Welcome to the Battalion Oil Q2 2022 Earnings Call. As a reminder, today's conference is being recorded. Now I'll turn it over to Battalion Oil Corporation's Director, Finance and Investor Relations, Chris Lang, to open the call. Mr. Lang, you may begin. Chris Lang;Director, Finance and Investor Relations: Good morning. I'm joined by a few of my colleagues today that I'd like to introduce: Battalion's Chief Executive Officer, Richard Little; our Chief Financial Officer, Kevin Andrews; and our Chief Operating Officer, Daniel Rohling. This conference call contains forward-looking statements. For a detailed description of our disclaimer, see our earnings release issued yesterday and posted on our website. This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in our earnings release announcement released yesterday. We have also published an investor presentation, which may be found on our website and will be referenced during this webcast. Now our team will present a few scripted remarks followed by Q&A. And with that, I'd like to turn it over to Rich to start things off. Rich?

Thanks, Chris. It's great to be here this morning. Welcome, everyone, to our second quarter 2022 earnings call. I'd like to thank everyone who's taken the time to join us today. We really appreciate your interest in Battalion and the story we have to tell. The second quarter was an exciting one for us as we welcomed the return to growth. Over the course of the entire quarter, we put online 5 new wells, the first from our 2022 capital program and saw our daily production begin to trend up as we exited the quarter. These new volumes are critical for us as we look to drive an increase in cash flow in the second half of the year. With much of our base production hedged coming into the year, our ability to participate in this higher pricing environment relied on our ability to bring on new volumes. Our results this quarter do a great job illustrating what happens when we execute. So despite volumes remaining roughly flat quarter-over-quarter, we saw an adjusted EBITDA increase of over 50%. With a full quarter of production from these new wells ahead of us and our next 3-well pad on track to come online late in the third quarter, we're building solid momentum as we accelerate into the second half of the year. Getting to this point hasn't come without its challenges, though. You've no doubt heard from operators and service providers across the energy sector on how supply chain disruptions and inflation have hit the industry hard this year. And like others, we felt these pressures, too. That's why it's important to remind you that we did factor some of this uncertainty into our original budgeting and capital planning process. While these market dynamics have received a significant amount of our attention…

Thank you, Rich. I want to start with a few additional comments on EHS, and I'll open by congratulating the team on the phenomenal safety achievement. Our recordable incident rate of 0.0 is extremely rare in our industry, particularly for companies that are in active development mode. That type of performance doesn't just happen, and our leaders in the field and here in Houston have worked tirelessly to establish our hazard recognition program and to put together a culture of safety first. We're also delivering on the environmental front, where we continued our trend of reducing flare volumes in Q2. This has been a major focus for us at the time this year, and we're proud of where we sit today with our trailing 12-month average well below the industry standard and continuing to drop. In addition to our reduced flare volumes, we also continued to improve and expand on our leak detection program or LDAR. We kicked this program off 4 years ago with the goal of being proactive instead of reactive in addressing emissions issues, and we're encouraged by the improvements we've made across all the fields. Now to touch on a few of our operational results. We had a busy quarter as we looked to build on the progress we made in Q1 on our capital program. During the quarter, we put online 5 total wells and continued with our 1-rig program by kicking off and spudding our next 3-well pad, which we expect to have online by the end of the third quarter. Overall, we continue to see improved efficiency in drilling completion operations. On the drilling side, we've increased our drilling footage per day by nearly 10% over 2021 averages. And on the completion side, we're averaging more than 18.5 pumping hours per day, both…

Thanks, Danny, and good morning, everyone. Total production in the second quarter increased to 15,044 barrels of oil equivalent per day, or BOE per day, compared to 14,767 BOE per day during the first quarter this year. We entered the quarter anticipating volumes to be roughly flat with first quarter results. The fact that we were able to increase total volumes despite downtime in June related to weather and third-party curtailments is a real testament to the strength of the wells being online. And we're encouraged by the impact those volumes are having on our financial results. Total revenue in the second quarter was $101.5 million, of which oil represented 73%. We continue to receive strong pricing, realizing 101% of the average NYMEX oil price during the quarter before realizing a $44.7 million loss from our hedge program. We came into 2022 heavily hedged on our base production, with many of those hedges below current market prices. One of the primary benefits of this new production from a 2022 capital program is that we're able to more fully participate in an improved commodity price environment, evidenced by an increase in adjusted EBITDA. During the second quarter, adjusted EBITDA totaled $18.2 million, a 54% increase over the first quarter of this year, and that was on relatively flat production volumes. With our third quarter being the first to fully benefit from production from these new wells and our 2022 capital program continuing to ramp up, we expect to drive significant increases in cash flow through the second half of the year as volumes come online and realized prices continue to improve. As we turn an eye to 2023, our excitement only builds as our weighted average strike price on crude oil swaps in 2023 improves by over $15 per barrel as…

Thanks, Kevin. With new wells online, our cash flow building and a game-changing asset gas treatment facility breaking ground, there's a lot to be optimistic about. We are at our turning point and we're excited about the second half of the year. With our capital program ramping up, we expect to methodically grow production and drive cash flow growth as we move forward. Once again, thank you for your interest in Battalion, and that concludes our scripted remarks. I'll now turn it over to the operator to facilitate Q&A.

[Operator Instructions] We will take our first question from [ Edward Steely ].

Yes, I would like to know on wells you're planning on drilling for the rest of the year.

Yes. Thanks for being on the call and listening to our story. We've guided beginning of the year between 8, 12 wells, and that's still probably going to be a pretty fair estimate right now. So we brought on the 5 that we talked about in the second quarter. We're on track to bring on 3 in the third, and so we'll continue to grow that. But I would estimate anywhere from, call it, 8 to 12 still within the guidance.

[Operator Instructions] It appears there are no further questions at this time. I would like to turn the call back over to Richard Little for any additional or closing remarks.

Okay, great. Thanks. And I do appreciate everybody's time today. This is an exciting time for us. It's taken a lot of hard work and dedication by our team to get to this point, and we're excited about the future, returning back to growth. But again, I just want to thank you for your interest in Battalion. Goodbye.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.