EON Resources Inc. (EONR) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the EON Resources, Inc. Special Conference Call to discuss acquisition of the South Justis Field in the Permian Basin. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Michael Porter. Sir, the floor is yours.

Thank you, Matthew. Good morning, ladies and gentlemen, and welcome to our special conference call. To get the legal stuff out of the way, this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainties that could cause actual results to differ materially from what is expected. Words such as expect, believe, anticipate, intend, seek, and various and other similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The company's expectations are disclosed in our corporate documents filed with the Securities and Exchange Commission and then placed on EDGAR, and we follow all the laws and disclaimers that are involved in that. Without further ado, I'd like to turn the call over to our President and CEO, Dante.

Yes, hi. Thank you, Mike. Welcome, everybody. Yes, we called this special call because we did close on a nice piece of property in the Permian, in New Mexico. It's called the South Justis Field and it's a short drive from Hobbs, New Mexico, just as our current property in Local Hills, we also refer to it as Grayburg-Jackson Field or that we purchased from CIC Pogo. So it has a lot of attractions for us. And frankly, it was just a deal too good to pass up. So on the call is our team, our CFO, Mitch Trotter. You'll hear from Jesse Allen, our Vice President of Operations, and we have our General Counsel also online. So I'm on the slide with acquisition highlights. We purchased it and closed it on June 20. It's located in Lea County. It's part of the big prolific Permian Basin. We purchased it for 1 million shares of Class A common stock or if you converted that to cash, roughly $0.5 million. It's cash flowing, $100,000 a month. $1.2 million in net annual cash flow. There's really, I'll say, minimal impact to our G&A. We're not going to hire anybody. We're just going to do a little more work with the same G&A folks that we have. We've purchased 94% of working interest, net revenue interest of 82%. It's similar in some ways and different in other ways from our current field, and I'm going to ask Jesse to kind of go through that. Also, we bought it from Team Operating. We have a relationship with that company. And we're also going to use one of their pulling rigs. So before we bought this property, it was making 50 barrels a day, which did not interest us. So I asked the owner put a rig on these wells, and let's put some wells back on production because it has something like 70 idle wells, and let's see what they do. And so we got the production to double by just repairing tubing leaks and changing out pumps. But the field is not in an area that suits them because he doesn't have any other operations in the area. It's just not big enough. But for us, where we have a center of gravity with our current property, this thing is a nice fit. So with very little expense, this property was doubled in production, and I said, okay, we're interested. And we'll just continue on that same vein, taking it from where they took it from 50 to 100 in just a few months, we'll take it from 100 to 250, we believe, in probably another quarter. So with that, I'm going to turn it over to Jesse to talk about how we do that.

Yes. Good morning. This is Jesse Allen, VP of Operations. And what I'm going to do is kind of give you an overall profile of the property to give you an idea of just what we're acquiring here. As Dante said, it's in Lea County, New Mexico. Just outside of Jal, New Mexico, if you all take a look at map in your -- once you get off the call. It's about 60 miles from our field office there outside of Local Hills. We're getting almost 5,400 additional acres. And currently, there are 208 producing wells and injection wells. As Dante has said, current production is just a little over 100 barrels of oil a day from 19 active wells. This is very similar to our property there outside of Local Hills, the Grayburg-Jackson Field. There's a lot of oil in place and most of it is still there, and that's what we're going to exploit. Production to date has been about 30 million barrels. You can see there in the slide that current PDP, Proved Developed Producing is about 150,000 barrels of oil and Proved Developed Not-Producing about 361,000 barrels. We believe that we can recover another 15 million barrels of oil with recompletions, returning idle wells to production and maybe even doing some drilling. We feel like there's horizontal drilling potential here like there is in our Grayburg-Jackson field. What's different about this field is we are producing deeper -- we'll be producing deeper horizons here in the South Justis Field at about 5,000 to 7,000 feet. And those intervals are known as the Glorietta, the Blinebry, the Tubb, Drinkard and the Fusselman. Over in our Grayburg-Jackson Field, we're producing the zones above this. And in the Seven Rivers, Queen, Grayburg and the San Andres. So that -- there's the difference there. We're just a little bit deeper. If you'll go to that next slide, what you'll see there is the decline curve. And what you'll notice is that the production over the last 3 or 4 years? Or is COVID hit production just dropped off dramatically. Previous operator stopped doing work, the one putting wells back on production as they went off, had to do a little bit with COVID and just the ability to work. But that's where the potential is. We feel like we can get back up there to 250 barrels of oil a day from the current 100 barrels oil a day. So that is very significant for us. And as Dante said, it's mostly well serviced, changing out any -- if there's an issue with the tubing or the pumps, it should be relatively inexpensive to do that and get this production back up to around 250 barrels of oil a day. Let's go to that next slide. And so what do we -- what's been the history of this property? I'll talk a little bit about that. It was developed in the '60s and production was as high as 6,000 barrels oil a day. Historically, it's had a low decline rate, which we like. And as I said from that production curve, it was around 250 barrels oil a day before COVID, and it fell off very rapidly as you could see in that decline curve, mainly downhole issues with the pumping wells. We feel like we've got this again. We have 15 million barrels of reserves that we believe we can develop. We plan over the next quarter, maybe a little bit longer to activate 30 additional idle wells. And at 5 to 10 barrels of oil a day, you can do the math there. We'll do like we've been doing over in our Grayburg-Jackson Field. We'll do some little asset cleanup jobs, and we feel like we've got a great formula that's working really well over there in Grayburg-Jackson field. And again, to highlight what's really important here is getting oil production up. And so we feel like with not a whole lot of effort and a whole lot of money being spent, we can get production up to 250 to 400 barrels of oil a day. So with that, I'll turn it over to Mitch. Mitch?

Well, thanks, Jesse. Mitch Trotter, CFO. It's always great to talk to you, and thanks for attending today. In this call, I'll give you insight into, one, the reasons of the purchase price and the shares issued; and two, the economic impact of our business over the next few months. The purchase price is compared to the market value of price per flowing barrel. A more developed field could easily run $30,000 to $50,000 or more per flowing barrel. But given the number of wells to reactivate, the lower amount is reasonable because of the unlocked potential. The price paid, of course, is a function of stock price since we're issuing 1 million shares, and everyone on the call has their view of what the stock price is or should be or will be. We used 3 versions. One is the analyst target price at the moment of $2 a share, and that produces 20,000 flowing barrels -- $20,000 per flowing barrel. At a very short term, we should be at a [ $1 ] in our view, it's $10,000 a barrel. And the closing data, as Dante noted, at the $0.50, it was $5,000 per flowing barrel. Any which way you look at it, the number of shares is appropriate and not excessive. The field is priced appropriately. On the economic impact, the estimated cash flow from operations are about $100,000 a month or $1.2 million annually, as Dante had noted. The incremental increase of production I used [ 100 ] reflects about half of the reactivations that Jesse talked about over the next few months. The current and economic estimates, we are just assuming $70 a barrel when we put it into the thing, we all know it changes daily. We did use their historical LOE averages. And we kept that as the same per barrel for the increase in production because it's just too early to forecast driving it down and the chemicals and assets to pop some production that Jesse talked about. So we thought that was appropriate. And as Dante noted, there should be minimal impact to the G&A cost. There'll be some, but not a lot. So it's not worth forecasting in there. The estimated cash flow from operations results both currently and on an incremental basis. When we double production or higher is a good contribution to the company's business. So with that, thank you, and back to Dante for wrap up in the Q&A session.

Yes. It summarizes pretty easily folks. Really, the Grayburg-Jackson Field has got 1 billion barrels in place. About 7% has been recovered. We're looking at doing drilling over there to get the lion's share of the reserves out. Over here, this field actually did better on primary from drilling, producing 30 million roughly over its life with 207 million, 208 million barrels in place. And overall, this increases the oil in place in our, I'll say, portfolio by 20%. It increases our acreage in the Permian by 33%, adding 5,000 acres to our say, 16,000 acres, increases our production by 10% immediately, and it would increase our production by 20% near term. We think there's significant upside just because this was -- this field was owned by others that had portfolios that were larger than this field. So it just became a field overlook, which was ideal for us. We're going to give it the love and attention that it needs, and we're going to get this production near term to go up to 200, 250 and then keep going. And then we'll look for a drilling partner just like we've done at the Grayburg-Jackson, and we might in the Q&A, give a little bit of update for that field as well. So reactivation of idle wells is a no-brainer. Buying this thing at the price we got it for also a no-brainer and potential for drilling in the future based on what these wells did originally, on primary, I think it's also going to be a no-brainer. So we think we got a very good buy for very little money. And so in conclusion, I just put here. We got a very good deal, and we certainly did. If there were 10 more just like it, I'd grab all 10. So with that, I'm going to turn it back over to Mike Porter for Q&A.

Matt, can you poll for questions, please?

[Operator Instructions] Your first question is coming from Tucker Andersen from Above All Investing.

Congratulations. And even before this presentation, I was pretty convinced you had a good deal. But after this presentation, I'm more convinced. I have several questions, but I'll follow the rules. The first question is, was this put up for bid? Or did they just approach you know you guys who are in the area, and so this was a privately negotiated transaction because the price seems incredibly low given the potential.

It was sole sourced. It was from a relationship and we get a lot of these things. We're not going to bid for anything for the most part because we're not going to pay market. And this was a special situation where the seller had other properties in New Mexico, sold the other properties, and this thing was left as an orphan. And he knew it was near us, talk to us about it, and we negotiated this with no other parties involved.

And the follow-up would be given what you expect to do with the field short term, I'm not talking about 2 or 3 years, will you need additional financial resources or resources at any time? What I'm wondering is as opposed to the cash flow this might provide, will there be additional expenses against that cash flow?

Near term, no. We're going to contract with the seller to use their rig in the same way they doubled production to double it again. And we're going to do it at a pace where I don't believe we're going to have net borrowing. I won't say we won't have some impact to the cash flow. But at the moment, these rigs are running $440 an hour and maybe $5,000 a day. And if we want to run one rig out here, we could put back on production say, 3 wells a week. And if our goal is to put on another 30, we need 10 weeks of that rig, and it's just a very quick payout. And the surprising thing is these wells are quite good. I mean they're 5 to 10-barrel a day wells without a stimulation. So we'll follow right behind putting the wells back on production with low-cost stimulations and see what we get. So we are in a bit of a discovery. I'm looking at this to just supplement our cash flow and help us to get to a net cash flow positive before the end of the year. So that -- I don't know if I answered your question, but that's my answer.

Yes. That's good. I'll get back in the queue, I have some more questions, but I'll get back in the queue. Thanks, Dante.

Okay.

Certainly, there are no other participants in the queue at this time. Tucker, your line is still live if you have further questions.

I do. The other question is, is it possible that you will eventually discover that there are more recoverable reserves here? How well has the property sort of been already adjudicated and those sort of things?

Yes. We don't know the answer to that one. It's a great question. And every time we have somebody look at a Permian field, I mean, and most people, they find more reserves. So I think the inclination is we're going to find more reserves here than what's published. So our 208 million barrels, it's in the published documents. And Atlantic Richfield was the last major owner, and they published a number of documents that you can find in -- just on the web. And we have already contacted Haas & Cobb for a proposal to study this field so that we can get the answer to your question. But it's going to involve some testing. So I think that the steps are going to be -- there's interesting areas to perforate and frac. We'll do that. We'll see what the results are. We're referring back to the third-party engineers and then they'll rejig the reserve calculations. So I think your hunch is right. Now on the Grayburg Jackson, it just -- it's a gift that keeps giving. This one here I don't think is as prolific as that field, but it's going to increase. But I'm just taking a rule of thumb that the guys were telling me frankly, from our third party that said, whatever it did on [ Blinebry ], you probably could cut it in half, and that's what your new wells are going to do. And I took that as a conservative view of it. This field was waterflooded. The results were mediocre. We don't think this is as water floodable as the Seven Rivers is at Grayburg-Jackson, but that doesn't bother us at all because we're mostly looking at this as a primary play.

Right. Yes. It just seems to me, you mentioned there were several producing zones, and it seems to me with that, that maybe it had been fully delineated and things like that. And so we'll have to -- we'll have to wait and see what happens. Yes, talking about Grayburg-Jackson, you said maybe you could expand a little on what's happening there, and I'll take advantage of that opening.

Yes. Well, the last earnings call was all about that. I think of interest to everybody is the status of our funding to retire the settlement with Pogo. And we've lumped in there the desire to also pay off our senior debt with FIBT. So the status is about the same as what we said a couple of weeks ago. It's progressing. We have turned the crank to put more energy into this funding. We have more than one investor doing due diligence now on it to support Enstream's financing. We think that the timing is the end of July until the middle of August. And we also extended the agreement with the seller to keep that settlement in place until mid-September. But it's not our intent to drag this thing out to them. It's our intent to get this closed end of July 1st or 2nd week of August at the latest. And that's what we're working to right now.

Yes. Just on that, it seems to me like there's a lot of good news for your company. And yet, as you're well aware, the stock price isn't reflecting. Is there any chance that in order to get that done, you will need to suffer a lot of additional equity dilution?

I don't think so. I think it's just what you said. I've taken the time to speak to some of our major shareholders to see what's in their head, you're one of them. But most are anxious about us getting the funding. And I'll say that the market as a whole are doubtful. Can we pull it off? And we're as transparent as we can be about the details behind the funding to retire the Pogo settlement. All I can tell you is we're optimistic. We're betting on the future. And we have sweeteners in that funding and one of which is this field. I mean if we were scared to that, we probably would not have bought this but we're confident we're going to close the deal. I'm less confident it's going to be the end of July or the first week of August. But I feel we've got ample time to make everybody happy, including the -- right now, we have 3 investors in the mix looking at Enstream's deal because they have to secure their investment, but separate from them and known to them, we have backups to Enstream that we're working. So we've got backups to the backups to the backups such that I feel really confident we're going to close the deal. And really, it's a $2 a share benefit to shareholders. So if people believe that the stock would be, soaring they want to see it. They're going to make us work for it, and we're fine with that. So I don't know if that answers your question or not.

Yes. That gives me a little flavor, too. I think that perhaps the fact that you're seeing a little delay means that people think that rather than just working it hard, you're sort of in trouble and maybe that's part of what's happening. But as you know, I'm a long-term stockholder, and I'm very patient, and I want you to do what's best for the long term, not worry about the market.

Yes, we appreciate that and your advice is ringing in our head not to do anything stupid, and we're doing our best not to. So we think this is a dynamite deal for shareholders. The other thing that's a dynamite deal for shareholders, and we've talked about it, is signing up a drilling partner, and we're very close to signing with a very reputable group. They too have to secure their funding. We're unlikely to announce it until they achieve their funding just because we have a lot of investors from Missouri. They want to see the funding there. So we've heard that message. But I can tell you at my hand on my heart, we're very close to signing with a very reputable group. I'm very excited about the drilling potential of San Andres. It's a gift from God that we have those kind of reserves and that kind of potential.

You need more optimistic investors from Texas and less investors from Missouri and you'll be a better shape.

It works because the astute investor can take advantage of this, right?

Yes. One last question, and I'll get you guys back to work, making money for us. Sort of -- as you know, there's a lot of different opinion about what's happening with the price of oil recently and what happened with the attack in Iran and all these sort of things. It's pretty clear that the Trump administration sort of has 2 competing objectives. One is for people to drill baby drill and the other is to get the price of oil down even lower than it is now. And at what price of oil, one, what do you think that's going to happen to the fact that you guys are down in the oil patch and how those are going to be balanced because we know the lower the price of oil, the less people are going to drill. What price of oil do you sort of worry about your fundamentals? I know you're hedged in the short term, but sort of over the intermediate term when you're looking at all these things.

Yes. So it's a perfect question. Everybody is asking that question. And I'll give you my take on it. The industry -- I was in this industry starting in 1979. And so we watched oil prices dip below $10 a barrel, and everybody thought that was the end of the world. But I want...

I was an investor then. I remember well.

But I watched what the industry did because I was part of it, and you just simply cut costs. You keep cutting costs, you cut drilling costs. So the answer to your question today is not going to be the answer to your question a year from now or 2 years from now. But the answer to your question today from our perspective is that we need $60. We need $60 to be attractive to a driller. But as drilling costs come down, maybe that number goes down to $55. Maybe that number goes down to $50. But horizontal drilling is expensive. The estimate for our wells is $3.7 million a well on South Justis, which is another couple of thousand feet deeper, that number is going to be north of $4 million. But right now, the economics look attractive at $60. Now the Permian, the rig count is dropping. And it was dropping before the Iran-Israel deal broke out. And I don't think the amount of rigs running is going to dramatically increase because we had a blip of $8 or $9 a barrel. I think the rig count will continue to drop. However, we have exceptionally good rock at the Grayburg-Jackson. So we anticipate an aggressive drilling program there, but we also anticipate reducing our costs and with our intent to retire the senior debt with FIBT and do the settlement, it's our intention to get as close as we can to be in debt free. If we go debt free, we're living in a very low cost basis. So we're less vulnerable to a dip in oil prices. And then I hate to say it, but being a public company, if the shareholders like what we're doing, we can recover a little bit of loss from an [ ELOC ]. So which is not our intent, but it's an avenue of raising capital. So I think the short answer to your question is, today, we need $60. If oil keeps going down in price, and nobody knows where it's going to go other than when the drilling slows down in a field like the Permian, which is America's best most prolific field and you have a very steep decline rate. Americas oil production is going to decline. And if Americas oil production is going to decline. And if we remain one of the top producers in the world. Oil prices have to go up. So it's a balancing act. I just don't see oil prices going that low when the Permian is going to self-adjust to reduce production and then oil prices go up and then the drilling rigs go back up. So -- to me, we're going to trade in a range. And I think it's going to be in that $60 to $80 range. Before people had said, well, $70 to $90. I do think that range is now $60 to $80. So I don't know if I've answered it for you, and I invite my team to make any comments they wish. I always kind of jump in and I like these questions. And of course, I certainly don't know any more than the guys at Exxon or Goldman Sachs who answer these questions routinely, but that's my view from the ground.

Well, they've proved that you may not know anymore, but they don't know anymore either on.

So from my ignorant basis, that you have my answer.

Well, what you're saying is that long term, there's no equilibrium because any price produces some reactions that changed the equilibrium and I think people don't realize in general, not just for your company but just in general, that as you said, if prices go down and stay down, that there -- then costs go down too and stuff like that. But I do think that it's important for you guys to keep emphasizing that if you can get close to debt free, it really changes the equation for you on all these things. The word I get from Washington from people I know who -- I won't say are well connected, but at least no more than the average person is that the administration has not really resolved, as I said, this conflict between one in oil prices. But then as you say, the lower the price of the short term, higher the price in the long term. But that the President's goal as opposed to his advisers goal is he would like to see it closer to $50 than $60, and I think that's part of the tension you're seeing in the markets right now that people who are plugged into Washington. I don't know if you've heard that, but operate it from enough people.

No, I've heard the conflict. And I think as advisers are telling, you push it to $50, the drilling is going to dry up. In a lot of fields, it's not economic. So you're not -- nobody is going to drill baby drill if it's uneconomic. And I even think that it's $70, if you don't have $70, a lot of the fields are uneconomic. Just for our particular economics, $65, $60 is economic. So we have that blessing. But there are other large basins, you're not going to see drilling at $70. You need more than $70.

No, no, yes, no, I sort of tend to agree with you. Of course, the other wildcard is how what we have done in the Middle East affects our relationship with Saudi Arabia and what they decide to do. But that's beyond my pay grade.

So yes. Nobody knows. I think the best thing we can do is run a clean operation at the lowest cost, at the lowest G&As using existing wellbores to the maximum extent and drill very carefully, keeping those costs low and then making sure we get big wells when we do drill. So -- and that's our plan.

You should take the recording of what you just said and write it up and put it as your goal on your website because that's a great summary.

I think this call is recorded. I think it is recorded.

That's what I'm saying. What I'm saying is don't expect everybody to sort of listen to the call. Just as your corporate goal, write that up, make whatever buy the corrections you want, but say this is the way we are operating this company for everybody who wants to elevator speech if they're only gone from the first floor to the second floor because that's where...

You're a great supporter, Tucker. No, you're a great supporter. And for others, Tucker and I met in New York, he made a commitment to us just after we went public. So we need to have a website page just for our supporters who have seen us through thick and thin. And right now, this is thin. So we really value the shareholders that we have right now today because they're hanging in there with us and our stock is, frankly, so low. So thank you for all that, Tucker.

You may guess that this has been one of my best performing stocks since I met you. But anyway, thanks for [indiscernible] guidance. Thanks for answering all the questions. I appreciate it.

And back to you, Mike.

Okay. Matthew, any other questions?

Certainly, there are no further questions in the queue. That concludes our verbal Q&A. [Operator Instructions] I will now turn the call over to Michael Porter for remaining questions.

Dante, I have several questions that have been come up over the web. The first one is, thank you for the details of this transaction. The deal seems accretive. What is the total well count at Justis Field of those? How many are SI with no future use? What is the average cost to P&A, a well there in New Mexico?

Yes. This is a really good question, and it was a major concern because we are going to pick up plug and abandonment liability for the wells that have no future. But part of the deal when we bought this was to make sure that it was in full compliance with the BLM in the state of New Mexico for plug and abandonment of any wells that the state felt needed to be abandoned. So that's part of our agreement with the seller that those wells were plugged and there were something like Jesse's on. But I think 5 or 6 wells were plugged in the last 12 months. And since field inception, maybe there's a total of 20 wells that were plugged but we didn't buy the property to just plug all these wells. We bought it to reactivate the wells and to stimulate the wells with new [ PEFS ] in new zones with new sand fracs. So the answer is, in '25, there aren't any wells for us to plug and abandon. And the cost is roughly $60,000; $40,000 to $60,000 to abandon the well and another, I'm going to say, $20,000 to reclaim the surface. So you have to kind of rake it over, put a marker on it. So you're into this for maybe $80,000 a well to abandon. And we looked at the equipment value out there which we think when Atlantic Richfield developed it, they invested in the late '90s, close to $40 million. So that value today say it's probably about the same $40 million in equipment. And if we went out there and abandon everything, today, just said there's nothing here. We're just going to abandon everything. We saw a maximum liability of about $20 million. So we figured we had more in equipment than if we just had to go and abandon it. So we paid what we paid with really no premium for upside and virtually no a 5-month payout on current production. So that's given you the, I think the answers to your question. However, just like we think costs are going to come down, we have 550 wells today on the -- I keep wanting to say Andrew Jackson, the President, but it's Grayburg Jackson. So we have 550 wells there. We've got 200 -- Jesse, is it 208 on this field?

Yes, that's correct. It's 208...

We have 208 here. We have 22 active producers, 70 active injectors and the rest of the wells are idle. So our intent is really to convert everything subject to a third-party study to producers. I don't think the water injection does is a lot of good, but you still have to inject water. So where it does the most good is where we'll inject water -- and the rest of it, Katy, bar the door! turn them to producers, a way you go, we are going to abandon some wells probably each year as we sort through what do we have in the well? What's the operating horizons, but we don't have that clearly understood yet other than the worst-case scenario is acceptable. Does that answer your question?

It's only typed in Dante. Mike?

What is the average lift cost for both fields right now? And when will you expect to breakeven post interest expense?

All right. The average hasn't dramatically changed. And between the 2 fields, they're running approximately the same at the $30 lift cost. And as production goes up because I think really both of them are at base level of our expenses. So as production goes up, we will leverage that down. And in all the Haas Cobb reports have also estimated as we get to the different level. And that's primarily -- I'm talking about the Grayburg-Jackson there. On South Justis, it's at 30 now in my slide, I showed it staying in the same range as we double production, mainly for one, obviously, the unknowns and what we need to do. And as I said, the acid treatment, the great pops to operations and production and all that. And so we'll address that going forward. Now when do we get to cover all the G&A and all the interest expense? That's obviously in the outlets. We don't -- we're not forecasting to do that immediately. So that's a year out, but that's solely in our plans. But then with Enstream deal depending on how much volumetric we use, that drives out a lot of the interest expense. So a lot of variables that will become a little bit better known in the July, August time frame as we wrap up Q3, actually. So that's about the best I can give you as far as a forecast and all that, that we're really again, I go to the disclaimer. So I'm going to hand that back to Mike.

It's an important metric, it's an important metric. I'm glad it was asked. We want to drive that number down. I think, the best operators in the Permian, and you need more oil production. There's 2 ways to do it, cut costs or increase oil. But we think it's possible to get that number well below 20. So that's our goal.

Okay. And the last question. Do you see this field purchase have hit any positive or negative impact on the pending Enstream financing deal?

It was cheaper to buy these 100 barrels a day than to do a workover to get 100 barrels a day. I mean, it's almost the same. So if you look at the company portfolio, we're a stronger company from this purchase. So trust me, the discussion with Enstream and their investors is this is part of the portfolio that they're investing in. So it definitely strengthens the attractiveness of making that investment.

Dante, I just got 2 more questions that just came in. And looking into Trump's big beautiful build that he wants to pass, talk that there will be an additional tax on foreign-based oil companies that are doing business in the United States. As you're selling oil, I believe to Chevron, if you can please confirm that they are a U.S.-based oil company, do you see any positive impact impacting your sale going forward?

This one I have to go do homework and give Chevron a call. We have a good relationship with them. They want to buy as much oil as we can send them. But it just occurs to me, if the U.S. taxes imported oil. First of all, we do import some oil because some refiners like on the West Coast, they may supplement their oil from points East rather than transported from the Gulf Coast. But it just occurs to me that if you tax it, maybe we get a bump, maybe we don't get a bump. I don't know the answer. It seems like you would get a bump but I don't know if it just lowers overall global oil prices by the amount that you tax. I just don't know the answer to this one. Mitch, do you want to...

Yes, the tax codes and all that and what's a U.S., what's not a U.S., I own a car that everybody here would just got that would have thought that, that was made in Japan, and it is the most U.S. made car in the country because of the way the parts and the way these corporations move stuff. So with tax code, people shift stuff.

Let's say that for this question, we're going to -- if that individual would reveal himself to Mitch, we will ask Chevron about it and come back with a proper answer.

I have the email address. So we're good to go.

Okay. Perfect. So we'll get you an answer. We will get you an answer. What else you got? And I'm sorry, I just don't know the answer to that one.

Mike, Let me add something real quick. Yes, we do sell to Chevron. Chevron is very -- as everybody knows, they're one of the big majors, one of the 7 sisters, if you will, if you've ever read that book. But we get a really good price from Chevron because we do have some premium oil as far as API gravity, et cetera and so on. So from that point of view, we don't get a big hit on our -- the price of the oil when we sell it to them. So that is a very big positive. Right now, when I last looked at it, it was WTI, less $0.85 per barrel, which is really good. So I just wanted to add that quickly.

Yes, we have a sweet crude in our field, we have a sweet crude and others in the Permian do not, so they get a bigger penalty. But I think Jesse is right on. What else you got for us?

That's the last question. Matthew?

Certainly. Thank you, everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Thanks everybody.