U.S. Energy Corp.

Good day and welcome to the U.S. Energy Corporation third quarter 2024 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Mason McGuire, Vice President of Finance. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to U.S. Energy Corp's third quarter 2024 results conference call. Ryan 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, Marcus Ajak, will give a more detailed review of our financial results. After the market closed yesterday, U.S. Energy issued a press release summarizing operating and financial results for the quarter ended September 30, 2024. The press release, together with accompanying presentation materials, are available in our investor relations section of our website at www.usnrg.com. Today's discussion may contain forward-looking statements about the future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to the 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 measurements are available in our latest quarterly earnings release and conference call presentation. With that, I would like to turn the conference call over to Ryan Smith.

Good morning, everyone, and thank you for joining us today. I'm pleased to share with you our results from this quarter as well as provide an update on our strategic outlook. Turning to our quarterly results, these reflect the dedication and resilience of our operational team as well as the positive momentum from our recent business development efforts. Focusing on our recently acquired Montana project, we made significant progress this quarter with the completion of our first industrial gas well in late October. We're currently evaluating the results and finalizing plans to target what we believe are economically promising production zones, which have been independently tested to show non-hydrocarbon helium concentrations of up to 1.5%. Looking ahead, we plan to commence drilling a second well in early 2025 with additional developments throughout the year aimed at similar zones where we anticipate similar helium concentrations. Importantly, our initial well came in below our projected drilling costs, and we expect these costs to decrease as we move forward with our drilling program next year. We remain highly enthusiastic about this opportunity, confident that the Montana project not only stands as a substantial value driver for U.S. energy on its own, but also serves as a foundational step towards building a robust industrial gas platform. This initiative represents an efficient and economically compelling use of our existing capital while positioning U.S. energy with heightened relevance in the capital markets. Based on the data gathered so far, We continue to anticipate that these wells will drive highly economic development of our asset base, both in the field and at the infrastructure level, supported by a realistic and achievable capital spending plan that can be funded from U.S. Energy's existing balance sheet. This is advantageous for several clear reasons, with positive impacts expected to flow directly into our realized economics. Looking ahead, our 2025 wells will not only further define the productive parameters of the asset base but will also enable us to confidently forecast our plant development and strategically execute on our production timeline. Lastly, I want to highlight an essential aspect of our recent transaction and the strategic background of our Keven Dome assets in Montana. It's important to note that the vast majority of helium production in the United States is hydrocarbon-based, largely as a byproduct of natural gas extraction. In contrast, the helium and industrial gas streams from U.S. Energy's new assets are non-hydrocarbon-based, Positioning this project is one of the lowest environmental footprint initiatives of its kind in the country. We are extremely encouraged by the initial results from our first well and will continue to provide regular updates on our drilling and completion progress as we advance. Turning to our legacy oil and gas assets, we completed the sale of our South Texas properties at the end of July for a purchase price of approximately $6.5 million. Adjusting for this divestiture, which included roughly 100 barrels of oil equivalent per day, our third quarter net daily production reached 1,149 barrels of oil equivalent per day, a sequential improvement over both the first and second quarters of 2024. This progress underscores the dedication and effectiveness of our operations team, who successfully managed to remediate the effects of significant flooding across East Texas and the Gulf Coast earlier in the year. For the third quarter, oil accounted for 58% of our total production with the remainder consisting of a balanced mix of natural gas and NGLs. As we close out 2024, the majority of our capital will be allocated efficiently towards completing our recently drilled industrial gas well, supporting the production profile of our legacy asset base, advancing the company's share repurchase plan, and maintaining strong balance sheet integrity. Additionally, we remain poised to capitalize on organically generated M&A opportunities that align with our industrial gas growth strategy. As we head into 2025, we will continue to strategically monetize our legacy assets while deploying that capital into our Montana project and maintaining disciplined balance sheet management. We believe the execution of these efforts will make 2025 a truly transformative year for U.S. Energy. While any development project, of course, requires development capital, we are in an exceptionally strong position compared to our peers with significant access to internally generated non-dilutive capital derived from both operational cash flow and asset sales. We firmly believe that U.S. Energy stands apart from other energy companies of similar scale in today's evolving energy landscape. With a highly economic and scalable development project, alongside legacy E&P assets that require minimal capital to maintain steady production, we're generating and deploying predictable cash flow that allows us to strategically allocate capital for maximum returns. Our approach positions us to withstand market fluctuations and seize emerging opportunities, ensuring that we are well prepared to navigate the complex and ever evolving dynamics of the energy industry. At U.S. Energy, our focus remains steadfast on operational efficiency, balance sheet discipline, and responsible resource management, underscoring our commitment to sustainable value creation. As we look ahead, we are dedicated to capitalizing on favorable market conditions and leveraging our core strengths to drive continued growth and deliver meaningful returns to our shareholders. In the third quarter, we intensified our previously announced share repurchase program. To date, the company has repurchased approximately 886,000 shares at an average price of $1.17 per share, representing 3% of our outstanding shares. This share repurchase activity alongside meaningful and consistent insider buying by executive management, underscores our conviction that repurchasing our stock at current valuations is both prudent and one of the highest return opportunities available for our free cash flow. We plan to continue this activity as we move forward. A strong balance sheet is always a top priority for U.S. Energy, and I'm pleased to report we ended the quarter with zero debt outstanding on our credit facility. Importantly, despite recent asset sales, our borrowing capacity remains unchanged, a testament to the solid value foundation of our company's platform and underlying asset base. In closing, U.S. Energy is uniquely positioned at the forefront of a true first-mover advantage as a growth-oriented, non-hydrocarbon, industrial gas-focused public company in the United States. The majority of competitors in this space are constrained by complex equity structures, stressed balance sheets, limited capital access, and exchange listings that deter institutional investors. U.S. Energy is free from these hurdles, and we are confident that as our distinctive position gains recognition in the marketplace, further actionable, scalable, and highly accretive growth opportunities will emerge. Now, I would like to introduce Mark Zajac, our Chief Financial Officer, who will provide a detailed update on the financial results of the third quarter.