Petrus Resources Ltd. (PRQ) Earnings Call Transcript & Summary

Welcome to the Annual General Meeting of Shareholders of Petrus Resources Limited. The meeting will now come to order. My name is Ken Gray, and I am the President of Petrus. I will act as Chairman of the meeting. In order to attempt to deal with the formal portion of the meeting as efficiently as possible, we have prearranged with designated shareholders to move motions. This is in no way intended to discourage any comments, questions or discussion on any motion. Appointment of secretary and scrutineers. Jeff Oke of BDP will act as secretary of the meeting and a representative of Odyssey Trust Company, our transfer agent, will act as scrutineer. Notice of meeting. I have received a declaration from Odyssey with respect to the due mailing of the proxy materials and the 2021 audited financial statements of the company where required. The reading of the notice of meeting will be dispensed with. Quorum and scrutineers' reports. In accordance with the bylaws of the company, business may be transacted at the meeting if there are not less than 2 persons present or represented by proxy, not less than 25% of the shares entitled to be voted at the meeting. It is met. The scrutineers' report shows that a quorum is present. I now declare that the meeting is regularly called and properly constituted for the transaction of business. To my knowledge, each resolution to be considered today will be passed by the proxies deposited in advance of the meeting. Voting in respect of the election of directors will be by ballot. Voting in respect of fixing the number of directors and the appointment of auditors of the company will be by show of hands. Any registered shareholders and holders of valid proxies were given a ballot when they registered with Odyssey at the entrance. I don't know if that actually happened or not, but... Okay. Okay. We would like to collect all remaining ballots at this time. If you have not returned your ballots, please raise your hand so that the scrutineers can collect them now. Okay, pause. Financial statement and auditor's report. The first item of business is the presentation the audited financial statements for the year ended December 31, 2021. A vote on the financial statements is not required or proposed. Copies of the financial statements are available to shareholders upon request. The next item of business is to fix the number of directors of the company to be elected at the meeting. I move that -- or no, that's you.

[ I'm going to move and you can second ]. So I move the number of directors to be elected at a meeting to be fixed at 5 directors. You can Go on then. If you can just second the motion.

You want me to second? I second the motion. Any discussion? All those in favor, please raise your hands. I guess -- who's voting here? Do you guys vote for all the proxies, or do -- I do. Okay. So I'll -- any contrary? [Voting]

No. Carried. Election of directors. The next item of business is the election of directors. Our bylaws contain advance notice provisions, which provide a procedure to be followed for the nomination of directors at meetings of shareholders of the company. In accordance with the advance notice provisions, the only individuals entitled to be nominated as directors at this meeting are the persons named as nominees in the company's information circular and proxy statement dated April 5, 2022. Accordingly, Patrick Arnell, Donald Cormack, Don Gray, Ken Gray and Peter Verburg are hereby nominated as directors of the company to hold office until the next annual election of Directors or until their successors are elected or appointed, subject to the provisions of the Business Corporations Act of Alberta and the bylaws of the company. Is there any discussion? [Voting]

In accordance with our majority voting policy, the election of directors has been conducted by way of a ballot, allowing registered shareholders and holders of valid proxies to register votes for or to be withheld from each individual director. I've been advised by the scrutineers that the results are more than 50% in favor of each director and in accordance with legal requirements and their majority voting policy. Those nominated are duly elected as directors. The next and final item of business is the appointment of auditors. I move -- or that's you...

Yes, I move that Ernst & Young LLP, Chartered Accountants, to be appointed auditor of the custody until the day annual meeting or until their successor are appointed and that their remuneration as such be fixed by the Board of Directors.

I second the motion. Is there any discussion on the motion? [Voting]

All in favor, signify by raising your right hand. Any contrary? Carried. Other business?

Why are volunteers not polled...

Unless there are any questions from the floor, we would entertain a motion that the formal portion of the meeting be terminated.

I move terminated.

I second the motion. All in favor signify by raising their right hand. Any contrary? [Voting]

Carried. I declare this meeting terminated. All right. [Technical Difficulty] Is there somebody on the call? Hello? Did we scare them away? All right, well, that's the formal portion of the meeting. So...

We are not going to have a formal part of the presentation. But if you have any questions you want to ask...

[ What about this debrief for the rights offering]

Debrief for the rights offering in what way?

[ Why were we oversubscribed for this...syndicate all ]

The syndicate all... I don't really, I don't talk to the syndicate.

Yes, I hear that. So we have 184 but it's oversubscribed as of right now. So and yes, I think the [ bankers will be very pleased and please ] pay down debt. And [ assume right now a refinancing ] of the existing banks.

Thanks, guys.

Yes, we just refinanced with PPP. So that will be closing at the end of this month, we made the announcement.

[ Have they had any friendly mindset from any other banks?]

I hope so. [ We have the ] local bank and Alberta bank. I can't see them not supporting the oil and gas industry or changing their mind like some of the other banks have. So yes, I mean there's a lot of pressure on those guys.

On the ESG?

Yes. I guess that's true. But I think it's misplaced. Even their concern is misplaced in my mind. I mean we still need oil and gas. So yes, I can understand. I can understand there are certain groups that are pressuring, but it's not really a realistic kind of scenario that they're presenting, right? I would hope that the banks could have been a bit more reasonable about it. And I think [ my attention ] guys are just sort of starting to retire. But I mean I think my generation of people who are in those kind of businesses have also absorbed. [ But not in a ] particularly sophisticated, but we do [ have employees who ] understand [ who have absorbed ] that point of view. And one of [ my buddies who just died but should ] left the university endowment. And the [ guest around that rationale ] really sophisticated. But I mean, they wouldn't touch oil since [ 90 statements ]. And it's not like they might have had their own opinions about it, but they just understood that it wasn't going to be well received, [ that it was going to be a problem. But that perception, but banks the same ].

Yes. I think you're right about that, although it would have been nice to see somebody come out and kind of say -- present maybe a little bit more of a realistic view of things. I mean when I look around the country, for instance, we're primarily a natural gas producer. I think most of our houses are heated by natural gas. And so what are we going to do if we have no natural gas? Yes. It seems amazing that we can't seem to move it in that direction, though. I mean everybody can go home as they should realize that, okay, it'd be pretty cold around here or very expensive. Like if you're heating it with electricity, very expensive.

But people [ have a limited amount of perception. [ Sunrise ] pipelines are a great example of that.

Yes.

But I sort of started out as an environmentalist who got frustrated and went into [ government ] but there are people who have a practical sense that there's a price for stuff, some stuff that need for compromises and there's a need for efficiency. And natural gas is a great [ fit I think in ] reality, and will continue to [ prove a great fit ] I think you just, a lot of sort of my generation conventional people just sort of shut off on that [ when you have that ] conversation, they can't.

Maybe you can't. But I think we'll see, though, that the reality isn't quite the way it's being presented. And once -- my feeling of it always was everybody's an environmentalist until it starts to cost you some money. And then people maybe aren't as adamant or enthusiastic about being environmentalists. And so far, it hasn't cost us a whole lot of money, right? But it's going to. I mean it's coming, and that's the part that's always left out of any of these conversations is that there is a huge cost to this. And once that really starts hitting people, and they start to realize, but hey wait a minute. I'm not sure that their support for some of these environmental initiatives is going to be as strong as it has been.

Yes. It all sounds good. And everybody is like, "oh, yes, it doesn't cost us anything." And that's kind of how it's being portrayed, right? Is that oh, this won't cost anything. We can do this. We can transition, it will all be good. It will create jobs. The reality is just that's not true.

Stuff has happened faster than pragmatic people thought, which is nice.

Yes. Yes. Well, yes. In that respect, I think even now people maybe starting to rethink a few things. But yes, anyway, to your question on the rights issue, I think it was very strongly supported by our shareholders. We kind of expected that. And we could have raised probably a lot more money. As a matter of fact, we've had a number of kind of the investment banks around town asking us to raise money, right? They want to give us money.

I love the way you did it.

Well, we felt like if you've got support from your shareholders and they want to invest more money in the company, well, you should go to them first. Yes, absolutely. So that just seemed like a no-brainer to us that we would go back [ rue ]. It was a little more complicated than I really had thought it would be. So we were definitely scramble a little bit. Some of our U.S. turned out to be very complicated to the U.S. investors, so -- which I hadn't realized.

You ever seen [ your printed ballot ]?

It just seems so simple. I mean understanding that all the problems come up. But when it seems such an appropriate way to do something, that you save money by not bringing [ other ], but I can't think of sort of encountering someone who does that way.

Yes, I think it has been done. I think a lot of times, it's done by companies that are more in trouble, like they can't raise money outside the company.

Well, I'm not saying -- not saying there isn't money but the way you did it, sort of did it by yourselves.

Right.

I don't know.

Yes.

People were very supportive of that [ rights offering ], and were actually [ not solving that energy ] services, which operates [ as a gas one really not to push that now ] But that's totally, that's an appropriate way to go out into [ in lesser's case it did happen to take their cut of the net ].

Right.

So it created some insolvent, financial hardship...

Yes.

Created really a [ miscard ]

I think -- yes, and that's one of the things that we were trying to get across in our press releases was that this was not something that we had to do. Because I think it is, a lot of times, it's companies that are more in distress. They can't go outside the company. So you have some insiders that are willing to kind of back it but are reluctant. And so they want to see who else they can get to help them out with that and then they'll sort of fill in. But in this case, it was the exact opposite of that. It was like, no, we want to invest more. The major shareholders wanted to invest in the company. They didn't want to go outside and that -- so we had that support and we hoped to kind of get that idea across to everybody that this was something that just seemed like a good idea to us. It's not like this was the only option that we had. So we do have -- it does appear like there's plenty of money out there for us if we were to need it for anything. But certainly, right now, we're looking at cash flow, just investing cash flow, and we think we can achieve some fairly substantial growth just organically.

But presumably [ your banking services have decided which way to jump ].

So -- but yes, no, I think the company is in really good shape. Now I think the balance sheet is fixed. I mean I don't think we have any issues there anymore. We have a supportive bank on board with ATB. We're not planning on having very high debt levels. So they're not -- we've got my brother filled in the second lien loan, which we'd kind of like to get that paid off in the next year or 2, and that just be solely kind of along with the banks there.

How's the negotiation on the interest rate been?

On the interest rate, the way we did that was we actually were talking to third parties about gaps and replacing our syndicates because we were basically looking -- we talk to everybody. Believe me, Mathew's been very busy talking to everybody to figure out what would be the best way to go to sort of replace our current syndicate because they wanted out. So okay, we've got a -- we've got to replace you guys. So -- and ATB was willing and that, but they were only going to come in at a limited level. So we've talked to private debt guys, because there aren't a lot of other banks. Frankly, there aren't very many banks in [ Alberta ] to begin with, and we had 4 that wanted out. So it doesn't leave a whole lot of others. And we're a relatively small oil and gas company. And they just look at us differently for some reason. They lend to all kinds of small businesses. But when you're an oil and gas company, which we're really not that small of a business. But in their minds, we're in this category, you're an oil and gas company, and you're a small oil and gas company, so we don't want to have anything to do with you, okay. So -- but we did talk to a number of third-party lenders, which a number of other companies have gone with. But I'll be honest with you, the terms that they offered us were horrendous. And so when we looked at those, we just said well, we knew we could do better. We knew that my brother had the resources. So we went to him and said listen, would you loan us some money here? We'll pay you a fairly good rate, but we won't -- we needed to make a good deal for Petrus. So we're actually -- we kind of split the middle with him. So -- and one thing that -- it's tough for us to get across in press releases and that. But on these debt things, the interest rate is not telling you the whole story. There are so many fees and conditions around most of these debt deals that are done, especially with the private banks but also with the main banks as well, that the cost of that debt is a lot higher than what's indicated by the interest rate. So having said that, the deal we've negotiated with my brother is a way better deal for the company than anything else we could get. And the headline interest rate probably looks a little high. And we expected that. We expected that maybe some people would question that. But we had our bankers kind of review it and give us a third-party opinion. Our review the other options as well, Mathew went through all the numbers and stuff. And the other debt options we had were more on the order of 15% and other kind of tough conditions.

Maybe I should know this, but is there a prepayment penalty if you pay your brother?

No. We have no -- like there's no conditions on this. We can pay it off whenever we want to, provided -- we've got to get approval from ATB but there's nothing from his standpoint. We can pay it off whenever we want to, there's no conditions, there's no...

Is it 1 year -- or is it [ limit ] after 1 year?

Well, it's after a year that we can pay off anytime, yes. So in the 3-year and we have option to renew at our optional cost there. But the other thing, it's also a fixed interest rate that [ interest rate ] that is going up.

Prior to the year we can still pay it off. We just need to get approval.

You need approval from all parties and we could get them. So we have total flexibility with the debt that we got from him. We got it at a much lower cost than anything else we could get. So and like Mathew said, it's also a fixed interest rate, which gives us some certainty going forward, especially in rising interest rate environment. If we haven't gone fixed, which actually -- it increased the interest rate slightly. But if we hadn't gone fixed, we were going to have to pay all kinds of fees to hedge the interest. And we were like no, we're not paying fees to hedge the interest. So we just said, no, we'll give them another point. We'll do a fixed interest and we're going to keep this thing simple. I have some problems with the banks and some of these guys and all the fees they're charging for some fairly questionable services. So anyway, that's what we decided to do, and I think it's been -- I think it was the right decision, I think it was good for the company. Like if you're looking at other companies and they're sort of talking about their third-party debt deals, I would -- and they talk about the interest rate they're getting, you can be guaranteed that there's all kinds of other fees behind that. And the cost of that is a lot higher than what's sort of indicated there.

So I appreciate you put your, some of your loan information on SEDAR last year, which I appreciated. That sort of communicating some of that pretty well.

Yes. Yes. Well, we'd like to be open about it.

So once you close at the end of the month, we'll do the same thing?

Yes...

In terms of understanding the issues. For the layman it's not so easy to understand all these complications, but...

Yes, and sometimes you don't even see some of the fees in these -- in the financials really.

You can, you just don't talk about it.

Well, nobody wants to talk about it, but they even don't even appear. They get taken off of -- like when you're raising equity, the fee comes off of the amount of money you get. So it never even shows up there, which I've never understood.

The change [ you shouldn't call ].

What's that?

The cost you shouldn't call it that. [ They're hiding it somewhere ]

Yes, but it doesn't come off as a fee, right? It doesn't come out as an expense. It comes out on how much capital you actually receive. So to me, that's deceptive. I never understood that as an accounting practice but our goal is to pay as few fees as possible to banks, et cetera. We're trying to return or generate cash flow that we can reinvest on behalf to shareholders and make some money. And those fees tend not to make us money, so.

[ Would you like to grow the business, what's the plan? ]

Well, I don't know that we have an end plan. We're working on that. Lindsay is probably going to be the key person to kind of figure all this out for us. But we're -- there's a pretty clear path for the next couple of years, right? We have these assets, we have the infrastructure. This was kind of the obvious thing. We've got to drill some wells. The wells are good. This is -- it's very low risk. We've got infrastructure that we can produce into so we're not investing a lot of money in the infrastructure. That part is very clear. This is what we've got to do first. Now beyond that, that's what we're still kind of trying to figure out, what's next for the company beyond that, right? So it could take all kinds of forms. We could decide that we wanted to become a cash generation machine, that, that seems to be the best thing for shareholders. We could continue to grow. But I wouldn't say that we're going to necessarily grow just for growth's sake. I don't think that's been a great move for companies in the past necessarily. I think the marketplace has kind of driven that and maybe encouraged that somewhat, but it also encouraged guys to maybe go a little bit beyond or to do things that maybe weren't really smart from an economic decision. They're looking more at just production growth, production growth and reserves growth. And sometimes the actual fundamentals weren't as strong as they should have been on that. So whatever we're going to do here as far as investing shareholder money is going to have strong fundamentals as far as rates of return and those kind of things. We're not going to just go crazy on just growth for growth's sake, growing production. So that's kind of yet to be determined, I would say..

Okay. Just to add to Ken's point, if you look at the history of the company, in 2017 we were 11,000 people. So but because we didn't accrue enough in the last few years. We've come back now. But now it's very real infrastructure, as Ken mentioned, infrastructure, the plan is all in place. So we just -- right now in the short term, the next year we just go back to where we were. Like 11,000 people, that's like 50, 70% growth [ production ] by itself. Once it is beyond that, then we can decide what to do. But very clear path, very low cost for economics also.

Half-cycle economics.

Oh, yes. Right now it's all half-cycle economics.

Just a couple of specific things about [ monetary ] in construction. One of the things I noticed in this slide was that you've got 2 different numbers really working in the [ outside ]

In the [ combination of other where it ] ?

No, no, on this one. On the Ferrier slide, you've got it as [ AP cloud 2 ] and then [ I think it was H 1A ]

All right, we'd better fix that. Lindsay would know what that is.

Yes. So [ Listing off of the dealer offering is our original org grid was really just around keeping around 7%. We're also doing an expansion of that plant. ] So it's 2 phases. Phase 1 is pave it in, and that's what our working interest up to is 10.8%. Phase 2, I just voted on maybe 2 days ago. So those [ were going to be about that, and that's going to take enough to be that ] So [ the say for go for 18 and I'll be starting to and thanks for pointing that out. It's online so we've just been sending our posting posse ] there so when we do drill out there we've got somewhere to take them.

So you think you're comfortable that in that area you might need to do more?

Do more...

With the infrastructure?

Yes. Plain and simply, we've expanded our ownership in that plant, but it's still not enough to handle how we would like to develop it. We've got -- I think we're going to have 150 [ depths ] a day capacity. I don't know what that is [ in wheel length ]. But it's kind of 1 well a year kind of production. We'd like to develop it faster than that. That would be the third new development plan. So it doesn't give us the room to develop it the way we'd like to. So we're working through various different things. One possibility is that we'd build a big pipeline down to our plant down south, take the gas down there. But we're going to probably fill our plant down south with gas [ raised ] in that area, at least in the short term here. There may be some ring in that plant longer term. But -- so we're working through various scenarios about how we can develop that.

How much of that plant -- how much of your plant's capacity is actually under [ full stress with deposits ].

I don't know that we have that, not a lot. I'd say we're 85% if not even more operating in production with that plant. It's about a [ third full. ]

And we were actually concentrating on higher working interest wells and lands and that kind of thing for a number of reasons. One is we don't want to really fill our plant with third-party guys. We need the capacity for ourselves. Likewise, services are somewhat tight right now. And we don't want to be using the services that we've contracted and pipe that we bought for other people. There's a limited amount of it, so we want it to go towards Petrus stuff. So we consciously really tried to target 100% or high working interest development at this stage. And I think our plant -- our -- sort of our working interest gas going through the plant has increased over the last little while because we've been concentrating on that and will continue to increase.

I'm curious about this Kakwa and that's -- I mean, you guys were -- I sort of -- again, I'm an unsophisticated person, don't know geology or [ rise or union ] anything like that but try to read where I can, and I noticed that you had that well up there some time ago.

Yes.

And you continue to say that's something you're still looking at, right, that's fair to say. Yes.

It was drilled in 2020, I think, actually, that brought on production last year. And it came on really good. Like everybody was quite excited about the well and very oily. I think we were quite surprised at how much oil it has relative to gas. The wells we're drilling in Ferrier are primarily gas wells with high liquids. This was an oil well with relatively little gas associated with it.

[ so that gas was one for ]

Oil was the key, so -- but it fell off fairly quickly.

I noticed you -- maybe write-down is the wrong word but you...

Yes, we wrote down some reserves on it, I think that we probably got a little ahead of ourselves based on those initial results. So right now, it's still producing. I think it's around 70 boe a day, 30 barrels of oil. But that's not really an economic well, certainly, it doesn't compete with our other stuff in Ferrier. Having said that, I'm not sure that's representative of what we have there. We've got to do some more studying on it and see if we can understand it a bit better. Because the one thing we've noticed about it is that the pressure seems to have dropped fairly quickly. And that doesn't make a lot of sense because we haven't actually produced that much from it. And what that suggests is that we're producing from a fairly small kind of reservoir. And that also doesn't make a lot of sense, because when we map the thing, it looks a lot bigger. So I think we've got to do a lot more work on it. We're not writing it off by any stretch of the imagination. We're not promoting it really. It's there. It's got potential for us. We're going to do the technical work on it to really try to understand the well that we did drill and what's going on there. And then we're going to -- out of that, we'll decide whether we want to drill another well out there, whether we think it has additional potential beyond what this well has showed. And yes, if that needs to be tested. It's probably not in our plans in the next couple of years. We're not drilling up there this year, probably not next year. But beyond that, we'll probably -- we'll either do something with it, drill another well to test it or it will be something we won't talk about anymore. So -- but that those -- we have other -- we're targeting the Cardium right now because it's the bread and butter and it's got great economics, and we know what we've got. But having said that, we think there's other opportunities in our core Ferrier areas and those lands. We just haven't needed to and haven't had the time to really look at those and work through them yet, but that's coming. We've got -- like I said, we've got at least a couple of years here, just really solid, easy drilling. And then we're moving a little bit further outside of core in that, although we have the acquisition here in -- just earlier this year. That's given us some more land. So we'll be drilling some of that next year, and that probably carries us into 2024 as well. And we've got some other stuff that's a little further out [ which we know ] will require some pipelines and stuff. So a little bit of additional investment. But we still have quite a bit of running room here, and that's without even looking at any of the other zones in the area. And there are some fairly prolific ones. The Glauc is one that's being pursued by a number of companies in that area, and with some fairly good results. So yes, we think there's still a lot of potential in Ferrier. And we'll hope to start drilling. I would like to see us drilling maybe the next year, but certainly 2024, a few wells or a lot of 2 wells that are testing some different ideas rather than just the Cardium, which kind of take us to that, the next sort of step, I guess. But that North Ferrier is a great area. The wells -- the activity. I drove up there the other day. You'd be amazed what's going on up there. There's a number of companies that are quite active up there. CNRL is drilling like 5 wells just offsetting us. Peyto is super active up there. Who's the other one? Westbrick that's drilling up there. And there's just trucks flying all over the place. And pipes laying here. Just a beehive of activity. It was quite impressive. So it's nice, yes, you've got a nice little land position up there and that's going to be a really good area for us. And that first well we drilled, we kind of laugh about it because they've got a fair amount of -- kind of talk in the -- on both boards and stuff and that before we ever even started producing it that. So we felt like we needed to put a press -- normally, we wouldn't press release individual wells and stuff. But because it had all this buzz out there, we felt like we needed to. And so we've press released what was sort of an IP 30 rate. It didn't look bad. I mean it was 830 barrels a day. It was a great well. But actually, we were choking it back quite a bit, right?

We still are.

Yes, we still are. We tried to say that, but I don't know if anybody believes it. And most people shouldn't believe that stuff because it gives a [ certain big subs ]. A lot of people say things like that and it doesn't turn out to be true. But we have a production meeting here every Tuesday and you just have to laugh every time you look at the chart because it's just going up, right, then these oil wells are supposed to decline.

[ been reducing the ]

We're been -- yes, opening up the choke a little bit, and we just get more and more out of that well. So that well looks great, and we'll definitely be drilling some more [ holes ] here as soon as we can figure out where we can take all that gas. Almost too much gas, right?

It's a good problem to have.

Yes, it's a good problem to have. So -- but yes, no, that's been [ about a mile ]. Yes, it would be great to get up there and drill some more.

What's the -- sorry [indiscernible] What is the -- what is the thing that you're thinking about, that you just don't have an answer to yet?

That we don't have an answer to. Well, the one thing that you're always worried about in this business is what is the price going to be at. And that's not really a fair answer. I think for us probably it's kind of what direction is the company going to take, whether -- which direction do we want to pursue, like which strategy do we think is going to be the best for generating value for our shareholders and that. That's probably the biggest question that we're going to be working on here over the next 6 months to a year, is just trying to figure that out. We have a number of different options. They're all going to be pretty good. I'll tell you that right now. It's just which one is the best, like what's the best thing to do here. And that's going to be a little tricky because you're always making a ton of assumptions in this sort of stuff, right? You're making assumptions about what prices are going to be and all those kind of things. But anyway, you have to do it, we have to have the strategy going forward, what we want to do with the company. So that's what we're going to be thinking about.

I had a friend [ Swadays Watson ] who died a year ago. When I was a student he was a [ grad student ] in economics before he went to Wall Street. But one day a bunch of us were sitting around our house and watching [ the share ]. And he had stopped working on this senior thesis and just wrestling with investor interest and them. I don't know. I don't know how we deal with that. And then he sort of shuts me down and says this is my job here. And what I do is every person might take. So he had no interest in what I was talking about. He said I take them to the point where they don't know the answer but I just want to see if they're bulls****ing. And that was a smart thing because you may -- nothing is better than working with people who are honest and you can trust. And whenever you're doing anything having trust, you're dealing with a high level of uncertainty and you're dealing with a high level of uncertainty in cooperation with others. So if people bull**** you then you know that it's [ mistake ].

Yes, I would agree. We're going to try not to bull s*** you, Tom.

No. I mean that's my perception from the business, is this.

Yes, I don't think we need to, to be honest. So -- like when you get -- when you start doing that, you're probably in trouble.

[ I don't want to go back and watch what you did but still ] Yes. So I would -- I'd be very interested to hear your kind of impression in the company over the last year and why it's so much better.

Well, that's good. I mean I know a lot of the stuff has been insider stuff, right? My brothers invested, they bought out NGP there, then they did the next stream. They did some kind of private issue, right, to get out of that Macquarie debt. And now we've done -- we actually, to be honest, when we did the one last year to take out Macquarie, we would have preferred that to be a rights issue as well, but we didn't have the time to sort of get it done. We had tried to do it, but it just wasn't going to work. So we ended up doing just a private placement on that one. And then this time we were able to do the rights. But -- so I know there's been a lot of insider kind of stuff. We've got a fairly high ownership amongst just a few individuals there. So I don't know how that's viewed by the rest of the investors in that. I think from our standpoint, we're certainly trying to do everything in all shareholders' interest, right It's not sort of something that we're trying to do something and not sort of look out for minority shareholders. We're trying to do things that benefit all shareholders. So that's kind of our view, but I hope that, that's kind of the view of our minority of shareholders as well.

But it's mine, but I'm kind of oddball, I sort of look for that. I'm not sure -- I'm not representative of that minority community.

Well, you are, though. You're an independent investor and so...

[ But I was -- how you're communicating is a puzzle ]

Well, I don't know -- I don't know how if we've done a good job of communicating that or not. I hope we kind of have but...

My only observation is that having bigger [ gross ] is generally better there probably for valuation, but... and higher [ margins is also very telling but people are taking around more daily leaving capital allocations...

Yes. No, I think certainly my brothers were very bullish on the company. So yes, the liquidity thing, we'll have to see what we can do about that. I'm not sure what...

That's an interesting question though, because to me, I mean, I think as an investor, and again, I'm still not representative, but I want to have a long time horizon. And so I'm quite happy to find things that are illiquid. I understand that's not the way the world works for a lot of other people. But I think there's a lot of the bargains are less liquid because people who need to trade [ they won't support it ].

Yes.

So I mean you can have different shareholders their priorities. So maybe the way to do stuff will attract people who like liquidity, so. But liquidity is [ such that ] you can't make everybody happy.

No, you can't make everybody happy. But I mean, eventually, if you're looking for things or maybe deals in illiquid investments, you're kind of hoping that at some point they become more liquid and that value gets realized.

Yes. But I mean human nature is a puzzle, that we can look around the world and see all these train wrecks. But we're fairly confident [ they won't ] happen today or tomorrow but maybe 5 years. So if you're under pressure to do things quickly, then you have to deal with that. But you're not.

No.

Well, that's good you have the [ university doubters ], that's one of the great advantages that they have a long time line for us, right? So not taking the management [ university ].

I have a question that I wanted to ask you. I heard Ken mention about the different path to be taken after we build plant, either return the shareholder dividend or we can continue to grow an acquisition or our production. So different pathway, but from my investors -- my associate minority investors, do you get more return or will the share price depreciate? So then what will the... I'm the guy [ if I look deep shell it gets canceled ] My view is whatever you think is the best use of the money, you probably know a lot better than I do So I hope personally, the less you understand the situation, I guess, the more comfortable you'll be with a mistake. I think there's money in the past then you know certain stuff that is true. And so I mean, I think there are a lot of people that's a very valuable thing. But I suspect you guys at a time like this you're getting maybe more pressure to do stuff like that, than I would think is necessary. But again I'm [ coachable but I'm ]... My point is, you have enough high quality in both inventory with higher rates of return, you should be able to, and we can't, as investors, necessarily get 60% ROIs on our next investment but you can let it ride in the [ stock price ]?

Yes, I think what I'd like to see is there is less for in that regard. And like I said earlier, I don't want to be investing money where we're not generating good returns, just because that's kind of the thing to do. So I think that was the case in the past. I think now because more companies are distributing some cash and the public markets are -- have a little bit different expectation, I think, from oil and gas companies. I think that gives us the flexibility now to sort of do both. If we don't have really good opportunities right in front of us, we can distribute the cash. If we do, then we should be invested. And we can -- and that can go back and forth, I think. So I think we will certainly endeavor to make sure that what we are investing money is in good, high return, relatively low-risk type things. If we don't have those opportunities, then we'll be happy to distribute the income. I don't like it when you're sort of pressured into reinvesting funds and you maybe don't have the best things to invest that. I think that gives, comp us into trouble when we're invested.

Especially on the E&D side.

Yes. Yes. E&D side, the drilling side, sometimes you just swing for the fences. You're hopeful, you're always hopeful, but a lot of times very definitely riskier than other ones, right? And so we'll try to stay true to what we're doing here. We have such incredibly good rates of return right now but we can do rate in the immediate future. So this is just kind of this no-brainer. Now as we go forward, we'd have to add some infrastructure and stuff. So the economics aren't as strong as they are right now. But right now, they're kind of ridiculously strong right? This is -- it's a byproduct that hadn't invested a whole bunch of money in 2015 and 2016, and so now that's -- those are some costs that we can take advantage of that. So that's not necessarily a sustainable type trade. But having said that, once we do fill up the plant and get all that done, the next level of investment, I would expect is still going to be very economic. It can't quite match what we're doing now, but it's going to be very good. So it's certainly something I think that we'll be pursuing for sure. But it becomes more, we get into the more sustainable type economic [ resume ] where your costs are kind of the cost of a full development. And so that's the kind of thing you can repeat, providing you find the right opportunities. So -- but anyway, we're quite excited. Everybody -- we've been just kind of trying to get all the debt stuff fixed up here, and were able to drill a few wells last year and they've been really good. And we just can't wait to get drilling here. We're going to start in about a month, right. And everybody has just been getting fired up, getting ready for it. So it's going to be a good part for the next 6 months and even longer than sort of -- to sort of do the drilling that we want to do this year, we're going to be very busy.

How serious an issue is this [ lining up drill rigs? ] Is that all in place or is that...

It's in place. We've got contracted stuff. Yes, no, it's an issue. Rates have gone up. But we've got a fairly good idea of what we wanted to do. So we've been a little bit ahead of the curve, if you will, and been able to contract the rigs. When you have the time to sort of plan it out, you can get those services. And casing is another thing, just getting pipe. It's not the same as it used to be. It used to be just phone up, and there's pipe there, and you just have it delivered. Now the lead times are much longer now. And so we had to get ahead of that and make sure that we had pipe available to us. And I was even worried about, like we've got probably 3 or 4 wells' worth of pipe right now. And I was asking our drilling engineer, I said no when you charge [ we've got another guy waiting ]. I was a little worried because the other pipe we've got contracted is actually contracted from the mill, right? And it's being milled over in China. So I'm like, are we sure this is going to show up? It's still got a long ways to come and they're shutting down for COVID over there. But he told me that the one order that we've got is already in Vancouver. So I feel better about that one. So that gets us another 10 or 15 wells, I think. And then we've got another order coming after that. So we feel like we're in pretty good shape as far as that goes, and all those services, right, fracking services, everything has tightened up quite a bit, but we've been -- because we have a good idea of what we wanted to do, we've been able to talk to and line up the services and commit to them. So I'm sure we're going to have some hiccups, I'm going to tell you that right now. I'm just not sure exactly what it's going to be, but we'll manage it. And yes, no, we're excited. We're going to have 2 rigs running. And we're a pretty small staff here. We've got 1 drilling engineer. We just hired another engineer. We had only 2 engineers here when we came in. Mathew has been working like 2 or 3 jobs lately. Lindsay has had to take up all kinds of extra stuff. So it's a small but a really good group that we've got working here and we're going to test everybody to see how much we can actually do. But I think everybody is excited about it, so -- and excited about the prospects. And after -- and lately probably -- and Mathew can fill you in much more than I can that the last few years have been tough in this business. Prices were low. There were times when you didn't even know if the company was going to make it. So this is a breath of fresh air now, to be able to actually have better prices and be able to now be active, right? Not just one well here, one well there, and praying they don't have a problem, because if you do, that's probably going to put the company under kind of thing. So no, this is -- it's a much better environment right now. Much more positive. So it's almost [ like sun ]. So anyway, that's all I've got. Do you have any other questions?

No, grateful for all you guys' time.

Yes, well thanks for coming by. Yes, And if you ever have any questions or whatever, just give me a call, give Lindsay a call, we're happy to answer any questions on that. We try to make sure we keep everybody as informed as we can. Lindsay puts out a monthly activity report every month. So we're trying to make sure that people know what's going on here, trying to communicate as much as we can, what we're doing. So -- but yes, if there are any questions, just give us a call.

Okay, great.