Good morning, and welcome to SandRidge Energy's Q1 2023 Earnings Conference Call. All participants are in a listen-only mode. After the speakers' presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Scott Prestridge, Vice President, Finance and Treasury. Thank you. Please go ahead.

Thank you, and welcome, everyone. With me today are Grayson Pranin, our CEO and COO; Salah Gamoudi, our CFO and CAO; as well as Dean Parrish, our SVP of Operations. We would like to remind you that today's call contains forward-looking statements and assumptions, which are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. We may also refer to adjusted EBITDA and adjusted G&A and other non-GAAP financial measures. Reconciliations of these measures can be found on our website. With that, I'll turn the call over to Grayson.

Thank you, and good morning. I'm pleased to report on another good quarter of results and that the company's efficient activity continues to translate to meaningful free cash flow from our producing assets this past quarter and projected into 2023. Before expanding on this, Salah will touch on a few highlights.

Thank you, Grayson. Production for the quarter averaged 16.7 MBoe per day and oil production increased approximately 22% from the first quarter of 2022, driven by the higher oil content of our new Northwest STACK wells. Over the quarter, the company generated adjusted EBITDA of approximately $31 million. As we have pointed out in the past, our adjusted EBITDA is a unique metric for SandRidge due to us having no I and very little T, given that we have no debt and a substantial NOL position that shields our cash flows from federal income taxes. Net cash, including restricted cash, increased to approximately $288 million, which represents $7.79 per share of our common stock issued and outstanding as of March 31, 2023. The company has no term debt or revolving debt obligations as of March 31, 2023, and continues to live within cash flow, putting all of its capital expenditures with cash flow from operations and cash held on the balance sheet. Commodity price realizations over the first quarter, before considering the impact of hedges, were $74.26 per barrel and $2.73 per Mcf for oil and natural gas, which were 98% and nearly 100% compared to average WTI and Henry Hub benchmarks before the impact of any hedges. NGL realizations were $24.62 per barrel or 32% of WTI. The company realized commodity derivative settlement gains of approximately $5.9 million in the first quarter. As alluded to earlier, we have maintained our large federal NOL position, which is estimated to be approximately $1.6 billion at quarter end. Our NOL position has and will continue to allow us to shield our cash flows from federal income taxes. Our commitment to cost discipline has continued to be impactful. And despite increased activity, adjusted G&A for the quarter was approximately $2.5 million or $1.68 per Boe. We also held LOE and expense workovers to approximately $11.7 million for the quarter. We believe we compare favorably with our peers in regards to G&A and LOE on both an absolute and a per Boe basis. We continue to generate net income for our shareholders. During the quarter, we were net income of approximately $24 million or $0.64 per basic share and net cash provided by operating activities of nearly $40 million. The company has also generated approximately $2.5 million in interest income during the first quarter. This is all culminated in the company producing approximately $30 million in free cash flow during the first quarter, which represents a conversion rate of approximately 98% relative to adjusted EBITDA and approximately $0.82 per share of common stock outstanding at the end of the first quarter. Before shifting to our outlook, you should note that our earnings release and 10-Q provide further detail on our operational and financial performance during the quarter.

Thank you, Salah. We thought it would be helpful to walk through some of the company's highlights, management strategy and other business details. As I mentioned previously, this past quarter had good results, adding relatively oilier production from new wells in the Northwest Stack while converting over 98% of EBITDA to free cash flow and benefiting from our commodity derivative settlements of nearly $6 million as well as $2.5 million from interest income during the quarter. Production from our Mid-Con assets averaged 16.7 MBoe per day for the quarter with oil volumes increasing 22% compared to the first quarter of 2022, aided by the oilier production content of our new Northwest STACK wells. The company's largest natural gas purchaser was in ethane rejection for two months during the quarter with more ethane staying in natural gas stream. While this resulted in less NGL and Boe barrels, it helped improve realizations, which were nearly 100% compared to Henry Hub for natural gas and 32% of WTI for NGL. We anticipate that a majority of our natural gas stream could remain in ethane rejection for the remainder of the year. Again, while this could impact the total volume of NGLs, price realization for NGLs will be relatively improved on a per barrel basis as it will be composed of more profitable C3+ components like propane, butane and gasoline on a percentage basis. Likewise, the ethane remaining in the natural gas stream will improve its BTU quality. Since the beginning of 2021, the company has returned 182 wells to production. In addition, we have converted artificial lift systems of four wells for their long-term systems over the first quarter, with 24 planned for the remainder of the year, which will aid in optimizing lifting efficiency and lower point forward costs for this well…

[Operator Instructions] Our first question comes from Ephraim [ph] from Contract Accounting Services. Please go ahead. Your line is open.

Good morning. My question has to do, I think the stock has come under a lot of pressure as all oil and gas companies have recently. Is there any update on maybe possibly using some of the cash to buy back some of the shares? And it seemed like a very good use. I know everybody is asking about that. Any updates on any kind of dividend that may be coming down to be paid with all this cash we have? And those are my two questions. Thank you.

Thanks Ephraim [ph]. No, that's some great questions and happy to discuss. Return of capital is always top of mind for Management and the Board. We believe that with increasing cost of capital and fed rate hikes this year that we'll continue to see pressure from an economic perspective. And that should open up some acquisition opportunities and lower valuations as we proceed throughout the year. And then as well, we think competition for capital and low cost of capital will continue to be challenging for some of our competitors, which should give us a strategic advantage if we're holding on to dry powder with our current cash position and cash flow from operations, and then that should be – should allow us to execute on some very accretive potential M&A. With that said, if we are – if we continue to be unable to execute on any highly value-accretive M&A, our Board, investors and management will continue to evaluate the possibility of return of capital. And ultimately, the goal, regardless of if we do M&A or not is to make sure that we have a means of returning cash flow to shareholders through accretive buybacks and dividends.

[Operator Instructions] We have no further questions in queue. This will conclude today’s conference call. Thank you for your participation. You may now disconnect.