Good day, ladies and gentlemen, and thank you for joining us. Welcome to the Presidio Production Company's third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. As a reminder, this conference is being recorded. I will now hand the call over to Mr. Connor Fair, Director of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Presidio Production Company's third quarter 2026 earnings conference call. I'm Connor Fair, Director of Investor Relations, and joining me today are our Chairman and Co-CEO, Will Ulrich, Co-CEO and Director, Chris Hammack, Executive Vice President and CFO, John Brawley, Executive Vice President and General Counsel, Brett Barnes. We released our third quarter results yesterday after the market closed. An updated investor presentation is available on the Investor Relations section of our website at ir.viperstudio.com. As a reminder, today's call includes forward-looking statements. These statements are based on management's current expectations and assumptions and are subject to risks, uncertainties, and other factors, many of which are beyond the company's control. That could cause actual results to differ materially from those expressed or implied on this call. For a discussion of these risks, please refer to the cautionary language in yesterday's earnings release and the risk factors in our filings with the SEC, which are available on the investor relations section of our website. We will also refer to certain non-gap financial measures, including adjusted EBITDA, net debt, and leverage. The most directly comparable gap measures, together with definitions and reconciliations, are included in yesterday's earnings release. With that, I will turn the call over to Will.

Thank you, Connor, and good morning, everyone. A few weeks ago, I was in Austin for the United States Grand Prix. While I enjoyed the speed and the scene as an F1 newbie, I was really struck by the teamwork and strategy and by how every team on the grid answers the same question, what do we buy and what do we build? Take Mercedes. In early 2009, Honda pulled out of Formula One and walked away from a team it had spent years in a fortune building. Ross Perron bought that team for a reported one pound, and that season it won both world championships. At the end of 2009, Mercedes bought the championship. Then it put its own engineering into the one thing nobody could sell, the engine, and built a hybrid power unit. Starting in 2014, Mercedes won eight Constructors Championships in a row, a record in the sport. In Austin, I got to see that team up close. I enjoy watching Toto Wolff, who runs Mercedes, being interviewed in the paddock, and I got to meet some of the Mercedes team under the podium. It stood out to me how calm and precise and happy they all were. But what I really took from Austin is this. Thank you for joining us today. Someone else paid for the learning curve. So here's how we think about it. We buy assets, then we install our engine with the three things that no one can sell us. The first is our operational expertise. That's our engineers, our field teams, and the discipline they bring the day we take over. We cut costs, reduce downtime, and pick better workovers until the wells forecast flow than they did before we home them. The second is our technology layer, the intelligence that sits on top of every well we operate. It watches each well against what it should be producing, advises the field what to fix first, and gets smarter with every well we add. The third is how we create value from acreage. We monetize it through carried interest, joint ventures, and acreage sales. So someone else spends the drilling capital, but we still generate upside. That approach has already generated more than $100 million as a private company at $17 million so far in 2026 as a public. Mercedes bought a team and built an engine. We buy wells and we install our engine. The operations, the technology, and the acreage strategy that make them worth more.

In our model, that's where the race is won.

On to the courier. I believe a public company owes its shareholders a clear thesis and Proof That Is Working. This quarter, we have continued to deliver both. We offer one of the highest dividend yields on the New York Stock Exchange, backed by stable PDP cash flow and a clear framework for growing it. We said we would raise the dividend on realized cash flow. With a full quarter of Canyon Creek in the numbers, our board declared a third quarter dividend of 37.5 cents per share, or $1.50 annualized, up from $1.35, and that increase comes from the contribution of Canyon Creek. We grow the dividends through acquisitions. We buy producing assets at levered returns well above our cost of capital, so each deal adds long-term shareholder value. Canyon Creek closed in July as the first draw on our ABS warehouse, and integration is complete, and our acquisition pipeline continues to be deep. We optimize those acquisitions by dropping in our engines. Every well we buy gets the same things, our operations, our technology, and our acreage energy. On operations, we create alpha after we buy. For our two acquisitions so far this year, we've cut operating costs by about 30% at EQVR, and we project 32% at Canyon Creek. Fifth quarter lease operating expense is $9.10 per BOE, our lowest of the year. We produce 26,133 DOE per day, our highest quarter as a public company, and we have had zero safety incidents in 2026. Our workover playbook targets returns above 50%. This year's wedge workover program has completed 37 jobs, which has delivered 8% more barrels than we forecast at 13% less cost. On technology, we said FTW Technologies would grow production 3% to 5% this year without drilling a well or spending capital. In the second quarter, we reported 2.3%. In the third quarter, we're at 3.2%. We're inside our target with a quarter to go, and the programs coming online now put our exit rate potential at around 4%. In October, the first of the Ida wells on our piped water system came back online, and 10 more reactivations are planned by year end. This is an AI-generated project that identified and modeled a business case for bringing wells back online economically. Chris will have more on this. And on acreage, we've completed $17 million of leasehold sales so far this year, including $2.1 million in the third quarter and $7.1 million so far in the fourth. That's the engine working on the wells we already own. The dividend and the engine. That's the case. Back to the paddock for minutes. Some parts a team builds for itself because they can't be bought. For us, that's Mainspring. Mainspring is FTW Technologies' operating system for oil and gas. Many of you know Doug, our first AI agent. Doug's technology now lives inside Mainspring, and Doug himself has been retired. Field Intelligence runs on it today. Deal Intelligence, our AI-assisted acquisition underwriting, is being built on it, and over the coming months, we'll release it along with our other intelligence modules for lands, legal, finance, corporate development, and geology, to name a few. After the success of our pilot programs, we made a choice this year to stop building AI products one at a time. We hired a senior team out of Silicon Valley, led by our CTO, Jason Hudak, have built the foundation first. One platform, one front door, security and controls, designs in from the start. Then we built the gauntlet, our AI software factory. It's the same idea as factory mode drilling. You standardize once and you repeat it on every product. There's a lesson here our industry has already paid for once. Remember shale 1.0. The technology was real. Horizontal drilling and fracking changed this country's energy future. But for most of the decade, the industry kept score the wrong way. We counted rigs, wells, spud. We celebrated production growth at all costs. Capital markets rewarded all of it, so the industry drove for growth and treated returns as something that would show up later. And as we know, for a lot of companies, those returns never showed up. AI agents are having their shale 1.0 moment right now. The technology is just as real, but look at how companies are keeping score. They count how many agents they've deployed, how many tokens they've burned, how many lines of code they've shipped. Some have internal leaderboards for AI usage. We've seen an agent write 300,000 lines of code in a few days, which is impressive activity. Then someone asked the question that every E&P investor learned to ask. You spend how much to build what? As we know, activity isn't returns. So we approached AI for studio the way Shale 2.0 taught us to run a drilling program, like a capital project. Every program starts with a specific outcome written down. We measure it against the baseline set before we start. We pilot first and only scale what works. The AI makes recommendations and our people in the field still make the call. In 2027, we'll expand that same approach into every facet of stewarding oil and gas assets. and we keep one school board for about $10. This quarter, that school board leads 3.2% more production from the same wells. And this is where it starts to compound. Every acquisition we make joins Mainspring on day one alongside the more than 2,300 wells we operate today. Every well we add makes the system smarter and every acquisition integrates faster than the last. More to come in 2027 from FTW Technologies. and now over to Chris.

Thanks, Phil. I'll start with operations. Simply put, our team is running on all cylinders in delivery. For the quarter and a year, we are ahead on production and under uncontrollable expenses versus our expectations. We'll talk about what we're building with AI. Let me tell you what it's delivering. Our target for 26 is to use AI to increase production across our existing asset base by 3% to 5% without additional capital spending. In the third quarter, our AI programs added approximately 3.2% up from the 2.3% in the second quarter. Here's where it comes from. First, production surveillance. Our field intelligent agent watches every well against its expected rate, ranks the biggest misses, and finds the likely cause. It then tells the field which wells are fixed first, why, and how. Second, weekend coverage. Weekend Well Check ranks every well in a territory, so a shorthanded weekend crew goes first to the wells that need attention. We estimate it adds about 1.4% to production per year from the same wells and the same crew, and it took hours to build because the platform was already in place. Third, the AI Plunger Box, now on 25 wells, which sets each well's plunger cycles from its own production data instead of fixed timers. We also added two new programs. The first is the well reactivations we'll mention. In September, we used AI to find the shut-in wells on our packed water system that could be profitable to restart at lower water disposal rates, and a model business case for bringing them back. With this analysis, we negotiated lower disposal rates, which makes it economic to bring wells back that had been cash flow negative. The first of those wells came back online in October, with 10 more to follow by year-end. These reactivations are one of the programs behind the exit rate potential we'll describe. The second is an AI Workover Advisor, which we put in place in October to review every workover job so the next one gets better. None of these replace field judgment. AI recommends and the field makes the call. Every program is measured against a pre-programmed baseline, piloted first, and scaled only when it works. As for integration, at the EQBR assets, which we acquired at IPO, we cut lease operating expenses by about 30%. When Canyon Creek closed in July, we took over field operations right away and moved its 42 wells onto our production systems on day one. We estimate we will cut lease operating expenses by about 32% through labor optimization, chemical program changes, and removing compression where it's no longer needed. We also completed five more govers the prior operator had deferred, with all five being successful. The integration has gone smoothly, and we are achieving the objectives we set. The result is evident in our numbers. With Canyon Creek now in the mix, company-wide lease operating expense fell from $939 to $910 per barrel of equipment. Speaking of Canyon Creek, I also noted that we recently made a small working interest addition to our Canyon Creek assets for approximately $4.3 million. Beyond field operations, we also continue to find new sources of value in our assets in the form of leasehold sales. An IPO only didn't have expectations for these and so had not included them in our outlook. This is an area we are solidly outperforming. So far this year, we have sold 17 million leaseholds. That's unmodeled profit that goes straight to the bottom line. We still hold hundreds of thousands of acres, which potentially provide additional upside for asset sales. While we don't drill, we have always monitored upside through partnerships where our costs are carried, through retained overriding royalty interest, and through undeveloped land sales. We are demonstrating our proficiency here, and there will be more to come. With that, I'll turn it over to John.

Thank you, Chris. We've had another strong quarter, exactly as we've discussed. Last call, I indicated the last three quarters were totaled $90 million of EBITDA. We think that still holds. We delivered $33.2 million last quarter and $29.1 million this quarter. The EBITDA difference is largely based on price and the shape of pricing in our hedge book. Beyond EBITDA, non-producing asset sales have been surprisingly positive this year. We expect this will continue during the remainder of the year. As a reminder, I note that the asset sales are not included in the EBITDA numbers we provide. As for other financial metrics, on these calls, rather than read every detail which already exists in our filings, I'll just stick to pointing out items of note where commentary is useful. This was Presidio's second full quarter as a public company, to include Canyon Creek, which closed in July. are continuing to deliver on the outlook we gave you in August. Production was up approximately 15% this quarter over the last quarter, owing to the inclusion of our newly acquired Canyon Creek assets and our AI efforts continuing to add production to our legacy assets. Revenue and expense details are included in our press release, aligned with expectations, and reflect the first full quarter with Canyon Creek. Of note this quarter was our net loss attributable to Presidio of $46.4 million. This net loss was caused by a $66.5 million unrealized non-cash loss on our hedge book because prices rose during the period. As a reminder, at the end of every quarter, we mark our hedge portfolio to fair value, and any change in value runs through net income as an unrealized non-cash expense. As for our balance sheet, at the end of the quarter, total debt principal outstanding was $400.6 million. Net debt was $349.4 million. Based on net debt of $349.4 million and adjusted EBITDA of $124.5 million, which represents the last two quarters annualized, leverage was 2.8 times. Now that we have two full quarters as a public company, this period annualized gives us a fuller picture versus the single quarter annualized we gave last year. We put this last two quarters annualized L6A in our materials, which stands for last six months annualized. As for liquidity, we note that we remain extremely liquid, buoyed by excess cash flow from leasehold sales, following a great job from our land team. Using our balance sheet, unrestricted cash, and RBL capacity, we have liquidity of almost $100 million as of September 1st. As a reminder, we are expecting our RBL borrowing base to decrease in our winter redetermination based on hedge cash flow roll-up. I've expected the borrowing base to drop from $60 million to around $45 million after the next redetermination. The facility is entirely undrawn with no impact other than a relatively small reduction to our liquidity. Needless to say, we have ample cash flow and liquidity to support our acquisition efforts, dividends, and other high returning investment opportunities as they arise. Our Goldman and Citizens Warehouse facility remains with $54 million drawn after a little bit of amortization during the period. We will look to turn that out in the first half of 2028. As of 930, our core ABS had a balance of $344 million, and I note that that ABS is performing beautifully. Speaking of debt, interest rates have become a topic du jour. Well, that is if you exclude Microsoft politics from NVIDIA. with inflation concerns and projected Fed rate hikes. Polymarket now quotes a 98% chance of at least a 25 basis point rate hike in the December SOMC meeting with additional 25 basis point hikes expected in the first half of 2027. Rising rates are making things generally more difficult for borrowers. As for Presidio, we could not have had a better time. In June, we fixed the interest rate of our core $344 million of debt and the rest of the industry. We also have a number of other companies that we're working with. We have a number of other companies that we're working with. We have a number of other companies that we're working with. We have a number of other companies under the warehouse is effectively now fixed at approximately 7.2%. And so we fixed the interest rate on the vast majority of our debt. Our existing is not about meaningfully impacted by rising rates. Our blended effective interest rate across both the warehouse or ADS is therefore effectively fixed at 6.6%. With respect to future deals, we've been asked how rates affect our ability to acquire new assets. were solving for return on equity close to 20%. Moving rates 50 to 100 bits is not meaningfully impact our acquisition model. There's plenty of meat on the bone. I do think higher rates will affect others more than us, and higher rates will also have the potential to widen the acquisition discount rates, all of which is actually helpful for strategy. We are less sensitive here because we're not maxing leverage as others do when they're buying producing assets, and because we create a meaningful part of our expected return through operation versus Just Financing Leverage. Generally, the ABS market remains extremely strong. We're seeing new asset classes such as Gathering and Midstream come to market, assets with far higher concentration and clients than ours come to market. In that context, we continue to set the market for ABS as a gold standard issuer and observe new investors in greater depth coming to the market each quarter. As for commodity hedges, we continue to maintain a multi-year commodity hedging program across oil, natural gas, and MGL. The detailed hedge table is included in the earnings release, and we continue to view hedging as an important part of our risk strategy. It provides cash flow visibility, supports dividend durability, and helps us underwrite acquisitions with far greater confidence. I'll close with the acquisition market. Since we put, we are very active. At any time, we may be involved in several acquisition discussions in various states. The opportunity set remains deep. We've identified more than 17 billion of our clients across three bases. What we look for hasn't changed. Producing long life, low decline wells that we can operate, where our team and our technology can lower costs and add production after we close. We also have the capital to act on it. With our $1 billion ABS warehouse facility, which gives sellers confidence we can close. In addition to larger acquisitions, we've remained focused on high grading our portfolio, selling acreage upside with no wealth, and buying accreted old-born work interests, such as the one Chris mentioned earlier. We'll keep constantly managing our portfolio, high grading its value over time. Technology is also starting to change how we underwrite. As Will mentioned, we're building deal intelligence on our mainspring AI system. It's designed to test acquisition information against our own well history, so our team starts each deal with a reviewed first pass instead of a blank page. As always, we won't comment on specific transactions, so we have something to announce. With that, I'll turn the call back over to Will.

Thanks, John. One more thought from Austin. The Grand Prix isn't won on Sunday afternoon. is one in the hundreds of decisions made long before the car leaves the garage. What to buy, what to build, where to put your best people. We make those decisions every day at Presidio. We buy proven producing wells at attractive prices. We install our engineering, the operations, and the intelligence to make them better than they were. And we return the cash to you while generating long-term equity returns. As always, We endeavor to deliver on our simple business model, acquire, optimize, grow the dividend, repeat. And my hope is we'll look back to you in short order with continued proof of Presidio executing on this thesis. Operator, we will now open the line for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Neil Dingman with William Blair. Please proceed with your questions.

Morning, guys, and thanks for the time. Just jump right into it. My first question, you know, well, some of you said just interest on the portfolio optimization. Specifically, it's good to see that Caden Creek had its first full quarter, and then, you know, you all sold some non-producing assets for what seemed to be a great price. My question is, you know, how active and, you know, how much upside could you continue to derive from this optimization in 27, you know, meetings? What kind of opportunity is either to add, you know, another Canyon Creek or dispose of another non-producer like that you all have?

Yeah, I think it's kind of two separate questions, but, you know, the odds of another Canyon Creek, I think, are obviously very good. I mean, that's in 2027. Our desire will be to continue to expand through acquisitions. I think at this point, you know, the Arcoma, we have a few acquisitions. opportunities that we were doing that would be very attractive bolt-ons. And the adding of the additional working interest is something that's fairly typical that we've done in all kind of prior acquisitions where as we enter the basin, we'll then tend to get people or go see people out to buy up our interest in the wells that were already operating at attractive prices. On the acre side, it's really been a part of our business since... Really, 2022, where we've been active in forming joint ventures to bring forward the value from the large undeveloped leasehold that is underpinning all of these PDP wells that we go and buy. And so, you know, while you'll not hear us talk about, you know, drilling and completing those wells ourselves, we have been, we do have a team that studies these opportunities, we We will, on occasion, market drilling opportunities to outside companies, and we've been successful in bringing outside operators to come and drill on the acreage where we receive attractive carry economics and retain an override in those wells. And then, to the extent that we think an area maybe is less tested or is something where, you know, we think it's better or we're getting a more attractive kind of relative price, you kind of PD10 per acre on the acreage. Then we'll contemplate selling acreage, which is kind of the direction where we headed this year. In prior years, I would say it's been more joint venture focused in 2026. It was acreage focused in 2027. Obviously, a lot of this will depend on the oil, but at the same time, every other call that you'll hear about is talking about inventories and the reality is we have inventory. And so we are at the appropriate prices, happy to part with that inventory to help out other operators who are looking to grow wells as well as, you know, create and bring forward value from undeveloped leasehold that, you know, we wouldn't be developing ourselves.

But yeah, I think the only thing I'd add, Neil, was that, you know, and I think as it applies to the ARCOMA assets and kind of our plans there, The majority, if not all, of the things that we've done today have been on our lab assets. So the idea of understanding the undeveloped and the arcoma and our own technical position on what that is and kind of what value is there and then figuring out the best way to go about monetizing that through. It's one of the avenues that Will talked about, JVs or divestitures of non-producing lands for somebody else to go drill. Those things are underway. And I think once we have a good technical picture in-house of what those opportunities are, we'll expect those same type of strategies and results from our ARCOMA assets as well. Because, again, it's another area that we focused on that has a lot of different pay potentials. that have served us really, really well in our existing, the lab assets over time. So I think there's more to do there. So I think from an operations perspective, we keep doing what we're doing. And I think from an upside perspective, we're just beginning that. We'll continue to work on it and come up with ways to see value there.

That's a great point, guys. And then my second, just on operational efficiency. Specifically, I look at that, Chris, you've done a lot of what I call more traditional improvement. You know, you continue to, whether it's compression, chemical improvement, you know, all that sort of thing. But then you all talked about with the gauntlet now, a lot of potential AI savings ahead. I mean, could, you know, is it fair to say you'll continue to see equal savings, I mean, either on existing properties or as you take over new properties? on both, or should we think about, hey, the traditional savings will still be, you know, whether it's compression chemicals, all that kind of good stuff, will that still be more impactful even than AI for 27?

Yeah, you know, I don't know that we know. You know, Will and I spoke at a conference yesterday, and we joked that when we set these production goals for 3% to 5%, you know, gains in 26, I think we thought we were being aggressive, and we've come to find out we were actually probably being very conservative. Thank you for joining us. a bigger letter, you know, as AI continues to grow and we have more tools, you know, the smarter it gets, the more understanding it gets for what impacts profitability from a production expense, you know, reactivation standpoint, it could probably be equal to what we're doing today. You know, we're not there yet, but I think, you know, and the trajectory we're at now with what we've seen in 26 and what I think we'll see, you know, with a fulsome effort from our technology team in 26 into 27. I don't know where the top is. I mean, we have to remember that for the last few years, our AI efforts have been, for lack of a better description, kind of bootstrapping. And we've really just now, in the last few months, kind of gone all in with our technology team and Jason's efforts at the company. So it'll be really exciting to see what the output of that is over the next six months to a year.

Yeah, I would just add that We know our kind of traditional underwriting, you know, what we've really focused on are the things that Chris focuses on and that you mentioned, which is really resetting the cost structure. As we've gotten better at improving workovers and other forms of increasing output from PDP at good low cost and good returns, you know, we started adding some of those projects were applicable into our acquisition underwrite. We also think about things like gas marketing efficiencies and how we can get an uplift in the pricing by taking gas in kind. We kind of have all these different legs of value creation. And I would definitely see us adding AI as an additional leg of value creation. And to Chris's point, if that is, for example, a 3% to 5% uplift in production, I think two things. One, that will probably be about a doubling of the efficiencies that we'll gain from assets by in addition to resetting the cost structure, also increasing production. And two, if we have that ability, I do believe that that will give us a distinct competitive advantage in the market to be able to go and wire and aggregate more assets. Absolutely agree. Thanks.

Thanks, Will. Thanks, Chris.

Thank you.

Thank you. Our next questions come from the line of Michael Scialla with Stevens. Please proceed with your questions.

Good morning, guys. To start with the dividend, Will, you mentioned you have one of the highest yields of any public company. I wanted to see if I could get some insight into how you on the board weighed that decision to increase the dividend versus, say, paying down debt or leaving more cash on the balance sheet.

Yeah, so let me just... Quick response. We did pay down debt. So we do pay down debt quarterly through the schedules and variable amortization on the ABS bonds. So for the... Yeah, for the...

I think it was... John Brawley. For the amortization point, our RBL is ungrown. And you really don't pay down ABS debt or count ahead of time if it's unscheduled. So we've paid down all the debt that isn't in the ABS systems. So... both built liquidity.

Yeah, so we built liquidity and... But, you know, broadly, I think the question that you're asking is, you know, we're trading at this high yield. How do we think about increasing the dividend into already being at, you know, a wide of where the comps are trading on a yield basis and pushing ourselves even higher by increasing the dividend? And the answer there, I think, is pretty simple, which is, you know, we've really dedicated ourselves in this first 12 months as a public company to laying out very simple and predictable goals to the market that we then intend to execute on and provide the certainty to our investors that they can believe us when we say we're going to go do things. And so I think that over a long period of time, that will result in us trading at a significantly premium yield to our peer group. as the market sees this story mature over time. So, you know, to your question of kind of what the discussion was, you know, the discussion was geared towards, you know, there's the market perception, but then there's also the realities of our business that generates a lot of cash flow. It generated more cash flow this quarter because of the increase in the Canyon Creek assets, the inclusion of the Canyon Creek assets for a full quarter. We have a massive amount of liquidity that we are capable of using to go and acquire additional assets at scale and continue to grow that dividend. So we look at all facets of it, but the most important thing we think is to continue the track record of delivering on saying, I'm doing what we said we were going to do. So that's what led to the increase.

Got it. I appreciate that answer. You mentioned the AI-controlled plunger lift on 25 wells. I'm just curious, is that all the wells that you have on plunger lift, or could this become a broader application across more wells? And I guess along the same lines, do you have plans to use AI to help with other lift mechanisms?

Yeah, no, this was the pilot program. So the pilot program was to go out to these specific 25 wells. You know, I don't have the numbers in front of me, but probably a third of our wells, you know, the 2,500 are on plunger. It's primary lift for us. So the idea here was kind of like everything we've done with AI is proof of concept test, you know, make sure it works and make sure it works the way we want it to, make sure that it's delivering the results on those wells using the information that has, you know, on those wells to be able to kind of fine-tune things before we roll it out to others. So This is an application, too, where in areas where we don't have SCADA information, where we can't really real-time analyze the wells, where we've got applications to use these plunger boxes that use only the information that are on the wells there that we can't access remotely. A lot of our wells don't have full SCADA control where I can see them from a central office and get real-time data. So this is a big application for a lot of wells that we have. So no, I think the pilot program was a success. And so now the next phase of this program will be how many more wells do we roll it out to here in the near future?

Yeah, the other interesting thing when we think about a lot of the eventual cases that we will be able to use AI for require the collection of additional data. and then we have to balance that with the fact that these wells are kind of midlife and the cost of adding incremental equipment to them at this point may not be able to be justified. But the really cool thing about the data collection aspect of this is that while we have 25 of these out there, we're collecting a ton of data on them that may enable us to be predictive around wells that don't even have These plunger boxes on them. So we can take the learnings from this 25 and we can apply it more broadly to provide more recommendations on different settings to the pumpers who are pumping wells that don't have the system on them to the extent those wells can't afford the hardware.

That's interesting. One more if I could. Given that this was a pilot program, I guess, any sense of what the 27 program might look like?

In terms of the number of miles? On the plunger list? Yeah.

Yep.

I don't think that we have any thoughts on it right now.

Okay, fair enough. Thanks. Thanks, guys. Appreciate it.

Thank you. Our next question has come from the line of Greg Lewis with BTIG. Please proceed with your questions.

Hey, thank you, and good morning, and thanks for taking my question. I did want to touch a little bit more on the AI. You know, since you initiated it earlier this year, it's kind of been improving on a linear basis. I know you have the longer term target of 3% or 5%. Is that something we should kind of, I guess what I'm wondering is, could there be some lumpiness around that? And then the other is just given the success, is there thoughts of maybe expanding that budget to kind of expand on the AI production targets even more?

Yeah, so we're in the midst of our 2027 planning here and put it together kind of what the various projects, the AI group projects, what the contribution could be. The total size of the prize, like when we first started looking at this and when we calculated What we call kind of a distance to theoretical production for a well. So assuming a well is flowing perfectly, it's not impeded by any sort of high line pressure or any equipment issues, downtime, or whatever it is, our analysis kind of statistically showed that there's about a 15% gap between where the wells are producing and then where the theoretical production, theoretical max production could be from those wells. So that's kind of besides the prize on the production side is the 15%. So when we set that three to five, it was a challenge to ourselves to say, you know, can we go capture 25% to a third of that year in the first year of the program through these various pilots? And as we were able to demonstrate that, you know, we decided to shift from these kind of one-off pilot programs to actually developing this as a kind of full-scale industrial strength program. and the rest of the application, that's what led to us bringing in Jason and Jason hiring his team. But it'll permeate into other things as well, things that make our pumpers more efficient, whether that's through better insight into invoices and on the expense side is another piece that we'll be attacking. So production was the prize that we wanted to attack first, on the operating expense side will be a part of 2027 as well. As well as, you know, while they're not huge value drivers, but the kind of the 10X of the efficiency of all of our employees is a really important piece. And then I think you'll see that as we grow through acquisitions, our IBA margins will be scaling and probably not linearly as a result of the ability to implement additional AI processes on the actual kind of stewardship of the assets out of Fort Worth as opposed to what we're being able to do in the field. So I think that'll be another piece you're going to see in 2027 as well as expanding even a margin around it.

Thank you. This does conclude our question and answer session. And with that, I'd like to hand the call back over to Will Ulrich for any closing comments.

We appreciate everyone's time this morning, and we look forward to speaking soon and continuing to deliver on what we're doing here at Presidio. Thanks all.

Thank you, ladies and gentlemen. This does now conclude today's conference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.