Presidio Production Company (FTW) Earnings Call Transcript

Hello, and welcome to Presidio Production Company's earnings conference call for the first quarter of 2026. My name is Connor Fair, and I serve as Director of Investor Relations. With me on the call are our Co-CEOs, Will Ulrich and Chris Hammack, along with our CFO, John Brawley, and General Counsel, Brett Barnes. I'd like to remind everyone that forward-looking statements are part of today's discussion. Such statements reflect management's present expectations and assumptions, and they carry various risks, uncertainties, and other factors — a great many of which lie outside the company's ability to control — that might lead actual results to diverge materially from what is expressed or implied here. To see a full list of cautionary statements, please look at the risk factors laid out in our latest Form 10-Q, Form S-1, Form S-4, and other SEC filings, all of which you can access on the investor relations page of our website. In addition, we will discuss some non-GAAP financial measures. For further disclosures regarding these non-GAAP measures, including reconciliations to comparable GAAP measures, please see our earnings release that we issued yesterday, which is likewise posted on the investor relations page of our website. With that, I'll hand things over to our Chairman and Co-CEO, Will Ulrich.

Hello, everyone. Presidio takes part in the Great Game. If you've read up on oil and gas, you're likely familiar with Daniel Yergin's The Prize — a book my father handed me many years back. Within its pages, he traces the history of that first Great Game: a hundred-year contest over acquiring resources and achieving geopolitical supremacy, which molded the world as we know it. Across more than a century, this contest shaped countries, brought down regimes, and constructed the industrial society we live in now. Victory went to whoever held the largest share of oil beneath the surface. That contest has shifted. What we play now is something else. The winners are those capable of turning data into decisions, decisions into action, and action into cash flow. That's what we refer to as asset intelligence, and our view is that Presidio was designed precisely for the situation we now find ourselves in — a situation that, notably, ranks among the most pivotal ever encountered by humankind. This year, American enterprise and ingenuity reach the quarter-millennium mark. Reaching America's 250th year isn't merely a chance to look back. Few generations in history have ever stood where our civilization now stands. Artificial intelligence's swift advancement could prove the single most pivotal development our species has seen — possibly on par with the establishment of this great nation. Here at Presidio, we've chosen deliberately how we'll respond to this moment. We aren't just aiming to keep up with the shifting landscape—we intend to set the pace, both in technology and in ethics. I'll say more about that shortly. When we went public, the timing couldn't have been better. A profound transformation is underway in the energy sector, and we think it will shape the coming ten years while aligning perfectly with what Presidio has developed. Consider the global picture. Turmoil across the Middle East is cutting into supply channels and throwing into disarray the nations that have historically determined where global oil prices settle. The conflict in Europe has fundamentally altered how energy moves around the world, broken apart supplier ties that had existed for many decades, and compelled Western nations to face just how vulnerable their energy reliance truly is — something they had previously opted to overlook. Alliances are realigning. Routes for trade are being changed. The foundational beliefs that supported worldwide energy markets for a full generation are all being put under pressure at once. Meanwhile, energy demand is growing faster than at any point in recorded history. Data centers built for artificial intelligence are going up so quickly and on such a massive scale that they are overwhelming the U.S. electricity grid. The coming transition toward robotics and automated production — the next major phase of America's industrial transformation — will generate additional electricity needs that analysts have only just started to quantify. Good-quality U.S. drilling spots are getting harder to come by. Most of the readily accessible crude and natural gas has already been discovered. Shale has grown into a mature industry. Finding each additional barrel and MCF of output in this country will cost more and pose greater difficulty than the one before it. So where does that leave Presidio? It means the properties in our portfolio—long-lived, slow to decline, and already generating American crude and gas—keep gaining value rather than losing it. The takeaway is this: in today's market, what's in demand are the operators who can extract the greatest value from existing flowing wells, rather than relying on new drilling. It also tells you that Presidio's way of doing business sits right where several of the strongest, most lasting forces now remaking worldwide energy intersect. We designed this company for exactly this point in time, and our position could hardly be stronger. But before we look ahead, let's cover where things stand right now. What we've assembled at Presidio is really pretty straightforward at bottom. This is a cash flow business. That cash flow is generated by American oil and gas—the foundation of our country's energy security and economic strength. We buy producing properties that already throw off cash; we make that cash flow better in quality; we hand shareholders a dividend that is both fixed and growing; we earn a long-term return on equity well above what our capital costs us; we never drill; we carry no development risk. Thanks to that discipline, we can offer shareholders a plain promise: reliable, rising cash dividends paid for by assets that are already producing. Some may see this as an unusual business plan, yet our record supports it—during our 8 years as a private company following precisely this approach, we delivered compounded annual equity returns above 50% per year. Once we buy an asset, optimization starts right away. Every deal we close comes with a plan for day one—a playbook we've already worked out in detail, ready to launch the moment the deal is ours. First thing we do is change how the operation is run. Layers get stripped away. Authority gets pushed down to the folks out at the wellhead—the pumpers and operators who know these properties far better than anyone in a corporate headquarters ever could. We hand them real authority. Their pay gets linked to how well the assets under their care perform, and after that we leave them alone. Chris, my partner and our Co-CEO, has a line he shares with anyone within earshot: drive out to see how we run things in the field, and you'll see something you won't find anywhere else in today's oil patch. The result is an organization in the field that operates with greater speed, lower expenses, and higher output. That didn't happen because we hired a fresh leadership group from the outside—it happened because we activated capability that was already present within the company and gave those people both the resources and the decision-making power to deliver results. In our sector, I would contend, that skill is something people tend not to value enough, and Chris will elaborate on that point when he speaks. I also want to take a brief moment to address how strong the groundwork was that we established at the time of listing, because we hold the view that the way we structured our capital and the group of investors we assembled represent a competitive edge in their own right—one that may also be insufficiently recognized. Our CFO, John Brawley, will walk you through the specifics when he speaks, though I'd like to share a few thoughts from my vantage point first. Back at the start of this year, we completed our transition into a publicly traded business through the combination with EQV Ventures, and we deliberately chose both the types of partners to bring on board and the capital structure we wanted. Those results stemmed from relationships built over many years, along with a sharply drawn vision of what a top-tier public energy company should look like. At the foundation of our investor base sit essential, long-horizon institutional holders — not short-term traders. The people involved here mean business. They invested real energy into learning how our business is built. They believe in what we're doing, and they intend to build wealth with us for years down the road. I'm talking about Adage, BP, Morgan Stanley, JP Morgan Investment Management, plus several more. A company such as Presidio deserves exactly this kind of investor group, and going forward, we'll continue expanding that group, together with our float and liquidity. It would be a dereliction of my responsibility if I didn't also mention that Presidio Management turned every bit of the equity we received at the private Presidio — 100% of it — into common shares of Presidio Production Company. Collectively, the leadership team sits among the largest stockholders in this business. I'm thankful to each member of our workforce for the direction they provide, and it's a point of pride for me to share right now that every single one of our team members — those at desks in the office and those out in the field alike — owns a piece of the company through equity. We're people who run the operation and people who hold a stake in it. What we want is fully and totally aligned with what every investor on this call wants.

We designed our capital structure so it could underpin consistent, expanding returns for shareholders. When we closed, we have an investment-grade ABS in place — cheap, with a long duration, tailored specifically for a PDP asset base. We brought in perpetual preferred equity, with JP Morgan Investment Management serving as the anchor, a firm that ranks among the world's great financial institutions. Our SPAC sponsor put 75% of their founder shares into either a mandatory dividend reinvestment program or a share price earn-out structure. A quick exit is not what the sponsor wants. Their stake in the outcome matches ours. Everybody is pulling in the same direction. Earlier this year, in February, we unveiled a $1 billion credit facility together with Goldman Sachs — the first arrangement of this type, designed specifically for PDP acquisition financing. This capital structure was engineered to generate compounding returns, and we've only just begun deploying it. I'm pleased to share that our inaugural dividend has been approved at $1.35 per share on an annual basis, equivalent to a 12% current yield; I'd note that this stands among the best yields available to investors, not just in energy markets, but in any public market. We're happy to already be increasing it; we've executed a purchase and sale agreement to acquire producing assets in the Arkoma Basin for $83 million. We're entering a brand-new basin here at Presidio, and that's a big deal — it proves our way of operating delivers results no matter which basin we're in. The deal should wrap up near the start of Q3. After it's done, our plan is to bump the yearly dividend up to $1.50 a share from $1.35. That's the playbook functioning exactly the way we intended: buy, improve, boost the payout, do it all over again. Honestly, watching a strategy come together like this is a wonderful thing, and the results we've posted make clear it genuinely works. Now, let's turn to the piece of this story that doesn't quite fit into a standard E&P valuation model — as if we were ever bound by that model in the first place — and that we see as a truly asymmetric opportunity for our shareholders. Listen closely here. From the day Presidio was founded, we've delivered substantial alpha by applying technology to our assets in a disciplined way. That record didn't happen by chance; back in 2020, we set up FTW Technologies as a purpose-built subsidiary. At that point, nearly everyone else in this industry wasn't giving serious thought to artificial intelligence and machine learning. We were. Our conviction about the direction the world was moving in was clear, and we built with that in mind. Here's what we've created: a domain model for oil and gas that's proprietary, sitting on top of a custom ontology, and trained using millions of operational data points along with hundreds of hours of information-dense voice submissions from pumpers working in the field. It also draws on hundreds of thousands of inputs covering well files, drilling reports, completion reports, workover reports, producing pressures, production volumes, and geology, just to name a few. From this, we've produced what we consider the most sophisticated Asset Intelligence system in operation across the upstream industry today. Early this year, we made a deliberate move as an organization, and I'd like to walk you through it, because it perfectly illustrates both our approach to technology and what we expect to get out of it. Our operations were restructured into 3 separate yet tightly interconnected units. First comes the Asset Intelligence Group — our engineers and support personnel, equipped with AI and analytics to generate efficiencies in the field. Then there's our operations group, the individuals whom all of us in Fort Worth serve, the ones operating those assets daily. And last, our specialized AI team at FTW Technologies, which has a single mission: helping the Asset Intelligence Group and the broader company by providing the tools, models, and insights required to reach better decisions more quickly. Going further, we've named our inaugural cohort of Presidio AI Astronauts — men and women acting as ambassadors for this AI transformation, spreading it throughout every part of our organization and bringing their coworkers along. This is a pioneering initiative. Ours is a hard asset operation that we've successfully digitized, yet we will forever require the man or woman turning the wrench at our locations. Our goal with artificial intelligence isn't to swap out people. It's to render each individual at Presidio vastly more capable; we hold that given proper infrastructure, proper tools, and proper mindset, we can amplify the productivity of every Presidio employee by tenfold. People stay at the heart of all we do. AI is the multiplier. I also want to be just as candid regarding what we are and aren't attempting with this technology in general. Our main objective isn't deploying AI to automate documentation, optimize administrative processes, or speed up report generation; those things are worthwhile, and we're pursuing them, yet they aren't the real reward. Within this business, the reward is production. The reward is revenue. The reward is cash flow. That's exactly where our technology has been pointed. Our Asset Intelligence Group holds a goal of increasing production 3% – 5% during this year with zero dollars of capital expenditure. Not via drilling, not via workovers, but via intelligence — via understanding which wells to prioritize, which interventions to perform, and which choices to make before an issue turns into an issue. Via applying 9 years of proprietary data toward the particular task of getting every well in our portfolio to deliver at its maximum capability. Across the first 4 months of 2026, we've realized roughly a 1% gain; we've barely begun. When I say we've barely begun, I'm serious. In oil and gas's physical realm, the upside has a limit. You might buy additional barrels, you might enhance recovery, yet ultimately a ceiling exists. Technology works differently. Its upside has no limit, and its growth can be exponential. The intellectual property that we've built at FTW Technologies has applications far beyond Presidio's own wells. It can be used outside the Anadarko, outside the Arkoma, outside everything we've discussed today. Using our domain model as a foundation, we're developing well surveillance agents, production intelligence systems, financial modeling capabilities, and deal screening infrastructure. That work will serve Presidio for decades, and it holds real commercial potential for other operators facing the same challenges we face. We aren't overlooking that opportunity — our dedicated AI team is expanding as we speak. Based on what the results are telling us, we've reaffirmed our conviction that what we've created delivers substantial, potentially transformational value to the broader industry. Stay tuned. If anybody is still awake, I'll hand things to my co-founder and co-CEO, Chris Hammack, so he can go deeper into our operational philosophy. Chris built a large part of what I just described, and no one understands it better.

Thank you, Will. Good morning to all of you. I'd like to spend a few minutes explaining what really takes place when Presidio brings an asset into the fold. That 50% cut in costs Will mentioned is not something that occurs by chance. Nor does it come about gradually. It stems from a repeatable, systematic playbook that we've honed throughout every deal we've completed since the company was founded. A playbook that improves each time we put it to use. Once we've signed an agreement to buy an asset, we're on location the following day, sometimes sooner. The acquisition we completed most recently before our IPO was completely integrated 21 days after closing; that's the benchmark we plan to hit for every asset we buy, Arkoma Basin included. People come first in the playbook; people always come first. On any asset, the very first step is to interview 100% of the field staff; we measure them using a standardized framework, and we make quick calls. We flatten the field structure, give the people authority, and tie their incentives straight to how the assets they run perform. What you get is a field organization that's leaner, faster, and more accountable. One in which the right people make the right calls at the well level in real time, without waiting for approval from someone sitting in a corporate office in Houston or Oklahoma City. After that, we turn to artificial lift. Legacy operators have a tendency to oversize their compression. They put in systems built for peak capacity and never right-size them as production changes. This mistake is both common and costly. Once we're there, we audit every compressor on the asset. We downsize, release, or swap equipment so it matches actual system demands. In our acquisition case study, we delivered a 28% reduction in compression expense in month one alone. We bring that same discipline to artificial lift, lowering pump depths, installing plungers on gas lift wells, cutting downtime, and improving drawdown. These changes don't require much capital. They're operational decisions that create immediate cash flow improvement. Third, there's chemicals. The majority of acquired assets use vendor-managed chemical programs. Vendors have minimal incentive to cut consumption; they get paid based on volume. That's a misalignment of incentives that costs operators a great deal. We move chemical management in-house on day one. We centralize oversight under our own operations team, put well-level tracking and sampling in place, consolidate suppliers, and standardize treatment protocols throughout the asset. Year-over-year, from 2023 to 2024, we've cut chemical expense by 39% across the portfolio. That's a structural change. Last, we implement an industry-leading pump-by-exception model. Instead of sending pumpers out to every well daily, which is the legacy industry standard and deeply inefficient, our system only services wells that need attention. We visit the top 20% of wells by cash flow value every day, and we visit the rest only when our technology flags an issue. What we get is a 50% reduction in well visits with production performance that's the same or better. The people running our pumpers are focused on the highest-value work instead of following routes some person sketched out ten years back who never bothered checking the numbers. When you combine labor, compression, chemicals, and field deployment — those four levers together — that's the engine behind the savings we capture in each acquisition we've completed; this playbook had its origins in the Anadarko Basin, though keeping it confined there was never the plan. The same old operating models that we've already overhauled were in place for the assets we're picking up in the Arkoma Basin. What lies ahead is clear to us, we understand the steps required, and the timeline is something we can predict. One last point before I finish. Will called Presidio's technology an asymmetric upside in our story. My addition would be that our operational playbook serves as the basis for all of it, the thing everything else is built upon. Before AI came along, it was the OG alpha generator. Why does the acquisition model succeed? Because our underwriting relies on what we're confident we can deliver, rather than on promises a seller makes about potential. The technology layer delivers its strongest results when positioned above a field organization that's already lean, already aligned, and already performing at the highest level. That's the thing we're constructing, and the results are showing. The best is genuinely yet to come. At this point I'll hand things over to John Brawley, our CFO.

Thank you, Chris. To begin, I want to mention that our initial 10-Q will be submitted after the market shuts down today. Now, let's turn to the first quarter. That quarter doesn't reflect what our business can earn moving forward, since the factors involved won't repeat and stem from the closing. Let me go through this carefully. The business combination was completed on March 4th, which means our Q1 financials split into two segments: a predecessor stretch running from January 1st to March 3rd, plus a successor stretch from March 4th to March 31st, using a fresh accounting basis as of the business combination's close. To be specific, the EQVR assets picked up when we closed don't appear in the predecessor segment, so combining the predecessor and successor segments isn't possible. Turning to details, Q1 contains deal-related, non-recurring entries that management views as unrepresentative of continuing results. The first one is about $47 million in non-cash stock-based compensation during the pre-predecessor segment, a single occurrence completely linked to the deal. That figure represents management's stake in Presidio's common stock, tied to the way we handled the shift of management's equity from private Presidio into public Presidio. As Will mentioned before, management moved nearly all of its equity value at the IPO, which shows management's alignment with and dedication to the new Presidio as a public entity. On top of that, the predecessor segment also carries roughly $7 million in acquisition and transaction expenses, with lesser amounts of both flowing into the successor segment. The following big entry concerns fluctuations in the value of the company's hedge portfolio while commodities climbed during the period; altogether, the company booked about $44 million in unrealized net commodity derivative losses spread across both segments. About $17 million fell in the predecessor segment and $27 million in the successor segment. These figures are unrealized, non-cash mark-to-market changes to the hedge book as oil and gas prices increased during the period. Additionally, we carried out a $60 million restructuring of our commodity hedge book alongside the closing. That restructuring generated $2.2 million in realized derivative costs booked during the period, while the economic gain from the restructured hedges only started in the second quarter. To put it plainly, no restructured hedges deliver any benefit in Q1. That kicks off in Q2. In short, Q1 bears the expense of both the hedge restructuring and the transaction. Q2 is when the upside starts. Given those points, management considers Q1 unrepresentative of how we'll perform in later quarters, which is why we chose to offer explicit guidance for Q2. We anticipate roughly $30 million in adjusted EBITDA for Q2, based on the current strip price. Past Q2, we see that as a sensible level for sizing up each quarter through the rest of 2026. So, turning from those operational metrics, let's look at where production stands right now. We're sitting at about 22,000 BOE a day, and the mix breaks down as roughly 16% oil, 57% natural gas, and 27% NGLs. Lease operating expense for the successor period came in at $9.47 per BOE. CapEx was very minimal this quarter — it came in below $1 million — which lines up with our low reinvestment model. By design, our reinvestment rate is still one of the lowest anywhere in the sector. Our hedge book was restructured and went into effect when the second quarter began, and it gives us multi-year visibility into cash flow across oil, natural gas, and NGL production, with some pieces reaching all the way out to 2031. You can find the full hedge table in the press release, and as we close Canyon Creek, we'll keep layering on more hedges, which is consistent with how we protect dividend sustainability. Now let me turn to liquidity and the balance sheet. When the quarter closed, total liquidity stood at $48.7 million, made up of $20.7 million in unrestricted cash plus $28 million of undrawn capacity on our $65 million RBL. Cash in total, restricted cash included, came to $31.5 million. Looking at debt, principal outstanding was $295.9 million, and that figure includes $256.8 million of investment-grade ABS notes, $37 million drawn on our RBL, and a $2.1 million term loan. That brings net debt to $264.4 million. If we apply our projected second quarter adjusted EBITDA run rate of roughly $30 million, that works out to pro forma leverage of about 2.2x. Beyond the debt we have outstanding, there's also our Series A preferred stock, which has a $125 million aggregate stated value and pays an 8% cash rate plus a 4% PIK rate. You might also notice the Series B preferred. That one is a toothless preferred, and in effect it behaves very much like our Class A common stock. Its main feature is that it converts into 2.7 million shares of common stock. Let me take a moment on the $1 billion Goldman Sachs ABS warehouse facility, since it's central to how we'll fund acquisitions going forward. We're extremely proud of this facility and thankful to our partners at Goldman Sachs. It's the first oil and gas ABS warehouse of its kind. Several things make it special. First, it isn't a 365-day bridge — it carries several years of term. That lets us wait patiently for the right ABS window to refinance it into our long-term ABS. Second, its structure lets us stack multiple transactions inside the warehouse before refinancing them into something more permanent, which gives us scale and keeps the number of ABS we have outstanding down. That matters a great deal to us; we want as few ABS tranches outstanding as we can manage so our capital structure stays simple. Ideally, at any given time we'd have just two ABS structures outstanding: our core ABS and the warehouse. Third, the cost of capital on the ABS warehouse is attractive. What this does is let us step forward and make an offer on an asset with funding in place, while not giving up the strategic cost of capital edge that ABS gives us for producing asset purchases. Since ours is a dividend-paying company, provided the facility's conditions are satisfied, it permits distributions to be made; that way we can keep assets in the warehouse and still be able to tap cash flow for dividends. That's one more thing that sets our facility apart. Right now, work is underway to move the facility from its initial terms to final documentation so it can support its first funding. When the Canyon Creek acquisition closes, we will make our first draw, funding $55 million of the cash portion of that purchase price together with cash on hand. The rest of the capacity — close to $1 billion — can back future PDP acquisitions as we keep executing on our pipeline; this facility was purpose-built for our acquisition model. It lets us act fast on bilateral deals, finance them efficiently against the cash flows of the acquired assets, and roll them into permanent ABS once those assets are acquired. With this facility, we have the firepower to put our deal pipeline to work. On the subject of ABS, I will note that our current ABS uses a very heavy amortization structure.

On the amortization front, since our existing ABS was issued back in 2023, we've paid down roughly $130 million of principal as a company. This ABS carries a rate in the mid-8% range. Worth pointing out that for investment-grade paper of this kind, today's market sits nearer the mid-6%. Structures being used now permit less amortization, which releases additional cash flow for dividends. There's definitely more coming on that front. Keep watching. Now on to dividends. Our first dividend, as Will referenced, has been declared, and it comes to an annualized $1.35 per share. May 4th was the record date, and we're very much looking forward to making our first dividend payment after the weekend, this coming Monday. We're being intentional about sticking to what we laid out. We've said we are a dividend-paying business. That payout is happening. On top of that, we anticipate it growing. We signed an LOI for the Canyon Creek assets, and after a tremendous amount of effort — credit to Brett Barnes, our General Counsel — we converted it into definitive agreements; we anticipate completing that deal when the third quarter begins. When the Canyon Creek purchase is finalized, we plan to lift the annualized dividend to $1.50 per share, assuming the board gives its approval. I want to spend a bit of time on the M&A landscape, because I think it's important for investors to understand not just the deals we've announced, but also the pipeline of opportunities ahead of Presidio. The total market for the kinds of properties Presidio buys is substantial, and it keeps expanding. Right now, private equity funds are sitting on tens of billions in PDP assets, and over the coming five years, those holdings are projected to require liquidity. These funds are getting older, and so are the assets inside them. Strong operators assembled meaningful portfolios back when money was easy to raise and exit deadlines were flexible. Sooner or later, those deadlines arrive, and sooner or later, investors want their money out. Because of what's happening globally right now, commodity prices have climbed, and that's brought a fairly large wave of assets onto the market. As a publicly traded company that enjoys an appealing cost of capital along with a substantial stockpile of dry powder, we're in an ideal spot to snap up appealing assets when they hit the market. That's exactly what we're trying to do, and we currently have bids in process worth well over $1 billion. A portion of these deals are marketed, while others are bilateral. A question we hear often is, "What do our criteria look like? What exactly are we after?" To begin with, since we don't drill, the asset has to be developed. Should there be some upside, bringing in partners is an option for us, but the value we're chasing sits in the producing wells. Along those same lines, number two: someone has to run it. Chris has already covered the ways operations generate value for us. Without being the one running things, there's no way to affect how they perform. Number three, we want wells that deliver strong margins yet decline more slowly — ideally under 20%. That way there's space to make real improvements to the wells, and at the same time they keep producing dependable cash flow as time passes. Number four: location, location. The area we call the Mid-Continent is where we're concentrated, and we define it broadly. Texas and Oklahoma are included, along with the surrounding areas. You'll find large inventories of properties that are already producing in those locations. Put those factors together, and the properties line up exactly with how we do business, what we know, and what we've done. Once we've defined those factors, the final test when we look at a deal comes down to economics. Our aim is equity returns that exceed 20%. Growing just to grow isn't something we'll do; we hold ourselves to underwriting against a defined base return, with additional upside coming from our operational edge; we've got the history, the know-how, the money, and the chance to get it done; that mix, in our view, is what turns Presidio into one of the standout compounding narratives in the American energy sector in the years to come. Turning now, a quick word on investor relations. Now that the IPO is behind us and we're ramping up, we want investors aware that we are deliberately and thoughtfully focused on growing Presidio's footprint in the public markets along with liquidity in our shares; things have been extremely hectic right from the start, both regarding deals we've announced and upcoming exciting developments you ought to keep watching for. Establishing sell side coverage is something we're actively pursuing alongside research analysts. Initial coverage should be announced within the next few months. We're sharing our story with analysts capable of conveying the complete Presidio narrative — the PDP acquisition model, the operational playbook, plus the technology upside. That story stands apart. There's a separate point worth mentioning as well. When it comes to conferences, we do plan to show up at them, and we value the opportunity for our people to sit down with investors in person and make our pitch directly. The next one on our schedule is Hart Energy's Energy Capital Conference, taking place June 4 at the Post Oak Hotel in Houston. Beyond the institutional audience, we're committed to building a broader base of investors and supporters who follow FTW. Will remains quite active on X. If you want his perspectives on the energy sector, the way the Great Game is shifting, and the thinking behind this company's strategy, go ahead and follow him at @willulrich. Our belief is that strong companies communicate clearly, consistently, and in a way anyone can access. On the NYSE we're a fresh name; our goal is to become a familiar and respected one for a very long time. Thanks; I'll now hand it back to Will.

Thanks, John. I want to close with something I keep thinking about. We, as a civilization, stand at a turning point. The tech shifts remaking our world aren't on the horizon—they're already here. For any company, any leader, any team, the real issue isn't if they should take part in that transformation, but if they'll steer it or get steered by it. Here at Presidio, we've picked our path. We aren't merely adjusting—we're out front, in both technical and moral terms, ushering in a fresh chapter for this sector. This company has been under construction since 2017. That's 9 years spent buying up properties nobody else wanted, fine-tuning them in ways nobody else had thought of, and putting money into tech. All of that was done quietly, on purpose, and with a crystal-clear sense of our destination. Going public wasn't about throwing a party for what we'd already achieved; it was about speeding it up. The facility from Goldman Sachs is fully funded. The Arkoma transaction is locked in. More than $1 billion worth of two-way discussions are moving through the pipeline right now. Production is climbing thanks to our Asset Intelligence Group, and it isn't costing a single dollar in capex. Down at FTW Technologies, our AI crew keeps expanding. It's quite possible our well intelligence platform gets picked up outside our own operations—perhaps eventually outside our borders too. And the people in the field—the pumpers, the techs, the asset managers putting in work day in and day out—are performing at a standard we think has no equal in this business. We've announced our first dividend; once the Arkoma acquisition closes, we anticipate raising it. Acquire, optimize, grow the dividend, repeat—that's the blueprint we've set forth, and we're carrying it out. Presidio is playing the Great Game. The Game itself has shifted. We anticipated that shift, we designed for it, and we're only at the beginning. Thanks for being on our inaugural earnings call; we hope to have many, many more. Operator, please open the line for questions.

Good morning, everyone. For the first question, maybe — you've already handed things over to Johnny, and both you and Will provided plenty of detail on the M&A approach, but what really stood out was in the release, where you mentioned, I believe, potentially more than $1 billion in the pipeline. Could you elaborate on that — I mean, are we talking about smaller transactions? Are they gassy? Which regions? Any details you could offer on that would be great. Thank you.

Thanks, Neal. We're evaluating a number of deals in the Oklahoma basin. Those would mirror the same liquids profile as our current assets; we're also reviewing a few opportunities in Texas, and I'll intentionally keep it vague. Those probably carry a bigger liquids component, but I'll stop there. That figure covers multiple transactions, with more of them in the basin and a couple in Texas.

When it comes to size, I'd put it this way: picture small, medium, and large, and that's what applies to everything we're considering.

Good. That's roughly what I figured. Then, Chris, perhaps you could spend a moment discussing the marketing approach. From my perspective, and you alluded to this, there appears to be opportunity perhaps in what you're pursuing regarding, say, the gas, possibly in relation to future arrangements, power, LNG offtake — any of those sorts of deals you might be able to put together down the road.

For years our philosophy on gas marketing has centered on moving molecules as near to the final consumer as we can. As demand from end users grows, that approach will remain our focus. Broadly speaking, if you consider where the potential upside might sit, right now roughly 30% of our gas goes to power plants for electric generation. We've observed data center build-outs arriving in the Panhandle, and we anticipate that figure rising. Naturally, the nearer we reach the end user, the stronger the pricing we capture. Regarding LNG, the gas from our Arkoma acquisition will probably be directed to LNG. As for the western portion of our production assets, once we achieve scale, that should provide the economics essentially to secure the FT required, so that it can be delivered for LNG export. Over the long haul, I believe these shifts — the reshaping of flows I referenced in my remarks — will, I think, gradually reach Presidio here across the years ahead.

All right, and then maybe just one final item regarding the Asset Intelligence Group that's focused on AI. Can you expand on that 3% to 5% target — whether that's a decrease or an increase — that you're anticipating for the rest of this year, and also what you're assuming for years ahead?