U.S. Energy Corp.

Greetings. Welcome to U.S. Energy Corporation fourth quarter and full year 2023 results conference call. At this time, all participants are in 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 Macy McGuire, Director of Corporate Development. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to U.S. Energy Corp's fourth quarter and year-end 2023 results conference call. Brian Smith, our Chief Executive Officer, will provide an overview of our operating results and discuss the company's strategic outlook. And our Chief Financial Officer, Mark Zajac, will give a more detailed review of our financial results. After the market closed yesterday, US Energy issued a press release summarizing operating and financial results for the year ended December 31st, 2023. This press release, together with accompanying presentation materials, are available in the investor relations section of our website at www.usenergy.com. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results made at first significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, please note that non-GAAP financial measures may be disclosed during this call. A full reconciliation of GAAP to non-GAAP measures are available in our latest quarterly earnings release and conference call materials. With that, I will turn the call over to Ryan Smith.

Thank you, Mason, and good morning, everyone, and thank you for joining us today. I'm pleased to share with you some of the strong highlights from this year and quarter, as well as provide an update on our strategic outlook. Our year-end results reflect the dedication and consistency of our entire team. We achieved annual net daily production of greater than 1,700 barrels of oil equivalent per day, which takes into effect our fourth quarter asset divestitures, which I will discuss later. marking an increase from the comparable period of 2022. Oil production accounted for 63% of our total production, with the remainder consisting of an approximately even split of natural gas and NGOs. I'm particularly proud to highlight our substantial achievements in cost management. Our lease operating expense came in at $3.1 million, or $22.38 per BOE. representing a significant reduction compared to both the prior quarter as well as the fourth quarter of 2022. This impressive reduction underscores our commitment to operational efficiency and has achieved the continued backdrop of high interest rates, which flows through to everything, including elevated service costs. That being said, I should mention that while some costs have remained elevated compared to historical levels, we have begun to see cost reductions in certain materials that we often use across our operations. Of significant note, during the fourth quarter, the company closed on approximately $7.3 million of asset divestitures. The assets represented the majority of our non-operated properties and represented roughly 11% of company production. All proceeds from the divestitures went to debt reduction, putting us at our current attractive leverage profile. As borrowing rates continue to increase throughout the year, and in my belief, a USEG equity valuation that is trading at less than what will be realized through certain asset divestitures, the USEG board made the decision to explore monetizing our non-operated properties to pull forward real, tangible value. We had good buyer interest across all four or five separate packages that were being offered, ranging from North Dakota to South Texas, and I was extremely happy with the results of the process. Looking ahead, I do believe that our geographically diverse asset base, which does have its challenges to manage, offers some opportunities in the future to take advantage of any company-perceived valuation disconnect to be able to pull value forward. Moving into 2024, our capital will be spent on maintaining the production profile of our existing asset base, reducing outstanding debt, maintaining the company's share repurchase plan, and taking advantage of organically driven opportunities. While equity valuations and borrowing costs have really made smaller-scale M&A tough recently, allocating capital to oil-weighted projects in the company's existing portfolio remains highly economic. We've had these assets under control for about two years now, and with the first year plus just really figuring out what we have from an asset optimization standpoint, Since that time, we have really been able to explore and engineer opportunities that we believe can add value in a much more capital accretive way than any third party M&A. These are projects that we are always currently evaluating, and we plan on sharing more on them as they come to fruition throughout the year. We believe that U.S. Energy stands out from other oil and gas producing companies of our size in this backdrop of both current macro industry dynamics and a relatively stable oil pricing outlook. Our current assets, requiring minimal capital to maintain a steady production profile, leading to predictable cash flow and allowing us to effectively allocate dollars to maximize our returns on capital. Our approach positions and allows us to weather market fluctuations and capitalize on opportunities, making us well prepared to navigate the always evolving energy landscape. Our focus at U.S. Energy remains on operational efficiency, balance sheet discipline, and responsible resource management. underscoring our commitment to driving sustainable value creation. As we move forward, we remain dedicated to capitalizing on current market conditions and leveraging our strengths to deliver continued growth and shareholder returns. To that end, during the fourth quarter, we continued our previously announced $5 million share repurchase program. We restarted our share repurchase activity during December 2023, post the closing of our non-operated divestitures, and since that point and up until the normal first quarter trading window limitations, we have repurchased nearly half a million shares, or approximately 2% of the company's outstanding shares. We continue to believe that repurchasing our equity at current valuation levels is prudent and one of, if not the best, allocations of free cash flow, along with as high of a rate of return opportunity as I currently see in the marketplace. In summary, 2023 in the fourth quarter was strong in terms of production, cost control, and the results of capital allocation decisions made earlier in the year. These achievements set the stage for our growth initiatives while positioning us to take advantage of oil prices that help generate steady, high-margin cash flow. The company's goal remains to continue expanding our scale through both being selectively advantageous in the M&A market while also growing our assets with initiatives to complement our core operating areas. By increasing our scale and maintaining our shareholder returns initiatives, we believe we can unlock greater equity value for all of our shareholders. Now I would like to introduce Mark Zajac, our Chief Financial Officer, who will provide a detailed update on the financial results for the quarter.