Financial Data and Key Metrics Changes - The company reported a record net income of $5.6 billion for Q3 2025, marking the highest level to date [5][18] - Shareholder equity increased by over $22 million from Q2 to Q3 2025, attributed to the retirement of debt and preferred shares [6][17] - The company retired all $41 million of senior and seller debt and preferred shares with a redemption value of $27 million [6][17] Business Line Data and Key Metrics Changes - The company acquired a 10% override with the original seller group related to the Grayburg Jackson field [6] - A horizontal well drilling program is set to commence next year, with plans to drill as many as 92 wells over the next five years [7][10] - Current production is primarily from the Seven Rivers formation, with ongoing development in multiple pay zones [7][11] Market Data and Key Metrics Changes - The company is experiencing consistent production above 1,000 gross barrels of oil per day across its two fields [21] - The San Andreas farm-out to Vertus includes a cash consideration of $5 million and a post-deal working interest of 35% for the company [23] Company Strategy and Development Direction - The company aims to enhance shareholder value by focusing on increasing stock prices and exploring acquisition opportunities [8][10] - Plans include cutting operational costs by $200,000 per month and increasing production through workovers and new drilling [26][29] - The company is looking to make a material acquisition in the first half of next year without taking on debt or diluting shares [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, emphasizing a clean balance sheet and the potential for increased production [10][29] - The company is well-positioned to weather low oil prices due to its debt-free status and cost-saving measures [29] - Management anticipates continued production increases and financial improvements through 2026 and beyond [27] Other Important Information - The company has not had any reportable safety incidents since taking over operations in November 2023 [21] - The installation of a two-mile injection pipeline is currently in progress, which is expected to boost production [22] Q&A Session Summary Question: Future energy supply for data centers - Management acknowledged the potential for supplying energy to data centers and is exploring proposals to monetize gas [34][35] Question: Timeline for horizontal drilling - Horizontal drilling is expected to begin in mid-2026, pending federal drilling permit approvals [37][39] Question: Convertible notes and dilution risk - The company has redeemed most non-insider convertible notes and is managing dilution risk carefully [68][71] Question: Crude oil price hedging - The company has hedged a quarter of its production through Q1 2026 at $62.50 and is monitoring market conditions for further hedging [72] Question: Acquisition potential - Management indicated that while the company is not for sale at a bargain price, it is open to strategic acquisitions that align with its growth strategy [74]

Financial Data and Key Metrics Changes - The company reported a stable production level of approximately 950 barrels per day, with expectations to increase this by 50% by the end of the year [10][15] - Lease operating expenses (LOE) were reduced from over $800,000 per month to an average of $765,000 in 2024, with a target of around $700,000 per month for 2025 [54][55] - The company aims to cut general and administrative (G&A) expenses significantly in 2025, with a focus on reducing costs related to equity-based compensation and professional fees [31][32][17] Business Line Data and Key Metrics Changes - The company is focusing on the development of the 7 Rivers waterflood, with plans to add 150 waterflood patterns, which are expected to produce about 20 barrels of oil per day per pattern [11][15] - Horizontal drilling potential in the San Andreas formation has been identified, with 50 wells expected to yield 300 to 500 barrels of oil per day [13][30] Market Data and Key Metrics Changes - The company is hedged through 2025 at a price of $70 per barrel or greater, which provides some stability against market fluctuations [25][26] - Oil price volatility remains a concern, impacting revenue and overall market conditions for the company [68] Company Strategy and Development Direction - The company plans to acquire a 10% royalty from the seller for approximately $15 million, which is expected to be a highly accretive transaction [8][16] - Future strategies include focusing on workovers, waterflood expansions, and drilling, with a cautious approach to ensure cost-effectiveness [15][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2024 but emphasized the importance of infrastructure repairs and upgrades that have stabilized production [16][22] - The outlook for 2025 is optimistic, with expectations of increased oil production and reduced costs, positioning the company for a profitable future [17][62] Other Important Information - The company has made significant progress in cleaning up its balance sheet, including settling liabilities and reducing debt [38][39] - The management team is committed to maintaining a balanced approach to funding, avoiding excessive equity dilution and debt [41][42] Q&A Session Summary Question: What are your largest concerns that might negatively impact your plans? - The largest concern is market volatility, particularly oil prices, which can affect stock prices and overall operations [68][69] Question: How is the stock valued, and is it fully registered when issued? - The stock is valued based on the grant date and trading value, and the shares issued are unregistered [70][71] Question: Are you still working on the workovers wells or is this less of a priority? - Workovers remain a top priority, especially as they are tied to the development of the 7 Rivers project [75][76] Question: What are you doing to negotiate and benchmark parts, pumps, and other goods? - The company conducts thorough bidding processes to ensure the best value for parts and services [79][81] Question: If oil prices recover, will you increase production faster? - The company plans to accelerate workovers and drilling if funding allows, but will do so cautiously [83][86] Question: Is the $52,800,000 revenue sharing funding deal still on track for June 2025 closing? - The lender has indicated that the deal is still on track, but there are concerns about potential oil price drops affecting the final amount [88][90] Question: What is your relationship with drilling permits in New Mexico? - The regulatory environment for drilling permits in New Mexico is improving, with expectations of faster processing times under the new administration [94][96]