NXT Energy Solutions Inc (SFD) Q2 2021 Earnings Call Transcript

NXT Energy Solutions Inc  (TSE:SFD) Q2 2021 earnings call dated Aug. 16, 2021.

Corporate Participants:

Rashid Tippu — Director – Geoscience Africa, Asia and Middle East

Enrique Hung — Director – Geosciences, Americas

George Liszicasz — President and Chief Executive Officer

Eugene Woychyshyn — Vice President-Finance and Chief Financial Officer

Mohammad Saqib — Head, Interpretation and Project Engineering

Analysts:

Thomas Wood — Woodlib — Analyst

Michael Mork — Mork Capital — Analyst

Tucker Andersen — Above All Advisors — Analyst

David Abelman — — Analyst

Peter Mork — Mork Capital Management — Analyst

Stan Trilling — Morgan Stanley — Analyst

Nesha Icke — — Analyst

Presentation:

Operator

Good day, ladies and gentlemen. My name is Faith and I will be your conferencing operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions 2021 Second Quarter End Operating and Financial Results Conference Call. [Operator Instructions]

I would now like to turn the meeting over to Mr. George Liszicasz, President and CEO of NXT Energy Solutions. Please go ahead, Mr. Liszicasz.

George Liszicasz — President and Chief Executive Officer

Thank you, Faith.

Welcome and thank you, everyone, for joining us today for NXT Energy Solutions’ second quarter 2021 financial and operating results conference call. This is George Liszicasz and joining me today’s conference call is Eugene Woychyshyn, Vice President of Finance and Chief Financial Officer; Dr. Xiang Gui, Director of R&D; Rashid Tippu, Director of Geoscientists for Africa, Asia and Middle East; and Enrique Hung, Director of Geosciences for the Americas; and Mohammad Saqib, Head of Interpretation and Project Engineering.

The purpose of today’s call is to briefly discuss the highlights of the release of NXT’s second quarter 2021 financial and operating results. Following our update, we will open — we will open up the line for questions.

Please note, all statements made by the company or management during this call are subject to the reader’s advisory regarding forward-looking information and non-GAAP measures set forth in our to Q2 2021 press release and MD&A issued on August 12. All dollar amounts discussed in today’s conference call are in Canadian dollars unless otherwise stated. The complete financial and operating results and consolidated financial statements for the second quarter of 2021 were published on August 12 and are available on NXT’s website, SEDAR’s website and soon will be available on EDGAR’s website.

Now over to Eugene for the financial review.

Eugene Woychyshyn — Vice President-Finance and Chief Financial Officer

Thank you, George, and welcome everyone.

As George mentioned, our second quarter 2021 financial statements and management discussion and analysis were filed on SEDAR’s website on August 12 and will shortly be available in EDGAR.

We are pleased with the quarter results, especially with CAD729,000 of operating cash flow and net income of CAD1.53 million or CAD0.02 per share. From a financial perspective, the focus remained on supporting the execution of the business development effort and continuing to control and optimize costs. For the second quarter, our financial results were as follows. Cash and short-term investments were CAD3.78 million at June 30, 2021. Net working capital was CAD4.64 million. Operating activities provided CAD729,000 of cash during the quarter. Revenue was CAD3.14 million in the second quarter and year-to-date. For the quarter, NXT recorded net income of approximately CAD1.53 million or CAD0.02 per share based on 64.5 million weighted average common shares outstanding. This compares to a net loss of CAD1.48 million in the second quarter of 2020 or CAD0.02 per share. For year-to-date, NXT recorded a net loss of approximately CAD110,000 or CAD0 per share based on 64.5 million weighted average common shares outstanding. This compares to a net loss of CAD2.8 million during year-to-date 2020 or CAD0.04 per share.

Total operating expenses for the first — total operating expenses for the second quarter were CAD1.51 million, including survey costs. This includes non-cash expenses of CAD0.5 million related to amortization and stock-based compensation expenses. Total operating expenses year-to-date were CAD3.12 million, including survey costs. This included non-cash expenses of CAD0.96 million related to amortization and stock-based compensation expenses.

General and administrative expenses decreased by CAD127,000 or 16% in the second quarter compared to 2020 for the following reasons. Salaries, benefits and consulting charges decreased CAD36,000 or 11% through the Canada Emergency Wage Subsidy. Board professional fees and public company costs decreased CAD29,000 or 11% due to lower professional fees. Premises and administrative and overhead costs decreased CAD107,000 for the quarter or 52% due to receipt of the Canada Emergency Rent Subsidy. And stock-based compensation was higher by CAD45,000 or 22% due to employee — due to the employee share purchase plan, which commenced in the fourth quarter of 2020 and it has approximately 75% employee participation.

G&A expenses decreased CAD223,000 or 12% year-to-date 2021 compared to 2020 for the following reasons. Board and professional fees and public company costs decreased CAD80,000 or 21% due to lower professional fees. Premises administrative overhead costs decreased CAD80,000 for the quarter or 21% through the receipt of the Canada Emergency Rent Subsidy. Business development costs decreased CAD126,000 or 96% as travel restrictions continued due to the COVID-19 pandemic and stock-based compensation was higher by CAD49,000 due to the employee share purchase and RSU plans. During the quarter, the Company received a CAD1 million HASCAP Loan with an interest rate of 4% for a 10 year term.

To summarize some of the key financial points, we ended the quarter with CAD3.78 million of cash and short-term investments on hand and a net working capital balance of CAD4.64 million. Net income for the quarter was CAD1.53 million and net loss was CAD110,000 year-to-date. Cash provided by operations was CAD729,000 for the quarter, and we used CAD154,000 year-to-date. Our main focus continues to be on the execution of NXT’s commercial opportunities.

I would now like to hand the call back over to George to further discuss the business update and forward plans.

George Liszicasz — President and Chief Executive Officer

Thank you. Thank you, Eugene.

First I want to convey my sincere hope that everyone is well and continue to stay healthy at this time. Before I continue with the business development update, I would like to say a few words about NXT’s position in light of the global energy changes as I see it. I want our shareholders to note that the transition of our Company into other energy sectors is coinciding with our transformation into a technology company. The application of SFD is fast and we are constantly considering expanding opportunities that can provide increasing returns to our shareholders. Therefore, our objective is to expand into these new spaces and capitalize on the opportunities not only as a service provider, but as a participant via special purpose vehicle, where the reward can include royalty, bonus, equity and participation rights.

Eugene mentioned that we recorded revenues of CAD3.78 million, and had total cash inflows of CAD730,000 from operations, which shows modest but initial results of our business development efforts. Revenues generated were from the sales of pre-existing SFD data.

Now continuing with the business update, we’d like to also announce — I’m also pleased to announce that the addition of Mr. Gerry Sheehan, a highly rewarded energy explorationist to our Board of Directors on July 1, 2021. Mr. Sheehan has worked extensively in international oil and gas exploration, development and production for over 30 plus years. He has a broad technical and business development experience in Africa, South Asia and Europe, which he will bring to NXT, as the Company seeks new markets for its proven SFD tool. In the short period of time he has joined NXT’s Board, Gerry has already made his presence felt. If you’d like to know more about Gerry’s background, please refer to the June 23 press release.

On the technology development, I would like to note that the SFD technology has been exclusively deployed to date in the upstream hydrocarbon sector for the identification of potential hydrocarbon traps [Indecipherable]. Recently, as you know, we have announced that the Company is receiving advisory services and funding for up to CAD50,000 from the National Research Council of Canada Industrial Research Assistance Program or IRAP to support the research and development of the SFD technology for geothermal applications. The IRAP funding follows an earlier announcement of the acquisition of the SFD geothermal technology rights.

The Company now embarks on an exciting new chapter in transitioning itself as a multiple application solution provider for both the oil and gas and geothermal industries. The objective of IRAP funding is to test, identify and analyze the design elements of the SFD sensor response over known geothermal areas with the ultimate goal of developing and providing NXT with a clean geophysical service branch for renewable power initiatives in Canada and abroad. We are extremely pleased to have the support of IRAP to advance the application of SFD for exploring geothermal energy resources. We can see this as the first step in establishing a long-term relationship with IRAP.

Continuing on the Africa business development. NXT’s most promising opportunity for significant revenue is tied with our recent success in Nigeria’s frontier basins. We are very pleased that the country has this morning espoused into law the petroleum industry peer to overhaul its oil and gas industry. A significant portion of the capital will be allocated for exploration and producing oil and gas for the large population in the interior. Because of that, Nigeria is our priority and we believe our business with NOC, which is NNPC, the national company, and other international explorers will thrive for many years to come.

We are excited about the continued positive development in other African countries as well. We recognize that Africa is one of the most important continents for sustained hydrocarbon and geothermal application. The utilization of SFD will mitigate over expiration risk, provide time and cost effective solutions in a friendly ESG manner.

Now let us turn our attention to Latin America. We are equally focused on Latin America projects where we have seen increased interest in SFD application. A number of SFD recommendations have been treated successfully over the years in Mexico, Bolivia, Colombia, and Argentina. We anticipate these successes will lead to new contract opportunities in Latin America. With respect to the Middle East and Asia, NXT is engaged in continued discussions with interested parties. Prospects are developing progressively in spite of the COVID-19 pandemic, which is currently ramping across Asia.

With respect to the GT opportunities, I would like to say that I’m pleased that there are a number of companies already that will consider using SFDGT — the geothermal is GT — and we are hopeful to have our first geothermal project announced this year.

In summary, hydrocarbon survey opportunities continue to progress well in our core areas in Africa, Mexico, Asia and South America. In addition, we are in discussions with multiple geothermal companies about providing SFD services. For these reasons, we are optimistic about the second half of 2021, and will remain focused on contract execution in order to deliver value to our shareholders.

A couple of notes about the upcoming Sidoti conference. I’m pleased to note that Eugene and I will be presenting at the Sidoti August Microcap Conference, Wednesday, August 18, which is tomorrow, 11:30 AM Eastern Standard Time, 8:30 AM Pacific Standard Time. Please refer to the press release issued on August 11 for instructions on how to view the presentation.

In conclusion, on behalf of our Board of Directors and the entire team at NXT, I want to thank you all our shareholders for their continued support. We wish you the best of health to you and your families.

I now ask the operator, Faith, to open the line for questioning.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Thomas Wood from Woodlib [Phonetic]. Your line is open.

Thomas Wood — Woodlib — Analyst

Just want to say first off, I really appreciate all you guys have been doing. It’s been a really tough year. I’ve been a long time investor, like nearly a decade. And I feel like everybody on this call, the story we’re all telling ourselves about NXT is it’s this amazing game changing technology. And I think we’ve all bought into that. But I think also over the last few years, it’s just felt like we faced a ton of skepticism and I’m excited for all the things that are up and coming. I’m super excited about the geothermal front. I’m wondering from, I guess I’d call it a marketing standpoint if you guys are thinking at all in terms of the story that you’re able to tell here, like, do we have a test that we could be doing that would be proving the technology in a more undeniable way? Is there some sort of independent body that could be verifying stuff that we’re doing? Because right now it just feels like for the last years we’ve been facing all this skepticism and I don’t want this great work that you guys are doing, trying to get all these contracts to then be second guessed by the industry leaders, if we are a tech company, I guess the question is how are we proving our disruption in a way that’s easy and undeniable and digestible? That’ll be it. Thanks.

George Liszicasz — President and Chief Executive Officer

Thank you, Thomas. I think that the, your comments are valid and thank you. From the marketing perspective, what we found over the last couple of years that is becoming easier. There are papers and we are happy to share that with any of our investors as well. And probably some of that we should post also on the website. We always telling me that we will do so that now proves that this technology — this type of technology can be constructive build. And we have never shied away just regarding the testing part from a test. And Thomas, every single national company and every oil company test us. We had done two tests actually in Nigeria. One was onshore test and one was an offshore test. And in both cases, two different divisions of the national company were involved. And we were not on the airplane either, so that, so the technology was independently tested onshore and offshore, and we did it with flying colors. That’s why we got the contract. That’s why we are looking forward now for a long term, many years to come a contract opportunity in Nigeria, where we are going to be working potentially with the super majors and majors as well. So if you know anybody that, I’m totally open where we can do a test, we offer it to the industry. We offered it to a super major as well. And they said that they don’t understand the technology. Therefore the test is not important to them, but if you do know anybody that the third-party that would test the tool, we are willing to do a 1,000 line kilometer test anywhere in the world. Okay. As long as they have their G&G information and maybe Enrique or Rashid, you guys can end — add to this, they are the geologists, geophysicists with respect to this question.

Rashid Tippu — Director – Geoscience Africa, Asia and Middle East

I think he was referring to the geothermal testing, which is also being considered. That was part of the question. So the marketing for the new branch of SFDGT, yes.

Enrique Hung — Director – Geosciences, Americas

I’d say rather, I mean, that’s…

George Liszicasz — President and Chief Executive Officer

[Indecipherable] brought in very important people from universities to review the technology and we had no problem.

Thomas Wood — Woodlib — Analyst

So I guess the fundamental question is just saying that we love the technology. We’re excited about it. I think there are a lot of papers and research, and I think there are these tests that you guys are doing. And I’m just wondering if there’s ways that we can get that, I don’t know, like a simpler story and it might just be talking marketing language so that it’s like you say, they don’t understand the technology. Is there something so simple that we can put in front of people that like these guys did this that would wow the world. And again, that’s not a challenge, that’s an encouragement because I’m excited by what’s happening.

George Liszicasz — President and Chief Executive Officer

So everybody, every major oil and gas company tested the technology independently. Okay. So whether it is PEMEX or down in Colombia, PRE did it and also the national company; Ecopetrol did it. GIG report is out there. They did it many years ago. It’s all on the website as well those ones. And maybe I just very slowly, I described one of the tests, or maybe you can describe the Shell Chevron’s 3D test offshore in Nigeria that they did. This is Rashid.

Rashid Tippu — Director – Geoscience Africa, Asia and Middle East

Yes. Rashid. So George mentioned earlier, like in Nigeria we were tested by two different, the government authorities. One is like definitely the survey we were doing for the company, the initially planned for offshore, but we give us online onshore areas right before we fly and the other one was on offshore area where nobody knows we give them independent results for the test. And when we integrated with their geoscientists team, then we learned there were two super major companies, they requesting for a drilling permission based on the seismic prospect. So SFD recommended those seismic prospect as independently verifying those seismic prospect, which was non-known two prospect and two super major, but looking for a prohibition to build. And we completed that test in a fly in like three hours. And next day, they were requesting us to present the results. So it’s like within 24 hours, we give them. So that’s something. And that’s why we got the approval from Nigerian authorities. That’s how they started, this is a SFD is the only unconventional technology will be used to explore in frontier exploration and also before drilling any well, we should use this technology.

George Liszicasz — President and Chief Executive Officer

So I hope that that answers your question. And if you want to talk about it more and you are interested in the papers, or maybe you have some very good suggestions regarding the marketing or any other aspects of the technology, please give me a call.

Thomas Wood — Woodlib — Analyst

Thanks, George. Appreciate all you guys are doing.

George Liszicasz — President and Chief Executive Officer

Thank you so much.

Operator

Your next question is from Michael Mork from Mork Capital. Your line is open.

Michael Mork — Mork Capital — Analyst

Yes. Hi, it’s nice to see some decent working capital on the balance sheet and it’s got some momentum now. I just wondered, it’s been a couple of years since you’ve got a Director of Sales. Is there any game plan here to get a Director of Sales to make sure that all the leads and all the things that are happening are followed up on, and in particular, I’m wondering if Gerry Sheehan who you said has business development experience in Africa, Asia, Europe, if he can help in this endeavor of getting the technology out there a little better.

George Liszicasz — President and Chief Executive Officer

Thank you, Mike. Thank you for your support. This is George. I just talked to Gerry yesterday. He is preparing a whole list of countries in Africa that we are going to be talking to and I can go ahead of myself, but there are a number of countries that he has in mind, and he has very good connections in those countries that we are considering as an opportunity. And that includes a number of the Sub-Sahara countries. So we are very positive and very pleased with his involvement because everybody knows him. So it’s a very, very good thing for NXT. He has a tremendous respect there. As you know, he was heading Talos exploration and he’s the Jubilee field that is about 300 million barrels off shore is he’s doing it’s that’s how Talo took off. And he brought a number of new discoveries to that company, and we are very, very pleased to have him to work with us.

Michael Mork — Mork Capital — Analyst

Okay. Thank you.

Operator

Your next question is from Tucker Andersen with Above All Advisors. Your line is open.

Tucker Andersen — Above All Advisors — Analyst

I hope you and your family have been safe during all the COVID.

George Liszicasz — President and Chief Executive Officer

Well, I am fully vaccinated.

Tucker Andersen — Above All Advisors — Analyst

Sometimes that hasn’t stopped people from catching yet, but I’m glad you were to [Technical Issues] Sounds like all our prayers are getting closer to being recorded. My question was your comment on geothermal on Africa, I was not aware that Africa was really active market for geothermal, are there projects there currently, or is just — is this a case of there’s enough potential? So SFD would be very helpful in identifying the projects.

George Liszicasz — President and Chief Executive Officer

Yes. We are currently in negotiations and talks within very powerful funding capital, excuse me funding firm, an investment banking firm that has several projects in Africa, including Kenya and Mozambique. And so we are establishing this relationship right now. They sought us out the technical people know Rashid. I don’t think I know anybody who doesn’t know Rashid in the geoscience world or Enrique for that matter. So we are positioning ourselves for the geothermal activities also in Nigeria. There’s a tremendous interest. So yes, the answer is yes to your question.

Tucker Andersen — Above All Advisors — Analyst

Well, good luck. And congratulations on the working capital, as Mike said.

George Liszicasz — President and Chief Executive Officer

Thank you so much. Thank you, Tucker.

Operator

[Operator Instructions] Your next question is from David Abelman, a Private Investor. Your line is open.

David Abelman — — Analyst

Hi, George. How are you doing?

George Liszicasz — President and Chief Executive Officer

Hi. How are you?

David Abelman — — Analyst

Not too bad. My question is what is being done to get the information to the brokerage community and to get more investors involved internationally with the company. Is there a marketing plan or is somebody in charge of doing that at this time? We were with the company the asteroid now is the liquidity in the market. And I’d like to know what’s being done through increased the knowledge base of the brokerage community.

George Liszicasz — President and Chief Executive Officer

That’s exactly what this conference that we just attended to is going to accomplish to start the whole process. And as we are going to generate more revenues and more contracts, we are just going to expand it to North America and then Europe and Asia at the same time. So I agree with you, that the market, our market, stock is a little bit depressed, but the truth is that you cannot just inflate the share price we want to deliver the goods and I think that we are on the right track now to do so. And it seems, I can’t say everything on a conference call because it’s with the selective disclosure, but as we are making these announcements, these new opportunities, new contracts, you will see a significant increase in market share value. And thank you for your question, David.

Operator

Your next question is from Peter Mork from Mork Capital Management. Your line is open.

Peter Mork — Mork Capital Management — Analyst

Hey guys. Again congrats on the revenue, the working capital and the earnings. That was great. A lot of optimism in, you’re expressing for the kind of the back half of this year that we’re already into. I was wondering if you could on a couple of different fronts, give us some of the key milestones that we should be looking at as investors and specifically on work in Africa, work in LATAM and geothermal, if you could. And I don’t know if one person wants to answer that or but just what your next call is going to be in, let’s call it mid-November. What are some of the keys that we should be looking for to show that this optimism that you’re expressing is coming to fruition? Thanks.

Rashid Tippu — Director – Geoscience Africa, Asia and Middle East

Yes. Hi, Peter. Rashid is here. So as you heard what George was talking about, petroleum industry bill, the main objective for a net petroleum industry bill for Nigeria is to promote exploration and exploitation for oil and gas in Nigeria. So what we are looking at knowing is a multi-year project opportunities within Nigeria, especially since we are approved and tested technology in Nigeria and not only this will help in Nigeria, it will also help in us to getting projects outside of Nigeria, other African countries. So we are seeing really very positive news for us in term of business development in the region.

Peter Mork — Mork Capital Management — Analyst

Yes. And then how about like I would just say like, Latin America and also the geothermal, like what are some of the key markers we should be looking for there?

George Liszicasz — President and Chief Executive Officer

Pete, well for Latin America, if you take a look up what’s going on in Ecuador, in Bolivia, we have been in videoconference because it’s very exciting what is happening there. They’re detonating big funds for expiration, which is what’s not happening in the past two or three years. So Bolivia, for example is investing CAD1.4 billion on exploration, and similarly Ecuador is investing CAD2 billion in exploration. And then the goal is at least for Ecuador Petroamazonas is to duplicate their production in the short term. Also we’re working in alliances with people in Mexico and in Latin America that has allow us to have a broader view of other new contacts in different countries. So these means are — they are major service companies that will be announcing alliances in the future. And these companies have foot on the ground on many other countries that we will be soon be reporting hopefully very positively.

Peter Mork — Mork Capital Management — Analyst

Great. And then just tying into geothermal, I mean, one kind of following up on Thomas’ question just to lead that off, you guys got this funding to prove out the technology or develop the sensors, I guess, how does SFD specifically fit into this as a geothermal application in terms of exploration, maybe a little color on that, and is there some sort of like, tests that could be, so we could see a paper up on the website or whatnot, proving that it works as you’ve done with the oil and gas. And again, just kind of tying it back to some of the milestones we should be looking forward to know that there’s something there.

George Liszicasz — President and Chief Executive Officer

Yes, we have a good start — we have two people who told us that are ahead of us, that these tools could be used for geothermal. One is a Professor from Waterloo University. And the other one is an experienced geothermal expert, both says, we can use this, but we are more cultures than that and say, we before using it directly, we like to take a look ourselves because they were very much ahead of us, but now who can give some specifics you want.

Mohammad Saqib — Head, Interpretation and Project Engineering

Peter, I think, we can go with the schedule of Arab so we can conduct them, test the flight over lone area, and then we can see in what aspect our sensor can be modified. And also in what aspect our data processing technology can be improved. So it is an ongoing process and we are confident we should be able to achieve what we want to achieve.

Peter Mork — Mork Capital Management — Analyst

Those test flights going to be in the next, like before your end in the next month, like, what’s kind of the timing on that?

George Liszicasz — President and Chief Executive Officer

Yes. I am just answering that. So what we’re going to do is that we are already started the process. We already got approval from Iraq. We are already doing it. We’re going to be working with their specialists. They are introducing us to laboratories not all fabrication, all sorts of things that are going to be happening here, to build better and better sensors. We’re working with the universities. So what’s going to happen is that once we are going to use the original SFD sensors to do test flights, okay. First in very shortly, I think that it’s going to happen in September, in Alberta, there are several sites that we can fly over and test the technology. Once that is done, we are going to start the modifications — finalizing the modifications for the new sensor, because there are certain aspects that I’ve shared, so there are number of common elements in fluid deposition and geothermal setting.

So the deployment of SFD for geothermal setting will allow the clients to focus on the most favorable subsurface conditions, which is basically velocity connected permeability and you want to have a large area that is permeable so that you can use the — you can optimize your geothermal activities. It’s very, very important that you have a large area because otherwise your temperature would be — use very, very quickly and the water would be cooled and then your geothermal test to be closed. So SFD is an ideal technology to find this — identify the subsurface conditions for heat and fluid circulation, and that will increase the chance of success and reduce the overall time and cost and also you do it in an environmentally friendly manner.

So the testing is going to take place in September. And once we modify it, we are going to come down also to the US. We’re going to fly down. There are a number of sites there. One of them is 1000 megawatts, largest in the world. So we’re going to be flying over those areas as well. And we are going to land in Los Angeles probably or San Francisco. And with the plane and the technology, and anybody who wants to come and see us, we probably going to have a function for our investors down there. So that is the plan actually.

Also Eugene — Enrique mentioned, that we have been blessed by the professor in Waterloo University. These guys are specialists in stress and so on. So we are on the right track. There is less and less resistance towards the technology and the technical capabilities of ours. So also we are working with very reputable geothermal companies now who are looking at us to help them identify these geothermal sites, not just one or two projects, but ongoing project and so on. So we have three of those right now, and we are — we believe that we are going to be able to execute one of them this year. And hopefully, that just going to open up a new chapter in our lives and we should put the results on the website. I totally agree with you because these are very, very important steps in the company’s life and its future.

Peter Mork — Mork Capital Management — Analyst

Thanks so much, guys. That was great. And again, appreciate really on the revenue and the strong quarter, really showed your earnings potential. So thanks a lot.

George Liszicasz — President and Chief Executive Officer

Thank you. Thank you, Peter. And let’s just push over it.

Operator

Your next question is from Stan Trilling from Morgan Stanley. Your line is open.

Stan Trilling — Morgan Stanley — Analyst

Hi, George.

George Liszicasz — President and Chief Executive Officer

Hi. Stan.

Stan Trilling — Morgan Stanley — Analyst

One of the things that comes across to me is — and this is something that concerned me for a while is that you have too many irons in the fire and you have a limited capital base to handle all of these opportunities. So what I would really like to know is, do you have a specific plan of direct focus, one, two, three, on which items you’re going after and what type of priority?

George Liszicasz — President and Chief Executive Officer

Yes. As I actually in the speech or the call during this conference call I mentioned, number one, focus was Nigeria because of the long-term contract opportunity there. And I’m not talking about CAD5 million here, long-term significant numbers. Also the number two was Mexico. And some of the new relationship that we are establishing with a service company that is taking us basically to these — taking us, I have to be very careful how I word it, but joined us in our quest for getting the contracts done in a number of Latin American countries.

And then we are focusing on the geothermal — the geothermal activities two or three countries. We never going to have a problem of acquiring the data, okay. And now that we have this new mapping algorithms developed we are going to be able to do this much, much faster as long as we are conducting grid surveys. So we are very, very positive and very hopeful that we can produce significant revenue without any change in the current situation of the Company.

So those are the three main components I would like to mention to you. Stan, hello?

Operator

He withdrew the question, presenters. Your next question would be from Nesha [Phonetic] Icke [Phonetic], an Individual Investor. Your line is open.

Nesha Icke — — Analyst

Hi, George. Hi, everyone. A quick question, which is really a follow-up to what Dave was asking as well as Stan and to some extent Peter. Now, especially with respect to the last question, if you have the contracts in Nigeria signed and possibly one more contract in South America, would it be reasonable to expect that you will be listing on the NASDAQ since you’re a technology company? This I think would help us market the company to institutional investors. And what are the benchmarks, if so that we need to see in terms of the price — stock price, and in terms of the contract volume, such that that can be expected to happen.

Eugene Woychyshyn — Vice President-Finance and Chief Financial Officer

Nesha, it’s Eugene. Obviously, we’re always looking at that opportunity. The benchmarks are relatively high but it’s going to come down to us executing, as you said, on contracts. And we believe once we’ve executed on two or three contracts, but we should be able to go down that path.

George Liszicasz — President and Chief Executive Officer

It’ll take about three months.

Eugene Woychyshyn — Vice President-Finance and Chief Financial Officer

Yes. And it’ll take about three months at CAD4 per share.

Nesha Icke — — Analyst

Yes, so that’s — from the CAD4 per share and signing of the — after signing of the contract, of course, obviously, and starting to execute them. That’s three more months after that, right?

Eugene Woychyshyn — Vice President-Finance and Chief Financial Officer

Yes.

Nesha Icke — — Analyst

Okay. Thanks, guys.

George Liszicasz — President and Chief Executive Officer

We would like to do it, Nesha, as fast as possible. I mean, it is a priority for us to be listed on a very serious market.

Nesha Icke — — Analyst

Okay. Thanks, guys.

George Liszicasz — President and Chief Executive Officer

Thank you, Nesha.

Operator

We do have a follow-up question from Stan Trilling from Morgan Stanley. Your line is open.

Stan Trilling — Morgan Stanley — Analyst

I don’t know what happened. I either my line got dropped or my voice got shot. But thank you. And thank you for the information on Nigeria. We’ve been talking about multiple contracts and I just want to know what is getting in the way of the announcement of the potential contracts. Is it the government? Is it politics? Is it intermediaries? I’m just curious about the mystical pertinent has been put up.

George Liszicasz — President and Chief Executive Officer

That’s a very good question, actually, Stan. The issue is here that we are used to deal — used to dealing with North American companies. And even if they function or operate in other countries, things are much, much easier. Like if you recall some contracts, we concluded in North America in two weeks and we were flying in next two weeks. So it’s the way the people operate. And in third world countries it’s even harder. The bureaucracy is enormous, everything is hand delivered, signed, 15 people have to sign one single contract is the same in Mexico, the same in Nigeria.

And we just — I mean, if you take a look this bill that it’s just now done has been on the table for almost two years. And now finally, they are allocating 30% of all production revenue to the interior or the frontier exploration programs. And as I mentioned, SFD is the number one tool now in Nigeria. We knew that its happening, it’s going to happen, it’s going to happen. But unfortunately you cannot control the national companies, how they operate or government people, how they negotiate and do things. It’s as you — I think you mentioned it well, it is bureaucracy in a sense that everybody has to be happy, satisfied, then you can move the paper to the next step and so on and so forth — the next branch of government.

And in Nigeria, you have the national company, you have the frontier exploration people, you have several branches of the national company IDSL and PDC and so on and so forth. Then you have the NPNPD, which is the major tender board. Then you have the Ministry and on and on and on. But now we’re in, so we’re just waiting for them to give us the green light. That’s all.

Stan Trilling — Morgan Stanley — Analyst

Okay. And how far along are we with Mexico? Because Mexico, we actually had a contract with them that I guess just expired. I don’t know if it was expired or what happened, but is it a whole new, do we have to go through all of the pains and tribulations we went through before? Or is it more streamlined there?

Enrique Hung — Director – Geosciences, Americas

It’s more streamlined. I will take that last word that you said. This is Enrique Hung again. Yes, PEMEX, we’re very optimistic with PEMEX. We have an Alliance with a service company that has is doing services with them. One of the three companies that are doing services with them. So that’s unique and they are the ones that have branches in the whole Latin American world. And we are meeting with them, we are about to — we’re in conversations we can say to be like the brothers. And they are — they will facilitate. That will tell us, they did the job and I have done the foot work in Mexico and that we are doing the — in the system with PEMEX. The lack of activity was justifiable, there’s no claim or nothing wrong with the service that PEMEX did.

And In fact, the last question I did was — I sent a list of the discoveries that they have had inside our recommendations in Mexico. That goes from 2016 to 2020. So it’s more than five or six fields and production. And then good activity that we recommended Arcelius 2012. So similar to that, we have good results in Bolivia discovery that came in 2020. And a new in 2021, we have a discovery in Mexico at onshore. So they we are aware of this. The only thing that they are very slow, but we are pushing our way in, and we have creative ways of making this contract work as soon as we possibly can.

Stan Trilling — Morgan Stanley — Analyst

Okay, great. The last question has to do with geothermal, and then I’m done. You can shoot me after that. You had mentioned that you think you can execute some sort of contracts with a US company on geothermal. Just one question, I don’t want to know who it is, but will it be a name that is recognizable to the people in the geothermal industry.

George Liszicasz — President and Chief Executive Officer

We have Canadian companies that are, they are very recognizable. They all have doctorates and everything.

Enrique Hung — Director – Geosciences, Americas

Who the company he means?

George Liszicasz — President and Chief Executive Officer

They are also recognizable. So, they have a history of worldwide geothermal plants that are being found and they have a whole number of people in who are experts in geothermal science basically and geology. And they have bills that I think in one country they did about 300 megawatts altogether, 30 megawatts, 20 megawatts, 15 megawatts plants that have been put together. And they are here in Alberta now as well. And there are two Alberta companies. We have one overseas company — two overseas company, one in South America and one in the Middle East. So as soon as we are ready and that’s what Dr. Enrique think to do. As soon as we are ready, when he says we are ready, then we are off to the races.

Enrique Hung — Director – Geosciences, Americas

The only good thing about PEMEX is that they have the government support.

George Liszicasz — President and Chief Executive Officer

Yes. These companies here in Canada, they are all have — just think about it, that the IRF and the NR Can, which is the National Research Council and so on that we are dealing with an approved technology. They also improved them for financing for matching funds. And we are talking about CAD25 million, CAD50 million, CAD100 million here each. So we are in good situation as far as geothermal is concerned. And as Peter said, we will do the test. We will do the test in Alberta. We’ll do the test in California. We know the sites, we know what we need to do. They are going to be working with us. I rap on this and we are going to present our results properly to them and also to the technical people and the professors. And then hopefully we are going to be approved for the next funding and the next funding and the next funding and the next funding.

Stan Trilling — Morgan Stanley — Analyst

Okay. Thank you, guys. Keep plugging, keep plugging. I appreciate it.

George Liszicasz — President and Chief Executive Officer

Thank you so much, Stan. Thank you.

Operator

Your last question is from the line of Tucker Andersen from Above All Advisers. Your line is open.

Tucker Andersen — Above All Advisors — Analyst

Hi, George. Thanks for keeping all of us on the line and answering the questions. It occurred to me that one of the things that’s changed pretty dramatically in the last six months is the price of oil. And to the extent that COVID not only sort of interrupted the bureaucracies and they had other things on their mind there was also a question about the long-term demand. And the price of oil going up, obviously has changed the economics of a lot of these projects. And is that a factor and that maybe they’re more likely to be a shorter timeline to approval or not?

George Liszicasz — President and Chief Executive Officer

Absolutely. Absolutely, I mean, they didn’t even to want to talk to us until the oil went over CAD40. So, it’s correct. It’s just — we just don’t want any excuses in a sense. We don’t want to have the oil price as an excuse, because the national companies cannot stop drilling, okay. So their production is vital to the country. There’s usually 40% on average of the GDP in developing countries. So Bolivia depends on it. Guatemala depends on it. Ecuador depends on it. Algeria, Nigeria, all these countries they all need to have significant oil revenues. And if they don’t have it, the country goes into depression — so economically. So that’s why it is so important. What you said is that yes, the oil price is a major factor, but hopefully now it’s going to be a positive thing for us because we can find it faster than anybody else. And that’s the key. And our success rate is hasn’t — it actually improved. So we are doing extremely well in that regard as well.

Tucker Andersen — Above All Advisors — Analyst

Yes. I would think everybody would want to shorten the development cycle as much as possible. And in some of the questions about the depression of demand due to COVID, it now looks like it’s recovering. So good luck.

George Liszicasz — President and Chief Executive Officer

Thank you so much, Stan and Tucker in supporting us. Thank you.

Operator

There are no further questions at this time. Let me now turn the call over to George for closing remarks.

George Liszicasz — President and Chief Executive Officer

In that case, I would like to thank everybody for participating in our conference call. Wishing everybody safety and good health. And we are going to be online hopefully very soon with you again. And thank you for your questions. I think this was a good call in terms of getting some revenues in and also the interest is there and the support is still there from you. And we love you all. Thank you so much.

Operator

[Operator Closing Remarks]