Q2 2024 HNR Acquisition Corp Earnings Call

August 21, 2024

Operator: Greetings.

Greetings and 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 Corp. 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: Your next question is coming from Chris Rucuso from Partner Cap Group.

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

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: <unk> 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.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please.

Operator: Please note this conference is being recorded.

Speaker Change: Please note this conference is being recorded.

Matt: I will now turn the conference over to your host, Michael Porter, and Vester 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 will now turn

Chris Rucuso: Your line is live.

Operator: I will now turn

Michael Porter: Thank you, Matt.

Michael Porter: Thank you, Matt good afternoon, ladies and gentlemen.

Dante: Good afternoon, ladies and gentlemen. First, the forward-looking statement. This conference call includes forward-looking statements within the meaning 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.

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 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 <unk>.

Operator: the conference over to your host, Michael Porter, and best relations for the company.

Chris Rucuso: Good afternoon, guys.

Operator: the conference over to your host, Michael Porter, and best relations for the company.

Operator: You may begin.

Chris Rucuso: Just one question is macro-based.

Operator: You may begin.

Michael Porter: Thank you, Matt.

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.

Michael Porter: Thank you, Matt.

Michael Porter: Good afternoon, ladies and gentlemen.

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

Michael Porter: Good afternoon, ladies and gentlemen.

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: First, a forward-looking statement.

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.

Dante: Included in the availability of all the material that you received that is listed with the Securities and Exchange Commission and can be left under www.scc.gov. It is except as expressly required by applicable security law.

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: 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.

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

Speaker Change:

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.

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

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

Speaker Change: The call is yours.

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.

Chris Rucuso: If macro softness persists well into 2025, does that have any impact, does that have, any influence on you gentlemen in terms of your production strategy, so to speak, in the foreseeable future?

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.

Dante: Thank you, Mike. 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, the potentially invest in us.

Speaker Change: Thank you, Mike really appreciates 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 for myself.

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

Dante: So, for the next 30 minutes, you're going to hear from myself, you're going to hear from Mitch Trotter, R.C.F.O., and then you're going to hear from Jesse Allen, our Vice President of Operations. 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. So, I had to get that commercial. Q2 was much better than Q1.

Speaker Change: On the ear from Mitch Straughter, our CFO and then you're going to hear from Jesse Allen, Our vice President of operations.

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

Dante: First of all, Chris, we're hedged up pretty good, so we're a little bit immune to oil, prices through 2025, 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?

Speaker Change: First of all.

Michael Porter: events, or otherwise.

Dante: But we checked 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.

Michael Porter: events, or otherwise.

Speaker Change: Bob.

Speaker Change: I'd like to just say.

Speaker Change: You know the analysts are pegging, our stock value at four to $7 a share and those of you that.

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

Dante: We also think we're hedged pretty good, so whoever wins the election, whatever happens, in China and Russia, for us, it's kind of Katy bar the door, we're going for it.

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

Are 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 of today's pricing levels. So I had to give that commercial.

Dante: The call is yours.

Dante: Thank you, Mike.

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 to profitability and we plan to do both.

Dante: However, we did not deliver a profit, but it was a much smaller loss.

Dante: Really appreciate that.

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.

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: 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: 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.

Speaker Change: So our our our top.

Speaker Change: 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 an 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 doubled production in the wells we did that with. You're going to get all those details coming at you from Jesse. And those treatments, on average, cost about 5,500 to well. And we've done normally 24 wells. We've got 342 total wells.

Dante: First of all, I'd like to just say, you know, the analysts are pegging our stock value at four to seven dollars, a share.

Speaker Change: So first of all we issued a press release this morning about a test pilot.

Dante: So 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.

Speaker Change: Our 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 well and we've done normally 24 wells we've got 340.

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.

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

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

Dante: So, I had to give that commercial.

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

Jesse Allen: Two total wells so simple math would tell you we've got a long way to go.

Dante: 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 Jesse Allen. Q2 had a substantial reduction in optics, 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.

Dante: Now if oil prices were to just take a precipitous drop, and 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.

Jesse Allen: We also developed field specific frac procedures, because half of what the previous owner was spending on the without any compromise on the sustainability or the maximum production that those will make again youre going to hear about that from from Jess yelling.

Mitch Trotter: But that's my two cents.

Dante: Q2 was much better than Q1.

Jesse Allen: Q2 had a substantial reduction in Opex and we spent a lot of of Capex on repairing and improving our field infrastructure on average we spend a million and a half in Q1 and another $1 million in Q2, these things together position.

Speaker Change: Does the increase oil production without interruption.

Dante: We also negotiated with the seller a credit that also impacted our Q2 financials substantially. 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, and all these things help us with our runtime, so we're not down due to well plugging or flow line plugging. And in the end, what everybody wants, and certainly what all of us in the management team want, our board want, is uninterrupted oil production that we sell each month on an increasing basis, and I'm happy to report the numbers are moving up.

Speaker Change: We also negotiated with the seller a credit that also impacted our.

Speaker Change: Q2, our financial substantially youre going to hear about that.

Mitch Trotter: Mitch, do you agree with that?

Speaker Change: Permit.

Speaker Change: Ah you're gonna 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 of a hot oil machine and all of them.

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.

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 one is uninterrupted oil 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 to profitability, and we plan to do both.

Mitch Trotter: Production goes up.

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 and 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 and we've just those are one time costs and we've just got to we've just got to pay them off and 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.

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

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

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

Speaker Change: 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. It was yes. Those those are one time costs and we've just got it.

Dante: 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.

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

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

Mitch Trotter: Now maybe one more point Chris on that.

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

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

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

Dante: We've got

Dante: But it's very tough to predict.

Dante: 342 total wells.

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

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

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

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.

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.

Dante: We also developed field-specific frack 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: So we'll continue to try to buy a cushion against geopolitical unrest through 2025 and, beyond as the market gives us opportunities.

If we increase oil production by 100 barrels a day.

Speaker Change: We assume $70 oil and our NRI of 74% that's $157000 a month.

Chris Rucuso: Thank you.

If we increase it by 300 barrels a day, that's about a half million dollars a month to our net our debt and then if we increase it by 500 barrels a day.

Chris Rucuso: That's pretty reassuring.

Speaker Change: We're at 787000 a month.

Speaker Change: Our two are good.

Chris Rucuso: And you're telling me that Chevron's willing to waive in 2, 3x of what you guys are producing, right now.

We've just these little 24.

Speaker Change: The 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.

Chris Rucuso: That's a pretty reassuring profile.

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

Chris Rucuso: Thanks.

Speaker Change: Yeah.

Q3, and Q4 into 2025, we see 100 to 200 re completions.

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

Speaker Change: And.

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 already at 26 before we need to drill because we see so much opportunity just laying on the ground.

Chris Rucuso: Yeah.

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

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

Mitch Straughter: Thank you Dante.

Dante: So, I had to give that commercial.

Dante: Q2 was much better than Q1.

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

Dante: 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.

Mitch Straughter: 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.

Mitch Straughter: 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 are on all 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 HnrA. 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.

Dante: Q2 had a substantial reduction in OPEX, and we spent a lot of CAPEX on repairing and improving our field infrastructure. On average, we spent $1.5 million in Q1 and another $1.5 million 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: They need a lot.

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 that caught me a little bit better this will roll into little bit later, Jesse how he'll explain these results are leading to increasing production.

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

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.

Jesse Allen: 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.

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

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

Dante: Exxon needs a lot.

Jesse Allen: And then like I said before a little bit of insight onto the noncash expenses impacting our financials.

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. You find his name on our website, and he'll schedule one on one. We've done this several times with many people in the past.

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

Mike Porter: 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 expensive to me and that explaining Q1 and Q2 was basically minimal as the price oil had little change.

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

Dante: You saw some press releases.

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

Speaker Change: So please advance to the revenue slide.

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

Dante: We've got

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

Dante: 342 total wells.

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

Speaker Change: Generally <unk> 5 million in cash each quarter.

Dante: So I feel pretty good about that.

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

Dante: Chevron.

Chris Rucuso: Thank you.

Chris Rucuso: Thank you, Chris.

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

Chris Rucuso: Thanks.

Operator: All right.

Speaker Change: Q1 had a noncash GAAP expense of 2 million to that explained in Q1.

Speaker Change: Q2 was basically minimal as the.

Operator: Thank you.

Speaker Change: Price of oil had little change.

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.

Operator: There are no further questions in the queue.

Speaker Change: So what is this noncash impact it.

Dante: Well, holy cow, guys, you're easy on us.

Speaker Change: It's the hedged derivative liability.

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

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 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.

Dante: All of us felt Q1 and Q2 were no fun.

Mitch Trotter: So, in short, that's good for the company because we made more money. Final note: I want to hit oil prices. If it drops dramatically, we've 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.

Dante: We wanted to deliver big time profits.

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.

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.

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 1,400 barrels a day, and we need that for credibility with all of you.

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 restate of Q1 and year-to-date, and you'll see that in the tenant queue that was filed.

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.

Speaker Change: 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 the L. O E call seem out of line with the efforts and.

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

Mitch Trotter: So why this 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 first of feel of a 60% LOE effort and a 40% LOE CAPEX.

Dante: It's a higher number.

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 of a 60% L O effort and a 40% capex.

Dante: But I can't let that out.

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 predecessor. And hence, we have rectified that, and we have a good review process.

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

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

Mitch Trotter: It will not 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; hence, 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: Lastly, on Q1 versus two to it.

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.

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 costs, 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.

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

Speaker Change: Yeah.

Mitch Trotter: With that, let's drill down into the non-cash expenses, so advances live, 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. 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. These were on existing agreements.

With that let's drill down.

Speaker Change: And to the noncash expenses sort of answer slides 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: 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 that 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.

Speaker Change: And these were all 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.

Mitch Trotter: They were just cleaning up a little bit.

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. The warrant and the Ford 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, and if you'll note, Q1 both had big expenses, so that's a very positive.

Speaker Change: And 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.

Speaker Change: Pick up this time of 277000 and.

Speaker Change: Hmm.

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.

Speaker Change: That's a very positive.

Mitch Trotter: I'm just going to go to the last one. Dante's already hit on it. It's a gain from extinguishing 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: And I'm just go to the last one Don to he's already hit on it.

Don: It's a gain from extinguishment of liabilities.

Speaker Change: Giving us a debt and this is a one time gain of opinion too and it happened in Q2, we had a settlement that removed a million seven 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.

Mike border: And that's all I really want to talk about on those again say if you need a deeper dive feel free to reach out to Mike border.

Mitch Trotter: You need a deeper dive. Feel free to reach out to Mike Porter with this.

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

Jesse Allen: I want to pass it on to Jesse to tell you a lot more about what's going on in the field. Thank you. It's advanced to that next slide. Please.

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.

Mike border: Yeah.

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

Jesse Allen: Yes, I'm Jesse Allen. Good afternoon on 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, and all these things help us with our run time so we're not down due to well plugging or flow line plugging.

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

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.

Operator: And thank you all.

Dante: You saw some press releases.

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

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

Operator: Thank you.

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

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.

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

Jesse Allen: And first and foremost. We operate safely. 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.

Operator: Thank you for your participation.

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

Jessie Alan: And our first and foremost.

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.

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

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.

Jesse Allen: They operate safely we had no reportable incidents no offshore reportable incidents.

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.

Jesse Allen: We have no reportable incidents, no OSHA reportable incidents.

Operator: Thank you.

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

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.

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.

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

Mitch Trotter: Thank you, Dante.

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

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.

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

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 HnrA so you understand the company a little bit better.

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

Mitch Trotter: So I will have in a minute three areas I will 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.

Mitch Trotter: Like we have stated in the past, if you need a deeper dive, 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 will schedule one-on-one.

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

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

Mitch Trotter: So please advance to the revenue slide.

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. 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.

Speaker Change: Every evening.

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

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. 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 1555 barrels all the day. And also field improvements work continually optimizing our producing wells, optimization of our injection wells in 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.

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

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.

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

Mitch Trotter: Final note, I want to hit on oil prices.

Mitch Trotter: 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.

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.

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

Mitch Trotter: So why did that happen?

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

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.

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.

Mitch Trotter: So advance the slide, yeah.

Speaker Change: 55 barrels oil a day.

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

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.

Don: And also field improvements.

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

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 per fees that we paid in stock.

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.

Mitch Trotter: And these were on existing, agreements that we're just cleaning up a little bit.

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

Mitch Trotter: 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.

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

Mitch Trotter: So that's a very positive.

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

Mitch Trotter: Dante's already hit on it.

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 clean.

Mitch Trotter: And that's all I really want to talk about.

Mitch Trotter: And I'll again say if you need a deeper dive, feel free to reach out to Mike Porter.

Jesse Allen: And with this, I want to pass it on to Jesse to tell you a lot more about what's going on in the field.

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

Jesse Allen: Thank you.

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

Jesse Allen: Yes, I'm Jesse Allen.

Jesse Allen: We want to make. Talk about our development plan, which is. Our targeted seven rivers work over and then work over to exploit the potential reserves in the Queen, the Grayberg, and the Sinandras.

Jesse Allen: Good afternoon.

Jesse Allen: I'm the VP of Operations.

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

Speaker Change: Our targeted seven rivers workovers in them Workovers to exploit the potential reserves in the AR.

Greetings.

Operator: Greetings. Welcome to the conference call of Hnr Acquisition Corp, concerning financial and erding results for the second quarter and at June 30, 2024. At this time, all participants run a listen-only mode. 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. I will now turn the conference over to your host, Michael Porter, and Vester Relations for the company. You may begin. Thank you, Matt. Good afternoon, ladies and gentlemen.

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

Greetings.

Operator: WelcometotheconferencecallofHnrAcquisitionCorp, concerningfinancialandearningresultsforthesecondquarterendedJune30,2024. Atthistime,allparticipantsareonalisten-onlymode. Aquestionandanswersessionwillfollowtheformalpresentation.

Mitch Trotter: Soifoilpricesweretogoupto$85,$90andasweincreaseproduction,I'mconfidentthatMitchisgoingtoincreaseourhedgingamountbeyondwhatthebanksrequire.

Queen the Gray Bergen the San Andres.

Jesse Allen: Next slide. 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. 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 day increase, about a 2x increase over the before the first phase. That 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.

Speaker Change: Next slide please.

Speaker Change: Yeah.

Speaker Change: Our production trends and 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.

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

Dante: 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.

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

Operator: Ifanyoneshouldrequireoperatorassistanceduringtheconference,pleasepressstarzeroonyourtelephonekeypad.

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

Dante: If we increase it by 500 barrels a day, we're at $787,000 a month to our good.

Speaker Change: Besides working safely and.

Operator: Please note this conference is being recorded.

Operator: Pleasenotethisconferenceisbeingrecorded.

Speaker Change: And how have we done that well over that.

Matt: I will now turn the conference over to your host, Michael Porter, and Vester Relations for the company.

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

Matt: Iwillnowturntheconferenceovertoyourhost,MichaelPorter,andbestrelationsforthecompany.

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

Michael Porter: You may begin.

Michael Porter: Thank you, Matt.

Matt: Youmaybegin.

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.

Dante: Good afternoon, ladies and gentlemen.

Michael Porter: Thankyou,Matt.

Dante: Goodafternoon,ladiesandgentlemen.

Mitch Trotter: Sowe'llcontinuetotrytobuyacushionagainstgeopoliticalunrestthrough2025andbeyondasthemarketgivesusopportunities.

Dante: 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.

Dante: First,aforward-lookingstatement.

Chris Rucus: Thankyou.

Dante: This conference call includes forward-looking statements within the meeting of the private securities litigation reform act of 1995.

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 left 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 fold-looking statements whether as a result of new information further events or otherwise.

Dante: Thisconferencecallincludesforward-lookingstatementswithinthemeetingofthePrivateSecuritiesLitigationReformActof1995thatinvolvesrisksanduncertaintythatcouldcauseactualresultstodiffermateriallyfromwhatisexpected. Wordssuchasexpect,believe,anticipate,intend,estimate,seek,may,might,plan,possible,should,andvariationsinsimilarwordsandexpressionsareintendedtoidentifysuchforward-lookingstatements.

Dante: 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.

Speaker Change: Completed well.

We're now evaluating and we've seen an 80 to 100 barrel per.

Speaker Change: All per day increased about two X increase over the before.

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

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 upgrade.

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.

Jesse Allen: Obviously, we'll monitor those closely to make sure 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 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.

Dante: Buttheabsenceofthesewordsdoesnotmeanthatastatementisnotforward-looking.

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

Dante: Includedintheavailabilityofallthematerialthatyoureceived,itislistedwiththeSecuritiesandExchangeCommissionandcanbelookedunderwww.sec.gov.

Speaker Change: There 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 add to 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 of oil a day.

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

Dante: Itis,exceptasexpresslyrequiredbyapplicablesecuritylaw,thecompanydisclaimsanyintentionorobligationtoupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,furtherevents,orotherwise.

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

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

Jesse Allen: 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 Seven 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 increasing.

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

Dante: I now like to introduce you all to our CEO, Dante. The call is yours. Thank you, Mike. 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, the 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, R.C.F.O., and then you're going to hear from Jesse Allen, our Vice President of Operations.

Dante: I'dnowliketointroduceyoualltoourCEO,Dante.

Chris Rucus: That'sprettyreassuring.

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 seven rivers formation and noticed the curve. There you can see as we've gotten into the end.

Dante: The call is yours.

Dante: Thecallisyours.

Dante: Thank you, Mike.

Dante: Thankyou,Mike.

Dante: Really appreciate that.

Dante: Reallyappreciatethat.

Dante: Thank you all who are for dialing in.

Dante: Thankyouallfordialingin,thosewhoareinvestorsinHNRAstockandthosewhoarelookingatustopotentiallyinvestinus.

Chris Rucus: Andyou'retellingmethatChevron'swillingtowaivein2,3xofwhatyouguysareproducingrightnow.

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

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

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

Jesse Allen: Next slide, please.

Speaker Change: Next slide please.

Dante: So,forthenext30minutes,you'regoingtohearfrommyself,you'regoingtohearfromMitchTrotter,ourCFO,andthenyou'regoingtohearfromJesseAllen,ourVicePresidentofOperations.

Chris Rucus: That'saprettyreassuringprofile.

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. The troubleshoot a lot more easily. We also purchased two portable well-test units, which we can move around the field well-to-well-related basis as needed. In addition, we've upgraded 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.

Speaker Change: 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.

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.

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.

Dante: Firstofall,I'dliketojustsay,youknow,theanalystsarepeggingourstockvalueatfourtosevendollarsashare.

Chris Rucus: Thanks.

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

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

Speaker Change: Our testing in other words.

Mitch Trotter: 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.

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.

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: Andthoseofyouthatareabletolookontheirscreen,youcanseeourstockisn'tatthatlevelyet.

Speaker Change: Troubleshoot a lot more easily.

Mitch Trotter: So I will have in a minute three areas I'm going to focus on.

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

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 one-on-one.

Speaker Change: Purchased two portable well test units, which we can move around the field well to well.

Dante: So,wethinkit'satremendousvalueattoday'spricinglevel.

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. 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.

Dante: So,Ihadtogivethatcommercial.

Dante: Q2 was much better than Q1.

Dante: Q2wasmuchbetterthanQ1. However,wedidnotdeliveraprofit,butitwasamuchsmallerloss.

Speaker Change: Related basis as needed in addition.

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

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 up and then one of our waterflood.

Mitch Trotter: So please advance to the revenue slide.

Dante: Andjustlikeinyourhouseholdbudgeting,wehavetwochoices. Wecanmakemoremoneyorspendlessmoneytogettoprofitability,andweplantodoboth.

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: 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.

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

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

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.

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

Speaker Change: Stations on the scale of unit when.

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

Dante: So,ourtoplinegoalistoincreaseoilproduction.

Chris Rucus: Yeah,theydefinitelysaidfourtimesandtheysaid,well,evenprobably10timesbecausewe'resmallcomparedtotheamountofoiltheyneed. Theyneedalot.

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

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 doubled production in the wells we did that with. You're going to get all those details coming at you from Jesse.

Dante: We'vegotalotofoptimismaboutwhatwe'vebeendoing,andI'mgoingtocheatalittlebitandupdateyoualittlebitbeyondQ2totellyouwhat'sgoingon. So,firstofall,weissuedapressreleasethismorningaboutatestpilotoflow-costchemicalacidtreatmentsthatonaveragehavedoubleproductioninthewellswedidthatwith.

Chris Rucus: Exxonneedsalot.

Mitch Trotter: Final note, I want to hit on oil prices.

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 expense in the in the near future.

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

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

Chris Rucus: Soiftheycutback,thenwe'reinthepipeline.

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 a.

Dante: You'regoingtogetallthosedetailscomingatyoufromJesse.

Chris Rucus: Soyou'vegottheotherbigplayersthatwantasmuchoilaspossible.

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

Dante: Andthosetreatmentsonaveragecostabout$5,500awell,andwe'vedonenominally24wells.

Chris Rucus: SoIfeelprettygoodaboutthat.

Dante: And we've done normally 24 wells.

Dante: We've got 342 total wells.

Speaker Change: A week transformer.

Dante: We'vegot342totalwells.

Chris Rucus: Chevron.

Jesse Allen: The transformer 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 and 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.

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

Speaker Change: Warmer 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 install will be able to install a second age pump, which will increase our.

Dante: So,simplemathwouldtellyouwe'vegotalongwaytogo.

Chris Rucus: Thankyou.

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.

Dante: Wealsodevelopedfield-specificfrackproceduresthatcosthalfofwhatthepreviousownerwasspendingonthesewithoutanycompromiseonthesustainabilityorthemaximumproductionthatthosewillmake.

Chris Rucus: Thankyou,Chris.

Dante: Again, you're going to hear about that from from Jesse Allen. Q2 had a substantial reduction in optics 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 you're going to hear about that from Mitch.

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

Dante: Again,you'regoingtohearaboutthatfromJesseAllen.

Chris Rucus: Thanks.

Dante: Q2hadasubstantialreductioninOPEX,andwespentalotofCAPEXonrepairingandimprovingourfieldinfrastructure.

Michael Porter: Allright.

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

Speaker Change: We use a hot over every day and so it made sense to purchase one which we've done and it mitigates downtime are having our own unit there in the field.

Dante: Onaverage,wespent$1.5millioninQ1andanother$1.5millioninQ2. Thesethingstogetherpositionustoincreaseoilproductionwithoutinterruption.

Michael Porter: Thankyou.

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

Speaker Change: At 100% availability.

Michael Porter: Therearenofurtherquestionsinthequeue.

Speaker Change: <unk> 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. And so we estimated the end of the day, and that's going to save us about $110,000 per year.

Dante: We also negotiated with the seller a credit that also impacted our Q2 financial substantially you're going to hear about that from Mitch.

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

Dante: WealsonegotiatedwiththeselleracreditthatalsoimpactedourQ2financialssubstantially.

Michael Porter: Well,holycow,guys,you'reeasyonus.

Jesse Allen: Next slide, please.

Speaker Change: Next slide please.

Mitch Trotter: That I want to drill into the next slide, which is the lease operating expenses and the LOE and CAPEX.

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

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.

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 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 are the seven rivers between the Greyberg and the Senandres. In seven rivers, we have 100 plus recompletions to do and anticipate we'll do 20 by the end of the year. That'll develop an additional 15 million barrels of proven reserve. Is the deepest of the intervals there.

Dante: You'regoingtohearaboutthatfromMitch.

Michael Porter: AllofusfeltQ1andQ2werenofun.

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

Mitch Trotter: So why this restatement?

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 and all these things help us with our runtime so we're not down due to well plugging or flow line plugging.

Speaker Change:

Mitch Trotter: Well, the LOE cost seemed out of line with the efforts.

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

Mitch Trotter: And, you know, it had 80% LOE and only 20% CAPEX.

Dante: Yousawsomepressreleases.

Michael Porter: Wewantedtodeliverbigtimeprofits.

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

Mitch Trotter: So why did that happen?

Dante: I'lljustbringthemup.

Dante: Theyallfitthethemeofimprovedinfrastructure. Thiswasimprovementstoourelectricalsystem,improvementstomechanical,purchaseofahotoilmachine,andallthesethingshelpuswithourruntimesowe'renotdownduetowellpluggingorflowlineplugging.

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 San Anders.

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

Speaker Change: In seven rivers, we have 100, plus re completions to do anticipate a little due 'twenty by the end of the year that'll develop.

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

Dante: Intheend,whateverybodywantsandcertainlywhatallofusinthemanagementteamwantandourboardwantisuninterruptedoilproductionthatweselleachmonthonanincreasingbasis.

Speaker Change: Additional 15 million barrels of proven reserves.

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

Speaker Change: And Andrew Sone, you'll notice is the deepest of the intervals there.

Mitch Trotter: It will not happen again.

Mitch Trotter: Lastly, on Q1 versus Q2, it does show a Q2 had 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, hence it drove it down some.

Mitch Trotter: And it also drove down the LOE cost per BOE or the lift cost in the 29 range.

Dante: I'mhappytoreportthenumbersaremovingup.

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.

Jesse Allen: We have bypass pay and under perforated pay in a lot of wells out there, anticipate 20 of those by the end of the year that will help us develop 34 million barrels of potential reserves.

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

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

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

Dante: So now I'm going to talk about the outlook for Q3 and Q4 half our story and 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 from legal from accounting from auditing and we've just those are one time costs and we've just got to we've just got to pay them off and our plan to pay those off is from increased production.

Dante: NowI'mgoingtotalkabouttheoutlookforQ3andQ4. HalfourstoryinQ3andQ4isgoingtobeaboutimprovingourfinancialsbycleaninguptheoverhangfromtheacquisition. Wehavealotofprofessionalchargesfromlegal,fromaccounting,fromauditing. Thoseareone-timecostsandwe'vejustgottopaythemoff. Ourplantopaythoseoffisfromincreasedproduction.

Michael Porter: ButItellyou,IthinkQ3isgoingtobebetterthanQ2,butit'sprobablystillgoingtobenegative,butnotbymuch. AndQ4,we'repinningalotofhopeson.

Mitch Trotter: So advance the slide.

Speaker Change: Anticipating 20 of those by the end of the year that will help us develop 34 million barrels of potential reserves.

Mitch Trotter: Yeah.

Dante: ThesecondpartofwhatweseeinQ3andQ4isincreasedoilproduction.

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. 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. And we're now using state-of-the-art well-log analysis software, which our petrophysicist is using. And so 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.

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

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

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

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

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

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: The second part of what we see in Q3 and Q4 is increased oil production and I just want to give an example what increased oil production means to us.

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

Dante: Ijustwanttogiveanexamplewhatincreasedoilproductionmeanstous.

Michael Porter: Andourpromisethatwe'vestatedtoallofyoubefore,beforetheendoftheyear,we'llgopast1,400barrelsaday,andweneedthatforcredibilitywithallofyou.

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 world.

Michael Porter: Soandofcourse,that'snotarealnumber.

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.

Dante: 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. 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 just jump to a million dollars a well.

Dante: Ifweincreaseoilproductionby100barrelsaday,ifyouassume$70oilandourNRIof74%,that's$157,000amonth.

Michael Porter: It'sahighernumber.

Jesse Allen: And the cost to perform these reconpletions dependent on the complexity and what we encounter in the well. But our chemical treatments, our chemical acidizing treatments, as Dante said, are around $5,500. We're seeing two X production increase, pay back in less than 30 days on those, some even faster, depending on the increase. Our seven rivers completion, we're going to be in the range of $150,000, potentially a little higher, depending on the number of stages we do, and we expect an average increase of 50 barrels all the day, pay out less than 60 days.

Dante: Ifweincreaseitby300barrelsaday,that'saboutahalfmilliondollarsamonthtoournetgain.

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

Dante: And if we increase it by 500 barrels a day we're at $787,000 a month to our good.

Dante: Ifweincreaseitby500barrelsaday,we'reat$787,000amonthtoourgood.

Depending on the.

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.

Speaker Change: 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: Justtheselittle24pilottests,chemicalacidjobsincreasedourproductionbyabout100barrelsaday.

Dante: We'rejustbeginning,butI'mtellingyouwe'relookingforwardtoamajorimpacttoourbottomline. IfwewentbeyondQ3andQ4into2025,wesee100to200recompletionsatacostofabout$100,000eachatanaveragecontributionofabout50barrelsaday, andnoneofthatinvolvesadrillbitwherethecostwouldjustjumptoamilliondollarsawell.

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

So with that let's go to the next slide and I turn the presentation back over to Dante Our C E O.

Dante: 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 just jump to a million dollars a well.

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

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

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

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.

Speaker Change: The.

Dante: 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 a new Mexico.

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

Dante: Sowe'reprobablyinthelate25,early26beforeweneedadrillbecauseweseesomuchopportunityjustlayingontheground.

Dante: And where we're we're happy that we're you know we're we're we're keeping all the regulatory bodies that are involved happy.

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 I'm Mitch Trotter and we have talked to many of you in the past earnings calls and a lot of you individually.

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, you know, 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: 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.

Speaker Change: I wanted 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 if you did another 300 wells like those 24, we we think everybody.

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

Mitch Trotter: Nowwiththat,I'mgoingtoturnitovertoMitchtocoverthefinancials.

Michael Porter: ButIcan'tletthatout.

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.

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

Mitch Trotter: Thank you Dante.

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.

Mitch Trotter: Thankyou,Dante.

Michael Porter: Otherwise,you'llholdmetothat.

Mitch Trotter: So that's a very positive.

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

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 HnrA. 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.

Mitch Trotter: Dante's already hit on it.

Mitch Trotter: Again,I'mMitchTrotter,andwehavetalkedtomanyofyouinthepastearningscallsandalotofyouindividually,soIwanttothankyouforattendingagaintoday.

Michael Porter: SoIthinkwiththat,I'lljustturnitbackovertotheemcees.

Mitch Trotter: It's a gain from, extinguishing of liabilities, forgiveness of debt. And this is a one-time gain of $1,000,002. It happened in Q2. We had a settlement that removed $1,007,000 of payables from our balance, sheet to help us close.

Speaker Change: You 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.

Mitch Trotter: Cleanup.

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

Mitch Trotter: And that's all I really want to talk about, and 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: 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.

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.

Mitch Trotter: WewilldrilldownintoQ2alittlebit,andasDantehadstated,itisbetter.

Michael Porter: Andthankyouall.

Jesse Allen: on in the field.

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

Jesse Allen: 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, 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.

Mitch Trotter: It'saboutwhatwehadprojectedonthebasecostwhenwedidQ1.

Michael Porter: Thankyou.

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

Jesse Allen: Yes.

Speaker Change: 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 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.

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 you find his name on our website and he'll schedule one on one we've done this several times with many people in the past.

Mitch Trotter: Butinthiscall,IwanttogivealittlebitmoreinsightintotheresultsandoperationsofHnrAsoyouunderstandthecompanyalittlebitbetter. Thiswillrollintoalittlebitlater,Jesse,howhe'llexplaintheseresultsareleadingtoincreasingproduction.

Michael Porter: Thisconcludestoday'sconference. Andyoumaydisconnectyourlinesatthistime. Thankyouforyourparticipation.

Mitch Trotter: SoIwillhaveinaminutethreeareasI'mgoingtofocuson.

Michael Porter: Thankyou.

Dante: 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. 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.

Speaker Change: So we need to do a lot more field testing and make sure that that we can multiply 300 times times a few wells in 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 Q.

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 you find his name on our website and he'll schedule one on one we've done this several times with many people in the past.

Mitch Trotter: Therevenuecomponent,thedrilldownintoleaseoperatingexpensesandcapitalexpenditures,andthenlikeIdidbefore,alittlebitofinsightontothenon-cashexpensesimpactingourfinancials. Likewe'vestatedinthepast,ifyouneedadeeperdive,andsinceitisaconferencecallwithalotofpeople,pleasefeelfreetoreachouttoMikePorter,youcanfindhisnameonourwebsite,andhe'llscheduleone-on-one.

Speaker Change: Three in Q4, we already talked about Q1, and Q2 that they were impacted by so many you know there'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.

Mitch Trotter: We'vedonethisseveraltimeswithmanypeopleinthepast.

Mitch Trotter: So please advance the revenue slide.

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 expensive to me and that explaining Q1 and Q2 was basically minimal as the price oil had little change.

Mitch Trotter: Sopleaseadvancetotherevenueslide.

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.

Mitch Trotter: SothesalesforQ1andQ2foroilandgaswereverysimilar,generating$5millionincasheachquarter. Steadyproductionandlittlechangeintheaveragepricesbroughtinthe$5millionbothtimes. Now,therewasanetdifferencebetweenthetwoquartersbecauseofthederivativenon-cashimpact. Q1hadanon-cashgapexpenseof$2millionthatIexplainedinQ1,andQ2wasbasicallyminimalasthepriceofoilhadlittlechange.

Speaker Change: You know taken valve replacement those kinds of things. 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 downhole that's almost for.

Mitch Trotter: Now there wasn't that difference between the two quarters because of the derivative non cash impact.

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 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.

Mitch Trotter: Sowhatisthisnon-cashimpact?

Mitch Trotter: Q1 had a non cash gap expensive to me and that explaining Q1 and Q2 was basically minimal as the price oil had little change.

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: 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: It'sthehedgederivativeliability,andit'sacontingentliabilitycalculatedattheendofeachquarter.

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

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: Soit'snotsomethingthatyoupay,it'sjustoverthenexttwoyears.

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 if oil price goes down we have a positive on Q1 oil price went up significantly so hence the theoretical expense.

Mitch Trotter: Sothemarketpricechangedoeshaveaninverseimpactontheincomestatement. Soifoilgoesup,wegetanegativehit,andviceversa.

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 and the San Andreas low cost recompletions, these acid jobs are crazy cheap, 5500, 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 circulated out; we put a little more chemical down. We circulated 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.

Mitch Trotter: Ifoilpricegoesdown,wehaveapositive.

Mitch Trotter: OnQ1,oilpricewentupsignificantly,sohencethetheoreticalexpense.

Speaker Change: But the the big nuts behind us the seven rivers in the San Andreas low cost really 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: 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. Final note I want to hit oil prices if it drops dramatically we've 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: Soinshort,that'sgoodforthecompanybecausewemademoremoney.

Mitch Trotter: Final note I want to hit oil prices if it drops dramatically we've responsibly hedged to protect the company to cover debt service and base operating expenses.

Mitch Trotter: Finalnote,Iwanttohitonoilprices.

Mitch Trotter: Ifitdropsdramatically,weresponsiblyhedgedtoprotectthecompany,tocoverdebtserviceandbaseoperatingexpenses.

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: 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 is 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 they cost more money there.

Mitch Trotter: Wehave70%plusorminushedgedover$70allthewaythroughtheendof2025, life.

Mitch Trotter: ThatIwanttodrillintothenextslide,whichistheleaseoperatingexpensesandtheLOEandCAPEX.

Dante: So we're thinking we're pretty good on these acid things. We need to do the same with these recompletions; they cost more money, they're 100 grand to 125. And finally, there 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 boards and stimulating that.

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 restate of Q1 and year-to-date, and you'll see that in the tenant queue that was filed. So why this 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 first of feel of a 60% LOE effort and a 40% LOE CAPEX.

Mitch Trotter: InQ1,wedidhaveareductionof$824,000ofLOEfromwhatwepresentedbefore.

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 so.

Mitch Trotter: The earnings have been restate of Q1 and year-to-date, and you'll see that in the tenant queue that was filed.

Mitch Trotter: TheearningshavebeenrestatedforQ1andyear-to-date,andyou'llseethatinthe10-Qthatwasfiled.

Mitch Trotter: So why this restatement?

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.

Jesse Allen: I'm Jesse Allen.

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

Mitch Trotter: Sowhythisrestatement?

Mitch Trotter: Well, the LOE calls seemed out-of-line with the efforts, and you know, it had 80% LOE and only 20% CAPEX.

Mitch Trotter: Well,theLOEcostseemedoutoflinewiththeefforts.

Operator: Certainly, at this time, be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star two if you'd like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Mitch Trotter: And,youknow,ithad80%LOEandonly20%CAPEX. Managementdidadeepreviewandwerestatedit,andbothquartersareverysimilartowhatoureffortsversusthefeelofa60%LOEeffortanda40%CAPEX.

Mike: 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.

Jesse Allen: Good afternoon.

Jesse Allen: I'm the VP of Operations.

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

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

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.

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

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

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 of oil a day.

Jesse Allen: And also, field improvements, 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.

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 St. Andrews.

Jesse Allen: Next slide, please.

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.

Mitch Trotter: So why did that happen?

Mitch Trotter: So why did that happen? Well, the systems we inherited were not adequate for our needs or it's adequate for the predecessor. And hence, we have rectified that, and we have a good review process. It will not 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, hence 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 costs, 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.

Mitch Trotter: Sowhydidthathappen?

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

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

Mitch Trotter: Well,thesystemsweinheritedwerenotadequateforourneedsorit'sadequateforthepredecessor. Andhence,wehaverectifiedthatandwehaveagoodreviewprocess. Itwillnothappenagain.

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

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.

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

Mitch Trotter: It will not happen again.

Todd Felty: Your first question is coming from Todd Felty from Ages Financial. Your line is live. Hey guys, I really appreciate you taking my questions. You know we've heard a lot about the improvements and the recompletions going on, and when I look at your 10-Q, even if I take out the gain on 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. And then the six months of 2024 you just did over 10 million, which is about a 35% 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.

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, hence it drove it down some, and it also drove down the LOE cost per BOE or the lift cost and the 29 range.

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.

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

Mitch Trotter: Lastly,onQ1versusQ2,itdoesshowaQ2hadimprovementof85,excuseme,$65,000permonth,aswereallyfocusedalittlebitlongerinQ2onthelong-termbenefitsintheCAPEX,henceitdroveitdownsome.

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.

Jesse Allen: And what these do is remove scale buildup that restricts flow around the wellbore.

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.

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 oil per day increase, about, 2X increase over the before.

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.

Mitch Trotter: AnditalsodrovedowntheLOEcostperBOEortheliftcostinthe29range.

Speaker Change: Use from crude oil and natural gas and then the six months of 2024, you just did over 10 millions, which is about a 35% drop in revenues.

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, as we've always stated, that's where we want to get to.

Mitch Trotter: Now,we'retakingactionstofurtherreducecostandourtargetis19bytheendoftheyear,beginningofnextyear. Aswe'vealwaysstated,that'swherewewanttogetto.

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.

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

Mitch Trotter: With that, let's drill down into the non-cash expenses, so advances live, 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. Number one, the hedging derivative we've already touched.

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: Withthat,let'sdrilldownintothenon-cashexpenses.

Mitch Trotter: Soadvancetheslide.

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

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

Mitch Trotter: Yeah.

Mitch Trotter: JustlikeinQ1,Iwanttotalkaboutafewthings.

Mitch Trotter: If you look to the right, the table has the numbers right out of Q2, they come from the file tin.

Dante: All right, let me take that one, Todd, and good to always talk to you again. We're not comparable again to last 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, 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. So we spent Q1 and Q2 stabilizing it. So you're working off a significantly different volume of oil that was produced, and so that's last year the production was over 90,000, and this year it's around 60.

Speaker Change: Alright, let me take that one cotton good always talk to you again.

Mitch Trotter: Ifyoulooktotheright,thetablehasthenumbersrightoutofQ2.

Speaker Change: <unk>.

Mitch Trotter: Theycomefromthefile,Timmy. Iputthemtherewithsomereferencenumberssothatyoucanfollowalong.

Mitch Trotter: I put them there with some reference numbers so that you can follow along.

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

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

Mitch Trotter: 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.

Mitch Trotter: I'mnotgoingtohitthemall.

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

Mitch Trotter: Numberone,thehedgingderivativeswe'vealreadytouched.

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. 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.

Mitch Trotter: Andnumbertwo,theG&A,itdoesincludenon-cash,$574,000inQ1and$360,000inQ2forfeesthatwepaidinstock.

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: These were on existing agreements.

Mitch Trotter: Andthesewereonexistingagreementsthatwe'rejustcleaningupalittlebit.

Mitch Trotter: They were just cleaning up a little bit.

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.

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

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.

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

Jesse Allen: And notice the curve there.

Mitch Trotter: Itbetterpositionsthecompanygoingforwardandultimatelyimprovesourcashandbalancesheetpositions.

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

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

Mitch Trotter: Thegroupnumberthreeandfourtogether,thewarrantandtheforwardpurchaseagreementliability,theygetassessedattheendofeachquarter. Theresultswereapickupthistimeof$277,000inthewarrantliabilityand$24,000intheFPAliabilityinQ2.

Mitch Trotter: The warrant and the Ford purchase agreement liability, they get assessed at the end of each quarter.

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

Mitch Trotter: The results were a pickup this time of 277,000 in the warrant liability and 24,000 in the FPA liability in Q2, and if you'll note, Q1 both had big expenses, so 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 extinguishing 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. 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 with this.

Speaker Change: Of of oil that was you.

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.

Speaker Change: You know produced in and so that's a I mean last year production was over 90000.

Mitch Trotter: Andifyou'llnote,Q1bothhadbigexpenses.

Speaker Change: And this year, it's around 60, so that's a one third of it went away.

Dante: So that's one third of it, one away, and so that had a whole lot to do with it. So, in the price, yeah I think it was. I'm going to go back to 22. It was different.

Mitch Trotter: Sothat'saverypositive.

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

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

Mitch Trotter: Dante's already hit on it.

Mitch Trotter: AndI'mjustgoingtogotothelastone.

Mitch Trotter: It's a gain from extinguishing 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.

Mitch Trotter: Dante'salreadyhitonit.

Speaker Change: And the price Yeah, I think it was similar if we go back to 'twenty two is different so hopefully that answered your question, yeah, well, that's great to hear and I, if I'm reading between the lines.

Mitch Trotter: It'sagainfromextinguishingofliabilities,forgivenessofdebt.

Todd Felty: Hopefully, that answered your question. That's great to hear.

Mitch Trotter: Andthisisaone-timegainof$1,000,002. IthappenedinQ2. Wehadasettlementthatremoved$1,007,000ofpayablesfromourbalancesheettohelpusclose.

Dante: 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, you know, we're hearing a lot of 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? I would don't take that.

Mitch Trotter: Cleanup.

Speaker Change: I think the Comparables for Q3 and Q4.

Speaker Change: Should then look a lot better if we reverse the trend and then my follow up is you know we're hearing a lot of especially this week of politics.

Mitch Trotter: And that's all I really want to talk about and goes again safe.

Mitch Trotter: Andthat'sallIreallywanttotalkabout,andagain,sayifyouneedadeeperdive,feelfreetoreachouttoMikePorter.

Mitch Trotter: You need a deeper dive.

Mitch Trotter: Feel free to reach out to Mike Porter with this.

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

Mitch Trotter: I want to pass it on to Jesse to tell you a lot more about what's going on in the field.

Mitch Trotter: Andwiththis,IwanttopassitontoJessetotellyoualotmoreaboutwhat'sgoingoninthefield.

Speaker Change: One of 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.

Jesse Allen: Thank you.

Jesse Allen: Thank you. It's advanced to that next slide. Please. Yes, I'm Jesse Allen.

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? It was important to upgrade our well test facilities, which we've done, to troubleshoot, a lot more easily.

Jesse Allen: It's advanced to that next slide.

Mitch Trotter: Thankyou.

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.

Jesse Allen: Let'sadvancetothatnextslide,please.

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.

Jesse Allen: 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.

Jesse Allen: Please.

Jesse Allen: Yes, I'm Jesse Allen.

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 weak transformer. The transformer has arrived, they're in the process of installing now.

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.

Jesse Allen: Good afternoon on the VP of operations.

Jesse Allen: Good afternoon on the VP of operations. And first and foremost. We operate safely. 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.

Jesse Allen: Yes.

Jesse Allen: I'mJesseAllen.

Speaker Change: I'll, let Don take that yeah. It's a good him you know the the.

Jesse Allen: Goodafternoon.

Jesse Allen: I'mtheVPofOperations.

Dante: I'll take over to him. You know, 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 recomplicions, we don't think the fracking is going to be, you know, as critical. And part of what I hope we convey today is, you know, we're moving toward a fracked sand less fracked, meaning what we're really doing is more of, you know, just call them 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.

Jesse Allen: And first and foremost.

Jesse Allen: Andfirstandforemost,weoperatesafely. Wehavenoreportableincidents,noOSHAreportableincidentssofarthisyear. Andthat'sagoodthing. Ourfieldemployeesdoanexcellentjobofworkingsafely. Wewanteachofthemtogohomeeveryevening.

Jesse Allen: We operate safely.

Speaker Change: The the ban on fracking.

Speaker Change:

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.

Jesse Allen: I'm going to talk a little bit about our production trends.

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 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 1555 barrels all the day. And also field improvements work continually optimizing our producing wells optimization of our injection wells in 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.

Jesse Allen: I'mgoingtotalkalittlebitaboutourproductiontrends.

Jesse Allen: They're increasing and note the chart there on the right.

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

Jesse Allen: They'reincreasing.

Jesse Allen: Andnotethechartthereontheright.

Jesse Allen: First quarter, we averaged about 963 second quarter.

Jesse Allen: Firstquarter,weaveragedabout963.

Jesse Allen: 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 1555 barrels all the day.

Jesse Allen: Secondquarter,itwasdownalittlebit. Butcurrently,andasDantehasalludedto,we'vebeendoingsomeworktogetthatproductionup.

Speaker Change: Frac sand less frac, meaning what we're really doing is more of a.

Jesse Allen: Andcurrently,we'reabout1,055barrelsofoiladay.

Speaker Change: You know it.

Jesse Allen: And also field improvements work continually optimizing our producing wells optimization of our injection wells in our water flood.

Speaker Change: Just call a mini stimulations I mean.

Jesse Allen: Andalso,fieldimprovements,we'recontinuallyoptimizingourproducingwells,optimizationofourinjectionwellsandourwaterflood.

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.

Jesse Allen: And as it has been mentioned by Dante, our infrastructure upgrades to help us maintain, we're getting the old out of the ground.

Jesse Allen: AndashasbeenmentionedbyDante,ourinfrastructureupgradestohelpusmaintain,ifwe'regettingtheoiloutoftheground,wewanttomakesurewe'regettingtheoiloutoftheground.

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

Jesse Allen: We want to make.

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 for.

Jesse Allen: Talk about our development plan, which is.

Jesse Allen: We'lltalkaboutourdevelopmentplan,whichisourtargetedSevenRiversworkoversandthenworkoverstoexploitsomepotentialreservesintheQueen,theGreyburg,andtheSt.

Jesse Allen: Our targeted seven rivers work over and then work over to exploit the potential reserves in the Queen, the Grayberg and the Sinandras.

Jesse Allen: Next slide.

Jesse Allen: Next slide. Our production trends, as I've said production is increasing my focus and my field teams focus is to increase our daily oil production. That's our number one goal. Besides working safely.

Jesse Allen: Andrews.

Jesse Allen: Nextslide,please.

Jesse Allen: Our production trends, as I've said production is increasing my focus and my field teams focus is to increase our daily oil production.

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

Jesse Allen: Ourproductiontrends,asI'vesaid,productionisincreasing. Myfocusandmyfieldteam'sfocusistoincreaseourdailyoilproduction. That'sournumberonegoal,besidesworkingsafely.

Jesse Allen: You know, you're, I mean, we're not fracking at all with regard to these chemical acid treatments, but I also asked Jesse, Jesse, did I say it right? I'd like him to weigh in on your question. Yes, as Dante has said, the chemical-spice-acidizing treatments that we're doing, that's safe acid; so this is an acid that you could actually pour on your hand. 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.

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

Jesse Allen: That's our number one goal.

Jesse Allen: Besides working safely.

Jesse Allen: And how have we done that?

Jesse Allen: 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 day increase about 2x increase over the before the first phase that 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. Obviously, we'll monitor those closely to make sure we we continue to increase production.

Jesse Allen: 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.

Jesse Allen: Andhowhavewedonethat?

Jesse Allen: Well,towardtheendofthesecondquarterandasweweregettingintothethirdquarterhere,westarteddoingsomechemicalacidstimulations. Andwhatthesedoisremovescalebuildupthatrestrictsflowaroundthewellbore.

Speaker Change: Yes.

Speaker Change: As Dante has said the chemical.

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

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

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 the first phase that 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. Obviously, we'll monitor those closely to make sure we we continue to increase production.

Jesse Allen: Wedidapilotprogramof24wells,whichwe'vecompleted. We'renowevaluatingandwe'veseenan80to100barrelperoilperdayincrease,about2Xincreaseoverthebefore.

Speaker Change: But it doesn't like calcium carbonate so yes, what essentially what Dante has said is correct. We would just modify what we're doing and the 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.

Jesse Allen: Thefirstphase,we'regoingtomoveaheadwiththenextphaseoftheproject,wherewe'llprobablydoanywherefrom50to100additionalwells.

Todd Felty: So, a whole level or a whole degree of difference, and we're not using several hundred thousand barrels of fluid, going about three or four hundred barrels of fluid, which our environmentalists really like. Okay, that's great to hear, and I really appreciate you taking my questions. Thank you. Once again, everyone, if you have any questions or comments, please press star, then one on your phone.

Speaker Change: Oh, oh level or a whole degree of of difference and we're not using.

Jesse Allen: We'llmonitorthosecloselytomakesurewecontinuetoincreaseproduction.

Speaker Change: Yeah.

Jesse Allen: And then as I mentioned our artificial lift optimization and upgrades are an ongoing program for us. Use of our pump up 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.

Speaker Change: 100000 barrels of fluid.

Jesse Allen: Andthen,asImentioned,ourartificialliftoptimizationandupgradesareanongoingprogramforus.

Speaker Change: Three or 400 barrels of fluid, which okay, an environmentalist really like.

Jesse Allen: Useofourpump-offcontrollerstomakesurewe'rerunningthewellsandgettingeverydropofoilwecanoutofeachoftheproducingwells.

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

Jesse Allen: 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: 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.

Jesse Allen: We'vedoneseveralpumpupgradeswhereweconvertedawelltosuckerrodlifttoaprogressivecavitypump. Verysuccessfulthere. Weendedupgoingfromabout10barrelsofoiladayto35to40barrelsofoiladayonthefirstonewedid.

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

Jesse Allen: 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.

Chris Recuso: Your next question is coming from Chris Recuso from Partner Cap Group. 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 the recess of the 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? Does that have any influence on your production strategy, so to speak, in the foreseeable future?

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

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

Jesse Allen: 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 seven rivers formation.

Jesse Allen: 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 seven 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 increasing.

Speaker Change: Yeah.

Speaker Change: Good afternoon guys.

Jesse Allen: Andwecontinuallymakesurethatwe'reputtingthewaterwewanttointheareasofthefieldinourinjectionwellstooptimizeourwaterfloodintheSevenRiversFormation.

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: Next slide, please.

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

Jesse Allen: Our main zone that we're going after is the Seven Rivers zone.

Jesse Allen: 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 increasing.

Jesse Allen: If you look to the right there, there is the geologic column there.

Jesse Allen: You can see that the HMRA zones that we have access to is the Seven Rivers, the Queen, the Greyburg, and the St. Andrews.

Jesse Allen: Andnoticethecurvethere.

Speaker Change: We've been.

Jesse Allen: Youcansee,aswe'vegottenintotheendofthesecondquarter,intothethirdquarter,ourproductionhasdefinitelyincreased.

Speaker Change: In a macro slowdown.

Speaker Change: Recessive environment in China.

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

Jesse Allen: Next slide, please.

Jesse Allen: Next,I'mgoingtotalkaboutourfieldimprovementstoday. Oneofthekeyitemswasupgradingourwelltestfacilitiessothatweknewwhateachofourwellsaretesting.

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

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.

Jesse Allen: Next slide, please. 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. The troubleshoot a lot more easily. We also purchased two portable well-test units which we can move around the field well-to-well-related basis as needed. In addition, we've upgraded a 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: 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.

Jesse Allen: In other words, are we increasing production with the work we're doing?

Jesse Allen: Inotherwords,areweincreasingproductionwiththeworkwe'redoing?

Chris Recuso: 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 hedge, but we're pretty much hedge 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 checked that.

Jesse Allen: So it's important to upgrade our well-test facilities which we've done.

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

Jesse Allen: Itwasimportanttoupgradeourwelltestfacilities,whichwe'vedone,totroubleshootalotmoreeasily.

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: The troubleshoot a lot more easily.

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

Jesse Allen: Wealsopurchasedtwoportablewelltestunits,whichwecanmovearoundthefieldwell-to-wellonasimulatedbasisasneeded.

Speaker Change #100: 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.

Jesse Allen: Inaddition,we'veupgradedflowlinesonsomeofourproducingwells. We'didentified20producingwellsinitially,andwe'vecompletedabouthalfofthose,sothosewellsnowarebackonproduction.

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.

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

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.

Jesse Allen: OneofourwaterfloodstationsontheSkellyunit,whenwetookover,themaintrunklinewasinoperable. We'venowreplacedthattrunkline,andwe'reinstallingconnectionsasnecessarytoreviveourwaterstationontheSkellyunit. We'vebeenhaulingthatwatertooneoftheotherwaterstations,andthat'sbeencostingusroughly$30,000amonth,sowe'llbeeliminatingthatexpenseinthenearfuture.

In the near term and the secondhand influences.

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.

Speaker Change #101: Wood with the buyer, which is chevron and rk's need to take less less oil, but we we we checked that.

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 think we're hedged pretty good.

Speaker Change #102: 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 that production. We also think we're hedged pretty good so it's.

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. The transformer 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 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 and seven rivers.

Dante: So it's, you know, whoever wins the election, whatever happens in China and Russia, you know, for us, it's, it's kind of Katie bar the door. We're going for it. So these, these, these chemical assets, simulations are so cheap and the results are so substantial. I have a hard time thinking we're not just going to blow and go, you know, through that.

Jesse Allen: Inaddition,wehadtodosomeelectricalupgrades,whichmeantupgradingtransformersonourRussell-Turnerwaterstation. Weweren'tabletorunthepumpsat100%capacitybecauseofaweaktransformer. Thetransformerhasarrived,they'reintheprocessofinstallingnow.

Speaker Change #102: Whoever wins the election, whatever happens in China and Russia.

Speaker Change #103: You know for US, it's it's kind of a Katy bar the door, we're going for it. So these these are these chemical acid stimulation or so.

Jesse Allen: The transformer has arrived during the process of installing now. We will also upgrade our lightning protection.

Speaker Change #103: Cheap and that and the results are so.

Jesse Allen: Wewillalsoupgradeourlighteningprotection. We'vehadsomedowntimeasaresultofsubstandardlighteningprotection,whichwe'llbeupgrading.

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

Speaker Change #104: 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: 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 and seven rivers.

Mitch Trotter: So that's, that's what. And then when you get to the next level of investment, which are the re completions, you know, it may give us pause if there's some international event out there. But for the most part, 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 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.

Jesse Allen: In Seven Rivers, we have 100-plus recompletions to do, anticipate we'll do 20 by the end of, the year. That will develop an additional 15 million barrels of proven reserve, reserves.

Jesse Allen: Inaddition,oncewegetthetransformerinstalled,we'llbeabletoinstallasecondH-pump,whichwillincreaseourinjectioncapacity,whichofcourseisveryimportanttoourwaterfloodintheSevenRivers.

Jesse Allen: The St. Andrew's Zone, you'll notice, is the deepest of the intervals there.

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

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

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.

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

Speaker Change #105: 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.

Jesse Allen: Finally,wepurchasedahotoiltruckandunit. Weuseahotoilereveryday,soitmadesensetopurchaseone,whichwe'vedone. Itmitigatesdowntime,havingourownunitthereinthefieldat100%availability. Inthepast,sometimeswehaddowntimejustwaitingongettingsomebodyoutthere.

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.

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.

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 depends on the complexity and what we encounter in, the well.

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: 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, and we expect an average increase of 50 barrels of oil a day, payouts less than 60 days.

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

Speaker Change #106: 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: And so we estimated the end of the day and that's going to save us about $110,000 per year.

Mitch Trotter: But that's my two cents. Mitch, do you agree with that? I agree, exactly what you said, that we're properly hedged, and you asked a 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 are slightly less for 2025 based on the current level of production. Production goes up, will 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 kind of thinking that the market would drive oil prices up to the election and then oil prices would come down.

Jesse Allen: Weestimateattheendoftheday,that'sgoingtosaveusabout$110,000peryear.

Speaker Change #107: I agree are exactly what you said that's.

Jesse Allen: Next slide, please.

Jesse Allen: Next slide, please. 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 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 between the Greyberg and the Senandres. In seven rivers, we have 100 plus recompletions to do and anticipate we'll do 20 by the end of the year.

Jesse Allen: Nextslide,please.

Speaker Change #108: Or are you all were 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.

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

Jesse Allen: NextI'llbetalkingaboutourdevelopmentplan,providingalittlebitofdetailtherefortheaudiencehere.

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

Jesse Allen: Ourmainzonethatwe'regoingafteristheSevenRiverszone.

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 is the seven rivers between the Greyberg and the Senandres.

Jesse Allen: Ifyoulooktotherightthere,thereisthegeologiccolumnthere.

Jesse Allen: YoucanseethattheHMRAzonesthatwehaveaccesstoistheSevenRivers,theQueen,theGreyburg,andtheSt.

Speaker Change #108: So I feel pretty comfortable in that arena.

Jesse Allen: In seven rivers, we have 100 plus recompletions to do and anticipate we'll do 20 by the end of the year.

Speaker Change #108: And then maybe one more point on that we we do see I you know I was I was kind of thinking that the.

Jesse Allen: Andrews.

Jesse Allen: InSevenRivers,wehave100-plusrecompletionstodo,anticipatewe'lldo20bytheendoftheyear.

Jesse Allen: That'll develop an additional 15 million barrels of proven reserve, is the deepest of the intervals there.

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

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: Thatwilldevelopanadditional15millionbarrelsofprovenreserve, reserves.

Mitch Trotter: But, you know, we just, this is 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 us opportunities.

Jesse Allen: TheSt.

Jesse Allen: Andrew'sZone,you'llnotice,isthedeepestoftheintervalsthere.

Jesse Allen: Wehavebypasspayandunderperforatedpayinalotofwellsoutthere.

Jesse Allen: Weanticipate20ofthosebytheendoftheyear.

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: Thatwillhelpusdevelop34millionbarrelsofpotentialreserves.

Jesse Allen: Inaddition,asDantementioned,I'mgoingtotalkalittlebitaboutourimprovedwellevaluationandstimulationtechniques.

Jesse Allen: Oneofthethingswe'vedoneishiredapetrophysicistandwellloganalyst. Anybodywho'sworkedthePermianBasin,it'satougharea,andyoureallyneedtoknowyourpetrophysicsinordertoperforatezonesthataretrulyproductive. We'renowusingstate-of-the-artwellloganalysissoftware,whichourpetrophysicistisusing. Itresultsintargetedfocusonperforatingtherightzones,bothinourproducersandinjectorsintheSevenRivers,whichultimatelyendsupincreasingproduction.

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

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.

Mitch: <unk> through 'twenty, five and beyond as a as the market gives us opportunities.

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

Speaker Change #111: Yeah.

Dante: Thank you. That's pretty reassuring. Are you telling me that Chevron's willing to wave in two, three X of what you guys are producing right now? That's a pretty reassuring profile. Thanks. Yeah, they definitely said four times, and they said, well, even probably ten times because, you know, we're small compared to the amount of oil they need. 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.

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

Jesse Allen: And the cost to perform these reconpletions dependent on the complexity and what we encounter in the well.

Speaker Change #111: The reassuring profile. Thanks.

Definitely set a four times and they said well, even probably 10 times because you know.

Jesse Allen: And the cost to perform these reconpletions dependent on the complexity and what we encounter in the well. But our chemical treatments, our chemical acidizing treatments, as Dante said, is around $5,500. We're seeing two X production increase, pay back in less than 30 days on those, some even faster, depending on the increase. Our seven rivers completion, we're going to be in the range of $150,000, potentially a little higher, depending on the number of stages we do, and we expect average increase of 50 barrels all the day, pay out less than 60 days.

Speaker Change #111: We're small compared to the amount of oil that you need.

Jesse Allen: Thecosttoperformtheserecompletionsdependsonthecomplexityandwhatweencounterinthewell.

Speaker Change #114: They need a lot of Exxon needs a lot. So if they 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: But our chemical treatments, our chemical acidizing treatments, as Dante said, is around $5,500.

Jesse Allen: Ourchemicaltreatments,ourchemicalacidizingtreatments,asDantesaid,arearound$5,500.

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

Speaker Change #111: Feel pretty good about that.

Jesse Allen: We'reseeing2Xproductionincrease.

Speaker Change #115: Chevron yeah. Thank you.

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

Speaker Change #115: Yeah.

Jesse Allen: Paybackinlessthan30daysonthose,someevenfaster,dependingontheincrease.

Thank you and thank you Chris Thanks, Alright.

Speaker Change #115: Alright.

Dante: Thank you.

Jesse Allen: Our seven rivers completion, we're going to be in the range of $150,000, potentially a little higher, depending on the number of stages we do, and we expect average increase of 50 barrels all the day, pay out less than 60 days.

Speaker Change #116: Thank you there are no further questions in the queue.

Operator: There are no further questions in the queue.

Jesse Allen: ForSevenRiverscompletion,we'regoingtobeintherangeof$100,000to$150,000,potentiallyalittlehigherdependingonthenumberofstageswedo,andweexpectanaverageincreaseof50barrelsofoiladay,payoutslessthan60days.

Dante: Well, holy cow, guys, you're easy on us. Look, all of us, all of us fell 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 1,400 barrels today, and we need that for credibility with all of you.

Speaker Change #117: 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: So with that, let's go to the next slide, and I turned the presentation back over to Dante or CEO.

Dante: So with that, let's go to the next slide, and I turned the presentation back over to Dante or CEO. Yeah, thanks, Jesse. I'm going to wrap this up.

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

Jesse Allen: Withthat,let'sgotothenextslide.

Dante: IturnthepresentationbackovertoDante,ourCEO.

Speaker Change #118: It'd 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.

Dante: Yeah, thanks, Jesse.

Dante: Thanks,Jesse.

Dante: I'm going to wrap this up.

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

Dante: 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: I'mgoingtowrapthisup.

Dante: Thetopbullettotakeawayfromtodayisthatwe'rearesponsibleoperator.

Speaker Change #119: Our promise that 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.

Dante: Safety is our number one priority.

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

Dante: Safetyisournumberonepriority. Wewanttomakesureeverybodygoeshomethesamewaytheycame.

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

Dante: Wealsowanttotakecareofthelandthatwe'reentrustedwithbyNewMexico.

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.

Speaker Change #119: 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.

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

Dante: We'rehappythatwe'rekeepingalltheregulatorybodiesthatareinvolvedhappy.

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

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

Dante: Thanks, Jesse.

Speaker Change #120: I think with that I'll, just turn it back over to the M. Six and thank you all.

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

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, you know, 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: IwanttogobacktoJesse'sslideforjustasecond.

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'renotsayingtoallourinvestors,wehave300wells,weonlydid24,andwepickedup100barrelsaday.

Speaker Change #121: Thank you. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Dante: I'm going to wrap this up.

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

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

Dante: Safety is our number one priority.

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

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

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

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

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

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

Todd Felty: Thank you.

Dante: We think everybody can do the simple math.

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

Dante: Whatwouldyougetifyoudidanother300wellslikethose24?

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

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, 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.

Dante: We think everybody can do the simple math.

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

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.

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

Dante: Wethinkeverybodycandothesimplemath.

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

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, sustained production increase by the end of the year.

Dante: 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: Wejustcan'tbelieveitwouldbethateasy,andnothinghasbeenthateasyyet.

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, these acid jobs are crazy cheap, $5,500, and we don't even use a rig.

Dante: On these workovers that Jesse talked about, you know, 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: 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: Within five days, we can see what happened.

Dante: OntheseworkoversthatJessetalkedabout,we'reusingalotofsciencewithsomehigh-poweredpetroleumandgeologicexpertshere,tellingus,yeah,you'regoingtoget50barrelsaday.

Dante: And we're 23 for 24. 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.

Dante: They cost more money.

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

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

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.

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

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

Michael Porter: Certainly.

Michael Porter: At this time, we'll be conducting a question and answer session.

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

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 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.

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

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

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

Dante: Well,again,50barrelsadaytimes100wells,Idon'twanttodothatcomplicatedmathforthefolksonthecall,butmygoodness,that'swhywe'rebullishonQ3andQ4.

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

Michael Porter: We do ask that participants please ask one question and one follow-up, then reenter the, queue.

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

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

Michael Porter: One moment, please, while we poll for questions.

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

Operator: Your line is live.

Todd Felty: Hey, guys.

Todd Felty: I really appreciate you taking my questions.

Todd Felty: We've heard a lot about the improvements and the recompletions going on.

Todd Felty: And when I look at your 10Q, 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.

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

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 that we can multiply 300 times 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.

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?

Mitch Trotter: All right.

Mitch Trotter: Let me take that one, Todd, and I'll always talk to you again, were not comparable, again, to last, to the predecessor in 2023, and it had a lot to do with, 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 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: We'renotreadytoplanttheflagandtakeavictorylap,butwe'resayingit'ssortoflookinggood.

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

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

Mitch Trotter: If you go back to 2022, it was different.

Mitch Trotter: So hopefully, that answered your question.

Dante: So we need to do a lot more field testing and make sure that that we can multiply 300 times 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. 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.

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've reversed the trend.

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

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?

Dante: Weneedtodoalotmorefieldtestingandmakesurethatwecanmultiply300timesafewwellsand300times24wellstosaywhatthisfieldwilldo.

Dante: I'll let Dante take that.

Dante: Yeah, I'll take that.

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 as critical.

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 doing is more of, you know, just call them mini-stimulations.

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

Dante: So, I believe 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: 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: You know, I mean, we're not fracking at all with regard to these chemical acid treatments, but I'll also ask Jesse.

Dante: Jesse, did I say it right?

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

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.

Jesse Allen: It doesn't work on our tubulars, but it doesn't like calcium carbonate, so yes, essentially, what Dante has said is correct.

Jesse Allen: 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 several hundred thousand barrels of fluid.

Todd Felty: We're using about 300 or 400 barrels of fluid, which our environmentalists really like.

Dante: Wecansaythere'sabrightlightgettingbrighterattheendofQ3andQ4.

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

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: WealreadytalkedaboutQ1andQ2. Theywereimpactedbysomany–it'sreally$3millionspenttoimproveourfieldconditionintheboring,mundaneworldofflowlinereplacement,electricaltransformerreplacement,satellitetankandvalvereplacement,thosekindsofthings, sustainedproductionincreasebytheendoftheyear.

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.

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: What are the actions we're going to do for the most part?

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

Dante: That's almost for us for our little company.

Dante: 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.

Dante: 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: You'regoingtoseethisthinggohigher,butit'sgoingtodeclineabit.

Dante: So we're still trying to understand that the infrastructure improvements they're coming to an end.

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 the big nuts behind us the seven rivers and the San Andreas low cost recompletions these acid jobs are crazy cheap 5500 and we don't even use a rig we just move into the well we put chemical down the backside we let it set.

Dante: Sowe'restilltryingtounderstandthat.

Dante: Theinfrastructureimprovements,they'recomingtoanend.

Dante: We still have a few things on our chore list with electrical and mechanical but the the big nuts behind us the seven rivers and the San Andreas low cost recompletions these acid jobs are crazy cheap 5500 and we don't even use a rig we just move into the well we put chemical down the backside we let it set.

Dante: We circulated out we put a little more chemical down we circulated out within five days we can see what happened and we're we're 23 for 24 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 there 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 boards and stimulating that.

Dante: Westillhaveafewthingsonourchorelistwithelectricalandmechanical,butthebignutsbehindus,thesevenriversintheSanAndreas,low-costrecompletions,theseacidjobsarecrazycheap,$5,500,andwedon'tevenusearig.

Dante: Wejustmoveintothewell,weputchemicaldownthebackside,weletitset,wecirculateitout,weputalittlemorechemicaldown,wecirculateitout. Withinfivedays,wecanseewhathappened.

Dante: Andwe're23for24.

Dante: Anyboxerthatwins23outof24fightsisaprettygoodboxer.

Dante: 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 there 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 boards and stimulating that.

Dante: Sowe'rethinkingwe'reprettygoodontheseacidthings.

Dante: Weneedtodothesamewiththeserecompletions.

Dante: Theycostmoremoney.

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

Dante: Andfinally,they'rethelastbullet.

Dante: Wewanttoproveupthe34millionbarrelsthatarebehindpipe,andwecan'tdothatwithoutperforatingexistingwellboresandstimulatingthat.

Dante: 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: So with that that's pretty much a wrap for what we have I'll turn it back over to Mike for Q&A. Certainly at this time be conducting a question and answer session if you'd like to ask a question please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star two if you'd like to remove your question from the Q. 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 into the Q.

Dante: Sowiththat,that'sprettymuchawrapforwhatwehave.

Michael Porter: I'llturnitbackovertoMikeforQ&A.

Operator: Certainly at this time be conducting a question and answer session if you'd like to ask a question please press star one on your telephone keypad.

Michael Porter: Certainly.

Michael Porter: Atthistime,we'llbeconductingaquestionandanswersession.

Michael Porter: Ifyou'dliketoaskaquestion,pleasepressstar1onyourtelephonekeypad.

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

Michael Porter: Aconfirmationtonewillindicateyourlineisinthequestionqueue.

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

Michael Porter: Youmaypressstar2ifyou'dliketoremoveyourquestionfromthequeue.

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

Michael Porter: Forparticipantsusingspeakerequipment,itmaybenecessarytopickupyourhandsetbeforepressingthestarkeys.

Operator: We do ask that participants please ask one question and one follow up then re into the Q.

Michael Porter: Wedoaskthatparticipantspleaseaskonequestionandonefollow-up,thenreenterthequeue.

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

Operator: Once again if you have any questions or comments please press star one on your phone. One moment please while we pull for questions.

Michael Porter: Onceagain,ifyouhaveanyquestionsorcomments,pleasepressstar1onyourphone.

Operator: One moment please while we pull for questions.

Michael Porter: Onemoment,please,whilewepollforquestions.

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

Todd Felty: Your first question is coming from Todd Felty from ages Financial. Your line is live. Hey guys I really appreciate you taking my questions. You know we've heard a lot about the improvements and the recompletions going on and when I look at your 10 Q 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.

Todd Felty: YourfirstquestioniscomingfromToddFeltyfromAegisFinancial.

Todd Felty: Your line is live.

Dante: Hey guys I really appreciate you taking my questions.

Todd Felty: Yourlineislive.

Todd Felty: Hey,guys.

Todd Felty: Ireallyappreciateyoutakingmyquestions.

Todd Felty: You know we've heard a lot about the improvements and the recompletions going on and when I look at your 10 Q 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.

Todd Felty: And then the six months of 2024 you just did over 10 millions which is about a 35% 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. Why have the revenues gone down instead of up?

Todd Felty: We'veheardalotabouttheimprovementsandtherecompletionsgoingon.

Todd Felty: AndwhenIlookatyour10Q,evenifItakeoutthegainandlossofderivativeinstruments,Iseeinthesixmonthsof2023thatyoualldidjustunder$14millioninrevenuesfromcrudeoilandnaturalgas.

Dante: And then the six months of 2024 you just did over 10 millions which is about a 35% 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.

Todd Felty: Andthenthesixmonthsof2024,youjustdidover$10million,whichisabouta35%dropinrevenues.

Todd Felty: Withalltheseimprovementsandrecompletionsgoingon,giventhatthepriceofoilnowissimilartowhatitwasayearago,whyhavetherevenuesgonedowninsteadofup?

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

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

Dante: All right let me take that one Todd and good to always talk to you again. We're not comparable again to last 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 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 so we spent Q1 and Q2 stabilizing it.

Todd Felty: Allright.

Dante: Letmetakethatone,Todd,andI'llalwaystalktoyouagain, werenotcomparable,again,tolast,tothepredecessorin2023,andithadalottodowith,andwehadshownthecurveinthepast.

Dante: We're not comparable again to last 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 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 so we spent Q1 and Q2 stabilizing it.

Dante: Thepredecessor,theproductiondroppedofffromitspeakatthelaterpartof2022goinginto2023,andithadasteadydeclinefrom1400toabout900BPObarrelsofoilperdaybyNovember,December,whenwetookitover.

Dante: SowespentQ1andQ2stabilizingit,soyou'reworkingoffasignificantlydifferentvolumeofoilthatwasproduced,andsothat's,Imean,lastyeartheproductionwasover90,000,andthisyearit'saround60,sothat'sone-thirdofitwentaway,andsothathadawholelottodowithit.

Dante: So you're working off a significantly different volume of oil that was produced and so that's last year the production was over 90,000 and this year it's around 60.

Dante: So you're working off a significantly different volume of oil that was produced and so that's last year the production was over 90,000 and this year it's around 60. So that's one third of it one away and so that had a whole lot to do with it. So in the price, yeah I think it was. I'm going to go back to 22 it was different.

Dante: So that's one third of it one away and so that had a whole lot to do with it.

Dante: So in the price, yeah I think it was.

Dante: Andtheprice,yeah,Ithinkitwassimilar.

Dante: I'm going to go back to 22 it was different.

Dante: Ifyougobackto2022,itwasdifferent.

Dante: Hopefully that answered your question.

Todd Felty: Hopefully that answered your question. That's great to hear. 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.

Dante: Sohopefullythatansweredyourquestion.

Todd Felty: That's great to hear.

Dante: 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.

Todd Felty: Yeah,that'sgreattohear,andifI'mreadingbetweenthelines,IthinkthecomparablesforQ3andQ4shouldthenlookalotbetterifwe'vereversedthetrend.

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

Dante: And then my follow-up is, you know, we're hearing a lot of 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? I would don't take that. I'll take over to him. You know, 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 recomplicions, we don't think the fracking is going to be, you know, as critical.

Todd Felty: Andthenmyfollow-upis,youknow,we'rehearingalotof,especiallythisweek,ofpolitics.

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?

Todd Felty: Ifoneofthecandidateswastowinthat,let'ssay,proposedabanonfracking,wouldanyofourimprovementoperationsoroperationsoverallbeaffectedbyabanonfracking?

Dante: I would don't take that.

Dante: I'llletDantetakethat.

Dante: I'll take over to him.

Dante: You know, the ban on fracking affects more new wells than old wells.

Dante: Yeah,I'lltakethat. Youknow,thebanonfrackingaffectsmorenewwellsthanoldwells,sowhenwe'redealingwitholdwellsandwe'recallingtheseremedialstimulationsorrecompletions,wedon'tthinkthefrackingisgoingtobeascritical.

Dante: So when we're dealing with all old wells and we're calling these remedial simulations or recomplicions, we don't think the fracking is going to be, you know, as critical.

Dante: AndpartofwhatIhopeweconveytodayis,youknow,we'removingtowardafrackedsandlessfrack,meaningwhatwe'redoingismoreof,youknow,justcallthemmini-stimulations.

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

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: Imean,afrackthatIthinkconcernstheenvironmentalistsarethesemillion-poundfrackswith40trucksand40tankssetatawellsite.

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

Dante: We'retalkingaboutsomethingthat'snotawholelotdifferentthananacidstimulation.

Dante: 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.

Dante: 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. You know, you're, I mean, we're not fracking at all with regard to these chemical acid treatments, but I also asked Jesse, Jesse, did I say it right?

Dante: So,Ibelieveiftheworstweretohappentousandtheysaidyoucan'texceedthefrackgradientinawellbore,wewouldmodifywhatwedoandcomply.

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: AndIdon'tthinkitwouldmakeawholelotofdifferencebecausethefolksonthisteamforthiscompanyarethatgood.

Dante: You know, you're, I mean, we're not fracking at all with regard to these chemical acid treatments, but I also asked Jesse, Jesse, did I say it right?

Jesse Allen: Youknow,Imean,we'renotfrackingatallwithregardtothesechemicalacidtreatments,butI'llalsoaskJesse.

Jesse Allen: Jesse,didIsayitright?

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

Dante: I'd like him to weigh in on your question. Yes, as Dante has said, the chemical-spice-acidizing treatments that we're doing, that's safe acid, so this is an acid that you could actually pour on your hand. 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.

Jesse Allen: I'dlikehimtoweighinonyourquestion,Todd.

Jesse Allen: Yes,asDantehassaid,thechemical-slash-acidizingtreatmentsthatwe'redoing,that'ssafeacid,sothisisanacidthatyoucouldactuallypouronyourhands. Itdoesn'tworkonourtubulars,butitdoesn'tlikecalciumcarbonate,soyes,essentiallywhatDantehassaidiscorrect.

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

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

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

Jesse Allen: 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.

Jesse Allen: Wewouldjustmodifywhatwe'redoing,andlikehesaid,insteadof40trucksand40tanksoutthere,we'retalkingaboutonetruckandmaybeoneortwotankstopumpourstimulation,soawholelevelorawholedegreeofdifference,andwe'renotusingseveralhundredthousandbarrelsoffluid.

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

Dante: So, a whole level or a whole degree of difference, and we're not using several hundred thousand barrels of fluid, going about three or four hundred barrels of fluid, which our environmentalists really like. Okay, that's great to hear and I really appreciate you taking my questions. Thank you.

Jesse Allen: We'reusingabout300or400barrelsoffluid,whichourenvironmentalistsreallylike.

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

Todd Felty: Okay,that'sgreattohear,andIreallyappreciateyoutakingmyquestions.

Todd Felty: Thank you.

Todd Felty: Thankyou.

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 Cap Group.

Chris Recuso: Your line is live.

Dante: Good afternoon, guys.

Michael Porter: Onceagain,everyone,ifyouhaveanyquestionsorcomments,pleasepressstar,thenoneonyourphone.

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

Chris Rucus: YournextquestioniscomingfromChrisRucusofromPartnerCapGroup.

Dante: It seems apparent that we're moving into a slowdown here in the United States, and we've been in a macro slowdown in the recess of the environment in China.

Chris Rucus: Yourlineislive.

Dante: For the duration of the year, obviously, these are the two defining oil markets of the globe.

Chris Rucus: Goodafternoon,guys.

Dante: If macro softness persists well into 2025.

Chris Rucus: Justonequestionismacro-based.

Dante: Does that have any impact?

Chris Recuso: Does that have any impact? Does that have any influence on your production strategy, so to speak, in the foreseeable future? Yeah, I'll try to answer this. First of all, Chris, we're, 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 hedge, but we're pretty much hedge everywhere at $70. And so if your question was, would we curtail activity?

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

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

Chris Rucus: Itseemsapparentthatwe'removingintoaslowdownhereintheUnitedStates,andwe'vebeeninamacroslowdowninarecessiveenvironmentinChinaforthedurationoftheyear.

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

Chris Rucus: Obviously,thesearethetwodefiningoilmarketsoftheglobe.

Mitch Trotter: 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 hedge, but we're pretty much hedge 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 checked 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 think we're hedge pretty good.

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

Chris Rucus: Ifmacrosoftnesspersistswellinto2025,doesthathaveanyimpact,doesthathaveanyinfluenceonyougentlemenintermsofyourproductionstrategy,sotospeak,intheforeseeablefuture?

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: Yeah,I'lltrytoanswerthis.

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

Dante: Firstofall,Chris,we'rehedgedupprettygood,sowe'realittlebitimmunetooilpricesthrough2025,andMitchcouldgiveyoumoredetailonjustexactlywhatthepercentageisandwhatwe'rehedged,butwe'reprettymuchhedgedeverywhereat$70,andsoifyourquestionwas,wouldwecurtailactivity,Imean,we'relookingattheeconomicsofthereturnforthemoneywedeployinthenearterm,andthesecondinfluenceis,wouldthebuyer,whichisChevroninourcase,needtotakelessoil?

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

Chris Recuso: So it's, you know, whoever wins the election, whatever happens in China and Russia, you know, for us, it's, it's kind of Katie bar the door. We're going for it. So these, these, these chemical assets, simulations are so cheap and the results are so substantial. I have a hard time thinking we're not just going to blow and go, you know, through that. So that's, that's what. 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.

Dante: We're going for it.

Dante: So these, these, these chemical assets, simulations 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, that's what.

Dante: 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.

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

Chris Recuso: But for the most part, 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 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, we'd absolutely would consider that when we deploy capital. And maybe we use the money to pay down debt or something else.

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 up precipitous drop.

Dante: And we were, we were, we were naked with no hedge on that.

Dante: We, we'd absolutely would consider that when we deploy capital.

Dante: And maybe we use the money to pay down debt or something else.

Dante: But that's my two cents.

Chris Recuso: But that's my two cents. Mitch, do you agree with that? I agree, exactly what you said, that we're properly hedged and you asked a 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 are slightly less for 2025 based on the current level of production. Production goes up, will still be in the 50 to 60% range for next year.

Mitch Trotter: Mitch, do you agree with that?

Mitch Trotter: I agree, exactly what you said, that we're properly hedged and you asked a percent again.

Mitch Trotter: We're in the 70% range, maybe 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, will still be in the 50 to 60% range for next year.

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

Chris Recuso: So I feel pretty comfortable in that arena. Now maybe one more point Chris on that. We do see, you know, 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, this is 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: Now maybe one more point Chris on that.

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

Dante: But, you know, we just, this is very tough to predict.

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

Chris Recuso: 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 a market gives us opportunities. Thank you. That's pretty reassuring. Are you telling me that Chevron's willing to wave in two, three X of what you guys are producing right now?

Mitch Trotter: 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.

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

Dante: Thank you.

Dante: That's pretty reassuring.

Chris Recuso: That's a pretty reassuring profile. Thanks. Yeah, they they definitely said four times and they said, well, even probably ten times because, you know, we're small compared to the amount of oil they need. 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.

Dante: Are you telling me that Chevron's willing to wave in two, three X of what you guys are producing right now?

Dante: That's a pretty reassuring profile.

Dante: Thanks.

Dante: Yeah, they they definitely said four times and they said, well, even probably ten times because, you know, we're small compared to the amount of oil they need. They need a lot, X on needs a lot.

Dante: Butwecheckedthat,andrightnowthey'resaying,youcouldproducefourtimeswhatyou'reproducing,wewouldn'tflinch.

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.

Dante: Thank you.

Operator: There are no further questions in the queue.

Dante: There are no further questions in the queue. Well, holy cow, guys, you're easy on us. Look, all of us, all of us fell 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.

Operator: Well, holy cow, guys, you're easy on us.

Dante: Look, all of us, all of us fell Q1 and Q2 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 probably still going to be negative, but not by much.

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

Dante: 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 1,400 barrels today and we need that for credibility with all of you. 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.

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 today and we need that for credibility with all of you.

Dante: Sowethinkwehaveabuyerthatwillletusdouble,triple,quadrupletheproduction.

Dante: So, and of course, that's not our real number.

Dante: Wealsothinkwe'rehedgedprettygood,sowhoeverwinstheelection,whateverhappensinChinaandRussia,forus,it'skindofKatybarthedoor,we'regoingforit.

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

Dante: Sothesechemicalacidstimulationsaresocheap,andtheresultsaresosubstantial,Ihaveahardtimethinkingwe'renotjustgoingtoblowandgothroughthat.

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

Dante: Sothat'sone,andthenwhenyougettothenextlevelofinvestment,whicharetherecompletions,itmaygiveuspauseifthere'ssomeinternationaleventoutthere,butforthemostpart,we'renotverybig.

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

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

Dante: Andsoifweweretodouble,triple,quadrupleproduction,Ijustdon'tthinkwe'regoingtodentanything.

Dante: Nowifoilpricesweretojusttakeaprecipitousdrop,andwewerenakedwithnohedgeonthat,weabsolutelywouldconsiderthatwhenwedeploycapital,andmaybeweusethemoneytopaydowndebtorsomethingelse.

Dante: Butthat'smytwocents.

Operator: And thank you all.

Mitch Trotter: Mitch,doyouagreewiththat?

Operator: Thank you.

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

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

Mitch Trotter: Iagreeexactlywhatyousaid,thatwe'reproperlyhedgedandyouaskedthepercentagain. We'reinthe70%range,maybejustalittlebitmorefortherestofthisyearandjustrightat70orslightlylessfor2025basedonthecurrentlevelofproduction.

Mitch Trotter: Productiongoesup.

Mitch Trotter: We'llstillbeinthe50to60%rangefornextyear. SoIfeelprettycomfortableinthatarena.

Operator: Thank you for your participation.

Thank you.

Mitch Trotter: NowmaybeonemorepointChrisonthat.

Mitch Trotter: Wedosee,Iwaskindofthinkingthatthemarketwoulddriveoilpricesuptotheelectionandthenoilpriceswouldcomedown. Butit'sverytoughtopredict.

Mitch Trotter: ButIwouldtellyouthatasamanagementteam,webelieve$70,$80,$85abarrelisagoodnumber.

Q2 2024 HNR Acquisition Corp Earnings Call

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