Good morning, and welcome to Genie Energy's Second Quarter 2016 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation of Genie Energy's management, there will be an opportunity to ask questions. [Operator Instructions] In its presentation, Genie Energy's management team will discuss financial and operating results for the three months period ended June 30, 2016. Any forward-looking statements made during this conference call, either in prepared remarks or in the Q&A session, whether general or specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that Genie Energy files periodically with SEC. Genie Energy assumes no obligation, either to update any forward-looking statements that they may have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast. During their remarks, management may make reference to adjusted EBITDA, which is a non-GAAP measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows to either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with the GAAP. Management believes that Genie Energy's adjusted EBITDA provides useful information to both management and investors by excluding certain expenses that may not be indicative of Genie Energy's or the relevant segment's core operating results. Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, gross profit, income or loss from operations, cash flow from operating activities, net income or loss, basic and diluted earnings or loss per share or other measures of liquidity and financial performance prepared in accordance with GAAP. The Genie Energy earnings release including a reconciliation of adjusted EBITDA to net income is available on the Investor Relations page of the Genie Corporation website, www.genie.com. The earnings release has also been filed on the Form 8-K with the SEC. Please note this event is being recorded. I would now like to turn the conference over to Geoff Rochwarger, Genie's Vice Chairman and CEO of Genie E&P. Please go ahead, sir.

Thank you, operator. Welcome to Genie Energy's second quarter 2016 earnings conference call. On today's call, we will review our operational and financial results for the three months ended June 30, 2016. I will lead off with an update on the oil and gas exploratory operations conducted by our Afek subsidiary operating in Northern Israel. Michael Stein, CEO of Genie Retail Energy, will then review the operations results of our retail energy provider or REP business. Then, Avi Goldin, our Chief Financial Officer, will discuss the quarter's financial results. At the conclusion of Avi's remarks, we will you’re your questions. Turning now to Afek. During the second quarter, we concluded phase 3 of the exploratory program, a well-flow test program comprised with tests within two of the five completed wells in eight independent target zones. The goals of the well-flow test program was, as I stated last quarter, to further refine our reservoir model and determine the next phase of our exploratory program. We are now in the evaluation phase. And multiple experts in different fields have began to analyze the well-flow test results and we have a considerable data collected from the prior three phases of the exploratory program. This will enhance our understanding of the geology and resources present in the license area, identify the locations of potential resource concentrations within the basin, suggest potential approaches for production engineering of the identified reservoir and possibly explore other potential place. This fourth phase includes the compilation of all of acquired data during the well-flow test to create a pressure transient analysis. This PTA will incorporate extensive testing and analysis of core samples from our exploratory wells to help us identify the optimum techniques for oil and gas recovery and to construct a reservoir model. The PTA analysis and modeling…

Thank you, Jeff. Genie Retail Energy had another good quarter with excellent bottom line results despite regulator headwinds in New York State. Meters served increased to 390,000 at June 30, from 377,000 a year earlier, while decreasing slightly from 393,000 meters at March 31. We added 58,000 gross new meters during the second quarter, compared to 65,000 in the prior quarter and 84,000 in the year ago quarter. Our pace of new meter acquisitions slowed in the second quarter, primarily because of regulator uncertainty in New York, more on that in a minute. Outside of New York, our meter acquisition program continued to perform well with specialty strong growth in Illinois. Also during the second quarter, we again expanded our geographic foot print, by entering our sixth state beginning to acquire retail meters in our first utility in Ohio. We expect Ohio to begin producing strong sales results, as we continue to expand into more portions of the state. Our rate of churn meanwhile dropped a bit, decreasing to 6.2% in the second quarter from 6.4% in the first quarter and 6.3% in the year-ago quarter. RCEs decreased to 239,000 at June 30, from 247,000 three months earlier, and 251,000 at June last year, reflecting the relatively moderate weather over the last 12 months, compared to the corresponding periods a year earlier. Turning now back to the regulatory environment in New York State, as I mentioned during last quarter’s call on February 23 of this year, the New York Public Service Commission issued an order that sort to impose significant jurisdictions on retail energy providers or REPs operating in that state. Early last week, the New York State Supreme Court Judge hearing an industry challenge to that order penned down a decision nullifying the orders to key provisions. Since then,…

Thank you Michael and thanks to everyone listening and for joining us this morning. My remarks cover financial results to the second quarter of 2016; the three month period ended June 30. Consistent with my approach in prior quarters except or indicated otherwise all comparisons in my remarks are to the results of the corresponding period in 2015 to remove from consideration the seasonal fluctuations that are characteristic of our retail energy business. In the second quarter of 2016, strong results from our retail energy provider business again drove year-over-year increases in gross profit, adjusted EBITDA, income from operations and net income. As in prior quarters, Genie Retail Energy generated all of Genie Energy’s revenue direct cost of revenues and gross profit. In the second quarter, Genie Retail revenue increased to $44 million from $39.5 million in the year ago quarter. The increase was driven by an increase in revenue per kilowatt hours sold on the electric side and by increased consumption of both electricity and natural gas. Genie Retail generated $18.8 million in gross profit, compared to $13.4 million in the year ago quarter. Consolidated SG&A expense decreased to $15.9 million from $16.5 million in the year ago quarter. The decrease in consolidated SG&A expense was generated primarily by reduction in legal and regulatory expenses. In the year ago quarter, Genie Retail recorded a $1.5 million accrual for legal and regulatory matters. Research and development expense in the second quarter declined to $83,000 from $553,000, reflecting the scale back scope of operations at GOGAS, specifically at Genie Mongolia and IEI. Exploration expense incurred entirely by Afek's operations in Northern Israel was $1.4 million, compared to $1.3 million in the year-ago quarter. Pursuant to the successful efforts accounting method, we capitalize the cost of certain drilling and certain stratigraphic well…

[Operator Instructions] And we have a question from Rusty Leonard from Stewardship Partners. Please go ahead.

Hi guys question is about Afek, in the timing of any kind of a [indiscernible] I guess what are some of the other options you are considering on the financing of any kind of future cost, it doesn't sound like the timing is going to be any time soon because it doesn't sound like you're going to be doing too much in the next - until between now and the end of the year other than studies, but just trying to get a figure on when some kind of reason you got as to the timing of doing something on the financial side with Afek?

Sure, this is Avi. So, as Jeff described, we are in the middle of the analysis phase right now and our intention is to take the results of that analysis and that will ultimately drive whether or not the next step is declaring discovery and moving towards a commercial type production in which case we would need to raise the appropriate capital for that or additional exploration wells and all the requirement to do more testing in order to be able to demonstrate to the government in Israel that we have what would qualify for a discovery. So those ultimate outcomes are what's going to drive how much capital we need to raise and the types of sources and capital, which we’re going to look to access. That’s going to be flushed out over the next few quarters as those kinds of results get finalized and delivered to us, but as we've discussed in the past, we are open to a variety of different sources. In the past we've accessed private pools of capital with direct investments in either to the company or to this theory and ultimately we would consider as the cash needs of the projects grow, we would consider all kinds of the capital market, tight equity or debt or things like that. So, for us right now we are sitting here with the ability to fund the near-term needs of the project, but the expectation is that as the needs of the project ramp up again as it moves towards its next step, we would look to outside sources of capital, but it’s hard to be more definitive on what they might be.

But clearly you’re in a study mode here between now and the end of this year, I would say, it sounds like. And along those lines you said you won't have the capitalized cost that you’ve had in the past, but I assume the 1.4 million in expenses related to Afek that runs with the income statement that they will continue to be there in other words you are keeping staffing in place, you are paying for studies – all that kind of stuff, you are going to have some normal expenses that will continue. You just won’t have the capitalized cost to the same expenditure you had in the past, is that accurate?

Yes in general, this is Geoff. In general there is accurate, I would certainly say that costs that we've had prior to this quarter obviously were much higher related to equipment, we’ve either negotiated costs away or as low as possible to keep certain key equipments on the ground or in storage in the north close to our offices where we demobilized other equipment not necessary to the next several months. While the majority of the capital that we’ve required is not required we did also I would say certainly that staff is associated directly with the drilling that we provided. A vast majority of those resources have been let go, and yes we have ongoing expenses or several key individuals that are required for the internal analysis and we are also spending a little bit on obviously on the external experts, but my goal is to - until the next stage in operations we try to keep obviously the SG&A as low as possible without impacting our ability to move to the next phase of operations when that comes.

And can we conclude that or should we conclude that you’ve kind of given up on the southern portion after having done the test that you've done there and are now refocusing on the northern portion or you still think that there is possibly with additional work you might find something in the southern portion of [indiscernible]?

So, my first answer is no. You should not, nobody should assume that we have given up on the southern portion. What we have concluded in the southern portion, certainly for now, is be active on the ground operation. The drilling, the well flow test, however what we are now doing is we have engaged several firms, two separate firms, actually from North America, one is from Canada, one is from U.S. One firm is now collecting all of the data, They will be generating a reservoir model to reflect what we do believe is the asset that we have explored and found. And number two is, due to the lack of success during the drilling and follow-on well flow test to produce oil light oil to the surface, we have an analysis with more unconventional laboratory in Canada, in Calgary that is receiving core. We still have some core that was collected under pressure and was sealed and we are in the process of sending that to them for extraction aspects. So, I would say that these two separate analyses that are ongoing will tell us, will paint a much more and more accurate picture as to what we think that's out in hold for us.

Okay, thank you.

And our next question is from Aaron Shafter from Great Mountain Capital. Please go ahead.

Hi. First, congratulations on the quarter. Second, I’m a little bit confused about some seemingly conflicting information, you said that you’ve not discovered any liquid hydrocarbon so far, but you said there was a chance in the analysis that you would make a declaration of discovery under, Israel’s Petroleum Law and I am wondering if you can explain away my confusion on this.

This is Avi. Let me clarify a little bit what I meant by that. So under Israelis Petroleum Law discovery is contingent and I'm not the lawyer, but I'm going to see from sort of business persons perspective, the ability to demonstrate a production method commercial viability economic, the fact that the economics work, and the work that we are doing within the southern portion of licenses, Geoff mentioned, it’s still to get a final determination on whether or not there are methods they can produce that we think can work economically and that are viable just from oil prices or what we expect oil prices to be in the future and everyone moved forward. There is a potential outcome from that that we could walk into the [indiscernible] office with a viewpoint that what we have found in the self, despite the fact that the current work did not produce viable hydrocarbons that there is a commercially viable project there and that could possibly qualify for a discovery. I don't want to give the impression that it's something that we're looking at as part of the near-term. What I would try and imply is that from a capitalization perspective as we look to find the right sources of capital for the company on a go forward basis, we are going to be depending on all the potential outcome. And that because commercial production would require a significant non-capital, that potential outcome when we do get there is going to require its own set of capitalized - of sources of capital.

And based upon what you’ve said, I am hearing that there’s a possibility that you are talking about unconventional drilling methods, specifically are you talking about hydraulic factoring?

At this point right now, I’m not describing any of the potential EOR techniques that may have to come to come play in the laboratory. When I say, when I mentioned before conventional, I mean that in the most basic terminology in that the fact that regular drilling and regular well flow test did not result in like oil coming to the surface, the core samples will be taken to a laboratory that has the ability to be able to test a variety of different types of technologies that are now and then available today. More than that, I don't know at this point as the program, the laboratory program is still being assembled as we speak.

And finally can you give us any kind of schedule as to what is the analysis that's going on, when we could expect some type of announcements? Either positive or negative.

It is hard to give a firm schedule, you know our preferences do not put something definite out there. As we said in the past, this is an ongoing process and we will continue to update investors as we learn. More information from the analysis, from the flow testing. We have said that this analysis could take up to the remainder of the year, but if confirmation comes in within the course of the rest of the quarters we will be quick to share that as appropriate and when it’s material, but we are not in a position to give a front timeline.

And this is Geoff, and the only thing I would add to what Avi just said is, however – there are certain analysis that until they are complete there is – the data is not meaningful to us. However, there are other analysis that are – that are undergoing right now that sometimes as I mentioned in my comment, some of it can actually, some of the data from the interpretation can be used to help us better understand the entire license area and in fact that’s a process that is happening right now, which is our ability now to use the geological layered data that we were able to map at the subsurface for the area that we drilled which prior to our drilling was never available before. It has now enabled us to take seismic lines from the early 1990s that were interpreted by the Geophysical Institute without any basis of comparison. We are now able to take that old seismic data, reinterpret it with software that’s available in the industry. And again, it’s very preliminary, but what we are starting to see is based on the results of what we have already done in the exploration program, we are now getting to better understand the areas that we have not drilled in and the very preliminary information coming forth is pretty exciting.

Can you detail energy? Any update on the regulatory situation?

I think I mentioned in my remarks an update, but I will of course say again quickly. So with two orders that I mentioned in my remarks, the first one is the February 23 order, which involved in orientation we hear about, so that’s three weeks ago and the judge who was hearing the challenge by the SCO [ph] industry through that February 23 order have indicated the PSC, the Public Service Commission’s order [indiscernible] completely. And if the PSC wants to do something similar, they will have to reinstate. There was a second order that was put out on July 15 that especially targets low income customers to the SCO industry. Anyone who was on the government assistance because of low income situation is no longer allowed to be served by SCOs unless they are on a long-term contract. We don’t know exactly how many customers there are like that in New York State, referred anecdotally estimates about 400,000 total New York State customers that [indiscernible] customers among many SCOs in the space. I just said [indiscernible] that we assume it will have certainly far less of an impact than February 23 order would have had, but again we can’t say exactly what the impact because we don’t know who the customers are and who the customers aren’t and we are willing to hear from the utility as to which customers they are. And also as I mentioned, the SCO industry has discussed formulating a challenge and this as well.

Okay, thank you.

[Operator Instructions] We have a question from Lawrence Schreiber from Clarity Capital. Please go ahead.

Hi. Thank you for taking my questions. Just to go back to assets one more time. So I think you said in the early remarks, a statement like in the existing testing and existing drilling you’ve done, you’ve shown no evidence yet of commercial viable hydrocarbons. At this point, what were you expect? Are you disappointed with the results? Would it have been too preliminary to tell? I know you made a comment about not having no light flowing oil coming to the surface as if you might have expected that, but can you just give us some color on what were you hoping there and where do we stand versus what the company was expecting to?

Okay, sure. This is Geoff. So the way that I would start to respond to your question is when we started this operation and we put together our program and apply for a license, our expectation based on the best available data that we had, remember, our desire and theory to go up north was all built based on a lot of analysis and research that was done for our shale oil project in central Israel and it’s based on that research that lead us to build a theory for what we believe and what we hope is in the Golan, in northern part of Israel. So there were several key assumptions – underlying assumption that – unfortunately the only way to really be able to prove them out is to actually drill especially since – of the approximately 350 wells, onshore oil wells that have been drilled in Israel’s history, only two or three of them have ever produced any oil and none of those wells were ever drilled in the vicinity of our licensed area. Number two is there were certainly assumptions also made based on where the resource would be and that it would be shallow or – at certain depth. But again since the subsurface was never mapped by the Geophysical Institute in Israel, it was an assumption and we did not know what we would encounter. What I would say is, number one – based on the key assumptions that we had going into this, number one is, that we made an assumption based on a lot of facts that there would be significant hydrocarbons in the area. What we have found in fact is through the drilling program as well as the follow-on well-flow test that is in fact the case. There are chores…

Good. Just the last piece of it. If the results that you were seeing in the south would have been more positive presumable you would have continued to drill in the south, should we infer that the fact that you are – it sounds like to kind of stopping those drilling operations and are moving into [ph] the area, moving that you weren’t excited enough about what you saw to more further expands at this point in that area? Those are fair statements?

I think it’s mostly a fair statement, meaning, certainly to the extreme that had we seen light oil come to the surface. Certainly, we would then have continued with exploration activity on the ground. However, that being said, depending very, very heavily dependent on the result of the analysis, depending on what the conclusions are, that may in fact lead us to additional activity on that ground whether it’s an additional well, whether it’s additional seismic or an additional well-flow test. So we are at point right now where after discussing our whole program with outside experts, that we have done enough to understand what is happening in the south. It’s now up to the experts to come back to us, analyze it, tell us exactly what we are looking at and that will then determine whether or not we are going to continue some operational activities in the southern area in parallel or prioritize the north over continuing in the south for now.

Understood. Thank you very much for taking my question.

You are welcome.

[Operator Instructions]