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US Geothermal Inc (NYSEMKT: HTM ) Q1 2016 Earnings Conference Call May 11, 2016 13:00 ET Executives Dennis Gilles – Chief Executive Officer Doug Glaspey – President and Chief Operating Officer Kerry Hawkley – Chief Financial Officer Analysts Jim McIlree – Chardan Capital Gerry Sweeney – ROTH Capital Markets Jonathan Lo – Raymond James Chip Richardson – Wedbush Securities Operator Greetings and welcome to the U.S. Geothermal 2016 First Quarter Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Dennis Gilles, Chief Executive Officer. Thank you. Dennis, you may begin. Dennis Gilles Thanks, Chris. Good day, everyone and welcome to our first quarter 2016 earnings call. Today, I am joined by our President and Chief Operating Officer, Doug Glaspey; and our Chief Financial Officer, Kerry Hawkley. Our earnings release was issued yesterday and can be found on our website, usgeothermal.com. under the tab News. U.S. Geothermal’s three operating plants performed very well during the third quarter and generated availabilities ranging from 96% to 100% of the power output. However, our financial performance fell slightly short of our expectations due primarily to a one-time fee for engagement of financial advisors, plus higher than projected weather temperatures for the quarter and the breakdown of one of the production pumps at our Raft River project. In spite of those impacts, we produced our 14th straight quarter of positive EBITDA and cash flow, with both revenues and cash flows from operation exceeding those of the prior year. I am pleased with the steps we have taken to announce our 96 megawatts of advanced stage development projects. The pipeline of opportunities we have built provides us with a very strong platform for growth. Doug will provide more details on the operations and the development shortly, but first I would like to turn the meeting over to our CFO, Kerry Hawkley for an update on our financials. Kerry? Kerry Hawkley Thank you, Dennis and good morning to our listeners on the call. Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company’s plans, objectives and expectations for future operations and are based on management’s current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. During the call, we will present non-GAAP financial measures, such as EBITDA, adjusted EBITDA and adjusted net income. Reconciliation to the most directly comparable GAAP measures and management’s reason for presenting such information is set forth in the press release that was issued last night. Because these measures are not calculated in accordance with GAAP – U.S. GAAP, it should not be considered in isolation from our financial statements prepared in accordance with GAAP. I will now discuss the financial statements of U.S. Geothermal for the quarter ended March 31, 2016. Our financial statements and MD&A were prepared in a condensed format. Our balance sheet at March 31, 2016 total assets are $224.7 million. Total liabilities are $96.0 million. Non-controlling interests have been reduced to $26.2 million. Net stockholders’ equity has increased to $102.5 million. Cash and cash equivalents and restricted cash and bonds decreased in the first quarter as the company paid down notes payable and non-controlling interest. Our results of operation for the past quarter were consistent with our expectations. Revenues for the quarter were $8.5 million, up $29,000 from 2015 a one-time charge of $750,000 for the financial advisors and legal costs related to the investigation of strategic alternatives affects both professional and the management fees and travel and promotions. Annual bonuses paid to employees of $281,000 in the first quarter affects both plant production expense and employee compensation. These costs were recorded and paid in the second quarter in 2015. Net income before tax of $1.3 million in 2016 was down from $2.2 million for last year. Without the one-time charge for the review of strategic alternatives, 2016 would have been consistent with 2015. Net income attributable to the U.S. Geothermal was $150,000 in 2016 compared to $730,000 in 2015 again reflecting the effect of the one-time adjustment for cost of evaluating the strategic alternatives. Our statement of cash flows. We began the year with cash and cash equivalents of $8.7 million. Cash generated by operations was $5.0 million. Issuance of common stock generated $1.2 million. Though payments reduced our total debt by $1.8 million, payments to non-controlling interests were $2.5 million and the purchase of additional interest at Raft River energy was $1.6 million. Capitalized development costs at WGP geysers in El Ceibillo totaled $1.6 million for the quarter. We ended the quarter with cash and cash equivalents of $7.4 million. Our statement of changes in stockholders’ equity, we added net income attributable to U.S. Geothermal of $150,000 during the quarter. The accumulated deficit net of tax is now $17.3 million, down from a high of $32.8 million on December 31, 2012. Shares of common stock issued upon exercise of stock options were 225,000 shares. Another 2.5 million shares were issued under the ATM. Cash of $2.5 million was distributed to our non-controlling interest partner, Enbridge and common stock issued an outstanding at March 31, 2016 totaled 110.3 million shares. Please review the disclosure on Page 37 in the MD&A section regarding the net income attributable to the non-controlling interest and the net income attributable to U.S. Geothermal and its shareholders. For the first quarter of 2016, Neal Hot Springs contributed $1.2 million, San Emidio contributed $265,000 and Raft River contributed $53,000 for a total net income attributable to U.S. Geothermal and shareholders of $1.52 million. From that exploration activities and corporate overhead cost $1.37 million, all of these figures are net of tax. The company is well-positioned to act on any future opportunities resulting from our organic growth or potential M&A activities. I would like to thank you for your continued interest in U.S. Geothermal. I will turn the call over to Doug Glaspey, our President and Chief Operating Officer. Doug Glaspey Thank you, Kerry. Good day, everybody and we appreciate you being on the call today and your interest in the company. Our total generation for the first quarter from all three facilities was 93,788 megawatt hours. At Neal Hot Springs, the generation for the first quarter was 53,671 megawatt hours, with an average generation of 25.4 net megawatts per hour of operation. Neal operated at 96.7% availability for the quarter. We are planning at Neal to drill the freshwater well. During the second quarter to support our hybrid cooling system and as soon as we get our final approvals will be ready to go on that. At San Emidio, we had generation of 20,433 megawatt hours for the quarter, with an average generation of 9.4 net megawatts per hour. San Emidio operated at 99.4% availability for the quarter. At Raft River, we had generation of 19,684 megawatt-hours, with average hourly generation of 9.4 net megawatts per hour. Raft operated at 100% availability for the quarter. As Dennis mentioned earlier, we took production well RRG-2 offline in February on the pump failed. We pull that pump in March and they kept the well offline in preparation for drilling operations to add a second production leg to increase our overall production. That drilling is expected to be completed during the second quarter, with a total cost of the project estimated at approximately $3 million, which also includes a new pump cooling water well improvements and a few other ancillary upgrades needed to handle higher flow into the plant. Our operations team continues to ensure strong, stable performance at each of our power plants. On the development side, at WGP Geysers, we continue to move that project forward in preparation for start of construction. On March 6, we received the approved transmission interconnection agreement with the California Independent System Operator and Pacific Gas and Electric. With that approval, we made an initial payment of $1 million on a total estimated cost of $1.9 million for the cost of the grid operators’ portion of the work in the substation. We are also well on our way to getting our updated divisional use permit from Sonoma County, which is still expected to be issued in the second quarter of 2016. The conditional use permit again is required before we can start construction on the project. We are continuing our discussions for a power purchase agreement with a number of interested parties. On March 1, we mentioned earlier, we submitted a PPA proposal under a request for proposals from one of the new community choice aggregators in the San Francisco Bay Area, but we did not make initial shortlist, though the discussions with them are continuing. We will be submitting another proposal within the next couple of weeks and additional RFPs are expected to be issued yet in 2016. Bilateral negotiations or direct negotiations are also possible, but many of these folks require RFP type systems. At El Ceibillo, in Guatemala we have retained Mandeep [ph] Engineering from Iceland to advise the company on development of the well field and to construct the reservoir model for the project. El Ceibillo was located within a large volcanic complex, and Mandeep has specific expertise in volcanic host of geothermal systems and they worked for us on this project in the past. We have identified the location for a large diameter well, which will intersect the production zone. Preparations are being made to start drilling during the second quarter, followed by a flow test of the reservoir to provide modeling data for the reservoir model. The Guatemala government through the national electrical energy commission or CNEE has announced that its preparing to issue a 40-megawatt RFP exclusively for geothermal power. The CNEE is acting on the request of two of the large power distributors in Guatemala and has retained a large U.S. based consulting firm to prepare that RFP, the RFP is expected to be released during the second quarter. At San Emidio Phase 2, as part of the permitting process to deepen our two wells, additional plant and migratory bird surveys are being required by the Bureau of Land Management before drilling operations can commence. These are time of the year surveys, so cannot be done prior to May to ensure that the plants are actively growing. Plans have been made to complete these two wells early in the third quarter. The final interconnection study process was started by NV Energy in February. This facility study is expected to be completed during the second quarter of 2016 and would allow an additional 3.9 megawatts of transmission bringing our total transmission capacity to 19.9 megawatts to cover the Phase 2 plant requirements. In mergers and acquisitions, I will make a note that at Raft River, we completed the acquisition of Goldman Sachs interest in the project with the final payment of $1.635 million on March 31. This acquisition gives us the increased cash flow from the property and the new ownership structure allows the U.S. Geothermal to invest in new drilling to improve the plants generation output and can increase its contribution to your company. And in April, we received our first cash distribution from Raft River of $1.145 million. As noted previously, we have plans to drill a new leg on production well RRG-2. If that drilling is successful, we hope to increase the plant output by up to 3 megawatts annual average, which allows us to take advantage of the full 13-megawatt output allowed under the PPA. In regard to the power plant equipment we purchased in December, all of the major and long lead equipment for the construction of three binary geothermal plants was acquired for a total purchase price of $1.5 million, which is approximately 5% of the equipment’s estimated original cost of $28 million. The first payment of $750,000 was made upon signing the agreement and the final payment of $750,000 was made in January 2016. The components for the three units being purchased as we have said are all new and unused and represent approximately 70% of the components needed for a full plan. The equipment is from the same manufacturers and is of the similar size and design to the equipment that the company has installed at Neal Hot Springs and either San Emidio power plants. The design output of the acquired units is approximately 35 megawatts, but the actual output of these units will ultimately be determined by the resource conditions found at the site where we are installing. The three equipment packages meet the major long lead equipment requirements for the company’s proposed San Emidio 2 power plant 10 megawatts and Crescent Valley 1 power plant at 25 megawatts or alternatively it could be used in El Ceibillo, Guatemala. This equipment gives us the ability to expand our megawatt output at our existing advanced stage development projects, at significantly lower cost and in a much shorter construction timeframe. Since we have entered the second quarter, I want to remind everyone that we scheduled our annual plant maintenance outages during this period. At Raft River and Neal, the PPA price for March through May is approximately 73% of the yearly average price, due to the spring runoff or high generation conditions in the Idaho Power hydro power system. Taking advantage of this low-price period reduces the impact to our revenue for these maintenance outages. To-date, we have completed the annual outages at San Emidio and at Neal Hot Springs unit 1. Raft River’s outage starts next week, and the remainder of Neal Hot Springs will follow. It’s a very busy time of year for our operations team. In summary, we have 45 megawatts of power in production, and another 96 megawatts in advance development. We are very focused on bringing these projects forward as quickly as possible and growing value for all of our shareholders. And now, I will turn the call back over to Dennis. Dennis Gilles Thank you, Doug. Firstly, we would like to reaffirm our 2016 consolidated guidance that we had previously provided. Based on our current operations only, we expect operating revenues between $29 million and $34 million, adjusted EBITDA between $15 million and $19 million, EBITDA between $14 million and $18 million and net income as adjusted of $4 million to $8 million. Also, we wish to reaffirm our guidance for U.S. Geothermal only, which is less minority interest, of which we expect adjusted EBITDA of $9 million to $12 million and net income as adjusted of $1 million to $4 million. We have a number of development opportunities that can improve this performance, such as the well drilling plan at Raft River later this spring, the projected benefits from that drilling have not been included in our current guidance forecast. And as the year progresses we will be updating and tightening the range on all of our guidance This past fall, our Board of Directors undertook a review of strategic alternatives with the assistance of Marathon Capital. That process was concluded this quarter, when after reviewing the various alternatives available, the special committee of the Board, which was made up exclusively of independent directors concluded that the greatest long-term value for our shareholders would be obtained by staying in the current course. Our mission is to become the largest pure play geothermal independent power producer, providing renewable power 24/7 with a consolidated portfolio of 45 megawatts under operations and management. The acquisition of the majority of Goldman Sachs’ ownership interest at Raft River project at year end allowed us to successfully increase our shareholder portion of that portfolio by 20% going from 30 megawatts to now 36 megawatts. Additionally, we continue to advance our 96 megawatts of project in our advanced stage pipeline. We are very focused on obtaining a power purchase agreement for those projects, which is where we contract with a buyer for all of the output generated by that project for the next 20 to 25 years at a fixed price. On the legislative front, I am pleased to note that the U.S. government has extended the start of construction date that geothermal projects can qualify for the 30% investment tax credit. Any geothermal project that has begun construction, begun construction that is by December 31, 2016 now qualifies for that tax credit. And I want to point out that’s a tax credit, not a deduction. That investment tax credit allows 30% of the project’s cost to be taken as a credit against any tax payments in the year the project goes into operation. And basically to utilize that credit, we would bring a tax partner into our project similar to what we had done on Raft River with Goldman Sachs. There is a growing interest in the market for baseload renewable electricity to replace the phasing out coal, nuclear and once through cool plants along the California coast. All of which have historically provided firm predictable baseload generation. While solar and wind power will continue as sources of renewable energy, it should be noted that they supply intermittent power and not baseload power. The issue of climate change has grown tremendously over the last few years and shows no sign of abating. Government industries are increasingly favoring renewable energy over fossil fuels. Geothermal is the best form of renewable energy and we intend to work hard to ensure we can grow this company for the benefit of our stockholders and to make our contribution to favorably impact climate change. Now operator, I would like to open the call for questions. Question-and-Answer Session Operator Thank you. [Operator Instructions] And our first question comes from the line of Jim McIlree from Chardan Capital. Please proceed with your question. Jim McIlree Thank you. Doug, can you tell us why you didn’t make the shortlist for the choice aggregator RFP? Doug Glaspey That’s a good question, Jim. No, my guess would be its all based on price. So, we don’t know what the other folks bid. We only know what we bid. There hasn’t been a – they don’t come back and tell you why you didn’t make the short list. So, it’s really just a guess at this point. Dennis, I don’t know if you have another view of that? Dennis Gilles No, we do know that late in their bid process, they modified their bid conditions and opened up their bidding to existing renewables in addition to just new renewables. Initially, they had stated it was going to be for new renewables only and they opened it to existing. Existing renewables as they have been fully, the project is fully paid off are able to offer their product to try to get it re-contracted at a very competitive cost. And that’s what we believe happened, but we don’t know that for sure. Jim McIlree Okay. And then Doug, you implied that maybe it’s not over, you are going to resubmit. I was confused by that or where you saying that you are going to resubmit for different RFPs that are out there? Doug Glaspey Well, both Jim. They ask us the initial submittal. They ask for some additional information, which I believe we have provided now. Jim McIlree Yes. Doug Glaspey So, it’s not a bid issue. And in addition, there are new RFPs coming out, not from the same entity, but from several other entities in California. Jim McIlree Okay, that’s great. Thank you. And then on El Ceibillo, I think I heard you say that there is – you are expecting a government RFP for 40 megawatts, that’s dedicated to geothermal. What kind of competition do you have down there for geothermal supply? Doug Glaspey Well, we are waiting to see what the exact requirements are. They have come out of the RFP process. But our expectation is similar to what’s been happening in the U.S. now, they want – they will only accept bids from people that have a reservoir – a defined reservoir. They will want people that have development experience. Of cause, they want reservoirs in the country and that’s a very shortlist in Guatemala right now. We only know of maybe one or two others that might be able to qualify under those conditions. And we are probably as advanced or more advanced than most. So, we see our chances of being very good for that RFP and hopefully it’s slated to come out in May. If it lags a little bit, that won’t surprise me since it is the new – first time they have gone through this process, but we have high hopes under the process and having at the geothermal specific is just a reflection at the offtakers, which are brokers in the area are looking for reliable baseload power rather than an intermittent resource. Jim McIlree And assuming that it all went according to schedule, which I know it’s a dangerous assumption, when would that RFP be decided and the contracts left? Doug Glaspey Our hope is that it will be done before the end of the year if they get it out in May. Dennis Gilles Yes, we don’t know how aggressive their schedule is, because the RFP hasn’t serviced yet. Jim McIlree Alright, okay. Doug Glaspey We know the tetra-tech guys that are putting us together. So, we know they are on the job. They are in the country right now working on it. It’s been actively pursued. So, all we can do at this point is wait to see and hit the street. Jim McIlree Okay. And Kerry, can you just give us a summary of what the cash needs are and the cash availability is to fund those needs. I know that there is a lot of – it seems like a lot of things are going on and I am just having trouble tracking this on all of the cash requirements for the year? Kerry Hawkley Well, you do realize we do have about 10 million plus that’s generated internally by our three projects. There is a good possibility that we will evaluate other opportunities for funding. There is Raft River that’s not levered at all. If we wanted to go that way, there is also the possibility of some options and warrants that we have outstanding being exercised. We have seen some renewed interest in that. It’s generated probably a $1 million in the last quarter. So, I would expect we would have just from internal and issuance of options and warrants will have probably $12 million to $13 million generated there before we have to tap any type of debt and/or equity raise. We haven’t done an equity raise since December of ‘12. And of course, we do have the Raft project un-levered. So, those would be our sources, our uses over the next year. We are talking $3 million at Raft. We are talking probably another $3 million at El Ceibillo, but we would target those based on cash available and how we perceive or how we progress I guess on the PPA front. On WGP Geysers, we feel like we already have all the equity requirements already invested in that. And so if we go forward on that project, that would be potentially a tax equity investor and some project level debt that we would go there. Does that give you a flavor? Jim McIlree That does. Thank you. And if I can just ask on that same thing, the Neal project for the water cooling, Doug you might have said how much that’s going to cost, but that’s not a lot, correct? Doug Glaspey For the water well drilling that’s not a lot. And what our plan will be there Jim is if we find the water we need, of course we will do the final engineering on the project and then we have to go to our joint venture partner, look at the total dollars and we are expecting it to be in the $7 million to $10 million range for a full installation. And decide how we want to fund that. There are reserves at the project level that maybe – we may be able to use. And as a matter of fact, as far as additional income, we have some short-term well reserves that come out of reserve later this year. So there will be several million dollars that come out of the reserves at Neal, if you don’t consume them in any upgrades at the project. Jim McIlree Got it. Okay, that’s very helpful. Thank you very much. Operator And our next question comes from the Gerry Sweeney from ROTH Capital Markets. Please proceed with your question. Gerry Sweeney Hey, good morning guys. Thank you for taking my call. Dennis Gilles Good morning Gerry. Gerry Sweeney Question on Raft River, it sounds like the well went down because of the pump, curious of the impact on the power generation, it sounded like it was running at 100%, but also any commentary also it sounded like it did have some type of impact, so curious on that front. Also, the timing of the well work, we work at Raft River and how long it will be out of service and general impact and how we should look at it for the quarter? Doug Glaspey Our expectation to have that – to keep the well down as you said the pump went down anyway and it’s normally, it took us several weeks to get a pump rig on the site to pull it. And then it’s normally a 10 day to 15 day evolution after that to either rebuild or replace the pump and get it back in the hole. We decided to keep that well down, since we are planning in the short-term to drill that second leg. The economic hit because we are in the 73% period, it was about $40,000 to $50,000. So it’s not a huge amount, it’s not enough to put a pump back in the well until we drill. My expectation is that we will be drilling within the next 30 days, if all goes well. We have bids in from contractors. They are ready to go. So it really just becomes a timing matter at this point. I want to have that well back online no later than mid-June, I would say, because in July, August of course we go into our 120% pay period and we don’t want to miss that with the whatever additional production we get out of that well. Gerry Sweeney Got it. And then swinging back to the Geysers project, I understand that PPA was cumulative choice organization, how many other PPAs are floating around out there and are they similar in structure and style or are they looking for just new renewable generation, just a little bit of thoughts, comments on that, just to get a better sense or view of the opportunity that’s pending? Dennis Gilles Well, there are a number of opportunities pretty much, pretty much every community choice aggregator and utility in the state is looking for renewables. They continue to do that to meet the ever increasing Renewable Portfolio Standard in California that was recently raised from 33% up to 50%. So they need to and most of them are contracted up to the 20% level already. So they need to continue to acquire by legislative requirements, additional renewables. Now having said that though, we are currently in a period of low price natural gas, because of that low price natural gas there is the ability to buy power in the very near-term, in the next – the belief is in the next 1 year or 2 years at very low prices and so that’s cause them to not be as anxious or in a rush. Now having said that though, not all of them are taking that same approach, we are in active discussions with many of them. Some of them have formal bid solicitation processes where they go out like the recent one did, with a request for bid. We respond to it, you wait and then you are advised whether or not you have been selected. Others allow bilateral negotiations where they will sit down at the table with you and just negotiate the terms of the agreement. So it really depends on the entity and it really depends on their timing. Unfortunately, we are not in the driver seat on the timing they are. And they do it as their needs or their procurement cycle allows. Gerry Sweeney Got it, that’s helpful. I appreciate it. And then just one more question on the Geysers, assuming you get the conditional use permit, you won’t start construction until you have a PPA in hand, is that correct, is that the right way to look at that? Dennis Gilles That’s correct. Construction will not start, really than three key critical items for starting the construction on the project. One of them was the transmission interconnection agreement, which could have taken anywhere from 2 years to 5 years to obtain. So having that out of the way is a very critical element. The next key element is the conditional use permit and that depending on public opposition, depending on need, depending on community views and depending on environmental impacts and whatnot, could never occur or could occur over a period of say 2 years or to 4 years. And we are right at the dotting the Is and crossing the Ts on that, that as Doug mentioned, we expect to hear definitely this quarter. So at least that our belief, it’s that this quarter that’s what we are being told. So the third piece, the third leg of the stool then is the power purchase agreement. And we really couldn’t provide at a firm date and tell you, have the transmission interconnection, so we could have initial discussions, but we weren’t able to have detailed discussions or provide detailed pricing until we had that out of the way. So those discussions are ongoing now. So all three need to be done before construction can start. Gerry Sweeney Got it. So the transmission interconnection agreement really opened open up the negotiation of bidding process? Dennis Gilles That’s correct. Gerry Sweeney Okay. Thank you very much. Dennis Gilles Thanks Gerry. Operator And our next question comes from the line of Jonathan Lo from Raymond James. Please proceed with your question. Jonathan Lo Actually most of my questions have been answered. But just on a potential dividend, how are you guys looking at that in the future? Dennis Gilles Dividend is something that we have looked at and continued to look at. One of the things that would probably need to occur given our share price at some point, before we would consider a dividend is a share consolidation and we would probably do that in concert with a significant event, we just put the current share price that we have any dividend that would be offered in order to do a dividend with the income that the company has, it would be a small fraction of a cent, which is just I don’t know, I think it’s too complicated. So in that’s a down the road item, it’s not something that’s immediately envisioned, but it is something as long as we continue, which we don’t see any reason why wouldn’t to be a profitable company than that something that is out in the future. Right now our primary focus though with the cash that we are generating though is reinvesting it into the growth opportunities. Jonathan Lo And then similar to earlier question, on the PPA opportunities in California, are there many of them there? Dennis Gilles Yes. We are in discussion with the numerous companies. I can’t give the names of the companies or the exact number, but it’s not just a single company, it’s multiple companies. Jonathan Lo That’s all for me. Thanks. Dennis Gilles And something to point out to Jonathan, in California, while California is a market for our – clearly, a market for our Geysers project, which is located in California, it’s also a market for our other projects. California is in the process of changing its independent system operator from a single state to basically the Western United States and that’s forecast to occur over the next several years and be in place I think by the end of 2018. Our anticipated online date for many of our projects is out there in that same timeframe. So, projects in Nevada, Oregon, Idaho would all be then eligible to generate to meet the requirements of that broader electric grid, which is not – which currently is the California grid, but it would be expanded to the Western United States. So, when we have discussions with these counterparties, we are not just discussing our Geysers opportunity is my point. Operator And our final question comes from the line of Chip Richardson from Wedbush Securities. Please proceed. Chip Richardson Hello. I was just wondering it seems like you spent quite a bit of money on Marathon exploration. Can you give us any kind of color on how that went? It seems like it was awfully expensive for the periods of time involved? Dennis Gilles Yes, it was expensive. But the information that we received, we found to be very beneficial at least the board yet in assessing what they believed to be the value of the company. With that information in hand and looking at what opportunities we had available to us, the special committee concluded that staying the course was in fact the best grout. But the view of the special committee was it was a valuable exercise and worth the cost that was expanded in order to do the exercise. Chip Richardson Okay. Also, we have a big new shareholder who is acquired I guess in the neighborhood of 12 million shares, can you characterize the company’s relationship with the investor and how that’s going? Dennis Gilles Yes. And Chip, I do want to point out besides that one, we also have another, we have – that was James Atlas, we also have Bradley Radoff, who has accumulated 5.6 million shares. And so collectively between them, you have got almost 18 million shares held out of our 111 million. So, a pretty good portion of the company. They have been – they both share the same address in Houston. So, I am not sure what their affiliation with each other is, but we do know that, that is a minimum. Now, having said that, both of them in any calls that they had with us have been very cordial, they like the company, they like its direction, they like its management, they like the opportunities that they see ahead. Again, what’s their specific motive, what’s their specific interest beyond that, we have no idea. All we know is they like what they have seen and they are very supportive in their discussions. Chip Richardson Anything to add to that? Dennis Gilles No, I think it’s at least what we have heard is they saw the company has been undervalued when they first started buying and then they kept flying. And they like the long-term strategy that the company has. So, short of that, we have got a good relationship with them. And at this point, we look forward to having them as shareholders. Chip Richardson Great. I certainly concur that the stock continues to be undervalued. And now that what you guys are doing has been very positive and just hopefully can keep going and accelerate the growth? Dennis Gilles Well, that’s our hope as well, Chip. Doug Glaspey Yes, thanks Chip. Chip Richardson You are welcome. Thank you. Operator Gentlemen, there no further questions at this time. I will turn the conference back over to you for any closing remarks. Dennis Gilles Well, great. I want to thank everybody for your continued support of the company. As Chip noted, we wished these opportunities would happen more quickly, but we don’t see the opportunities falling away. They continue to be there. We are excited about those opportunities and the growth that they bring for the company. Similar to our Goldman acquisition, we are looking for in the short-term ways of increasing near-term value. We spent a considerable amount of time and attention trying to increase the visibility of the company. We are often told as we meet with perspective shareholders and they look at our company and they look at the long-term contracted cash flows that they see very minimal downside exposure and they see very large upside potential. That’s how we consider ourselves and we look forward to what lies ahead for the company. And thank you for your continued support. And with that, we will bring the call to an end. Thanks, operator. Operator Thank you everyone. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your time and participation today. You may disconnect your lines at this time and have a wonderful rest of your day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. 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