Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $21.3 million, a slight decline from $21.9 million in the same period last year, primarily due to lower realized oil and NGL prices, which decreased by 14% and 8% respectively, partially offset by a 43% increase in natural gas prices [4][15][16] - Net income for the quarter was $0.8 million, or $0.02 per diluted share, compared to $2.1 million, or $0.06 per share in the year-ago quarter [15] - Adjusted EBITDA was $7.3 million, down from $8.1 million last year, reflecting the impact of lower oil and NGL prices and higher lease operating costs [16] Business Line Data and Key Metrics Changes - The revenue mix for the quarter was 60% oil, 28% natural gas, and 12% NGLs, with an average realized price of $31.63 per BOE [15] - Natural gas revenues increased by 38% compared to the year-ago quarter, with Henry Hub averaging $3.03 for the quarter [9][15] Market Data and Key Metrics Changes - Crude oil prices are currently around $60 per barrel, with expectations that reduced CapEx budgets will eventually lead to higher prices to stimulate drilling [6][7] - The natural gas market is experiencing growing demand due to electrification and carbon intensity reduction efforts, with forecasts indicating a demand increase of 20-30 BCF per day over the next decade [8][9] Company Strategy and Development Direction - The company closed its first acquisition focused on minerals and royalties in the Scoop Stack, enhancing exposure to high-quality reserves while maintaining a capital-light profile [4][5] - The strategy emphasizes generating sustainable free cash flow, returning capital to shareholders, and pursuing attractive acquisition opportunities [10][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational consistency and strength of the asset base, indicating that the company is well-positioned for the future [18] - The management team highlighted the importance of maintaining a sustainable dividend and the potential for future price increases in both oil and natural gas markets [5][10][18] Other Important Information - The company declared its 49th consecutive quarterly cash dividend of $0.12 per share for the fiscal second quarter [5][17] - Total liquidity at the end of the quarter was approximately $11.9 million, including cash and cash equivalents [16] Q&A Session Summary Question: Update on TexMex asset performance - Management acknowledged that the results from TexMex may understate its potential, with expectations for normalized lifting costs and production recovery as optimization activities progress [24][25][26] Question: M&A activity and deal flow - Management noted a healthy pipeline of attractive acquisition opportunities, with a focus on minerals deals that offer competitive multiples [30][31] Question: Natural gas hedging program - The company is over 50% hedged for the next year, with a mix of collars and swaps to protect cash flow while maintaining upside potential [45] Question: Outlook for production levels in 2026 - Management indicated that while production guidance is challenging due to various factors, a flat year-over-year production outlook is reasonable [66] Question: Capital expenditures guidance - Management confirmed a guidance range of $4-6 million for capital expenditures in fiscal 2026, with approximately $1.9 million spent in the first quarter [67][70]