Good morning. Welcome to the IDEAS Conference. I'm Sandy Martin with Three Part Advisors, and next up, we've got Vitesse Energy, NYSE traded, ticker symbol VTS. And with us today are the CEO, Bob Gerrity, the president, Brian Cree, and the director of investor relations, Ben Messier. And I'll hand it off to Bob. Great. Thank you, Sandy. Good early morning, everyone. Appreciate you guys being here. Second day of a conference is always, "Okay, who's presenting first?" So we appreciate it. So I am not a slide reader. If you guys are interested, after my little blurb, you're more than welcome to go to our website and read the slides. We like the slides, but I don't think you need us to read them for you. So what I thought I would do is just give you how we got here and what we are and how we're different. So this is Brian, my wife, Gwen, and myself's second time at running a New York public, a New York Stock Exchange company. The first time was in the 1990's, and we were an operator in the DJ Basin of Colorado. What an operator means is you make the decisions. You have the rigs, you pick, you know, where you're gonna drill, and it is a very heavy capital intensive business. We gained alpha in that business by three things: costs, costs, costs. We were the low-cost operator in the nation. So what that company did was we'd had LPs first in the early 90's. I'm sorry, from mid 1980's to 1989. Some of our partners back then were George Soros, you know, Harvard Management, and a lot of, you know, pretty, you know, brand-named investors. We rolled those investors up in 1990, and that company was always meant to sell. So in 19 96, we merged our asset with Snyder Oil and Gas to form Patina. From the beginning of 1985 until Patina rolled into Noble, which then rolled into Chevron, there were a lot of ups and downs, but that was a many, many time multiple success. So Gwen and I took some time off, and then in 2008, we saw the shale revolution coming and said, "Ah, you know what? We've seen this before," and we wanted a asset that would provide us an annuitized stream of income for the rest of our lives. These wells last 30 years. That stream of income would be leveraged to technology. Everything out in the oil field improves technologically every year, and leveraged to inflation. We wanted to be in oil, not gas, too much variability in gas, and oil was a way that we were gonna play the, the potential destruction of the U.S. dollar, so it was a long-term deal that we were looking for, so Gwen and I, at our dining room table, you know, created maps of the Bakken, which is up in North Dakota. Bakken is a shale that, of all the shales, it's the tightest, which means you need to frack the hell out of it, and that fracture technology, as it develops and improves every year, the field becomes more economic, so our thesis back in, two thousand and eight, two thousand and nine, was that the field would get deeper, denser, cheaper, better expanded, and that word salad means that the field would become more economic. There would be more than just a couple of wells per DSU, for drilling and spacing unit, and over the course of time, drilling costs will come down, recoveries will come up, and the field, the core of the field will actually expand. We wanted to approach this asset as an investor. The first asset company we did, we were an operator, very capital intensive. This iteration, we're what's known as a non-op, which means we're financial partners, pari passu, with operators. So they do the drilling rigs, they, you know, buy the land, and we're, we just are partners in that activity. So we could do it with a lighter staff. The good news is that in, by two thousand and twelve, we had picked very, very well, and so all of a sudden, we were getting a lot of opportunities to spend capital. We went through all of our bank accounts, we borrowed money against our house, and we're still receiving what's known as an AFE, which is your opportunity to invest in these wells. I said to Brian Cree, who was my business partner in the first company, which was Gerrity Oil & Gas, New York Stock Exchange company. I guess second thing we learned was don't put your name on a New York Stock Exchange company. We named this one Vitesse, because as a non-op, you can compound your investment by considering the investment you make as a dollar widget. What that means is, if you have a 120 acres and a 128 acre, a 1280 acre spacing unit, then you own 10% of that activity. Well, we're in 7,000 wells, and our average interest is 3%. So we pay slowly, and we get cash in quickly. So that activity you can do as a small investor. So that was the concept coming in, and Brian came in and partnered with us, and we decided, look, we're gonna need some more capital somewhere. So one of the guys that was a partner with us in our first company was running the Jefferies, the investment bank, oil book, and he said: "Hey, well, we'd love to fund you." And we said, it was... The guy's name is George Hutchison. I said, "George, we'd love to take your money, but this is a long-term deal." When you take money from a private equity company, they give you money, and they give you a stopwatch, and they say, "Okay, you wanna make money? Give us money back fast." This kind of a play is not that, and it's really important for you to understand how we got here. We buy undeveloped acreage, spend money to convert that undeveloped acreage to something that's cash producing, and then we keep reinvesting that cash into more drilling, so that's how it compounds. There is no way we could have created this asset with private equity money because it needed to develop over the course of many years. We turned George down and said: "You know, there's no real long-term capital in the world." And George says, "Well, why don't you meet Joe Steinberg?" Who was who created Leucadia, and they, Leucadia, merged into Jefferies. Steinberg takes me to lunch and says, "I, I understand you don't think there's long-term capital. It's me. I am long-term capital. I've looked at your deal. I want to invest with you for, you know, as long as you want to invest." I went, "Yeah, okay, sure." That was in 2011, and you know what? Long-term capital turned out to be long-term capital. Jefferies eventually gave us over $400 million. In the period of time from two thousand and twelve to today, we never had a losing year, and we gave them back money through a distribution, and we gave them back net GAAP income so we came through the Leucadia portal into Jefferies, and Jefferies had, at that point, they had a meat packing company. They had a timber company. They had a mobile phone company in Italy. It was a mash of merchant banking assets. Well, over the course of time, they rationalized and sold all those assets except for Vitesse. So it was their idea, Brian Friedman, Joe Steinberg, and Rich Handler, to spin off Vitesse. Now, why would they do that? At the, you know, when we, when we spun off of Jefferies, we had a $2 dividend, which was actually less than what we had been distributing to them. The three of them owned 20% of Vitesse, and they sure loved the $2 dividend. There really is long-term capital, and Joe Steinberg was right. He's still with us, and, you know, he plans on holding this asset and giving it to his grandchildren. Again, we could not have created this asset unless we had that money to aggregate a lot of undeveloped acreage. To the slides, it's a long-duration asset. What does that mean? Over the next ten to fifteen years, we will spend, in converting that undeveloped acreage to cash, we'll spend over $1.5 billion, and at strip, the return on that will be somewhere between $3 billion and $4 billion. It is the classic get rich slow scheme. We could accelerate it by borrowing money and being more aggressive. That's not the plan. This is develop it over the course of time. 80% of our assets are still in the ground, so this asset is going to last for a very long time. High yielding, that's why Jefferies owned it. They wanna get a dividend. Inflation protected, we are in the oil business. We produce gas, but it's primarily an oil asset. Leverage to technology. Look, in 2011, some of the earliest wells we drilled were by Continental. They were public at the time, and they were called the Sefolosha Well, which was named after a basketball player in Oklahoma City, and the Sefolosha Well was very economic, and in the first year, this was in 2012, that well, one well, one Bakken well, did 85,000 barrels of oil. Very economic, had a rate of return on IRR at strip at the time, about 60%. Loved being in that well. Four years ago, Continental came back in and drilled three more Bakken wells right next to that original well, and in the first year, each of those wells did over 200,000 barrels for $1.5 million per well cheaper, so technology improves, and as we go on, through this asset that, you know, we are looking forward to getting better capital efficiency. So every dollar today gives you more barrels, which gives you more money than dollars in the past, so. So we spend money for a living. So we are capital allocators, and this is how we think. So we come in in the morning, and the first thing we say is: Don't screw this up. Of course, we use a different word, and because it's an asset that performs extremely well. First money that comes out pays our dividend. We call it a fixed dividend because that's fixed versus variable, and in the oil and gas business, they've gone to this variable dividend structure, which we can't even figure out. And it's, we've raised the dividend from $2 to $2.10 in the first year and a half. That's the money out the door first. A lot of other oil companies will wait till the, you know, the end of all their spending, and then whatever's left over, they're gonna give you a dividend. Gwen and I own 6% of the company. The rest of management owns another 5% of the company. The Jefferies shareholders own 20% of the company. So 30% of the company is owned by that group that's really been together since 2011, 2012. We're in it for the dividend. Organic CapEx, what does that mean? All this undeveloped acreage we have will get drilled over the course of time. That rate of return is somewhere between 60% and 100% IRR. Very high rate of return stuff because we bought that, and we have a very low cost basis in it for, you know, over the course of time. So that organic drilling is very high rate of return. We have more capital left over after the organic drilling, so what do we do with it? We could give that money back in an increased dividend, or we can go hunting, and there are what we call near-term development and acquisitions, which are other companies, other operators wanting to sell those AFEs, which is an authorization for expenditures. That's easy to say at eight o'clock in the morning, and so that's what we call deal flow. That's very lumpy. We did extremely well last year, and we were able to, in the last two years, actually increase our production. So that's not what we're out to do. We're not, we're not trying to just increase production, but when we find a good economic opportunity to spend money, we will. Where Organic CapEx is 60%-100%, the near-term drilling has historically been 35%-40% IRR. The next thing we do is asset acquisition. We got a picture of Ted Williams in our war room, and he... They asked him why he had such a high batting average, and he said, "I we wait for the fat pitch," and that's what we do. A lot of oil companies, like, especially oil companies, are driven to do deals, to use their capital structure to grow. We wanna grow our dividend, and we'll do everything we can with that in mind. So we are always looking for an asset acquisition. We've done two substantial acquisitions in 10 years. We've got a number of them that we're looking at, but again, if it's not a fat pitch, not interested. When we spun off from Jefferies, all of Jefferies, we have a great shareholder base because on a spin-off, you get 100% of the Jefferies shareholders, day one, and there was no lockup. So one day, all the Jefferies shareholders owned Jefferies stock. The next day, they owned Jefferies stock and Vitesse. So imagine a more unnatural group of oil and gas investors. You're owning Jefferies Financial one day, and then you have this stub of an oil company. So we thought we would have a substantial amount of churn, which we did, and so we put a $60 million buyback in place. We came out at $14 and change. All of the smart people, including Jefferies, thought we would trade down to $12 or $11, and we would, you know, come in and buy those shares. We didn't trade down, so I think we spent... How much did we spend to buy back? Just a couple million. Just $2 million bucks, so we didn't have a chance to do it. We would've loved to have done it. It's still in place because the oil business goes up, it goes down, and we would love to buy back our shares, if we think it's the best place to spend money. We are one of the few oil companies that trade at a premium to our NAV, and the reason for that is that not just because we pay a $2.10 dividend, but we have the asset that can support that kind of a dividend. And then finally, if there's money left over that we haven't allocated, then we'll pay down debt. But we're very lightly levered. We're 0.67 times now. Historically, we've been about 0.5. We will borrow money if we find an asset that's really attractive. But if we do that, that asset's gonna pay back pretty quickly. So, we only have an RBL. We will only have an RBL going forward. We're not gonna do a sub debt deal, we're not gonna do a junk deal, we're not gonna do a preferred, not because they don't look really cool on an Excel spreadsheet, but because that's how you destroy an oil company. So, third slide, so this is the summary slide. We have an awful lot of cash flow, and that's unique to, you know, to our industry. What do we do with the cash flow? We're a dividend payer. It's a very long duration asset. We have done... We've done a lot of deals, and we're continuing to do a lot of deals, but we only do deals if they're highly economic. Prudent risk managers: so we're in 7,000 wells. We take a small percentage of each well. So we're, in effect, a Bakken ETF. If the Bakken does well, we do well. We hedge about as much as we can hedge. The year that oil went negative was one of our most productive years, because we were fairly well hedged. But when oil went negative, the operators shut in their wells, so we didn't have the production, but we were getting paid for each barrel. So when you're hedged at $70 and oil goes to -$20, that day, we made $90 per barrel for wells we didn't have to deliver. So, we hedged out usually about two years in advance. That's the way we play the backwardation. Process-oriented: since this was a long-term asset, Jefferies allowed us to build a database that's next to. There's nothing like it in our industry. We call it Luminous, and it is a database that everybody in the company has access to because we're financial decision-makers. We want our land department, engineering department, finance department, management. We want everybody to know what we're doing and have an opinion about how we spend money. 'Cause bad news needs to travel at the speed of light. Good news, you can send it with the Pony Express. So, process-oriented, you come in every day, you work the process. You don't look at the stock price, you don't look at the price of oil, you just... you run the process. And finally, it's strong investor alignment. So 30% of the company is owned by people who intend to hold it for a very long period of time. And, you know, we have had good share growth. We're very concerned about our stock price, but we're a dividend payer. So that was. We got about 12 minutes for any questions. Yeah, please. I'm a little uncertain. So what is it you own? Yep. So, Brian, actually, you wanna come up and answer that one? Sure. I don't do a very good job of explaining that. The opening, you said you don't have land and you don't do the ops. Right. Halfway through, you said you have land. We own rights. We lease mineral rights. Brian? Yeah, we have mineral rights. So we have the right to the oil and gas that's under the ground. So even though we don't own the surface of the property, we have the rights to the oil and gas. So as those operators, they also take leases, they own other mineral rights. They go drill the wells, and we just participate with them, as Bob said, on a pari passu basis. So whatever they bring out of the ground, we get our percentage. Like, do you go in with specific operators? Yeah, we have roughly 35 different operators. That's one of those other risk management things, is we have lots of interest in 7,000 wells, or we have a 3% interest in lots of wells, but we also have a variety of different operators. And so we have some that are our favorites and some that don't do as well as others, and we try to pick, you know, the ones that we like and align ourselves with them and own interests in properties that they're going to develop. And then one last question: They partner with you to help de-risk their portfolio? We're supposed to repeat the question. They partner with us to de-risk their portfolio. Good question. Yeah, that is a good question. To some extent, yes. If you think about North Dakota, Bob mentioned that the drilling and spacing units are 1,280 acres. There's lots of people who own the mineral rights within that drilling and spacing unit. And so the operator goes out and picks up as many leases or picks up as much mineral rights as they can. So you can imagine, other people also pick up those rights, including us, and then those trade hands. So there is some just de-risking. It's not like the operator comes to us and says, "Hey, we don't wanna own 100% of this well. We only wanna we only want to own 70%. We'd like to sell some of that off." That does happen from time to time, and it's happened to us in the past with some operators that we really like, where they've said, "We have a very high working interest in this well. We'd like to drill more wells, so we'd like to lay off some of the risk." But a lot of times, it's just we've picked up that property, that mineral right over time. The field is already been de-risked, so it's in the manufacturing mode. This is just a, you know, convert what's in the ground to money, and the variability of returns is very narrow. So, yes? You mentioned the stock is trading at a premium to NAV. Can you define what the NAV is? Sure, sure. The stock is trading at a premium to the NAV. You wanna handle that? Yeah, sure. So net asset value for us in a public company, especially oil and gas company, is gonna be based off of what your reserve report is, okay? So the reserves are done by a third party. For us, it's Cawley Gillespie, one of the top two or three reservoir engineers in the country. From an SEC standpoint, the reserve engineers are only allowed to put on the books the wells that they believe are going to be drilled over the next five years. Even though we have wells that will be drilled over the next 25 years, only the first five years of drilling of those undeveloped locations can really go into our net asset value. So we have a lot of properties that are not in our engineering reserve report that we think will be developed over time. That is one of the reasons that we'll trade above our NAV, and that's how our NAV is calculated. And Exxon has the same situation. They call the wells that are outside of that SEC calculation their resource. So we're not trying to equate ourselves to Exxon, but you know, we're unique as a microcap company because we do have a resource. Most microcap companies, what you see is what you get, and they have you know, five to 10 years of drilling. Well, we've got 15 to 30 years of drilling. So that really does differentiate us, and you can't see that in the SEC numbers. So yes? With the emphasis on the long term and the dividend, what is your vision for dividend growth over multiple years? What is our vision for dividend growth over the upcoming years? Joe Steinberg would like us to increase our dividend $0.10 every year. I mean, and he's our largest shareholder. We do not wanna be put ourselves in a position where we ever have to cut our dividend. So, we stress test the dividend continuously. My vision is that the dividend would increase over the course of time. The cash flow that this company produces, that's your money. That's the shareholder's money, and we would rather, you know, give it back to you. We have grown our production in the last couple of years. That's just because we found things that we thought were extraordinary. But it, Ben often says that Ben Messier is our business development guy, who's also our IR guy, does a phenomenal job. So our IR guy is actually one of the management teams. But, you know, Ben always says that it's interesting that the amount hedged we are changes over the course of time. If the price of oil goes up... Ben, why don't you give that? All right, Ben, come on up. Yeah, I mean, I think, the point is, Come on, you gotta come into the microphone. Ben explains this much better. So, yeah. This is how we can pay the dividend in the future. Yeah, the point is, like, you know, when you're hedged in a status quo environment, we might have 55% of our current production hedged, based on guidance. And if prices go up, our operators drill a little bit faster because their 60% rates of return go to 110% rates of return, for example, and so they're trying to accelerate their own NAV. So then our production goes up, and we experience those higher prices, and we are then, as a percentage of production, less hedged, which is great because the unhedged portion is realizing higher prices. And then if prices go down, the opposite happens with our operators, so they tend to slow down drilling. They tend to drill only their best acreage, so it's a lot more efficient in terms of production per dollar of CapEx spent. And then we might be 70% hedged in that scenario, just because our production will fall off a little bit, but our distributable cash flow stays similar, A, because we're more hedged, and B, because there's less CapEx. So that dividend's hedged in a lot of ways, outside of just the financial swaps that we have, if that makes sense. Yeah. So, organically, if we don't do an acquisition, our dividend, we would expect, would creep up over the course of time. That's just the way the model works. If we look to do a larger transaction, which we're looking at all the time, the major criteria for that is, is it strategic, and does it accrete to the dividend? We're not gonna just do it, you know, a deal. So if we did something like that, our dividend would go up in a very lumpy fashion. But we, we're not gonna just do something to do something. Yes? Last year in Dallas, you mentioned that you were about 40% hedged at the $80 a barrel level. What's the hedge right now? Yeah, we're in the high 70s, and it's about 55% of our hedges for this year, and then we're hedged through the end of next year, but we don't provide guidance there. It's something like 25%-30% of what we're thinking for next year, though, so. We really hedge every couple of months. As the backwardation rolls off, we extend those hedges out. So we're not. We call ourselves opportunistic hedgers, but it's just we've done extremely well. We don't predict the price of oil, but we like to be 'cause these wells are so highly economic, you can spend some bips to lock in t hose rates of return. I had a follow-up question. What is your production cost right now? Last year, it was about mid- to low-forties per barrel. Yep. Has that changed? Good question. What's our production cost right now? Okay, so we have producing wells, right? That have already been drilled, and for those to stay online, oil prices need to be $20, right? So that's LOE per BOE plus production taxes, plus diffs per barrel. To drill a new well, it's probably about $8 million for a two-mile lateral, and so I think that probably still works out to about, you know, $40 break even to drill a new well. That said, if you look at the COVID year, we still drilled close to four net wells, and so in lower price environments, the CapEx cost tends to go down. So that year, we were drilling a lot of wells at, like, $6.5 million. And we're only approving wells that are meeting our return hurdles. The fact that we can send it to almost four net wells in that year means that they were working at $35 oil, at above 20% rates of return. So- The oil industry is a very, you know, capital intensive, and it can be very expensive. So, you know, the production cost of wells that have been drilled around $20, that's critical 'cause these wells need to produce for 30 years. And the oil industry often produces a lot of water, and wells go to gas, and their lives are shortened because the production costs get out of line. One of the reasons why we picked the Bakken. So... Any other questions? Those are pretty good questions for generalists. Yeah. We appreciate that. Really good. So, Sandy, we got two more minutes. We're gonna hang around. Look, we appreciate you guys getting up, coming and seeing us and listening to the story. So thank you very much, everybody, and thank you, Sandy.