NXT Energy Solutions Inc.

Good day, ladies and gentlemen. My name is Faith, and I will be your conferencing operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions 2021 Second Quarter and Operating and Financial Results Conference Call. All participants will be in listening-only mode for the first part of the conference call, with the ability to ask questions after the presentation by the company. For the question and answer session, if you would like to ask a question, please press star 1 on your telephone keypad. Should you wish to cancel your question, please press the pound key. So that all callers have an opportunity to ask their question, we will limit each caller to one question and a follow-up question. I would now like to turn the meeting over to Mr. George Lizikas, President and CEO of NXT Energy Solutions. Please go ahead, Mr. Lizikas.

Thank you, Faith. Welcome, and thank you, everyone, for joining us today for NXT Energy Solutions Second Order 2021 Financial and Operating Results Conference Call. This is George Lisitas, and joining me today's conference call is Eugene Wojcicin, Vice President of Finance and Chief Financial Officer, Dr. Xiang Gui, Director of R&D, Rashid Tipu, Director of Geosciences for Africa, Asia, Middle East, and Enrique Hung, Director of Geosciences for the Americas, and Mohamed Saqib, Head of Interpretation and Project Engineer. The purpose of today's call is to briefly discuss the highlights of the release of NXT's second quarter 2021 financial and operating results. Following our update, we will open up the line for questions. Please note all statements made by the company and management during this call are subject to the reader's advisory regarding forward-looking information and non-GAAP measures set forth in our Q2 2021 press release and MD&A issued on August 12th. All dollar amounts discussed in today's conference call are in Canadian dollars unless otherwise stated. The complete financial and operating results and consolidated financial statements for the second quarter of 2021 were published on August 12th and are available on NXT's website, CEDAR's website, and soon will be available on Edgard's website. Now, over to Eugene for the financial review.

Thank you, George, and welcome everyone. As George mentioned, our second quarter 2021 financial statements and management discussion analysis were filed on CDAR's website on August 12th and will shortly be available on EDGAR. We are pleased with the quarter results, especially with $729,000 of operating cash flow and net income of $1.53 million or two cents per share. From a financial perspective, the focus remained on supporting the execution of the business development effort and continuing to control and optimize costs. For the second quarter, our financial results were as follows. Cash and short-term investments were $3.78 million at June 30th, 2021, and net working capital was $4.64 million. Operating activities provided $729,000 of cash during the quarter, Revenue was $3.14 million in the second quarter and year to date. For the quarter, NXT recorded a net income of approximately $1.53 million or two cents per share based on 64.5 million weighted average common shares outstanding. This compares to a net loss of $1.48 million in the second quarter of 2020 or two cents per share. For year to date, NXT recorded a net loss of approximately $110,000 or zero cents per share based on 64.5 million weighted average common shares outstanding. This compares to a net loss of $2.8 million during year-to-date 2020 or four cents per share. Total operating expenses for the second quarter were $1.51 million including survey costs. This includes non-cash expenses of half a million dollars related to amortization and stock-based compensation expenses. Total operating expenses year-to-date were $3.12 million including survey costs. This included non-cash expenses of $.96 million related to amortization and stock-based compensation expenses. General administrative expenses decreased by $127,000 or 16% in the second quarter compared to 2020 for the following reasons. Salaries, benefits and consulting charges decreased $36,000 or 11% through the Canada emergency wage subsidy. Board and professional fees and public company costs decreased $29,000, or 11%, due to lower professional fees. Premises and administrative and overhead costs decreased $107,000 for the quarter, or 52%, due to receipt of the Canada emergency rent subsidy. And stock-based compensation was higher by $45,000, or 22%, due to the employee share purchase plan which commenced in the fourth quarter of 2020 and has approximately 75% employee participation. G&A expenses decreased $223,000 or 12% year to date 2021 compared to 2020 for the following reasons. Board and professional fees of public company costs decreased $80,000 or 21% due to lower professional fees. Premises administrative overhead costs decreased $80,000 for the quarter, or 21%, due to the receipt of the Canada Emergency Rent Subsidy. Business development costs decreased $126,000, or 96%, as travel restrictions continued due to the COVID-19 pandemic. And stock-based compensation was higher by $49,000 due to the employee share purchase and RSU plans. During the quarter, the company received a million-dollar ASCAP loan with an interest rate of 4% for a 10-year term. To summarize some of the key financial points, we ended the quarter with $3.78 million of cash and short-term investments on hand and a net working capital balance of $4.64 million. Net income for the quarter is $1.53 million and net loss was $110,000 year-to-date. Cash provided by operations was $729,000 for the quarter, and we used $154,000 year to date. Our main focus continues to be on the execution of NXT's commercial opportunities. I would now like to hand the call back over to George to further discuss our business update and forward plans.

Thank you. Thank you, Eugene. First, I want to convey my sincere hope that everyone is well and continues to stay healthy at this time. Before I continue with the business development update, I would like to say a few words about NXT's position in light of the global energy changes as I see it. I want our shareholders to note that the transition of our company into other energy sectors is coinciding with our transformation into a technology company. The application of SFD is fast and we are constantly considering expanding opportunities that can provide increasing return to our shareholders. Therefore, our objective is to expand into these new spaces and capitalize on the opportunities not only as a service provider but as a participant via special purpose vehicle where the reward can include royalty, bonus, equity, and participation rights. Eugene mentioned that we recorded revenues of $3.78 million and had a total cash inflows of $730,000 from operations, which shows a modest but initial result of our business development efforts. Revenues generated were from the sales of pre-existing SFD data. Now continuing with the business update, I would like to also announce, I mean, I'm also pleased to announce the addition of Mr. Jerry Sheehan, a highly rewarded energy explorationist to our board of directors on July 1st, 2021. Mr. Sheehan has worked extensively in international oil and gas exploration, development, and production for over 30 plus years. He has a broad technical and business development experience in Africa, South Asia, and Europe, which he will bring it to NXT as the company seeks new markets for his proven SFD tool. In the short period of time he has joined NXT's board, Jerry has already made his presence felt. If you'd like to know more about Jerry's background, please refer to the June 23rd press release. On the technology development, I would like to note that the SFD technology has been exclusively deployed to date in the upstream hydrocarbon sector for the identification of potential hydrocarbon traps and reservoirs. Recently, as you know, we have announced that a company is receiving advisory services and funding for up to $50,000 from the National Research Council of Canada Industrial Research Assistance Program, or IRAP, to support the research and development of the SMD technology for geothermal applications. The IRAP funding follows an earlier announcement of the acquisition of the SMD geothermal technology rights. The company now embarks on an exciting new chapter in transitioning itself as a multiple application solution provider for both the oil and gas and geothermal industries. The objective of IHRA funding is to test, identify, and analyze the desired elements of the SMD sensor response over known geothermal areas with the ultimate goal of developing and providing NXT with a green geophysical service branch for renewable power initiatives in Canada and abroad. we are extremely pleased to have the support of IRAP to advance the application of SFD for exploring geothermal energy resources. We consider this as the first step in establishing a long-term relationship with IRAP. Continuing on the Africa business development, NXT's most promising opportunity for significant revenue is tied with our recent success in Nigeria's frontier basin. We are very pleased that the country has this morning espoused into law the Petroleum Industry Bill to overhaul its oil and gas industry. A significant portion of the capital will be allocated for exploration and producing oil and gas for the large population in the interior. Because of that, Nigeria is our priority and we believe our business with the NOC, which is NNPC, the national company, and other international explorers will thrive for many years to come. We are excited about the continued positive developments in other African countries as well. We recognize that Africa is one of the most important continents for sustained hydrocarbon and geothermal application. The utilization of SFD will mitigate overall exploration risk, provide time and cost-effective solutions in a friendly ESG manner. Now let us turn our attention to Latin America. We are equally focused on Latin America projects where we have seen increased interest in SFD application. A number of SFD recommendations have been drilled successfully over the years in Mexico, Bolivia, Colombia, and Argentina. We anticipate these successes will lead to new contract opportunities in Latin America. With respect to the Middle East and Asia, NXT is engaged in continued discussions with interested parties. Prospects are developing progressively, in spite of the COVID-19 pandemic, which is currently ramping across Asia. With respect to the GT opportunities, I would like to say that I'm pleased that there are a number of companies already that would consider using SFD GT. The geothermal is GT. And we are hopeful to have our first geothermal project announced this year. In summary, hydrocarbon survey opportunities continue to progress well in our core areas in Africa, Mexico, Asia, and South America. In addition, we are in discussions with multiple geothermal companies about providing SFD services. For these reasons, we are optimistic about the second half of 2021 and will remain focused on contract executions. in order to deliver value to our shareholders. A couple of notes about the upcoming CDOTI conference. I'm pleased to note that Eugene and I will be presenting at the CDOTI August microcap conference Wednesday, August 18th, which is tomorrow, 11.30 a.m. Eastern Standard Time, 8.30 a.m. Pacific Standard Time. Please refer to the press release issued on August 11 for instructions on how to view the presentation. In conclusion, on behalf of our board of directors and the entire team at NXT, I want to thank you, all our shareholders, for their continued support. We wish you the best of health to you and your families. I now ask the operator, Faith, to open the line for questioning.

Thank you, sir. Again, if you would like to ask a question, please press star 1 on your telephone keypad. Should you wish to cancel your question, please press the crown key. So that all callers have an opportunity to answer a question, we will limit each caller to one question and a follow-up question. Your first question comes from the line from Woodlet. Your line is open.

Hey, guys. Used to have a mute on these calls. Just want to say, first off, I really appreciate all you guys have been doing. It's been a really tough year. I've been a longtime investor, like nearly a decade. And I feel like everybody on this call, you know, the story we're all telling ourselves about NXT is it's this amazing game-changing technology. And I think we've all bought into that. But I think also, you know, over the last few years, it's just felt like we've faced a ton of skepticism. And I'm excited for all the things that are up and coming. I'm super excited about the geothermal front. I'm wondering from, I guess I'd call it a marketing standpoint, if you guys are thinking at all in terms of the story that you're able to tell here. Like, do we have a test that we could be doing that would be proving the technology in a more undeniable way? Is there some sort of independent body that could be verifying stuff that we're doing Because right now it just feels like for the last years we've been facing all this skepticism, and I don't want this great work that you guys are doing trying to get all these contracts to then be second guessed by the industry leaders. You know, if we are a tech company, I guess the question is how are we proving our disruption in a way that's easy and undeniable and digestible? That'll be it. Thanks.

Thank you, Thomas. I think that your comments are valid, you know, and thank you. From the marketing perspective, what we found over the last couple of years, that it's becoming easier. There are papers, and we are very happy to share that with any of our investors as well, and probably some of that we should post also on the website. And Mo is telling me that we will do so. That now proves that this technology, this type of technology, can be constructed, built, and we have never shied away just regarding the testing part from a test. And Thomas, every single national oil company and every oil company tests us. We had done two tests actually in Nigeria. One was an onshore test and one was an offshore test. And in both cases, two different divisions of the national company were involved, and we were not on the airplane either, so the technology was independently tested onshore and offshore, and we did it with flying colors. That's why we got the contract. That's why we are looking forward now for a long-term, many years to come, contract opportunity in Nigeria, where we are going to be working potentially with the super majors and majors as well. So if you know anybody that I'm totally open where we can do a test, we offered it to the industry, we offered it to a super major as well, and they said that they don't understand the technology, therefore the test is not important to them. But if you do know anybody that's a third party that would test the tool, We are willing to do a 1,000-line kilometer test anywhere in the world, okay, as long as they have their GNG information. And maybe, you know, maybe Enrique or Rashid, you guys can add to this. They are the geologists, the geophysicists with respect to this question.

I think he was referring to the geothermal testing, which is also being considered. That was... part of the question. So the marketing for the new branch of FFDGT will also be, yeah.

Yeah, I'd say for either. I mean, just to specify.

I have brought in very important people from universities to review the technology, and we had no problem. So I'm just... Great, yeah.

I guess the fundamental question is just saying that, you know, we love the technology. We're excited about it. I think there are a lot of papers and research, and I think there are these tests that you guys are doing. And I'm just wondering if there's ways that we can get that, I don't know, like a simpler story. And it might just be talking in marketing language so that it's, you know, like you say, they don't understand the technology. Is there something so simple that we could put in front of people that, like, these guys did this, you know, that would wow the world? And, again, that's not a challenge. That's an encouragement because I'm excited by what's happening.

So everybody, every major – Oil and gas company tested the technology independently. Okay, so whether it is Pemex or down in Columbia, PRE did it, and also the national company. Ecopetrol. Ecopetrol did it. GRG report is out there. They did it many years ago. It's all on the website as well, those ones. And maybe I just very slowly, I describe one of the tests. Or maybe you can describe the Shell Chevron 3D test offshore in Nigeria that they did.

Yeah, so... This is Rashid. Rashid is here. So George mentioned earlier, like in Nigeria, we were... tested by two different, you know, the government authorities. One is like definitely the survey we were doing for the company. They initially planned for offshore, but they give us onshore areas, you know, right before we fly. And the other one was on offshore area where nobody knows. We give them independent results for the test. And when we integrated with their geoscientist team, then we learned there were two supermajor companies there requesting for drilling permission based on the seismic prospect. So SFD recommended those seismic prospect as a independently verifying those seismic prospect, which was not known to prospect. And two supermajor were looking for permission

How long did it take?

And we completed that test in like three hours and next day they were requesting us to present the results. So it's like within 24 hours we gave them the results. Nobody can do this. So that's something and that's why we got that approval from Nigerian authorities. That's how, you know, they said this is the SFD is the only unconventional technology will be used to explore in frontier exploration and also before drilling any well, we should use this technology.

So I hope that that answers your question. And if you want to talk about it more and you are interested in the papers or maybe you have some very good suggestions regarding the marketing or any other aspects of the technology, please give me a call.

Thanks, George. Appreciate all you guys are doing.

Thank you so much.

Your next question is from Michael Mork from Mork Capital. Your line is open.

Hi. It's nice to see some decent working capital on the balance sheet and got some momentum now. I just wanted to spend a couple years since you've been a director of sales. Is there any game plan here to get a director of sales to make sure that all the leads and All the things that are happening are followed up on. And in particular, I'm wondering if Jerry Sheenan, who, as you said, has business development experience in Africa, Asia, Europe, if he can help in this endeavor of getting the technology out there a little better.

Thank you, Mike. Thank you for your support. This is George. I just talked to Jerry yesterday. He's preparing a whole list of countries in Africa that we are going to be talking to. And I can't go ahead of myself, you know, but there are a number of countries that he has in mind, and he has very good connections in those countries that we are considering as an opportunity. And that includes a number of the sub-Saharan countries. So we are very positive and very pleased with his involvement because everybody knows him. So it's a very, very good thing for NXT. He has a tremendous respect there. As you know, he was heading Tullow's exploration and he's the Jubilee Field, that is about 300 million barrels offshore. It's his doing. That's how Talo took off, and he brought a number of new discoveries to that company, and we are very, very pleased to have him to work with us.

Okay, thank you.

Thank you. Your next question is from Tucker Anderson from Above All Advisors. Your line is open.

Hi, George. How are you?

Hi, Tucker. How are you?

Fine. I hope you and your family have been safe during all the COVID.

Well, I'm fully vaccinated.

Sometimes that hasn't stopped people from catching it, but I'm glad you worded anti-vaxxer. Sounds like our patience is getting closer to being rewarded. My question was your comment on geothermal in Africa. I was not aware that Africa was really active market for geothermal. Are there projects there currently, or is this a case of there's enough potential so SFD would be very helpful in identifying the projects?

Yeah, we are currently in negotiations and talks with a very powerful funding capital, excuse me, a funding firm, an investment banking firm, that has several projects in Africa, including Kenya and Mozambique. And so we are establishing this relationship right now. They sought us out. The technical people know Rashid. I don't think I know anybody who doesn't know Rashid in the geoscience world, or Enrique for that matter. So we are positioning ourselves for the geothermal activities also in Nigeria. There's a tremendous interest. So yes, the answer is yes to your question.

Well, good luck and congratulations on the working capital, as Mike said.

Thank you so much. Thank you, Tucker.

Again, if you would like to ask a question, please press star 1 on your telephone keypad. Should you wish to cancel the question, press the pound key. Please limit one question and one follow-up question. Your next question is from David Appelman, a private investor. Your line is open.

Hi, George. How are you doing? Hi. How are you? Not too bad. My question is, what is being done to get the information to the brokerage community and to get more investors involved internationally with the company? Is there a marketing plan or is somebody in charge of doing that at this time? What the company is asked right now is liquidity in the markets. And I'd like to know what's being done to increase the knowledge base of the brokerage community.

That's exactly what this conference that we just attended to is going to accomplish to start the whole process. And as we are going to generate more revenues and more contracts, we are just going to expand it to North America and then Europe and Asia at the same time. So I agree with you, you know, that the market, our market, our stock is a little bit depressed. But the truth is, you know, that you cannot just inflate the share price, you know. We want to deliver the goods. And I think that we are on the right track now to do so. And since I can't say everything, you know, on a conference call, because it would be selective disclosure, but as we are making these announcements, these new opportunities, new contracts, you will see a significant increase in market share value. Market share value or market value?

Thank you.

And thank you for your question, David. Okay.

Your next question is from Peter Mork for Mork Capital Management. Your line is open.

Hey, guys. Again, congrats on the revenue, the working capital, and the earnings. That was great. A lot of optimism in your expressing for the back half of this year that we're already into. I was wondering if you could, on a couple different fronts, give us some of the key milestones that we should be looking at as investors. and specifically on, you know, work in Africa, work in LATAM, and geothermal. If you could, and I don't know if one person wants to answer that, but just what, you know, your next call is going to be in, let's call it mid-November. What are some of the keys that we should be looking for to show that this optimism that you're expressing is coming to fruition? Thanks.

Yeah. Hi, Peter. Rashid is here. So, As you heard what George was talking about, petroleum industry bill, the main objective for that petroleum industry bill for Nigeria is to promote exploration and exploitation for oil and gas in Nigeria. So what we are looking at now is a multi-year project opportunities within Nigeria, especially since we are approved and tested technology in Nigeria. And not only this will help in Nigeria, it will also help in us to getting projects outside Nigeria, other African countries. So we are seeing really very positive news for us in terms of business development in the region. Great. Yeah.

And then how about, like, I would just say, like, you know, Latin America and also the geothermal. Like, what are some of the key markers we should be looking for there?

Hey, Pete. Well, for Latin America, if you take a look at what's going on in Ecuador and Bolivia, we have been in video conference because it's very exciting what is happening there. They are destinating big funds for exploration, which is was not happening in the past two or three years. So Bolivia, for example, is investing $1.4 billion on exploration. And similarly, Ecuador is investing $2 billion in exploration. And the goal is, at least for Ecuador, is to duplicate their production in the short term. Also, we're working in alliances with people in Mexico. And in Latin America, that has allowed us to have a broader view of other new contacts in different countries. So this means that there are major service companies that we may be announcing alliances in the future. And these companies have foot on the ground on many other countries that we will soon be reporting, hopefully, very positively. Great.

And then just tying in the geothermal, I mean, one, kind of following up on Thomas's question, just to lead that off, you know, you guys got this funding to, you know, prove out the technology or develop the sensors, I guess. You know, how does SFD specifically fit into this, you know, as a geothermal application in terms of exploration applications? Maybe a little color on that. And is there some sort of, like, test that could be, you know, so we could see a paper up on the website or whatnot proving that it works as you've done with the oil and gas? And, again, just kind of tying it back to some of the milestones where we should be looking for to know that there's something there.

Well, Pete, we have a good start. We have two questions. two people who told us that ahead of us that this tool could be used for geothermal. One is a professor from Waterloo University, and the other one is an experienced geothermal expert. Both said we can use this, but we are more cautious than that and said, well, before using it directly, we'd like to take a look ourselves because they were very much ahead of us. But now Gui can give you some specifics if you want to.

Well, Peter, I think, you know, we can go with the schedule of ARAP so we can conduct them test the flight over known area. And then we can see, you know, in what aspect our sensor can be modified. and also in what aspect our data processing technology can be improved. So it is an ongoing process, and we are confident we should be able to achieve what we want to achieve.

And are those test flights going to be in the next, like before year end, in the next month? Like what's kind of the timing on that?

Yeah, I am just answering that.

OK.

So what we're going to do is that we already started the process. We already got approval from IREF. We're already doing it. We're going to be working with their specialists. They are introducing us to laboratories, nanofabrication, all sorts of things that are going to be happening here to build better and better sensors. We're working with the universities. So what's going to happen is that Once we are going to use the original SFD sensors to do test flights, okay, first in very shortly. I think that it's going to happen in September in Alberta. There are several sites, you know, that we can fly over and test the technology. Once that is done, we are going to start the modifications, the finalizing the modifications, for the new sensor because there are certain aspects that are shared. So you know that there are a number of common elements in fluid deposition and geothermal setting. So the deployment of SFD for geothermal setting will allow the clients, you know, to focus on the most favorable subsurface conditions, which is basically porosity connected mainly with permeability and you want to have a large area that is permeable so that you can optimize your geothermal activities. It's very, very important that you have a large area because otherwise your temperature would be used up very, very quickly and the water would be cooled and then your geothermal site has to be closed. SFD is an ideal technology to identify the subsurface conditions for heat and fluid circulation. And that will increase the chance of success and reduce the overall time and cost, and also you'll do it in an environmentally friendly manner. So the testing is going to take place in September. And once we modify it, we're going to come down also to the U.S. We're going to fly down. There are a number of sites there. One of them is 1,000 megawatts, you know, largest in the world. So we're going to be flying over those areas as well. And we are going to land in Los Angeles probably or San Francisco. And with the plane and the technology and anybody who wants to come and see us, you know, we're probably going to have a, for our investors down there. So that is the plan, actually. Also, Erika mentioned that we have been blessed by the professors in Waterloo University. These guys are specialists in stress and so on. So we are on the right track. There is less and less resistance towards the technology and the technical capabilities of ours. Also, we are working with very reputable geothermal companies now who are looking at us to help them identify these geothermal sites, not just one or two projects, but ongoing projects and so on. We have three of those right now, and we believe that we are going to be able to execute one of them this year. and uh hopefully you know that's just going to open up a new chapter in our our lives and we should put the results on the website i totally agree with you uh because these are very very important steps in in uh in the company's uh life and its future

Thanks so much, guys. That was great. And, again, appreciate the – really like seeing the revenue and the strong quarter. It really showed your earnings potential. So thanks a lot.

Thank you. Thank you, Peter. And let's just push forward.

Your next question is from Stan Trilling from Morgan Stanley. Your line is open.

Hi, George. Hi. One of the things that comes across to me is, and this is something that has concerned me for a while, is that you have too many irons in the fire and you have a limited capital base to handle all of these opportunities. So what I would really like to know is, do you have a specific plan of direct focus, one, two, three, on which items you're going after and what type of priority?

Yes. Actually, in the speech or during this conference call I mentioned, number one focus was Nigeria because of the long-term contract opportunity there. and I'm not talking about $5 million here, long-term, significant numbers. Also, the number two was Mexico and some of the new relationship that we are establishing with a service company that is taking us, basically, to this, taking us, I have to be very careful how I word it, but, you know, joined joined us in our quest for getting the contracts done in a number of Latin American countries. And then we are focusing on the geothermal activities, two or three countries. We're never gonna have a problem of acquiring the data. And now that we have this new mapping algorithms developed, we are going to be able to do this much, much faster as long as we are conducting grid surveys. So we are very, very positive and very hopeful that we can produce significant revenue without any change in the current situation of the company. So those are the three main components I would like to mention to you.

Here we draw the question presenters. Your next question would be from Nessa Elick, an individual investor. Your line is open.

Hi, George. Hi, everyone. A quick question which is really a follow-up to what Dave was asking as well as Stan and to some extent Peter. Now, especially with respect to the last question, if you have the contracts in Nigeria signed and possibly one more contract in South America, would it be reasonable to expect that you will be listing on the NASDAQ since you're a technology company? This, I think, would help market the company to institutional investors. And what are the benchmarks, if so, that we need to see in terms of the price, stock price, and in terms of the contract volumes such that that can be expected to happen?

Nisha, it's Eugene. Obviously, we're always looking at that opportunity. The benchmarks are relatively high, but it's going to come down to us executing, as you said, on contracts. And we believe once we've executed on two or three contracts that we should be able to go down that path. It'll take about three months. It'll take about three months. And $4 per chair.

Yeah, so that's... From the $4 per share and signing of the, after signing of the contracts, of course, obviously, and starting to execute them, that's three more months after that, right?

Yeah.

Okay, thanks, guys.

We would like to do it, Nisha, as fast as possible. You know, I mean, it is a priority for us to be listed on a very serious market.

Okay, thanks, guys.

Thank you, Nisha.

We do have a follow-up question from Stan Trilley from Oregon Stanley. Your line is open.

I don't know what happened. Either my line got dropped or my voice got shot. But thank you, and thank you for the information on Nigeria. We've been talking about multiple contracts, And I just want to know, what is getting in the way of the announcement of the potential contracts? Is it the government? Is it politics? Is it intermediaries? I'm just curious about the mystical curtain that's been put up.

That's a very good question, actually, Stan. The issue is here that we are used to dealing with North American companies, and even if they function or operate in other countries, things are much, much easier. If you recall, some contracts we concluded in North America in two weeks, and we were flying in the next two weeks. so it's the it's the way the people operate and in third world countries it's even harder the bureaucracy is enormous everything is hand delivered signed 15 people have to sign one single contract is the same in mexico the same in in nigeria and we just i mean If you take a look, this bill that was just now done has been on the table for almost two years. And now finally, they are allocating 30% of all production revenue to the interior or the frontier exploration programs. And as I mentioned, SFD is the number one tool now in Nigeria. we knew that it's happening is going to happen is going to happen but unfortunately you cannot control national companies how they operate or government uh people how they you know negotiate and and do things it's uh as you as you i think you mentioned it well you know it is bureaucracy in a sense that everybody has to be happy satisfied then you can move the paper to the next people and so on and so forth, the next branch of government. And in Nigeria, you have the national company, you have the the frontier exploration people. You have several branches of the national company, IDSL, NPDC, and so on and so forth. Then you have the MPB, which is the major tender board. Then you have the ministry, and on and on and on. But now we're in. So we are just waiting for them to give us the green light. That's all.

Okay. And Uh, how far along are we with Mexico? Because Mexico, we actually had a contract with them that I guess just, uh, that, uh, expired. I don't know if it was expired or what happened, but, uh, um, is it a whole new, do we have to go through all of the pains and tribulations that we went through before? or is it more streamlined there?

More streamlined, I will take that last word that you said. This is Enrique Jung again. Yeah, Pemex, we are very optimistic with Pemex. We have an alliance with a service company that is doing services with them. One of the three companies are doing services with them. So that's unique, and they are the ones that have – branches in the whole Latin American world, and we are meeting with them. We are about to, in conversations we can say, to be like their brothers. And they will facilitate. That will tell us, you know, they did the job, and I have done the footwork in Mexico, and we are still in the system with Pemex. The lack of activity was, you know, justifiable. There's no claim or nothing wrong with the service that Pemex did. And, in fact, the last question I did was I sent a list of the discoveries that they have had inside our recommendations in Mexico. That goes from 2016 to 2020, so it's more than five or six fields and production and, you know, good activity that we recommended as early as 2012. So similar to that, we have good results in Bolivia, a discovery that came in in 2020. And a new one in 2021, we have a discovery in Mexico onshore. So they are aware of this. The only thing is that they are very slow. But we are pushing our way in, and we have creative ways of making this contract work as soon as we possibly can.

Okay, great. The last question has to do with geothermal, and then I'm done. You can shoot me after that. You had mentioned that you think you can execute some sort of contract with with a U.S. company on geothermal. Just one question. I don't want to know who it is, but will it be a name that is recognizable to the people in the geothermal industry? No, it's Canada.

Yeah, we have Canadian companies that are, they are very recognizable. They all have doctorates in everything. The company he means. No, the company. Also recognizable. So they have a history of worldwide geothermal plants that have been found, and they have a whole number of people who are experts in geothermal science, basically, and geology. And they have built, I think, in one country they did about 300 megawatts altogether, 30 megawatts, 20 megawatts, 15 megawatts plants that have been put together. And they are here in Alberta now as well. And there are two Alberta companies. We have one overseas company, two overseas companies, one in South America and one in the Middle East. So as soon as we are ready, and that's what Dr. Gui is saying to do, As soon as we are ready, when he says we are ready, then we are off to the races.

The only good thing about geothermal is that they have the government support. Yes. That's, you know, paramount. Yes.

These companies here in Canada, they all have – just think about it, that the IREP and the NRCan, you know, which is the National Research Council and so on, that we are dealing with and approve the technology. they also approved them for financing, for matching funds. And we are talking about $25 million, $50 million, $100 million here each. So we are in good situation as far as geothermal is concerned. And as Peter said, you know, we will do the test. We will do the test in Alberta. We will do the test in California. We know the sites. We know what we need to do. They are going to be working with us. I rep on this. And we are going to present our results properly to them and also to the technical people and the professors. And then hopefully we are going to be approved, you know, for the next funding and the next funding and the next funding and the next funding.

Okay. Thank you, guys. Keep plugging. Keep plugging. I appreciate it.

Thank you.

Your last question is from the line of Tucker Anderson from Above All Advisors. Your line is open.

Hi, George. Thanks for keeping all of us on the line and answering the questions. It occurred to me that one of the things that's changed pretty dramatically in the last six months is the price of oil. And to the extent that COVID not only, you know, sort of interrupted the bureaucracies and the other things on their mind, there was also a question about the long-term demand. And the price of oil going up, obviously, has changed the economics of a lot of these projects. And is that a factor in that maybe they're more likely to be a shorter timeline to approval or not?

Absolutely. Absolutely. I mean, they didn't even want to talk to us until the oil went over 40 bucks. So, you know, it's correct. It's just... We just don't want any excuses, in a sense. We don't want to have the oil prices as an excuse because the national companies cannot stop drilling. So their production is vital to the country. It's usually 40% on average of the GDP in developing countries. So Bolivia depends on it. Guatemala depends on it. Ecuador depends on it, Algeria, Nigeria, all these countries, you know, they all need to have significant oil revenues. And if they don't have it, the country goes into depression economically. So that's why it is so important, you know, what you said, is that, yes, the oil price is a major factor, but hopefully now... it's going to be a positive thing for us because we can find it faster than anybody else. And that's the key. And our success rate has actually improved. So we are doing extremely well in that regard as well.

Yeah, I would think everybody would want to shorten the development cycle as much as possible. And And some of the questions about the depression of demand due to COVID, it now looks like it's recovering. So, good luck.

Thank you so much, Stan and Tucker, and supporting us. Thank you.

There are no further questions at this time. Let me now turn the call over to George for closing remarks.

In that case, you know, I would like to thank everybody for participating in our conference call. Wishing everybody safety and good health. And we are going to be online hopefully very soon with you again. And thank you for your questions. I think this was a good call in terms of, you know, getting some revenues in and also that the interest is there and the support is still there from you. And we love you all. Thank you so much.

This concludes today's conference call. Thank you for participating. You may now disconnect.