Presidio Production Company Class A

Good day, ladies and gentlemen, and thank you for joining us. Welcome to Presidio Production Company's first quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, today's call is being recorded. I'll now hand the call over to Mr. Connor Fair, Director of Investor Relations. Please go ahead, sir.

Good morning and welcome to Presidio Production Company's first quarter 2026 earnings conference call. I'm Connor Fair, Director of Investor Relations, and joining me today are co-CEOs Will Ulrich and Chris Hammack, our CFO John Brawley, and General Counsel Brett Barnes. As a reminder, today's call includes forward-looking statements. They are based on management's current expectations and assumptions and are subject to a number of risks, uncertainties, and other factors. many of which are beyond the company's control, that could cause actual results to differ materially from those expressed or implied on this call. For a complete list of cautionary statements, please refer to the risk factors provided in our most recent 10Q, S1, S4, and other SEC filings, which are available on the investor relations page of our website. Additionally, we will also refer to certain non-GAAP financial measures. For additional disclosures about these non-GAAP measures, including reconciliations to Comparable gap measures, please refer to our earnings release issued yesterday, which is also available on the investor relations page of our website. With that, I'll turn the call over to our chairman and co-CEO, Will Olrich.

Good morning. Presidio is engaged in the great game. Any student of the oil and gas industry knows Daniel Juergens' The Prize, a book gifted to me years ago by my father. his account of the original great game, the century-long contest for resource acquisition and geopolitical dominance that shaped the modern world. For more than a century, that game defined nations, toppled governments, and built the industrialized civilization we inhabit today. It was won by those who controlled the most oil in the ground. But the game has changed. The new game is different. It is won by those who convert data into decisions Decisions into action and action into cash flow. We call that asset intelligence. And we believe Presidio was built for exactly this moment. And this moment, it should be noted, is one of the most consequential in human history. This year marks 250 years of American enterprise and ingenuity. But America's 250th year is not simply an occasion for reflections. Our civilization has arrived at a crossroads that few generations have ever faced. The rapid development of artificial intelligence may be the most consequential event in human history, perhaps rivaling the founding of this great nation itself. And at Presidio, we have made a deliberate choice about how to meet the moment. Our new manifest destiny is not simply to adapt to this changing environment. It is to lead, technically and morally. More on this later. We could not have gone public at a better time. The energy industry is undergoing a fundamental shift, one that we believe will define the next decade and that plays directly to everything Presidio has built. Look at the world around us. Conflict in the Middle East is disrupting supply routes and destabilizing the producers who have long set the margin of global oil markets. War in Europe has redrawn the map of energy flows, severed decades-old supply relationships, and forced the Western world to confront the fragility of its energy dependencies in ways it had long chosen to ignore. Alliances are shifting. Trade flows are being rerouted. The assumptions that underpinned global energy markets for a generation are being stress-tested simultaneously. At the same time, demand for energy is accelerating in ways that have no historical precedent. Artificial intelligence data centers are being built at a pace and scale that is straining the American power grid. The shift to robotics and automated manufacturing, the next great wave of American industrial reinvention, will drive incremental power demand that forecasters are only beginning to model. And the inventory of high-quality domestic drilling locations is shrinking. The easy oil and gas has been found. The shale revolution has matured. The next barrel and MCF of American production will be harder and more expensive to find than the last. What does all this mean for Presidio? It means that the assets we own, long life, low decline, already producing American oil and gas are becoming more valuable, not less. It means that the operators who can extract maximum efficiency from existing production without relying on the drill bit are exactly who this market needs. And it means that Presidio's business model sits at the nexus of some of the most powerful and durable forces reshaping the global energy landscape today. We built for this moment, and we could not be better positioned. Before we talk more about our future, let's talk about where we are today. What we have built at Presidio is, at its core, quite simple. We are a cash flow company. Our cash flow comes from American oil and gas, the backbone of this nation's energy security and economic strength. We acquire producing assets with existing cash flows. We improve the quality of those cash flows. We pay a fixed and growing dividend and we generate a long-term return on equity significantly greater than our cost of capital. We do not drill. We do not take development risk. That discipline allows us to make a simple promise to our shareholders, steady growing cash dividends funded by assets already in production. This may be perceived as a novel business plan, but we have the track record to back it up, having generated compounded annual equity returns in excess of 50% per year during our eight years as a private company pursuing exactly this strategy. When we acquire an asset, we begin optimizing it immediately. Every acquisition comes with a day one business plan, a systematic pre-built playbook that we execute from the moment we take ownership. We reboot the operating culture. We flatten the organization. We push decision-making down to the people who are actually at the wellhead, the pumpers, the operators who know these assets better than anyone in a corporate office ever could. We empower them, we align their incentives with the performance of the assets they run, and we get out of their way. As my business partner and co-CEO Chris will tell anyone who listens, come visit our field operations and you will see something completely unique in today's modern oil field. The result is a field organization that moves faster, costs less, and produces more. Not because we imposed a new management team from the outside, but because we unlocked the talent that was already there and gave it the tools and the authority to perform. That is, I would submit a rather underappreciated art form in this industry, and Chris will touch on it more in his remarks. I also want to take a moment to speak to the quality of the foundation we built at Listing because we believe the capital structure and investor base we assembled is itself a competitive advantage, perhaps an underappreciated one. John Brawley, our CFO, will provide additional detail in his remarks, but I wanted to provide a summary from my perspective. When we came public through our merger with EQV Ventures earlier this year, we made a deliberate choice about who we wanted as partners and how we wanted to be capitalized. They were the result of years of relationship building and a clear view of what a great public energy company should look like. Our shareholder base is anchored by fundamental, long-term, institutional investors, not traders. These are serious people who have done serious work to understand what we have built, who believe in the strategy, and who are here to compound alongside us for the long term. Adage. BP, Morgan Stanley, J.P. Morgan Investment Management, and others. This is exactly the kind of shareholder base a company like Presidio deserves, and we will continue to expand our base and our float and liquidity over time. I would be remiss if I did not also mention that Presidio Management rolled 100% of our equity earned at the private Presidio into Presidio Production Company common shares, and management as a group is one of our company's largest shareholders. I'm grateful to all of our employees for their leadership, and I'm proud to say today that 100% of our employees, whether in the office or the field, are equity owners in the company. We are operators and owners. Our interests are completely and utterly aligned with every shareholder on this call. Our capital structure was constructed to support durable, growing shareholder returns. At Close, we carry an investment-grade ABS, low-cost, long-duration, purpose-built for a PDP asset base. We raised perpetual preferred equity, anchored by J.P. Morgan Investment Management, one of the great financial institutions in the world. And our SPAC sponsor placed 75% of their founder shares into a mandatory dividend reinvestment program or a share price burnout structure. The sponsor is not looking for a quick exit. They are invested in the same outcome we are. Everyone is rowing in the same direction. And in February, we announced a $1 billion credit facility with Goldman Sachs. the first facility of its kind, purpose-built for PDP acquisition financing. This is a capital structure built for compounding returns, and we are just beginning to put it to work. I'm pleased to report that our first dividend has been declared at $1.35 per share annually, representing a 12% current yield. That dividend is the foundation of our equity story, and it is, I would note, one of the most attractive yields available to investors, not just in the energy markets, but in any public market. and we're pleased to be growing it already. We have signed a purchase and sale agreement to acquire producing assets in the Arcoma Basin for $83 million. This is Presidio's first entry into a new basin, a significant milestone that demonstrates our operating model works across basins. We expect the transaction to close early in the third quarter. Upon closing, we intend to increase our annualized dividend from $1.35 to $1.50 per share. This is the model working as designed. We acquire, we optimize, Grow the dividend, we repeat. It is, frankly, a beautiful thing when a model works, and our track record shows that it does. Now, to the part of this story that does not fit neatly into a traditional E&P valuation framework, as if we were subject to that framework anyway, and that we believe represents a genuinely asymmetric opportunity for our shareholders. Pay close attention to this part. Since our founding, Presidio has generated significant alpha through the disciplined deployment of technology on our assets. That track record was not an accident. In 2020, we formed FTW Technologies as a dedicated subsidiary. At the time, most of this industry was not thinking seriously about artificial intelligence and machine learning. We were. We had a clear conviction about where the world was heading, and we built accordingly. What we have built is a proprietary oil and gas domain model. built on a custom ontology and trained on millions of operational data points, hundreds of hours of information dense voice submissions from pumpers in the field, hundreds of thousands of inputs from well files, drilling reports, completion reports, work over reports, producing pressures, production volumes, and geology to name just a few. The result is what we believe to be the most sophisticated asset intelligence system operating in the upstream industry today. Earlier this year, we made a deliberate organizational decision that I wanted to share with you because it reflects exactly how we think about technology and what we expect it to deliver. We reorganized our operations into three distinct but deeply integrated groups. The first is our asset intelligence group, our engineers and support staff armed with AI and analytics to drive field efficiencies. Our operations group, the people all of us in Fort Worth serve who run the assets every day. And finally, our dedicated AI group at FTW Technologies, which exists for one purpose, to support the Asset Intelligence Group and the rest of the company with the tools, models, and insights they need to make better decisions faster. To go further, we have also designated our first class of Presidio AI astronauts, men and women who are serving as ambassadors of this AI transformation, carrying it into every corner of our organization and bringing their colleagues along with them. This is a pioneer program. This is a hard asset business that we have been successful digitizing, but we will always need the man or woman turning the wrench at our sites. Our intention with artificial intelligence is not to replace people. It is to make every person at Presidio dramatically more powerful. We believe that with the right infrastructure, the right tools, and the right mindset, we can multiply the productivity of every Presidio employee by an order of magnitude. People remain at the center of everything we do. AI is the force multiplier. I want to be equally direct about what we are and are not trying to do with this technology more broadly. Our primary focus is not to use AI to automate paperwork or streamline administrative workflows or generate reports faster. Those are fine things and we are doing them, but they are not the prize. In this business, production is the prize. Revenue is the prize. Cashflow prize. And that is precisely where we have aimed our technology. Our asset intelligence group carries a target of growing production 3% to 5% this year without a single dollar of capital expenditure. Not through drilling, not through workovers, through intelligence, through knowing which wells to prioritize, which interventions to make, and which decisions to take before a problem becomes a problem. Through the application of nine years of proprietary data to the specific challenge of making every well in our portfolio perform at its highest potential. Through the first four months of 2026, we have achieved an approximately 1% improvement. We are just getting started. And when I say just getting started, I mean it. In the physical world of oil and gas, upside is capped. You can acquire more barrels. You can improve recovery. But eventually, there's a ceiling. Technology is different. The upside is uncapped. The growth potentially exponential. And the intellectual property we have built at FTW Technologies is applicable far beyond Presidio's own wells. beyond the Anadarko, beyond the Arcoma, beyond anything we have announced today. Upon the foundation of our domain model, we are constructing well surveillance agents, production intelligence systems, financial modeling capabilities, and deal screening infrastructure, a body of work that will serve Presidio for decades and that holds real commercial promise for other operators who face the same challenges we do. That opportunity is not lost on us. We are currently expanding our dedicated AI team, And based on the results we are seeing, we have confirmed our conviction that what we have built has significant, potentially transformational value to the broader industry. Stay tuned. Now, if anyone is still awake, I'll turn it over to my co-founder and co-CEO, Chris Hammack, to walk through our operational philosophy in more detail. Chris built much of what I have just described, and nobody knows it better.