mitch Trotter: In Q1, we did have a reduction of 824,000 of LOE from what we presented before.

Mitch Trotter: In Q1, we did have a reduction of 824,000 of LOE from what we presented before. The earnings have been restated for Q1 and year-to-date and you'll see that in the 10Q that was filed. So why does restatement? Well, the LOE calls seemed out-of-line with the efforts and, you know, it had 80% LOE and only 20% CAPEX. Management did a deep review and we restated it and both quarters are very similar to what our efforts versus feel of a 60% LOE effort and the 40% CAPEX.

Mitch Trotter: Well, the systems we inherited were not adequate for our needs.

Speaker Change: Once again, if you have any questions or comments. Please press star one on your phone one moment. Please while we poll for questions.

Mitch Trotter: It was adequate for the predecessor, and hence, we have rectified that, and we have a good review process. It will not happen again.

Todd Felty: Your first question is coming from Todd Felty from Agedist Financial. Your line is live. Hey guys, I really appreciate you taking my questions. We've heard a lot about the improvements and the recompletions going on, and when I look at your 10 queue, even if I take out the gain on loss of a derivative instruments, I see in the six months of 2023 that you all did just under 14 million in revenues from crude oil and natural gas, and then the six months of 2024, you just did over 10 millions, which is about a 35 percent drop in revenues with all these improvements and recompletions going on given that the price of oil now is similar to what it was a year ago.

Speaker Change: Your first question is coming from Todd fill T from ages financial your line is live.

Mitch Trotter: The earnings have been restated for Q1 and year-to-date and you'll see that in the 10Q that was filed.

Mitch Trotter: Lastly, on Q1 versus Q2, it does show a Q2 had improvement of $65,000 per month, as we really focused a little bit longer in Q2 on the long-term benefits in the CapEx, since it drove it down some, and it also drove down the LOE cost per BOE or the lift cost in the 29 range.

Mitch Trotter: Now, we're taking actions to further reduce costs, and our target is 19 by the end of the year, beginning of next year.

Mitch Trotter: As we've always stated, that's where we want to get to.

Mitch Trotter: With that, let's drill down into the non-cash expenses.

Speaker Change: So I really appreciate you taking my questions. You know we've heard a lot about the improvements and re completions are going on and when I look at your 10-Q, even if I take out the gain and loss of our derivative instruments I see in the six months of 2023 that you all did just under 14 million in revenue.

Mitch Trotter: So why does restatement?

Mitch Trotter: So, advance the slide, yeah.

Mitch Trotter: Just like in Q1, I want to talk about a few things.

Mitch Trotter: Well, the LOE calls seemed out-of-line with the efforts and, you know, it had 80% LOE and only 20% CAPEX. Management did a deep review and we restated it and both quarters are very similar to what our efforts versus feel of a 60% LOE effort and the 40% CAPEX.

Mitch Trotter: If you look to the right, the table has the numbers right out of Q2.

Mitch Trotter: They come from the file, Timmy. I put them there with some reference numbers so that you can follow along.

Mitch Trotter: So why did that happen?

Speaker Change: Use from crude oil and natural gas and then the six months of 'twenty 'twenty. Four you just did over 10 millions, which is about a 35% drop in revenues.

Mitch Trotter: So why did that happen? Well, the systems we inherited were not adequate for our needs or it's adequate for the processor. And hence, we have rectified that and we have a good review process. It will all happen again. Lastly, on Q1 versus Q2, it does show a Q2 had an improvement of 85, excuse me, 65,000 per month as we really focused a little bit longer in Q2 on the long-term benefits in the CAPEX since it drove it down some and it also drove down the LOE cost per BOE or the lift cost and the 29 range. Now, we're taking actions to further reduce cost and our target is 19 by the end of the year beginning of next year. As we've always stated, that's where we want to get to.

Speaker Change: With all these improvements and re completions going on given that the price of oil now is similar to what it was a year ago why have the revenue has gone down instead of up.

Mitch Trotter: Well, the systems we inherited were not adequate for our needs or it's adequate for the processor.

Mitch Trotter: And hence, we have rectified that and we have a good review process.

Todd Felty: Why have the revenues gone down instead of up?

Mitch Trotter: I'm not going to hit them all.

Mitch Trotter: It will all happen again.

Dante: All right, let me take that one, Todd. Good to always talk to you again. We're not comparable again to the predecessor in 2023, and I had a lot to do with it, and we had shown the curve in the past. The predecessor, the production dropped off from its peak at the later part of 2022 going into 23. In it had a steady decline from 1400 to about 900 BPO barrels of oil per day by November December when we took it over. We spent Q1 and Q2 stabilizing it, so you're working off a significantly different volume of oil that was produced.

Speaker Change: Alright, let me take that when taught in good always talk to you again.

Mitch Trotter: Number one, the hedging derivatives we've already touched.

Mitch Trotter: And number two, the G&A, it does include non-cash $574,000 in Q1 and $360,000 in Q2, for fees that we paid in stock. And these were on existing agreements that we're just cleaning up a little bit.

Mitch Trotter: Lastly, on Q1 versus Q2, it does show a Q2 had an improvement of 85, excuse me, 65,000 per month as we really focused a little bit longer in Q2 on the long-term benefits in the CAPEX since it drove it down some and it also drove down the LOE cost per BOE or the lift cost and the 29 range.

Mitch Trotter: It better positions, the company going forward and ultimately improves our cash and balance sheet positions.

Mitch Trotter: The group number three and four together, the warrant and the forward purchase agreement, liability, they get assessed at the end of each quarter. The results were a pickup this time of $277,000 in the warrant liability and $24,000 in the FPA liability in Q2.

Speaker Change: <unk>.

Speaker Change: We're not comparable again to last to the predecessor in 2023.

And I had a lot to do with it and we have shown the curve in the past the predecessor.

Speaker Change: The production dropped off from its peak at the later part of 2022 going into 'twenty, three and it had a steady decline.

Mitch Trotter: Now, we're taking actions to further reduce cost and our target is 19 by the end of the year beginning of next year.

Speaker Change: From 1400 to about 900 P. P O.

Mitch Trotter: As we've always stated, that's where we want to get to.

Speaker Change: The oil per day by November December when we took it over so we spent Q1 and Q2 stabilizing it.

Mitch Trotter: With that, let's drill down into the non-cash expenses.

Mitch Trotter: And if you'll note, Q1 both had big expenses.

Mitch Trotter: So, the answer slide, yeah.

Mitch Trotter: Just like in Q1, I want to talk about a few things.

Speaker Change: So you're working off a significantly different.

Mitch Trotter: If you look to the right, the table has the numbers right out of Q2.

Speaker Change: Hum.

Speaker Change: Of oil that was.

Mitch Trotter: They come from the file tin. I put them there with some reference numbers so that you can follow along.

Mitch Trotter: I'm not going to hit them all.

Speaker Change: You know produced in and so that's and.

Mitch Trotter: So, that's a very positive.

Mitch Trotter: And I'm just going to go to the last one.

Dante: Last year the production was over 90,000, and this year it's around 60, so that's one third of it went away, and so that had a whole lot to do with it. The price, yeah I think it was, I'm going to go back to 22. It was different, so hopefully that answered your question.

Last year the production was over 90000 and this year. It's around 60. So that's a one third of it went away.

Mitch Trotter: Had number one, the hedging derivative we've already touched.

Mitch Trotter: In number two, the GNA, it does include non-cash, 574,000 in Q1 and 360,000 in Q2, for fees that we paid and stock.

Mitch Trotter: In number two, the GNA, it does include non-cash, 574,000 in Q1 and 360,000 in Q2, for fees that we paid and stock. And these were on existing agreements. They were just cleaning up a little bit. It better positions the company going forward, and ultimately improves our cash and balance sheet positions. I'm going to group number three and four together. The warrant and the Ford purchase agreement liability. They get assessed at the end of each quarter.

Speaker Change: And so that had a whole lot to do with it so.

Speaker Change: And the price Yeah, I think it was similar if we go back to 'twenty two it was different so.

Mitch Trotter: And these were on existing agreements. They were just cleaning up a little bit.

Speaker Change: Oh, hopefully that answered your question, yeah, well, that's great to hear now if I'm reading between the lines I think the Comparables for Q3 in Q4 should should then look a lot better if we reverse the trend and then my follow up is are you know we're hearing a lot of especially this week of politics, if one of.

Todd Felty: That's great to hear, and now if I'm reading between the lines, I think the comparables for Q3 and Q4 should then look a lot better if we reverse the trend. And then my follow-up is we're hearing a lot, especially this week, of politics. If one of the candidates was to win that, let's say, proposed a ban on fracking, would any of our improvement operations or operations overall be affected by a ban on fracking.

Mitch Trotter: It better positions the company going forward, and ultimately improves our cash and balance sheet positions.

Mitch Trotter: I'm going to group number three and four together.

Mitch Trotter: The warrant and the Ford purchase agreement liability.

Mitch Trotter: They get assessed at the end of each quarter.

Speaker Change: The candidates was to win that lets say proposed a ban on fracking with any of our improvement operations or operations overall be affected by a ban on fracking.

Mitch Trotter: The results were a pick up this time of 277,000 in the warrant liability in 24,000 in the FPA liability in Q2.

Mitch Trotter: The results were a pick up this time of 277,000 in the warrant liability in 24,000 in the FPA liability in Q2. If you'll note, Q1 both had big expenses. That's a very positive. I'm just going to go to the last one. Dante's already hit on it. It's a gain from a extinguishment of liabilities, forgiveness of debt. This is a one-time gain of a million, two. It happened in Q2. We had a settlement that removed a million, seven of payables from our balance sheet to help us.

Dante: I'll take that. The ban on fracking affects more new wells than old wells, so when we're dealing with all old wells and we're calling these remedial simulations, or we don't think the fracking is going to be as critical, and part of what I hope we convey today is we're moving toward a fracked sand less fracked, meaning what we're really doing is more of, you know, just calling many simulations. I mean a fracked that I think concerns the environmentalists are these million pound fracks with 40 trucks and 40 tanks set at a well site. We're talking about something that's you know not a whole lot different than an asset simulation, so I believe if we had the words, if the worst were to happen to us and they said you can't exceed the fracked gradient in a well board.

Speaker Change: I'll, let Don take that yeah.

With him you know the the.

Mitch Trotter: If you'll note, Q1 both had big expenses.

Don: The ban on fracking.

Mitch Trotter: That's a very positive.

Mitch Trotter: I'm just going to go to the last one.

Don: Affects more new wells than old wells, so when we're dealing with all old wells and we're calling these remedial stimulations or re completions. We we don't think that the fracking is gonna be you know.

Mitch Trotter: Dante's already hit on it.

Mitch Trotter: It's a gain from a extinguishment of liabilities, forgiveness of debt. This is a one-time gain of a million, two. It happened in Q2. We had a settlement that removed a million, seven of payables from our balance sheet to help us.

Don: That's critical and part of what I Hope we conveyed today is you know we're moving toward a.

Jesse Allen: and that's all I really want to talk about and goes again safe you need a deeper dive feel free to reach out to Mike Porter you know with this I want to pass it on to Jesse to tell you a lot more about what's going on in the field it's advanced to that next slide please yes I'm Jesse Allen good afternoon I'm the VP of operations and first and foremost the operate safety briefly we have no reportable incidents no OSHA reportable incidents so far this year and that's a good thing our field employees do an excellent job of working safely we want each of them to be to go home every evening I'm going to talk a little bit about our production trans they're increasing and note the chart there on the right first quarter we averaged about nine sixty three second quarter it was down a little bit but currently and as Dante has alluded to we've been doing some work to get that production up and currently we're about a thousand fifty five girls all the day and also field improvements work continually optimizing our producing wells optimization of our injection wells and our water flood and as it has been mentioned by Dante our infrastructure upgrades to help us maintain we're getting the old out of the ground we want to make talk about our development plan which is our targeted seven rivers workovers and then workovers to exploit the potential reserves in the the Queen the Greyberg and the Sinanders next slide our production trans as I've said production is increasing my focus in my field teams focus is to increase our daily all production that's our number one goal besides working safely and how have we done that well over the toward the end of the second quarter and as we were getting into the third quarter here we started doing some chemical acid stimulations and what these do is remove scale build up that restricts flow around the well bore we did a pilot program of 24 wells which we've completed we're now evaluating and we've seen an 80 to 100 barrel per or per day increase about two X increase over the before the first phase that we're going to move ahead with the the next phase of the project where we'll probably do anywhere from 50 to 100 additional wells obviously will monitor those closely to make sure we we continue to increase production and then as I mentioned our artificial lift optimization and upgrades are an ongoing program for us use of our pump up the controllers to make sure we're running the wells and getting every drop of all we can out of each of the producing wells we've done several pump upgrades where we converted a well to sucker rod lift to a progressive cavity pump very successful there we ended up going from about 10 barrels all the day to 35 to 40 barrels all the day on the first one we did and we continually make sure that we're putting the water we want to in the areas of the field and our injection wells to optimize our water flood in the 7 rivers formation and notice the curve there you can see as we've gotten into the end of the second quarter into the third quarter our production is definitely increased Next slide please.

Don: Track sand less frac, meaning what we're really doing is more of a.

You know Jim.

Jim: Just call a mini stimulations I mean.

Speaker Change: Our frac that well I think concerns the environmentalist are these million pound fracs with 40 trucks and 40 tank set at a well site, we're talking about something that's you know.

Speaker Change: Not a whole lot different than the than an acid stimulation. So I believe if we had the worst at the worst were to happen to us and they said you can't exceed the frac gradient in a wellbore, we would modify what we do and comply and I don't think it would make a whole lot of difference because the the <unk>.

Dante: We would modify what we do and comply, and I don't think it would make a whole lot of difference because the folks on this team for this company are that good.

Speaker Change: So on this team for this company are that good you know I mean, we.

Jesse Allen: You know you're, I mean, we're not fracking at all with regard to these chemical asset treatments, but also, as Jesse, Jesse did I say it right. I'd like him to weigh in on your question. Yes, as Dante has said, the chemical-slash acidizing treatments that we're doing, that's safe acid, so this is an acid that you could actually pour on your hands. It doesn't work on our tubers, but it doesn't like calcium carbonate. So, yes, essentially what Dante has said is correct. We would just modify what we're doing. And like he said, instead of 40 trucks and 40 tanks out there, we're talking about one truck and maybe one or two tanks to pump our stimulation.

Speaker Change: We're not fracking at all with regard to these chemical acid treatments, but I'll also ask Jesse Jesse did I say it right.

Jesse Jesse: I'd like him to weigh in on your your question Todd.

Jesse Jesse: Yes.

Speaker Change: <unk> said the chemical.

Jesse Jesse: Chemical slashed acidize the treatments that were doing that that's safe assets. So this is an asset that.

Speaker Change: You could actually pull in your hand, it doesn't work on our tubular.

Speaker Change: But it doesn't like calcium carbonate so yes.

Speaker Change: Essentially what Dante has said is correct, we would just modify what we're doing.

Speaker Change: Like he said instead of 40 trucks and 40 tanks out there we're talking about one truck and maybe one or two tanks to pump our our stimulation. So a whole full level or a whole degree of difference and we're not using.

Jesse Allen: So, a whole level or a whole degree of difference, and we're not using, you know, several hundred thousand barrels of fluid in about three or four hundred barrels of fluid, which our environmentalists really like.

Speaker Change: Yeah.

Speaker Change: Several hundred thousand barrels of fluid.

Three or 400 barrels of fluid, which okay on environmental is really like.

Todd Felty: Okay, that's great to hear, and I really appreciate you taking my questions.

Speaker Change: Okay, that's great to hear and I really appreciate you taking my questions. Thank you.

Operator: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone.

Mitch Trotter: Dante's already hit on it.

Chris Recuso: Once again, everyone, if you have any questions or comments, please press star, then one on your phone. Your next question is coming from Chris Recuso from Partner CapGroup. Your line is live.

Mitch Trotter: It's a gain from extinguishing of liabilities, forgiveness of debt. And this is a one-time gain of $1.2 million. It happened in Q2. We had a settlement that removed, $1.7 million of payables from our balance sheet to help us.

Mitch Trotter: Cleanup.

Speaker Change: Your next question is coming from Christopher Cuso from partner Cap Group. Your line is live.

Chris Recuso: Good afternoon, guys. I just one question that is macro-based. It seems apparent that we're moving into a slowdown here in the United States, and we've been in a macro slowdown in a recessive environment in China for the duration of the year. Obviously, these are the two defining oil markets of the globe. If macro softness persists well into 2025, does that have any impact?

Speaker Change: Good afternoon guys.

Mitch Trotter: And that's all I really want to talk about, and I'll again say if you need a deeper dive, feel free to reach out to Mike Porter.

Mitch Trotter: And with this, I want to pass it on to Jesse to tell you a lot more about what's going

Mitch Trotter: on in the field.

Speaker Change: Just one one question there's macro based it seems apparent that we're moving into a slowdown here in the United States.

Jesse Allen: Thank you.

Speaker Change: We've been.

Speaker Change: In a macro slowdown in a recessionary environment in China.

Speaker Change: For the duration of the year. Obviously these are the two.

Speaker Change: Finding oil markets of the globe if if.

Speaker Change: If macro softness persists well into 2025.

Speaker Change: Does that have any impact does that have any influence on on regeneron and then in terms of your production a strategy. So to speak are in our in the foreseeable future.

Dante: Does that have any influence on regimen in terms of your production strategy, so to speak, in the foreseeable future?

Dante: Yeah, I'll try to answer this. First of all, Chris, we're hedged up pretty good. So, we're a little bit immune to oil prices through 25. And Mitch could give you more detail on just exactly what the percentage is and what we're hedged, but we're pretty much hedged everywhere at $70. And so, if your question was, would we curtail activity? I mean, we're looking at the economics of the return for the money we deploy in the near term. And the second influence is, would the buyer, which is Chevron, in our case, need to take less oil, but we check that.

Speaker Change #100: Yeah, I'll I'll try to answer this.

Jesse Allen: Let's advance to that next slide, please.

Jesse Allen: Yes.

Speaker Change #101: First of all Chris where we're hedged up pretty good so we're a little bit immune to oil prices through 'twenty five.

Jesse Allen: I'm Jesse Allen.

Jesse Allen: Good afternoon.

Jesse Allen: I'm the VP of Operations.

Jesse Allen: And first and foremost, we operate safely.

Mitch Trotter: And Mitch could give you more detail on just exactly what the percentages and what we've hedged, but where we're pretty much hedged everywhere at $70 and so if your question was would we would we curtail activity I mean, we're looking at the economics of the of of the return for the money, we we deploy.

Speaker Change #103: In the near term and the secondhand influences.

Speaker Change #104: Wood with the buyer, which is chevron and rk's need to take less less oil, but we we we checked that.

Jesse Allen: We have no reportable incidents, no OSHA reportable incidents so far this year. And that's a good thing. Our field employees do an excellent job of working safely. We want each of them to go home every evening.

Jesse Allen: I'm going to talk a little bit about our production trends. They're increasing. And note the chart there on the right. First quarter, we averaged about 963.

Dante: And right now, they're saying you could produce four times what you're producing; we wouldn't flinch. So, we think we have a buyer that will let us double, triple, quadruple the production. We also happen in China and Russia. For us, it's kind of a Katie bar the door. We're going for it. These chemical acid stimulations are so cheap and the results are so substantial. I have a hard time thinking we're not just going to blow and go through that. So that's one. Then when you get to the next level of investment, which are the re completions, it may give us pause if there's some international event out there, but for the most part, we're not very big.

And right now, they're saying you could produce four times, what you're producing we wouldn't flinch. So we think we have a a buyer that will let us double triple quadruple that production. We also think we're hedged pretty good so it's.

Speaker Change #105: Whoever wins the election, whatever happens in China and Russia.

Speaker Change #106: For us, it's it's kind of Katy bar the door, we're going for it. So these these are these chemical acid stimulation or so.

Jesse Allen: In addition, we've upgraded the flow lines on some of our producing wells.

Jesse Allen: In addition, we've upgraded the flow lines on some of our producing wells. We've identified 20 producing wells initially and we've completed about half of those so those wells now are back on production. And then one of our water flood stations on the Skelly Unit. When we took over, the main trunk line was inoperable. We've now replaced that trunk line and we're installing connections as necessary to revive our water station on the Skelly Unit.

Jesse Allen: We've identified 20 producing wells initially and we've completed about half of those so those wells now are back on production.

Speaker Change #106: Cheap and that and the results are so.

Jesse Allen: And then one of our water flood stations on the Skelly Unit.

Speaker Change #107: Substantial I I have a hard time thinking we're not just going to blow and go you know through that so that's that's one and then when you get to the next level of investment which are the the re completions you know it may give us pause if there's some international event out there but for the most.

Jesse Allen: When we took over, the main trunk line was inoperable. We've now replaced that trunk line and we're installing connections as necessary to revive our water station on the Skelly Unit. We've been hauling that water to one of the other water stations and that's been costing us roughly $30,000 a month so we'll be eliminating that expense in the near future.

Jesse Allen: We've been hauling that water to one of the other water stations and that's been costing us roughly $30,000 a month so we'll be eliminating that expense in the near future. In addition, we had to do some electrical upgrades which meant upgrading transformers on our Russell Turner water station. We weren't able to run the pumps at 100% capacity because of a wheat transformer. This former has arrived during the process of installing now.

Speaker Change #107: We're not very big and so if we were to double triple quadruple production I. Just don't think we're going to we're gonna Dent anything now if oil prices were to just take a precipitous drop.

Dante: And so, if we were to double, triple, quadruple production, I just don't think we're going to dent anything. Now, if oil prices were to just take up a precipitous drop and we were we were we were naked with no hedge on that. We'd absolutely would consider that when we deploy capital, and maybe we use the money to pay down debt or something else. But that's my two cents.

Jesse Allen: In addition, we had to do some electrical upgrades which meant upgrading transformers on our Russell Turner water station. We weren't able to run the pumps at 100% capacity because of a wheat transformer.

Speaker Change #108: And we were we were we were naked with no head John that we absolutely would consider that when we deploy capital and maybe we use the money to pay down debt or something else, but that's my two sense Mitch do you agree with that.

Jesse Allen: This former has arrived during the process of installing now.

Mitch Trotter: Mitch, do you agree with that? I agree, exactly what you said. We're properly hedged, and you asked a percent again. We're in the 70% range. Maybe it's just a little bit more for the rest of this year and just right at 70 are slightly less for 2025 based on the current level of production. Production goes up. We'll still be in the 50 to 60% range for next year. So I feel pretty comfortable in that arena. Now, maybe one more point, Chris, on that. We do see, you know, I was I was kind of thinking that the market would drive oil prices up to the election and then oil prices would come down.

Jesse Allen: We will also upgrade our lightning protection. We've had some downtime as a result of substandard lightning protection which will be upgrading.

Jesse Allen: We will also upgrade our lightning protection. We've had some downtime as a result of substandard lightning protection which will be upgrading. And then in addition, once we get the transformer installed, we'll be able to install a second H pump which will increase our injection capacity which, of course, is very important to our water flood in seven rivers. And finally, we purchased a hot oil truck and unit and we use a hot oil over every day and so it made sense to purchase one which we've done and it mitigates downtime, having our own unit there in the field at 100% availability. In the past, sometimes we had downtime just waiting on getting somebody out there. And so we estimated at the end of the day, that's going to save us about $110,000 per year.

Mitch Trotter: I agree are exactly what you said that's.

Jesse Allen: Next slide, please.

Or yeah, we're properly hedged in U S. A percent again, we're in the 70% range, maybe it is a little bit more for the rest of this year and just right at 70 or slightly less for 2025 based on the current level of production production goes up we will still be in that 50% to 60% range for next year.

Jesse Allen: And then in addition, once we get the transformer installed, we'll be able to install a second H pump which will increase our injection capacity which, of course, is very important to our water flood in seven rivers.

Jesse Allen: And finally, we purchased a hot oil truck and unit and we use a hot oil over every day and so it made sense to purchase one which we've done and it mitigates downtime, having our own unit there in the field at 100% availability. In the past, sometimes we had downtime just waiting on getting somebody out there. And so we estimated at the end of the day, that's going to save us about $110,000 per year.

Mitch Trotter: So I feel pretty comfortable in that arena.

Mitch Trotter: And then maybe one more point on that we we do see I you know I was I was kind of thinking that the.

Speaker Change #109: The market will drive oil prices up until the election, and then the oil prices would come down but yeah. We just there's just very tough to predict but I would tell you that as a management team. We believe 70 80 $85 a barrel is a good number so if oil prices were to go up to 85 nine.

Jesse Allen: Next slide, please.

Mitch Trotter: But you know, we just it's very tough to predict, but I would tell you that as a management team, we believe 70, 80, 85 dollars a barrel is a good number. So if oil prices were to go up to 85 90, and as we increase production, I'm confident that Mitch is going to increase our hedging amount beyond what the banks require. So we'll continue to try to, you know, buy a cushion against geopolitical unrest, you know, through 25 and beyond as the market gives opportunities. Thank you.

Jesse Allen: Next, I'll be talking about our development plan, providing a little bit of detail there for the audience here.

Jesse Allen: Next, I'll be talking about our development plan, providing a little bit of detail there for the audience here. Our main zone that we're going after is the seven rivers on. And if you look to the right there, there is the geologic column there and you can see that the HMRA zones that we have access to the seven rivers between the Greyberg and the 100 plus recompletions to do, anticipate we'll do 20 by the end of the year.

Speaker Change #110: And as we increase production I'm confident that Mitch is going to increase our hedging them out beyond what the banks require so we'll we'll continue to try to you know.

Jesse Allen: Our main zone that we're going after is the seven rivers on.

Jesse Allen: And if you look to the right there, there is the geologic column there and you can see that the HMRA zones that we have access to the seven rivers between the Greyberg and the 100 plus recompletions to do, anticipate we'll do 20 by the end of the year.

Speaker Change #111: By a cushion against a geopolitical unrest.

Speaker Change #112: <unk> through 'twenty, five and beyond as a as the market gives us opportunities.

Speaker Change #111: Yeah.

Speaker Change #113: Thank you that's that's pretty reassuring, if you're telling me that chevron's willing to waive then two or three extra of what you guys are producing right now that's.

Dante: That's that's pretty reassuring. If you're telling me that Chevron's willing to wave in two, three X of what you guys are producing right now, that's not really a reassuring profile. Thanks. Yeah, they definitely said four times, and they said, well, even probably 10 times because, you know, we're small compared to the amount of oil they need. They they need a lot, X on needs a lot. So if they cut back, then we're in the pipeline. So you've got the other big players that won as much oil as possible. So feel pretty good about that. Chevron, thank you.

Jesse Allen: That'll develop an additional 15 million barrels of proven reserve.

Jesse Allen: That'll develop an additional 15 million barrels of proven reserve. It's an Android Zone. You'll notice it's the deepest of the intervals there. We have bypass pay and under perforated pay in a lot of wells out there. I anticipate 20 of those by the end of the year that will help us develop 34 million barrels of potential reserves.

Speaker Change #111: Really reassuring profile. Thanks.

Jesse Allen: It's an Android Zone.

Jesse Allen: You'll notice it's the deepest of the intervals there.

Speaker Change #111: Definitely said four times and they said well, even probably 10 times because you know.

Jesse Allen: We have bypass pay and under perforated pay in a lot of wells out there.

Speaker Change #114: We're small compared to the amount of oil that you need.

Jesse Allen: I anticipate 20 of those by the end of the year that will help us develop 34 million barrels of potential reserves.

Speaker Change #115: They need a lot of Exxon needs a lot. So if I just cut back then were in the pipeline. So you've got the other big players that want as much oil as possible. So.

Jesse Allen: In addition, as Dante mentioned, I'm going to talk a little bit about our improved well evaluation and stimulation techniques. One of the things we've done is hired a petrophysic physicist and well-log analysts. Anybody who's worked at Permian Basin, it's a tough area, and you really need to know your petrophysics in order to perforate zones that are truly productive. We're now using state-of-the-art well-log analysis software, which our petrophysicist is using. It results in targeted focus on perforating the right zones both in our producers and injectors in the seven rivers, which ultimately ends up increasing production, and the cost to perform these reconpletions dependent on the complexity and what we encounter in the well.

Speaker Change #115: Feel pretty good about that.

Speaker Change #116: Chevron yeah. Thank you.

Speaker Change #115: Yes.

Operator: Thank you. Thank you, Chris. Thanks. All right.

Speaker Change #115: Thank you and thank you Chris Thanks, Alright.

Speaker Change #115: Alright.

Operator: Thank you.

Speaker Change #117: Thank you there are no further questions in the queue.

Dante: There are no further questions in the queue. Well, holy cow, guys, they're easy on us. Look, all of us, all of us spelled Q1 and Q2 were no fun. You know, we wanted to deliver, you know, big time profits, but I tell you, Q3, I think Q3 is going to be better than Q2, but it's probably still going to be negative, but not by much. And Q4, we're pinning a lot of hopes on. And our promise that we've stated to all of you before, before the end of the year, we'll go past 1400 barrels a day, and we need that for credibility with all of you.

Jesse Allen: Anybody who's worked at Permian Basin, it's a tough area, and you really need to know your petrophysics in order to perforate zones that are truly productive.

Speaker Change #118: Well Holy Cow guys, they're easy on US look all of US all of US felt Q1, and Q2, where we're no fun you know we wanted to deliver you know.

Jesse Allen: Second quarter, it was down a little bit.

Jesse Allen: But currently, and as Dante has alluded to, we've been doing some work to get that production, up. And currently, we're about 1,055 barrels oil a day.

Jesse Allen: We're now using state-of-the-art well-log analysis software, which our petrophysicist is using.

Jesse Allen: And also, field improvements.

Jesse Allen: We're continually optimizing our producing wells, optimization of our injection wells, and our water flood.

Jesse Allen: And as has been mentioned by Dante, our infrastructure upgrades to help us maintain, if we're getting, the oil out of the ground, we want to make sure we're getting the oil out of the ground.

Speaker Change #118: Big time profits, but I'd tell you Q3, I think Q3 is going to.

Jesse Allen: We'll talk about our development plan, which is our targeted Seven Rivers workovers and, then workovers to exploit some potential reserves in the Queen, the Greyburg, and the San Andres.

Jesse Allen: Next slide, please.

Jesse Allen: Our production trends, as I've said, production is increasing.

Jesse Allen: My focus and my field team's focus is to increase our daily oil production. That's our number one goal, besides working safely.

Jesse Allen: And how have we done that?

Jesse Allen: Well, toward the end of the second quarter and as we were getting into the third quarter, here, we started doing some chemical acid stimulations. And what these do is remove scale buildup that restricts flow around the wellbore.

Gotta be better than Q2, but it's it's probably still going to be negative, but not by much in Q4, we're putting a lot of hopes on and.

Jesse Allen: We did a pilot program of 24 wells, which we've completed. We're now evaluating and we've seen an 80 to 100 barrel per day increase, about 2X increase, over the before.

Dante: We need to do the same with these recompletions.

Jesse Allen: The first phase, we're going to move ahead with the next phase of the project where we'll, probably do anywhere from 50 to 100 additional wells. We'll monitor those closely to make sure we continue to increase production.

Dante: They cost more money.

Jesse Allen: And then as I mentioned, our artificial lift optimization and upgrades are an ongoing program, for us. Use of our pump-off controllers to make sure we're running the wells and getting every, drop of oil we can out of each of the producing wells. We've done several pump upgrades where we converted a well to sucker rod lift to a progressive, cavity pump.

Dante: They're $100,000 to $125,000.

Jesse Allen: Very successful there. We ended up going from about 10 barrels of oil a day to 35 to 40 barrels of oil a day, on the first one we did.

Dante: And finally, they're the last bullet.

Jesse Allen: And we continually make sure that we're putting the water we want to in the areas of the field, in our injection wells to optimize our water flood in the Seven Rivers Formation.

Dante: We want to prove up the 34 million barrels that are behind pipe, and we can't do that, without perforating existing wellbores and stimulating that.

Jesse Allen: And notice the curve there.

Dante: So with that, that's pretty much a wrap for what we have.

Jesse Allen: You can see as we've gotten into the end of the second quarter, into the third quarter, our production has definitely increased.

Operator: Thank you.

Michael Porter: I'll turn it back over to Mike for Q&A.

Jesse Allen: Next, I'm going to talk about our field improvements to date. One of the key items was upgrading our well test facilities so that we knew what each, of our wells are testing. In other words, are we increasing production with the work we're doing? So it's important to upgrade our well test facilities, which we've done, to troubleshoot, a lot more easily.

Operator: There are no further questions in the queue.

Operator: We do ask that participants please ask one question and one follow-up, then re-enter the queue.

Jesse Allen: We also purchased two portable well test units, which we can move around the field well-to-well, on a simulated basis as needed. In addition, we've upgraded flow lines on some of our producing wells.

Dante: Well, holy cow, guys.

Operator: Once again, if you have any questions or comments, please press star 1 on your phone.

Jesse Allen: We'd identified 20 producing wells initially, and we've completed about half of those. So those wells now are back on production.

Dante: You're easy on us.

Operator: One moment, please, while we poll for questions.

Speaker Change #118: As we stated to all of you before before the end of the year will go past 1400 barrels a day and we need that for our credibility with all of you. So and of course, that's not a real number it's a higher number but I can't let that out otherwise you'll hold me to that so.

Jesse Allen: And then one of our water flood stations on the Skelly unit, when we took over, the main, trunk line was inoperable. We've now replaced that trunk line, and we're installing connections as necessary to revive, our water station on the Skelly unit.

Dante: Look, all of us felt Q1 and Q2 were no fun.

Operator: Your first question is coming from Todd Felty from Aegis Financial.

Jesse Allen: We've been hauling that water to one of the other water stations, and that's been costing, us roughly $30,000 a month, so we'll be eliminating that expense in the near future. In addition, we had to do some electrical upgrades, which meant upgrading transformers, on our Russell-Turner water station. We weren't able to run the pumps at 100% capacity because of a weak transformer. The transformer has arrived, they're in the process of installing now.

Dante: We want to deliver big time profits.

Todd Felty: Your line is live.

Jesse Allen: We will also upgrade our lightening protection. We've had some downtime as a result of substandard lightening protection, which we'll be upgrading.

Dante: But I tell you, Q3, I think Q3 is going to be better than Q2, but it's probably still going to be negative, but not by much.

Todd Felty: Hey, guys.

Jesse Allen: And then in addition, once we get the transformer installed, we'll be able to install a second, H-pump, which will increase our injection capacity, which of course is very important to our water flood in the Seven Rivers.

Jesse Allen: Our chemical treatments are chemical acidizing treatments.

Jesse Allen: Our chemical treatments are chemical acidizing treatments. As Dante said, this is around $5,500. We're seeing 2X production increase, pay back in less than 30 days on those, some even faster, dependent on the increase. Our seven rivers completion, we're going to be in the range of $150,000. Potential a little higher depending on the number of stages we do, and we expect average increase of 50 barrels all day, pay out less than 60 days.

Dante: And Q4, we're pinning a lot of hopes on.

Todd Felty: I really appreciate you taking my questions.

Jesse Allen: Finally, we purchased a hot oil truck and unit. We use a hot oiler every day, so it made sense to purchase one, which we've done. It mitigates downtime, having our own unit there in the field at 100% availability. In the past, sometimes we had downtime just waiting on getting somebody out there.

Dante: And our promise that we've stated to all of you before, before the end of the year, we'll go past 1,400 barrels a day and we need that for credibility with all of you.

Todd Felty: You know, we've heard a lot about the improvements and the recompletions going on.

Jesse Allen: We estimate at the end of the day that's going to save us about $110,000 per year.

Todd Felty: And when I look at your 10-Q, even if I take out the gain and loss of derivative instruments, I see in the six months of 2023 that you all did just under $14 million in revenues from crude oil and natural gas.

Jesse Allen: Next slide, please.

Jesse Allen: As Dante said, this is around $5,500.

Todd Felty: And then the six months of 2024, you just did over $10 million, which is about a, you, know, 35% drop in revenues.

Jesse Allen: Next, I'll be talking about our development plan, providing a little bit of detail there, for the audience here.

Todd Felty: With all these improvements and recompletions going on, given that the price of oil now, is similar to what it was a year ago, why have the revenues gone down instead of up?

Jesse Allen: Our main zone that we're going after is the Seven Rivers zone, and if you look to the, right there, there is the geologic column there, and you can see that the HMRA zones that we have access to is the Seven Rivers, the Queen, the Greyburg, and the St. Andrews.

Mitch Trotter: All right.

Jesse Allen: In Seven Rivers, we have 100-plus recompletions to do.

Mitch Trotter: Let me take that one, Todd, and I could always talk to you again.

Jesse Allen: We're seeing 2X production increase, pay back in less than 30 days on those, some even faster, dependent on the increase.

Jesse Allen: Anticipate we'll do 20 by the end of the year.

Mitch Trotter: We are not comparable, again, to last to the predecessor in 2023, and it had a lot, to do with, and we have shown the curve in the past.

Jesse Allen: That will develop an additional 15 million barrels of proven reserve, reserves.

Mitch Trotter: The predecessor, the production dropped off from its peak at the later part of 2022 going, into 2023, and it had a steady decline from 1400 to about 900 BPO barrels of oil per day by November, December when we took it over.

Dante: So, and of course, that's not our real number. It's a higher number, but I can't let that out. Otherwise, you'll hold me to that.

Jesse Allen: The San Andres zone, you'll notice, is the deepest of the intervals there.

Dante: And of course, that's not a real number.

Mitch Trotter: So we spent Q1 and Q2 stabilizing it, so you're working off a significantly different volume, of oil that was produced.

Jesse Allen: We have bypass pay and underperforated pay in a lot of wells out there.

Dante: It's a higher number, but I can't let that out.

Mitch Trotter: And so that's, I mean, last year the production was over 90,000, and this year it's around 60. So that's one-third of it went away, and so that had a whole lot to do with it.

Jesse Allen: We anticipate 20 of those by the end of the year.

Dante: Otherwise, you'll hold me to that.

Mitch Trotter: So, and the price, yeah, I think it was similar.

Jesse Allen: That will help us develop 34 million barrels of potential reserves.

Mitch Trotter: If you go back to 22, it was different, so hopefully that answered your question.

Jesse Allen: In addition, as Dante mentioned, I'm going to talk a little bit about our improved well, evaluation and stimulation techniques. One of the things we've done is hired a petrophysicist and well log analyst.

Todd Felty: Yeah, that's great to hear, and if I'm reading between the lines, I think the comparables for Q3, and Q4 should then look a lot better if we reverse the trend.

Jesse Allen: Anybody who's worked the Permian Basin, it's a tough area, and you really need to know, your petrophysics in order to perforate zones that are truly productive.

Dante: So I think with that, I'll just turn it back over to the emcees.

Todd Felty: And then my follow-up is, you know, we're hearing a lot of, especially this week, of politics.

Jesse Allen: We're now using state-of-the-art well log analysis software, which our petrophysicist, is using. It results in targeted focus on perforating the right zones, both in our producers and, injectors in the Seven Rivers, which ultimately ends up increasing production. The cost to perform these recompletions depend on the complexity and what we encounter in, the well.

Operator: So I think with that, I'll just turn it back over to the MCs. And thank you all. Thank you.

Todd Felty: If one of the candidates was to win that, let's say, proposed a ban on fracking, would any of our improvement operations or operations overall be affected by a ban on fracking?

Jesse Allen: Our chemical treatments, our chemical acidizing treatments, as Dante said, are around $5,500. We're seeing 2X production increase. Payback in less than 30 days on those, some even faster, depending on the increase.

Jesse Allen: Our seven rivers completion, we're going to be in the range of $150,000.

Dante: I'll let Dante take that.

Jesse Allen: For Seven Rivers completion, we're going to be in the range of $100,000 to $150,000, potentially a little higher depending on the number of stages we do.

M. Six: I think with that I'll, just turn it back over to the M. Six and thank you all.

Dante: Yeah, I'll take that.

Jesse Allen: We expect an average increase of 50 barrels of oil a day, payouts less than 60 days.

Dante: You know, the ban on fracking affects more new wells than old wells, so when we're dealing, with old wells and we're calling these remedial stimulations or recompletions, we don't think the fracking is going to be, you know, as critical.

Jesse Allen: With that, let's go to the next slide.

Dante: And part of what I hope we convey today is, you know, we're moving toward a fracked sand less frack, meaning what we're really doing is more of, you know, just call them mini-stimulations.

Dante: I turn the presentation back over to Dante, our CEO.

Dante: I mean, a frack that I think concerns the environmentalists are these million pound fracks, with 40 trucks and 40 tanks set at a well site.

Dante: Thanks, Jesse.

Dante: And thank you all.

Jesse Allen: Potential a little higher depending on the number of stages we do, and we expect average increase of 50 barrels all day, pay out less than 60 days.

Dante: We're talking about something that's, you know, not a whole lot different than an acid stimulation.

Dante: I'm going to wrap this up.

Dante: So, I believe if we had the worst, if the worst were to happen to us and they said, you can't exceed the frack gradient in a well bore, we would modify what we do and comply.

Dante: The top bullet to take away from today is that we're a responsible operator.

Dante: And I don't think it would make a whole lot of difference because the folks, on this team for this company are that good.

Dante: Safety is our number one priority.

Dante: You know, you're, I mean, we're not fracking at all with regard to these chemical acid treatments.

Dante: We want to make sure everybody goes home the same way they came.

Speaker Change #120: Thank you. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Dante: But I'll also ask Jesse.

Dante: We also want to take care of the land that we're entrusted with by New Mexico.

Operator: This concludes today's conference, and you may disconnect your timeline at this time. Thank you for your participation.

Dante: Jesse, did I say it right?

Dante: We're happy that we're keeping all the regulatory bodies that are involved happy.

Jesse Allen: I'd like him to weigh in on your question, Todd.

Dante: I want to go back to Jesse's slide for just a second.

Jesse Allen: Yes, as Dante has said, the chemical-slash-acidizing treatments that we're doing, that's safe acid.

Dante: We're not saying to all our investors, we have 300 wells, we only did 24, and we picked, up 100 barrels a day.

Jesse Allen: So this is an acid that you could actually pour on your hands.

Dante: What would you get if you did another 300 wells like those 24?

Jesse Allen: It doesn't work on our tubulars, but it doesn't like calcium carbonate.

Dante: We think everybody can do the simple math.

Jesse Allen: So yes, essentially what Dante has said is correct.

Dante: We just can't believe it would be that easy, and nothing's been that easy yet.

Jesse Allen: We would just modify what we're doing.

Jesse Allen: So with that, let's go to the next slide, and I turn the presentation back over to Dante or CEO.

Dante: On these workovers that Jesse talked about, we're using a lot of science with some high-powered, petroleum and geologic experts here telling us, yeah, you're going to get 50 barrels a day.

M. Six: Thank.

Jesse Allen: And like he said, instead of 40 trucks and 40 tanks out there, we're talking about one, truck and maybe one or two tanks to pump our stimulation.

Operator: Thank you.

Dante: Well, again, 50 barrels a day times 100 wells, I don't want to do that complicated math for, the folks on the call, but my goodness, that's why we're bullish on Q3 and Q4.

Jesse Allen: So a whole level or a whole degree of difference.

Operator: This concludes today's conference, and you may disconnect your lines at this time.

Dante: We're not ready to plant the flag and take a victory lap, but we're saying it's sort, of looking good.

Jesse Allen: And we're not using several hundred thousand barrels of fluid, but about 300 or 400 barrels, of fluid, which our environmentalists really like.

Dante: We need to do a lot more field testing and make sure that we can multiply 300 times a, few wells and 300 times 24 wells to say what this field will do.

Todd Felty: Okay, that's great to hear.

Dante: We can say there's a bright light getting brighter at the end of Q3 and Q4.

Todd Felty: And I really appreciate you taking my questions.

Dante: We already talked about Q1 and Q2. They were impacted by so many – it's really $3 million spent to improve our field condition, in the boring, mundane world of flowline replacement, electrical transformer replacement, satellite tank and valve replacement, those kinds of things.

Todd Felty: Thank you.

Dante: So, I go down to the last bullet here, what are the actions we're going to do?

Operator: Once again, everyone, if you have any questions or comments, please press star, then 1 on your phone.

Dante: For the most part, I mean, we have a billion barrels in place down hole.

Dante: Yeah, thanks, Jesse.

Operator: Your next question is coming from Chris Rucuso from Partner Cap Group.

Dante: That's almost, for us, for our little company, that's almost an infinite supply.

Chris Rucuso: Your line is live.

Dante: So as we attempt to unlock how to get more oil out of each one of these wells, we are, declaring some victory on these chemical treatments and expect at least 250 barrels a day as a sustained production increase by the end of the year.

Dante: I'm going to wrap this up.

Chris Rucuso: Good afternoon, guys.

Dante: You're going to see this thing go higher, but it's going to decline a bit.

Chris Rucuso: Just one question that is macro-based.

Dante: So we're still trying to understand that.

Chris Rucuso: It seems apparent that we're moving into a slowdown here in the United States and we've, been in a macro slowdown in a recessive environment in China for the duration of the year.

Dante: The top bullet to take away from today is that we're a responsible operator.

Dante: The infrastructure improvements, they're coming to an end.

Chris Rucuso: Obviously, these are the two defining oil markets of the globe.

Dante: We still have a few things on our chore list with electrical and mechanical, but the big, nuts behind us, the seven rivers in the San Andreas, low-cost recompletions, these acid jobs are crazy cheap, $5,500, and we don't even use a rig.

Chris Rucuso: If macro softness persists well into 2025, does that have any impact?

Dante: We just move into the well, we put chemical down the backside, we let it set, we circulate, it out, we put a little more chemical down, we circulate it out.

Dante: Does that have any influence on you gentlemen in terms of your production strategy, so to, speak, in the foreseeable future?

Dante: Within five days, we can see what happened.

Dante: Yeah, I'll try to answer this.

Dante: And we're 23 for 24. Any boxer that wins 23 out of 24 fights is a pretty good boxer.

Dante: First of all, Chris, we're hedged up pretty good.

Dante: So we're thinking we're pretty good on these acid things.

Dante: So we're a little bit immune to oil prices through 2025.

Dante: Safety is our number one priority.

Dante: And Mitch could give you more detail on just exactly what the percentage is and what we're, hedged.

Dante: But we're pretty much hedged everywhere at $70.

Dante: We want to make sure everybody goes home the same way they came.

Dante: And so if your question was, would we curtail activity?

Dante: I mean, we're looking at the economics of the return for the money we deploy in the near, term.

Dante: And the second influence is, would the buyer, which is Chevron in our case, need to take less oil?

Dante: We also want to take care of the land that we're there that we're entrusted with by New Mexico, and we're happy that we're keeping all the regulatory bodies that are involved happy.

Dante: But we check that.

Dante: And right now they're saying you could produce four times what you're producing.

Dante: We wouldn't flinch.

Dante: So we think we have a buyer that will let us double, triple, quadruple the production.

Dante: We also think we're hedged pretty good.

Dante: So it's, you know, whoever wins the election, whatever happens in China and Russia, you, know, for us, it's kind of Katy bar the door.

Dante: We're going for it.

Dante: So these chemical acid stimulations are so cheap and the results are so substantial.

Dante: I have a hard time thinking we're not just going to blow and go, you know, through that.

Dante: So that's one.

Dante: Then when you get to the next level of investment, which are the recompletions, you know, it may give us pause if there's some international event out there.

Dante: But for the most part, we're not very big.

Dante: And so if we were to double, triple, quadruple production, I just don't think we're, going to we're going to dent anything.

Dante: Now, if oil prices were to just take a precipitous drop and we were we were we were, naked with no hedge on that, we absolutely would consider that when we deploy capital and maybe we use the money to pay down debt or something else.

Dante: But that's my two cents.

Mitch Trotter: Mitch, do you agree with that?

Dante: I want to go back to Jesse's slide for just a second.

Mitch Trotter: I agree exactly what you said, that we're properly hedged and you asked the percent, again. We're in the 70% range, maybe just a little bit more for the rest of this year and just right at 70 or slightly less for 2025 based on the current level of production.

Mitch Trotter: Production goes up.

Mitch Trotter: We'll still be in the 50 to 60% range for next year.

Dante: We're not saying to all our investors, we have 300 wells, we only did 24, and we picked up 100 barrels a day.

Dante: We're not saying to all our investors, we have 300 wells, we only did 24, and we picked up 100 barrels a day. So what would you get if you did another 300 wells like those 24? We think everybody can do the simple math. We just can't believe it would be that easy, and then nothing's been that easy yet. On these workovers that Jesse talked about, we're using a lot of science with some high powered petroleum and geologic experts here telling us, yeah, you're going to get 50 barrels a day.

Mitch Trotter: So I feel pretty, comfortable in that arena.

Dante: Now maybe one more point Chris on that.

Dante: We do see, I was kind of thinking that the market would drive oil prices up till the election and then oil prices would come down.

Dante: But it's very tough to predict.

Dante: But I would tell you that as a management team, we believe $70, $80, $85 a barrel is a good number.

Dante: So if oil prices were to go up to $85, $90 and as we increase production, I'm confident that Mitch is going to increase our hedging, amount beyond what the banks require.

Dante: So we'll continue to try to buy a cushion against geopolitical unrest through 2025 and beyond as the market gives us opportunities.

Chris Rucuso: Thank you.

Chris Rucuso: That's pretty reassuring.

Dante: If you're telling me that Chevron's willing to waive in, 2X or 3X of what you guys are producing right now, that's a pretty reassuring profile.

Dante: Yeah, they definitely said four times and they said, well, even probably 10 times because, we're small compared to the amount of oil they need.

Dante: So what would you get if you did another 300 wells like those 24?

Dante: They need a lot.

Dante: Exxon needs a lot.

Dante: So if they cut back, then we're in the pipeline.

Dante: So you've got the other big players that want as much oil as possible.

Dante: So I feel pretty good about that.

Dante: We think everybody can do the simple math.

Chris Rucuso: Thank you.

Chris Rucuso: Thank you, Chris.

Chris Rucuso: Thanks.

Dante: We just can't believe it would be that easy, and then nothing's been that easy yet.

Operator: All right.

Dante: On these workovers that Jesse talked about, we're using a lot of science with some high powered petroleum and geologic experts here telling us, yeah, you're going to get 50 barrels a day.

Dante: Well, again, 50 barrels a day times 100 wells.

Dante: I don't want to do that complicated math for the folks on the call, but my goodness, you know, that's why we're bullish on Q3 and Q4.

Dante: But we can say there's a bright light getting brighter at the end of Q3 and Q4. We already talked about Q1 and Q2 that they were impacted by so many, you know, it's really $3 million spent to improve our field condition. And in the boring mundane world of flow line replacement, electrical transformer replacement, you know, satellite, you know, tank and valve replacement, those kind of things.

Dante: We're not ready to plant the flag and take a victory lap, but we're saying it's sort of looking good. So we need to do a lot more field testing and make sure that we can multiply 300 times a few wells and 300 times 24 wells to say what this field will do. But we can say there's a bright light getting brighter at the end of Q3 and Q4.

Dante: We already talked about Q1 and Q2 that they were impacted by so many, you know, it's really $3 million spent to improve our field condition.

Dante: And in the boring mundane world of flow line replacement, electrical transformer replacement, you know, satellite, you know, tank and valve replacement, those kind of things.

Dante: So I go down to the last bullet here, what are the actions we're going to do for the most part?

Dante: So I go down to the last bullet here, what are the actions we're going to do for the most part? I mean, we have a billion barrels in place down, down hole. That's almost for us, for our little company, that's almost an infinite supply. So as we, as we attempt to unlock how to get more oil out of each one of these wells, we are declaring some victory on these chemical treatments and expect at least 250 barrels a day of sustained production increase by the end of the year, and you're going to see this thing go higher, but it's going to decline a bit.

Dante: I mean, we have a billion barrels in place down, down hole.

Dante: That's almost for us, for our little company, that's almost an infinite supply.

Dante: So as we, as we attempt to unlock how to get more oil out of each one of these wells, we are declaring some victory on these chemical treatments and expect at least 250 barrels a day of sustained production increase by the end of the year, and you're going to see this thing go higher, but it's going to decline a bit.

Dante: So we're still trying to understand that.

Dante: So we're still trying to understand that. The infrastructure improvements, they're coming to an end. We still have a few things on our chore list with electrical and mechanical, but the big nuts behind us, the seven rivers in the San Andreas, low-cost, recompletions. These acid jobs are crazy cheap, 5,500, and we don't even use a rig. We just move into the well, we put chemical down the backside, we let it set, we circulate it out, we put a little more chemical down, we circulate it out, within five days we can see what happened, and we're 23 for 24.

Dante: The infrastructure improvements, they're coming to an end.

Dante: We still have a few things on our chore list with electrical and mechanical, but the big nuts behind us, the seven rivers in the San Andreas, low-cost, recompletions.

Dante: These acid jobs are crazy cheap, 5,500, and we don't even use a rig. We just move into the well, we put chemical down the backside, we let it set, we circulate it out, we put a little more chemical down, we circulate it out, within five days we can see what happened, and we're 23 for 24.

Dante: Any boxer that wins 23 out of 24 fights is a pretty good boxer. So we're thinking we're pretty good on these acid things. We need to do the same with these recompletions, that they cost more money, they're 100 grand to 125, and finally, they're the last bullet we want to prove up the 34 million barrels that are behind pipe, and we can't do that without perforating, existing well-bores and stimulating that.

Dante: Any boxer that wins 23 out of 24 fights is a pretty good boxer.

Dante: So we're thinking we're pretty good on these acid things.

Dante: We need to do the same with these recompletions, that they cost more money, they're 100 grand to 125, and finally, they're the last bullet we want to prove up the 34 million barrels that are behind pipe, and we can't do that without perforating, existing well-bores and stimulating that.

Michael Porter: So with that, that's pretty much a wrap for what we have, I'll turn it back over to Mike for Q&A.

Operator: Certainly, at this time, be conducting a question and answer session.

Operator: Certainly, at this time, be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We do ask that participants please ask one question and one follow-up then re-enter the queue. Once again, if you have any questions or comments, please press star 1 on your phone. One moment please, while we poll for questions.

Operator: If you'd like to ask a question, please press star 1 on your telephone keypad.

Operator: A confirmation tone will indicate your line is in the question queue.

Operator: You may press star 2 if you'd like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: We do ask that participants please ask one question and one follow-up then re-enter the queue.

Operator: Once again, if you have any questions or comments, please press star 1 on your phone.

Operator: One moment please, while we poll for questions.

Todd Felty: Your first question is coming from Todd Felty from Agedist Financial.

Operator: Your line is live.

Todd Felty: Hey guys, I really appreciate you taking my questions.

Todd Felty: We've heard a lot about the improvements and the recompletions going on, and when I look at your 10 queue, even if I take out the gain on loss of a derivative instruments, I see in the six months of 2023 that you all did just under 14 million in revenues from crude oil and natural gas, and then the six months of 2024, you just did over 10 millions, which is about a 35 percent drop in revenues with all these improvements and recompletions going on given that the price of oil now is similar to what it was a year ago.

Dante: Why have the revenues gone down instead of up?

Todd Felty: Why have the revenues gone down instead of up? All right, let me take that one, Todd, good to always talk to you again. We're not comparable again to the predecessor in 2023 and I had a lot to do with it and we had shown the curve in the past. The predecessor, the production dropped off from its peak at the later part of 2022 going into 23. In it had a steady decline from 1400 to about 900 BPO barrels of oil per day by November December when we took it over.

Dante: All right, let me take that one, Todd, good to always talk to you again.

Dante: We're not comparable again to the predecessor in 2023 and I had a lot to do with it and we had shown the curve in the past.

Dante: The predecessor, the production dropped off from its peak at the later part of 2022 going into 23.

Dante: In it had a steady decline from 1400 to about 900 BPO barrels of oil per day by November December when we took it over.

Dante: We spent Q1 and Q2 stabilizing it so you're working off a significantly different volume of oil that was produced.

Todd Felty: We spent Q1 and Q2 stabilizing it so you're working off a significantly different volume of oil that was produced. Last year the production was over 90,000 and this year it's around 60 so that's one third of it went away and so that had a whole lot to do with it. The price, yeah I think it was, I'm going to go back to 22 it was different so hopefully that answered your question.

Dante: Last year the production was over 90,000 and this year it's around 60 so that's one third of it went away and so that had a whole lot to do with it.

Dante: The price, yeah I think it was, I'm going to go back to 22 it was different so hopefully that answered your question.

Todd Felty: That's great to hear and now if I'm reading between the lines I think the comparables for Q3 and Q4 should then look a lot better if we reverse the trend and then my follow-up is we're hearing a lot especially this week of politics.

Dante: If one of the candidates was to win that let's say proposed a ban on fracking would any of our improvement operations or operations overall be affected by a ban on fracking.

Dante: If one of the candidates was to win that let's say proposed a ban on fracking would any of our improvement operations or operations overall be affected by a ban on fracking. I'll take that. The ban on fracking affects more new wells than old wells so when we're dealing with all old wells and we're calling these remedial simulations or we don't think the fracking is going to be as critical and part of what I hope we convey today is we're moving toward a fracked sand less fracked meaning what we're really doing is more of you know just calling many simulations.

Dante: I'll take that.

Dante: The ban on fracking affects more new wells than old wells so when we're dealing with all old wells and we're calling these remedial simulations or we don't think the fracking is going to be as critical and part of what I hope we convey today is we're moving toward a fracked sand less fracked meaning what we're really doing is more of you know just calling many simulations.

Dante: I mean a fracked that I think concerns the environmentalists are these million pound fracks with 40 trucks and 40 tanks set at a well site.

Dante: I mean a fracked that I think concerns the environmentalists are these million pound fracks with 40 trucks and 40 tanks set at a well site. We're talking about something that's you know not a whole lot different than an asset simulation so I believe if we had the words if the worst were to happen to us and they said you can't exceed the fracked gradient in a well board. We would modify what we do and comply and I don't think it would make a whole lot of difference because the folks on this team for this company are that good.

Dante: We're talking about something that's you know not a whole lot different than an asset simulation so I believe if we had the words if the worst were to happen to us and they said you can't exceed the fracked gradient in a well board.

Dante: We would modify what we do and comply and I don't think it would make a whole lot of difference because the folks on this team for this company are that good.

Jesse Allen: You know you're I mean we're not fracking at all with regard to these chemical asset treatments but also as Jesse Jesse did I say it right.

Dante: You know you're I mean we're not fracking at all with regard to these chemical asset treatments but also as Jesse Jesse did I say it right. I'd like him to weigh in on your your question. Yes, as Dante has said, the chemical-slash acidizing treatments that we're doing, that's safe acid, so this is an acid that you could actually pour on your hands. It doesn't work on our tubers, but it doesn't like calcium carbonate.

Jesse Allen: I'd like him to weigh in on your your question.

Jesse Allen: Yes, as Dante has said, the chemical-slash acidizing treatments that we're doing, that's safe acid, so this is an acid that you could actually pour on your hands.

Dante: So, yes, essentially what Dante has said is correct. We would just modify what we're doing. And like he said, instead of 40 trucks and 40 tanks out there, we're talking about one truck and maybe one or two tanks to pump our stimulation. So, a whole level or a whole degree of difference, and we're not using, you know, several hundred thousand barrels of fluid in about three or four hundred barrels of fluid, which our environmentalists really like.

Jesse Allen: It doesn't work on our tubers, but it doesn't like calcium carbonate.

Jesse Allen: Okay, that's great to hear and I really appreciate you taking my questions.

Jesse Allen: So, yes, essentially what Dante has said is correct.

Todd Felty: Thank you.

Jesse Allen: We would just modify what we're doing.

Jesse Allen: And like he said, instead of 40 trucks and 40 tanks out there, we're talking about one truck and maybe one or two tanks to pump our stimulation.

Todd Felty: Okay, that's great to hear and I really appreciate you taking my questions.

Todd Felty: Thank you.

Operator: Once again, everyone, if you have any questions or comments, please press star, then one on your phone.

Chris Recuso: Your next question is coming from Chris Recuso from Partner Capgroup.

Chris Recuso: Your next question is coming from Chris Recuso from Partner Capgroup. Your line is live. Good afternoon, guys. I just one question that is macro-based. It seems apparent that we're moving into a slowdown here in the United States, and we've been in a macro slowdown in a recessive environment in China for the duration of the year. Obviously, these are the two defining oil markets of the globe. If macro softness persists well into 2025, does that have any impact?

Operator: Your line is live.

Chris Recuso: Good afternoon, guys.

Chris Recuso: I just one question that is macro-based.

Chris Recuso: It seems apparent that we're moving into a slowdown here in the United States, and we've been in a macro slowdown in a recessive environment in China for the duration of the year.

Chris Recuso: Obviously, these are the two defining oil markets of the globe.

Dante: If macro softness persists well into 2025, does that have any impact?

Dante: Does that have any influence on regimen in terms of your production strategy, so to speak, in the foreseeable future?

Chris Recuso: Does that have any influence on regimen in terms of your production strategy, so to speak, in the foreseeable future? Yeah, I'll try to answer this. First of all, Chris, we're hedged up pretty good. So, we're a little bit immune to oil prices through 25. And Mitch could give you more detail on just exactly what the percentage is and what we're hedged, but we're pretty much hedged everywhere at $70. And so, if your question was, would we curtail activity?

Dante: Yeah, I'll try to answer this.

Dante: First of all, Chris, we're hedged up pretty good.

Dante: So, we're a little bit immune to oil prices through 25.

Mitch Trotter: And Mitch could give you more detail on just exactly what the percentage is and what we're hedged, but we're pretty much hedged everywhere at $70.

Dante: And so, if your question was, would we curtail activity?

Dante: I mean, we're looking at the economics of the return for the money we deploy in the near term.

Chris Recuso: I mean, we're looking at the economics of the return for the money we deploy in the near term. And the second influence is, would the buyer, which is Chevron, in our case, need to take less oil, but we check that. And right now, they're saying you could produce four times what you're producing, we wouldn't flinch. So, we think we have a buyer that will let us double triple quadruple the production. We also happen in China and Russia.

Dante: And the second influence is, would the buyer, which is Chevron, in our case, need to take less oil, but we check that.

Dante: And right now, they're saying you could produce four times what you're producing, we wouldn't flinch.

Dante: So, we think we have a buyer that will let us double triple quadruple the production.

Dante: We also happen in China and Russia.

Dante: For us, it's kind of a Katie Bar the door.

Chris Recuso: For us, it's kind of a Katie Bar the door. We're going for it. These chemical acid stimulations are so cheap and the results are so substantial. I have a hard time thinking we're not just going to blow and go through that. So that's one. Then when you get to the next level of investment, which are the the re completions, it may give us pause if there's some international event out there, but for the most part, we're not very big.

Dante: We're going for it.

Dante: These chemical acid stimulations are so cheap and the results are so substantial.

Dante: I have a hard time thinking we're not just going to blow and go through that.

Dante: So that's one.

Dante: Then when you get to the next level of investment, which are the the re completions, it may give us pause if there's some international event out there, but for the most part, we're not very big.

Dante: And so, if we were to double triple quadruple production, I just don't think we're going to we're going to dent anything.

Chris Recuso: And so, if we were to double triple quadruple production, I just don't think we're going to we're going to dent anything. Now, if oil prices were to just take up precipitous drop and we were we were we were naked with no hedge on that. We'd absolutely would consider that when we deploy capital and maybe we use the money to pay down debt or something else. But that's my two cents. Mitch, do you agree with that?

Dante: Now, if oil prices were to just take up precipitous drop and we were we were we were naked with no hedge on that.

Dante: We'd absolutely would consider that when we deploy capital and maybe we use the money to pay down debt or something else.

Dante: But that's my two cents.

Mitch Trotter: Mitch, do you agree with that?

Mitch Trotter: I agree, exactly what you said.

Chris Recuso: I agree, exactly what you said. We're properly hedged and you asked a percent again. We're in the 70% range. Maybe it's just a little bit more for the rest of this year and just right at 70 are slightly less for 2025 based on the current level of production. Production goes up. We'll still be in the 50 to 60% range for next year. So I feel pretty comfortable in that arena. Now maybe one more point Chris on that.

Mitch Trotter: We're properly hedged and you asked a percent again.

Mitch Trotter: We're in the 70% range. Maybe it's just a little bit more for the rest of this year and just right at 70 are slightly less for 2025 based on the current level of production.

Mitch Trotter: Production goes up.

Mitch Trotter: We'll still be in the 50 to 60% range for next year.

Mitch Trotter: So I feel pretty comfortable in that arena.

Dante: Now maybe one more point Chris on that.

Dante: We do see, you know, I was I was kind of thinking that the market would drive oil prices up to the election and then oil prices would come down.

Chris Recuso: We do see, you know, I was I was kind of thinking that the market would drive oil prices up to the election and then oil prices would come down. But you know, we just it's very tough to predict, but I would tell you that as a management team, we believe 70, 80, 85 dollars a barrel is a good number. So if oil prices were to go up to 85 90 and as we increase production, I'm confident that Mitch is going to increase our hedging amount beyond what the banks require.

Dante: But you know, we just it's very tough to predict, but I would tell you that as a management team, we believe 70, 80, 85 dollars a barrel is a good number.

Dante: So if oil prices were to go up to 85 90 and as we increase production, I'm confident that Mitch is going to increase our hedging amount beyond what the banks require.

Dante: So we'll we'll continue to try to, you know, buy a cushion against geopolitical unrest, you know, through 25 and beyond as as a market gives opportunities.

Chris Recuso: So we'll we'll continue to try to, you know, buy a cushion against geopolitical unrest, you know, through 25 and beyond as as a market gives opportunities. Thank you. That's that's pretty reassuring. If you're telling me that Chevron's willing to wave in two, three X of what you guys are producing right now, that's not really reassuring profile. Thanks. Yeah, they they definitely said four times and they said, well, even probably 10 times because, you know, we're small compared to the amount of oil they need.

Dante: Thank you.

Chris Recuso: That's that's pretty reassuring.

Dante: If you're telling me that Chevron's willing to wave in two, three X of what you guys are producing right now, that's not really reassuring profile.

Dante: Thanks.

Dante: Yeah, they they definitely said four times and they said, well, even probably 10 times because, you know, we're small compared to the amount of oil they need.

Dante: They they need a lot, X on needs a lot.

Chris Recuso: They they need a lot, X on needs a lot. So if they cut back then we're in the pipeline. So you've got the other big players that won as much oil as possible. So feel pretty good about that. Chevron, thank you. Thank you. Thank you, Chris. Thanks. All right. Thank you. There are no further questions in the queue.

Dante: So if they cut back then we're in the pipeline.

Dante: So you've got the other big players that won as much oil as possible.

Dante: So feel pretty good about that.

Dante: Chevron, thank you.

Dante: Thank you.

Operator: Thank you, Chris.

Operator: Thanks.

Operator: All right.

Operator: Thank you.

Operator: There are no further questions in the queue.

Dante: Well, holy cow, guys, they're easy on us.

Dante: Well, holy cow, guys, they're easy on us. Look, all of us, all of us spelled Q1 and Q2 were were no fun. You know, we wanted to deliver, you know, big time profits, but I tell you, Q3, I think Q3 is going to be better than Q2, but it's it's probably still going to be negative, but not by much. And Q4, we're pinning a lot of hopes on. And our promise that we've stated to all of you before before the end of the year, we'll go past 1400 barrels a day and we need that for credibility with all of you.

Dante: Look, all of us, all of us spelled Q1 and Q2 were were no fun.

Dante: You know, we wanted to deliver, you know, big time profits, but I tell you, Q3, I think Q3 is going to be better than Q2, but it's it's probably still going to be negative, but not by much.

Dante: And Q4, we're pinning a lot of hopes on.

Dante: And our promise that we've stated to all of you before before the end of the year, we'll go past 1400 barrels a day and we need that for credibility with all of you.

Dante: So and of course, that's not our real number.

Dante: So and of course, that's not our real number. It's a higher number, but I can't let that out. Otherwise, you'll hold me to that. So I think with that, I'll just turn it back over to the MCs. And thank you all. Thank you.

Dante: It's a higher number, but I can't let that out.

Dante: Otherwise, you'll hold me to that.

Dante: So I think with that, I'll just turn it back over to the MCs.

Michael Porter: And thank you all.

Operator: Thank you.

Operator: This concludes today's conference and you may disconnect your timeline at this time.

Operator: Thank you for your participation.

Q2 2024 HNR Acquisition Corp Earnings Call

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