Good afternoon, ladies and gentlemen. Welcome to the Q2 2017 report to shareholders and other matters conference call. I would now like to turn the meeting over to Mr. George Liszicasz. Please go ahead.

Thank you very much, Patrick, and welcome to today's investor conference call hosted by NXT Energy Solutions, Inc. My name is George Liszicasz, President and CEO. And with me today is Bev Stewart, our CFO; Todd Chuckry, Director of Operations; and Enrique Hung, Director of Geosciences for Latin America. Rashid Tippu, Director of Geosciences and Sajid Sayeed, Director of Global Business Development, cannot join us today. The purpose of today's call is to briefly discuss the highlights of the recent release of the Q2 2017 report to shareholders, which I hope you have had the chance to review, followed by an update of our ongoing business. This conference call, of course, contains forward-looking information. So we, therefore, caution with the standard disclaimer that such information is, by its nature, uncertain and often uncontrollable, and therefore, future results may vary from the estimates and expectations. I will now ask Bev to discuss our Q2 2017 financial results.

Thank you, George, and welcome, everyone. On the SEDAR system in Canada and on EDGAR in the U.S.A., you can find our Q2 2017 report, which includes the MD&A and the related financial statements. All amounts discussed today are in Canadian dollars, unless otherwise noted. For the second quarter of 2017, we reported operating results of 0 revenue and total expense, excluding tax, of $2.6 million. The net loss after tax was approximately $2.7 million or $0.05 per share based on 53.8 million common shares outstanding. It should be noted that the loss of $2.6 million includes noncash expenses of roughly $643,000, which relates to amortization and stock-based compensation expense. The Q2 results also reflected the fact that we completed the SFD survey in the Gulf of Mexico during the quarter. And George will provide more detail on this later in the call. Our revenue recognition policies require us to recognize all the direct costs of this survey since there were no confirmed sales of the SFD data as at the end of Q2. But please note these costs do not include any of the interpretation costs or the indirect costs associated with the use of the technology. A sale and leaseback of the aircraft was completed in early Q2, and the results of this transaction are also reflected in the results. The aircraft was sold to the lessor for approximately USD 2.3 million, and the company received net proceeds of approximately CAD 2.7 million. The sale of the aircraft resulted in a gain of CAD 776,000. However, our U.S. GAAP requires that we amortize this gain over the initial period of the lease and that -- rather than recognize it in full at the time of the sale. Since the transaction took place at the end of April, the Q2 results reflect 2 months of the net lease costs, which were approximately $81,000. Q2 results also included G&A costs of $1.3 million compared to $1.8 million in Q2 2016. We have undertaken a cost reduction and cost deferral program since late Q1. And the results of this initiative, combined with higher Q2 2016 costs, are the reasons for this significant reduction year-on-year or quarter-on-quarter. Q2 2016 results included staff termination costs and the cost of an extensive marketing trip that was undertaken by the senior management. Our net cash inflow for the quarter was $1.26 million, resulting in approximately $1.79 million in cash reserves at the end of June. We continue to monitor our cash reserves very closely and are continuing to defer cash payments wherever possible to ensure our ability to meet our ongoing obligations. However, the Q2 financial statements do contain the caveat that we do not have sufficient liquidity to meet our obligations for the next 12 months. However, we are taking all steps possible to secure shorter-term contracts and are pursuing financing options that will enable us to sustain the business. That leads us into our main discussion topic today, and George will continue with an update on the business.

Thank you very much, Bev. I would like to talk about our business update. Between 2009 and 2017, we focused our efforts mainly on NOCs, i.e., the national oil companies, to pursue SFD contracts. The reasoning was that NOCs own 90% of the land and are responsible for 30% to 60% of the nation's GDP. Therefore, they need continuous development and production. Even though our projects have resulted in a number of commercial discoveries in Colombia, Argentina and Mexico, it did not translate into a growth in revenue. Since early 2015, all sectors of the oil and gas industry started to feel the effects of collapsed commodity prices. NXT made the necessary adjustment and took steps to develop a business plan with the following objectives: secure large contracts in countries that have difficulties in attracting E&P companies for bid-rounds in their underdeveloped frontier regions; number two, to introduce the SFD technology to international players in anticipation of the patent issuance. With respect to the first part of the business plan, many countries historically awarded large blocks in their bid-rounds in hope of attracting big price money from majors and super majors. The reason why this approach has not been successful to date is because small- and medium-sized E&P companies can't compete. Using SFD for high-grading lands allow the countries to optimize their block sizes for the upcoming bid-rounds and make it affordable for multiple companies to participate. This approach levels the playing field and results in higher royalty bonuses and shorter exploration and development cycles. Examples would be Sri Lanka, Senegal, Ghana and the Dominican Republic. With regard to step 2 of our strategy, in Q4 last year, we made great progress in establishing relationships with international players, including majors and super majors. This was significantly enhanced by the award of our first international patent. Acceptance of the technology enabled NXT to conduct both multi-client and proprietary surveys in various parts of the world with the potential participation of these international companies. This is how it goes with majors and super majors, no patent, no contract. Previously, SFD was simply regarded as a black-box technology that was difficult to understand. Well, I am pleased to report that we have made significant progress in this regard. As just mentioned, we were awarded our first international patent by the Russian authorities in early 2017. This was a significant development for NXT as it was the first step in obtaining official recognition for the technology. Late last week, we were advised that Japan has also awarded a patent. In addition, we have been also advised by our patent lawyers that notices of allowance have been received with respect to our patent applications from Canada, the United States and Mexico. These notices of allowance are the final step prior to the issuance of patent, and therefore, we expect that patents will be soon issued by Canada, U.S.A. and Mexico. Further to these successes, we continue with our technological development. And in early August this year, we filed a CIP. It stands for Continuation in Part. We filed it in the United States of America, a patent application that covers the recently developed next-generation of SFD sensor design. Further details on our patent applications can be found in the recent press release. So let us now continue with the business opportunities update. Our last conference call we discussed our business development strategies regarding new markets and prospects that are related to the establishment and/or the development of the following countries: Sri Lanka. Project SHINE in Sri Lanka is still progressing. We await the announcement of the final project award and still confident that the project will proceed, but we cannot predict with any certainty when this may be. We are monitoring the situation closely, and we can report that the delays we have encountered thus far are due to process and procedure. Ghana. Following the appointment of new staff at GNPC, which is the national company of GNPC, we have had the opportunity to meet and discuss our projects with some of the new leadership in late February this year. We continue to await parliamentary approval towards a formal award of the contract from Ghana. Our proposal and project is viewed very positively due to the strategic value we can deliver in the exploration process of the onshore Volta Basin. Malaysia. We have had the opportunity to meet and discuss our proposal with the leadership team of Petronas in Malaysia in mid-May this year. Based on the proposal, NXT is currently engaged with the executive team of Petronas with regards to a potential pilot project, to be conducted in Malaysia. Senegal. The recent offshore discoveries have kept the authorities busy. However, our project focuses on shallow waters and onshore Senegal, which provides the opportunity to evaluate new potential areas of interest for companies to participate. We understand that there is a considerable interest within the government to move our project forward. Dominican Republic. Since our last update, we have been informed that our proposal is in the final review stages, and we expect further communication in September this year. Let us now turn our attention to projects and opportunities relating to multi-client service and proprietary surveys that are also -- that we are also actively pursuing. As you are aware, NXT has recently completed the multi-client SFD survey in early June in the Gulf of Mexico. Prior to undertaking the survey, we met a number of oil and gas companies in Houston. And based on their interest, we decided to conduct this survey as we view the Gulf of Mexico as a key region of opportunity for NXT. The survey has enabled NXT to acquire a large amount of SFD data that is of great value to exploration companies, both now and for many years to come. This provides NXT the ability to license this data to multiple parties, including majors and super majors. Our strategy to market of the interpreted SFD data to the successful block owners continues. And we are in detailed negotiations at the present time. We anticipate that these negotiations will be concluded in the near future, and we hope to be able to report positive results. Performing the survey also provided the opportunity for us to test our new generation of sensor technology, and we are very pleased with the results. Another benefit of performing the survey has been the increased visibility of the SFD technology to all the major players in the region. The exposure to new customers who has not been previously seen the technology had been very well received. And as a result, we now have request for the additional proposals and project designs for Guyana-Suriname and sole source project in Brazil. These would not have happened if not for the industry exposure of the multi-client project brought to us. We believe that this is an important step in the growth of our business. During the last call, we talked about opportunities working with Calgary-based E&P companies. Recent meetings have been very positive, and we have developed relationships with a number of well-established parties who are active in the Western Canadian basin and we are working on a number of projects. As we have reported on our previous calls, we are still seeking to sell data to our customers in Bolivia, although the value of the sale is now expected to be roughly USD 110,000. A number of parties have approached NXT with opportunities to license our extensive library of Colombia data to interested parties in North America. Since the end of Q2, we have engaged a highly-regarded sales representative who brings a wealth of experience and strong industry contacts in Brazil. This is another area where we see great potential for the benefits of our SFD technology. The relationship has started on a very, very positive note, as we have already submitted a number of quotes to international companies with global exploration interest and existing landholdings in Brazil. In conclusion, in spite of generating no revenue, our pipeline of opportunities remain strong and more diversified. The recent granting of patents has opened many doors and the completion of the multi-client survey in the Gulf of Mexico has introduced us to new level of opportunities and new customers. I appreciate that you may be frustrated with the length of time it is taking to translate these opportunities into revenue. However, we believe that we are on the right course to succeed, and we thank you all for your continued support and belief in NXT. I now ask the operator, Patrick, to open up the line for us to take a few questions.

[Operator Instructions] I have a question from Peter Mork.

A couple of questions. First one for George. You listed kind of with the -- kind of the more country-related NOC opportunities. There was an order to that. Should we -- it was sort of with Sri Lanka, then Ghana, Malaysia, is that kind of a way to think about it in terms of like what could be the first ones out of the gate? Is Sri Lanka the closest? Has -- I know Dominican Republic was mentioned a little bit later, has that fallen a little bit? I know there's some communications you said in September. But how do you -- like, can you guys predict or you have a feel about out of those opportunities which would be coming first?

We believe -- thank you very much for your question, Peter. We believe that Sri Lanka from the NOC part is number one, followed by Ghana and Petronas very closely. And all others are subject to further like 2, 3 months down the road. But these 3 opportunities in any order can occur at any time as we speak.

Okay. And then I was just kind of following up on the data that was the survey that took place in the Gulf of Mexico for the bid-round. Something maybe this one probably best to address to Enrique because at the AGM in June, I thought it was an interesting point that he made just with regards to, "Hey, these bid-rounds did take place and the exploration managers go out and the first thing they do is see what data is out there on this block that they now have the rights to." And there was an analogy made -- that Enrique made was like, "Hey, it's a big deal that we've got the technology approved by the CNH in Mexico." And essentially, it was -- if you want something -- your products sold in the supermarket, you got to be on the shelf and the SFD was on the shelf with that approval. So you guys are on the shelf and just maybe a little more color how -- do you have incoming calls? Is it still kind of a push? But how are you guys being received now that you're in that position?

Thank you, Peter. Yes, we've been approached by Ecopetrol and then everything -- we've been approached by several companies. Just because of what we mentioned in the -- George just mentioned, this gave us the opportunity to be out there. Of course, the Mexico authorities in the 120 days from the assignment of the blocks, it gets -- you have to give a little time for them to organize. When we met some of the companies, they still don't know the counterparts and their partners that they're just being awarded on the block. So things are going. It's slower than we are going. But in general, yes, you're completely right. This opened a lot of opportunities to us, not only to the companies working on Mexico, but the companies working elsewhere with exploration interest. So that's what it brought the interest on Guyana-Suriname and also from some people interested on Brazil, which also was mentioned by George in the communication.

And Peter, it's Todd, if I may, just one quick thing is that your analogy of having it on the shelf, to Enrique's point, we've had calls from a number of companies that we're not necessarily the operator, but the partner of the operator partners thereof wanting to get a presentation on the technology. These are groups that we reached out to prior to, like, call it, smaller groups, if you will, prior to the bid-round. And now they are encouraging their operator partners to look at what we have as an offering that would work in conjunction with other materials that it relates to those awarded bids.

Just kind of following up on that point. But recently, I guess, the bid-round 2.4 for the deepwater got pushed back a month, just reading what I saw in the press. Is there interest there? I mean -- because it seems to me like one way is to do kind of the multi-client before. Is there anyone that is looking at this saying, "Hey, for the cost of it, we could go potentially fly these -- some of these blocks beforehand that they're interested in?" Or have you not got there then?

Well, that -- from that perspective, if you look at some of -- not in all areas, but there are some of those blocks that have been posted for the deepwater round that we, during our travel path, flew over in the last survey. So there is that opportunity for those folks that are looking at those licenses to -- and we are in discussions with those parties. We were -- also in our meetings in Houston, we had discussions with companies that have an expressed keen interest in us looking at doing something in the deepwater round, and we were actually considering that when we were deployed on the shallow water round, but we weren't able to get those extended CNH permits based on the new design or call it an appendix or an amendment to the existing program. So yes, there is interest in the deepwater. And to George's point, we see Mexico as a fantastic opportunity for NXT, and we'll continue to foster any and all opportunities that present themselves there.

May I add something here? I think it's important for our investors to understand the magnitude that this survey bears. We conducted this survey at a fraction of the cost and the time that took the hundreds of line kilometers, thousands of line kilometers of seismic that it requires the time and the effort and the capital to do years and so on and hundreds of millions of dollars. We conducted this survey in 20 days, and we were able to provide the results 10 days after. And when I'm talking about results, it means that I have a deck of cards and, let's say, sake of argument that the super major is sitting across the table, and he has an independent tool called seismic that he paid a lot of money for and so on for that data, and he has an understanding of where the traps are located on their blocks and so on. And we are sitting across and I'm holding the cards and he's holding the cards, and I call out one of the cards because I know exactly where his prospects are. And I can identify it using SFD, while he can identify it using seismic. But look at the cost difference and the time difference that it takes to do that. Not only that, we are complementary to his tool. The 2 independent tools that are truly independent is SFD and seismic. All the other tools, full tensor gravimetry, aeromag, CSEM, which is controlled source electromagnetic survey, and so on, they all require seismic integration. We don't. And as a result of that, we can have an independent conversation with them and prove it through the data itself that we can do what they do. And I think that's where the significance lies. And that's why the interest is growing. And I understand that it is frustrating right now. It is frustrating for us as well. But we believe that this is the right course to take, not only now that we have the patent, but we also have direct proof and our audience is the super majors and the majors together, they're all there in the Gulf of Mexico. We got all the other phone calls because of it. So as we are proving our technology to them, and we are not afraid to do so, and we are confident that we will to be able to do that, we will continue expanding the horizon and the acceptance of the tool and secure more and more and more contracts. Anybody else wants to...

I'll jump back in the queue, but best of luck. It sounds good to get some of those sales done in the Gulf, and we'll also be looking for Sri Lanka that's announced and that number is pretty big. So that would fix a lot of problems. So good luck, guys.

[Operator Instructions] The next question is from Jerome Hass.

George, I just have a question. So I think this quarter, you booked $612,000 in terms of survey costs. So were you to sell some of the survey work that you've done in the Gulf of Mexico, what incremental cost would there be? Or have you already done that at analytical work?

Perhaps I can answer that. Jerome, this is Bev. The $612,000 of survey cost. Just to clarify, of that, only $370,000 of it was actually direct cost for the survey. The rest of it was aircraft operations and aircraft lease costs, et cetera, that would have been incurred anyway. The additional costs that we will incur now to package up the data are payroll and staff costs. Obviously, G&A overhead has been the interpretation in Calgary. And also the -- yes, we would book costs of the technology when we did recognize any sales. We don't anticipate significant further cash outlays in terms of preparing the data for sale. But obviously, we don't want to put a number on that right now.

And as I understand, there was -- is it 15 blocks that were awarded in the Gulf of Mexico in this round?

There were 10 blocks awarded.

10 blocks awarded. Okay.

Out of 15.

Out of 15. You're quite right. 15 were bid and there was 10 actually awarded.

We have data on all of them. Every one of all 15.

So George, when you -- in your comments there, you were kind of indicating that when you're sitting opposite to someone, you might have a good idea what's in the block, whereas they may not. So are you taking that into consideration in how you're pricing potentially the data for those blocks? Or are you sort of offering uniform pricing across the blocks?

I would put it this way. Our pricing is the same as it was before. And that's what we ask for. So any of the block sales would cover all the expenses that Bev just brought up. And we are looking at 3, 4 blocks already that we have submitted the pricing on. I mean it's all about negotiations, potential other work in other areas. So in some cases, it's tied to other contract opportunities as well.

I think the question that he has is that the clients in the other side of the table, they do know something about it, but they've been studying seismic and then traditional tools. We -- in 20 days, we have a pretty good idea of what they have, and we can show or at least tell them in which block or which of the blocks have the opportunity. So that's the power of the tool that George was trying to enhance and relate and describe to you.

And just to put it in context, do you have some -- any of the blocks, ideas of how much people have spent in 2D seismic for some of those and so that it might put things in perspective in terms of how you're pricing your data that would complement that?

We are talking about millions of dollars here. So we can't even compare the 2. They're way out there. I mean we know one company that has a very small block and want to spend another $10 million just on seismic. So I mean, it's just -- you can't -- price and time, you can't compare the 2. What we would do for them is that we would identify and narrow down the areas. So instead of spending $10 million, they spend $4 million. And the concept here, Jerome, is that you hold the cards on the other side of the table and I am on this side. And I tell you exactly what kind of cards you are holding. And because nobody can do that, no other technology can do this, except seismic, there is no way that you can have access to that information. If you go to some of this -- I mean, I don't want to name the companies, but you go to some of these companies headquarters and how they guard the seismic information with vaults and what -- I mean, it's unbelievable because it's hundreds of millions of dollars. And you have to assess their value. And here, we are a small company, and we are sitting across them and we tell them what kind of cards they have, what kind of prospects they have and where they have it. We can exactly locate in their blocks where they have the prospects. I mean nobody can do it in the world.

So let's just see in a block, you're in a situation like that. Assume the guys spent $10 million on 2D seismic. He potentially needs to spend at least another $10 million. You're sitting opposite to him telling him what's in his cards. So in lieu of him spending $10 million, if you can save him $5 million, how much is he willing to pay for that? And who is making the decisions on should they make that investment? Is it the guy that's sitting opposite you? Or is that done at a higher level?

It varies, but we are talking now to the decision-makers directly, but it does vary. Some of the companies are international, so they have a headquarter somewhere in Europe, for example, and they have to discuss it with the Europeans or it always goes back to the headquarters in some cases. In some cases, it does not.

So in the event that a positive decision was made, you would be able to essentially transmit that information such that it would be recognized in Q3, is that correct?

We are hoping so. I mean we are already in negotiations with them. So submitted the offers and so on and so forth.

Jerome, just one quick thing to follow up on what George said. So the question was, are they decision-makers? So a lot of the meetings we're now having, Houston, for example, when the last one we had with a major, we wanted to talk about the Gulf of Mexico, but we also wanted to talk about a program that was brought to our attention that we designed as a result of the Gulf of Mexico and Guyana. So in the room was the vice president of international operations for this company, which would have been the decision-maker for things like Guyana, he also brought all the technical individuals that would be a party to our technology as well as the vice president of exploration for Mexico. So these are the -- it's not just the baseline geotechnical people we're dealing with, they are also included, but the audience that we're garnishing now are those that actually -- can actually make the decision and write the checks versus having to go through the entire process of getting approvals and going up the ladder of -- the approval ladder in these organizations. So we're meeting with the decision-makers.

And you're talking more about Guyana. So could you give some indication of what the scope of that contract potentially could be?

Well, the project in itself was actually brought to us and put on our radar because we were looking at some areas, obviously, Dominican Republic, Bahamas, Trinidad and Tobago. But one of the clients that we've been talking to on numerous occasions in the Gulf of Mexico had indicated that they would like to see a template program in Guyana-Suriname. And the rationale behind it was that they didn't themselves have any landholdings. But what they wanted us to do was to design a program where they could use the template of our data offsetting the recent Liza discovery by ExxonMobil. And just for further information, Exxon has drilled the second successful well, is in the process of drilling a third well and is now in the process of considering a large 4D seismic program. So that program in itself is how many kilometers in total?

It's like more than 20,000 line kilometers.

Yes, 20,000 line kilometers.

On the 10x10 grid.

And we have been in discussions with all the current landholders that are in the area and see this as being kind of a -- if Brazil was to come first or this, but we see this as another tremendous opportunity for NXT.

Think about it this way, Jerome. There is Liza discovery. We fly over the lease of discovery. We have a signal, and we go and look for more. And you are talking about a tremendously large area here. I don't know the total, but it's...

It's huge.

Well, it's over 100,000 square kilometers.

And the advantage to operators is that the size -- this is elephant hunting territory.

Yes.

But the -- and the size and the scope of the rewards are significant for companies like ExxonMobil or whoever else is working in that area. And from an explorationers' perspective, it's in -- the target depth is relatively shallow. So costs associated with drilling, et cetera, is not what you would see in the deepwater Gulf of Mexico and some of these other areas. Henceforth, there is a tremendous focus by U.S. and international-based oil companies to participate in what's going on in that region.

And we know every one of them now.

[Operator Instructions] There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Liszicasz.

Well, that was quick. Well, thank you for all your attendance today and your continued support and looking forward to more positive Q3. Thank you again.

Thank you. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.