Good day, ladies and gentlemen. My name is Retta, and I will be your conference operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions Q3 2018 Operating and Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded and will be available on the NXT website tomorrow. I would now like to turn the meeting over to Mr. George Liszicasz, President and Chief Executive Officer of NXT Energy Solutions. Please go ahead, sir.

Thank you very much, Retta. I would like to welcome and thank everyone for joining us today for NXT Energy Solutions' Third Quarter 2018 Financial and Operating Results Conference Call. This is George Liszicasz. And joining me on today's third quarter conference call is Jakub Brogowski, VP Finance and Chief Financial Officer; Sajid Sayeed, Director of Global Business Development; Enrique Hung, Director of Geosciences for the Americas and Europe; and also joining us today is Eugene Woychyshyn, our Corporate Controller. First, as announced on October 29, 2018, Jakub has notified us of his intention to resign from NXT in December. Jakub has been a valued member of the management team. On behalf of the Board, I would like to thank Jakub for his work with us and wish him every success in the future. It is my pleasure to introduce to you Eugene Woychyshyn, who is NXT's Corporate Controller. Eugene and Jakub has worked together very well during the past year. Eugene has agreed to take on the responsibility of interim CFO upon Jakub's departure later this year. Eugene is a chartered accountant with extensive experience around the globe and with many diverse industries. Eugene has also a prior experience as CFO of a TSX Venture-listed issuer. I look forward to continuing to work with Eugene. Moving on to the third quarter. The purpose of today's call is to briefly discuss the highlights of yesterday's release of NXT's third quarter 2018 financial and operating results and to update the market on our business activity. Following our update, we will open up the line for questions. Please note, all statements made by the company and management during this call are subject to the reader's advisory regarding forward-looking information and non-GAAP measures set forth in our third quarter results press release and MD&A issued yesterday. All dollar amounts discussed in today's conference call are in Canadian dollars, unless otherwise stated. The company's financial and operating results and unaudited, condensed interim financial statements for Q3 2018 were published yesterday evening and are available on NXT's website as well as on SEDAR's website. The third quarter was a busy one for the company, with truly a primary focus on developing our contract pipeline. Exploration interest has increased globally as evidenced by the significant number of countries announcing bid rounds recently. Oil and gas companies globally are being required to make strategic decisions as to where to efficiently invest their resources. They require good quality prospects of our data. SFD is the only airborne tool that provides prospect-level information and are therefore engaged -- and we are, therefore, engaged in discussions with several NOCs and IOCs worldwide. My team and I spent the quarter meeting with potential business partners across the globe. I will expand on the key milestones reached later in today's call. I am also pleased to report that on July 3, 2018, we concluded our private placement financing for a total of $9.484810 million through the issuance of 10,264,946 units at $0.92 per unit during 2018 to Alberta Green Ventures Limited Partnership. Alberta Green Ventures currently holds approximately 15% of the company's 68.5 million outstanding common shares. We welcome AGV as a significant shareholder and continue to work with them developing corporations and opportunity -- cooperation opportunity, sorry. Now I over -- now over to Jakub for the financial review.

Thank you, George, and welcome, everybody. As George mentioned, our Q3 2018 financial statements and management discussion and analysis were filed on SEDAR's website last night. They will be available on EDGAR shortly. From a financial perspective, the focus remained on reducing noncore corporate costs and focusing on business development efforts in support of pursuing opportunities for generating SFD contract revenue over the third quarter. For the third quarter of 2018, our financial results were as follows: there were no revenues earned in Q3 2018. NXT recorded a loss after tax of approximately $1.66 million or approximately $0.02 per share based on 68.4 million weighted average common shares outstanding at the end of the quarter. The increase in our shares outstanding during the quarter was mostly the result of closing the second and third tranches of our private placement on July 3. NXT received gross proceeds of approximately $0.95 million in connection with the issuance of approximately 1.1 million units. Each unit consisted of 1 common share and 1/3 of 1 common share purchase warrant. Each warrant entitles a holder to acquire 1 common share at an exercise price of $1.20 for 12 months up to February 16, 2019. Total operating expenses, excluding tax, for the quarter of $1.66 million. This included noncash expenses of approximately $0.6 million related to mainly amortization and stock-based compensation expenses. Operating activities used $1.6 million of cash during the quarter, and we had a decrease in cash and short-term investments of approximately $0.79 million as operating uses of cash were partially offset by the private placement. G&A costs increased slightly by $18,000 or 2% when we compare them to -- when we compared Q3 2018 to Q3 2017. Business development costs were up as this was our main focus during the quarter, but we continue to see significant progress in our noncorporate cost reduction program as payroll, professional fees and other overhead costs decreased by approximately $80,000 during the quarter, almost entirely offsetting the increase in our BD expenditures. Some further detail on our G&A costs include the following: lower headcount resulted in payroll and overhead costs being lower; board, professional fees and public company costs were 17% lower during the quarter as the financing was completed and our cost reduction efforts continued. Business development costs increased almost threefold over the prior year as the company continued to focus resources on potential revenue-generating initiatives in regards to the SFD technology. Furthermore, business development costs in Q3 2017 were significantly below normal as the company needed to conserve cash at that time prior to completion of recent financings. We ended the third quarter with a solid short-term financial position of $5.4 million of cash and short-term investments on hand and a net working capital position of $5.1 million. However, as noted clearly in our financial statements, this will not be enough to sustain the company past the next 11 to 12 months if no SFD contracts or further financings were to materialize over that period. While the short-term survey prospects are expected to provide positive contributions to the company's liquidity position, there is no certainty these projects -- prospects will convert into executed contracts. At this point, the company is focused on closing contracts, which, if implemented, will improve its liquidity. I would now like to hand the call back over to George to further discuss our business update and forward plans.

Thank you very much, Jakub. As I mentioned at the start of the call, it was a busy business development quarter for the company. We had extensive marketing efforts during the quarter for the SFD technology focused on Africa and continued efforts in Southeast Asia and Americas. We have short-term, midterm and long-term objectives that are at different stages of development. Today, I'm going to talk about our key short-term and midterm projects. Our immediate focus is on projects in Indonesia, Nigeria, Ghana and Malaysia. We held several technical and business meetings already with the national oil corporations and key officials in these countries and with a number of IOCs as well. Some discussions have been ongoing for a number of years and some are more recent. Following the signing of the MOU between Generation Resource Discoveries, GRD, NXT's regional representative, and the Government of Aceh, Indonesia on February 22, 2018, GRD has extended discussions previously expected to conclude in August to secure funding and the required permits for their SFD survey over an area up to 20,000 square kilometers in the North Sumatra Basin offshore Aceh, Indonesia. NXT management is planning to join GRD for meetings during the fourth quarter with the aim of finalizing financing and permits. Upon successful completion of both components, NXT will work with GRD to design SFD survey to be included as part of the larger geophysical undertaking. NXT management traveled a number of times to Africa to meet representatives of the Nigerian National Petroleum Corporation, NNPC, and the Ghana National Petroleum Corporation to discuss -- GNPC, to discuss benefits of SFD that we bring to their current exploration programs. Discussions with NNPC and GNPC are continuing into the fourth quarter, and NXT is currently providing due diligence materials and project flight plans, commercial terms to facilitate the potential utilization of SFD in Africa. Before I continue with our midterm projects, I would say a few words about the state of the industry. Today, there is a renewed interest in exploration in the oil and gas industry. The problem is that the geology that traps hydrocarbons is getting more complex and the fines are getting smaller. Demands for petroleum liquids will reach 100 million barrels per day this year according to the International Energy Agency, IEA. However, as we can see, traditional exploration is unable to meet increasing demands. In 2017, only 5 billion barrels of oil reserves were replaced, that is less than 15% of what was needed. And last year, we also had the lowest discovery rate in the past 60 years. Furthermore, to meet global energy demand, it will require more than $2 trillion a year of investment in new supply to keep pace, according to the newly released figures from the International Energy Agency. SFD can be an important tool in improving return on this investment for our clients. As you all know, SFD is a patented technology. It provides critical information that only seismic can, but seismic comes with enormous cost and time. Remember, the industry's success rate from 2013 to '16, according to Wood Mackenzie, was only 18% for onshore and 7% for offshore or 82% failure onshore and 93% failure offshore. These numbers have not changed by introducing any of the advanced technologies: hyperspectral remote sensing; FTG, or full-tensor gradiometry; or CSEM, controlled-source electromagnetic, surveys that they use in offshore environment, to name a few. As one clearly see, none of these technologies has impacted success rates once seismic is shot. So what is the true value of our patented technology? Well, it is the only airborne tool that works at prospect level. Like seismic, it can verify trap integrity, just cheaper and faster. It can tell you if there is a trap in the subsurface, feel the pressure on its fluid that is sealed. When these 2 independent data sets of seismic and SFD are integrated, the result is a significantly higher overall success rate. As you are aware, we are working in a conservative industry, given the significant capital risks involved. Given the poor success rates and constrained budgets, it has become imperative for exploration teams to break down the barriers to improve success and use innovative technologies such as SFD. SFD technology is patented, therefore, it is easier to understand the underlying physical principles now. It works. We have high discovery rates, both onshore and offshore, and in different geological settings. This situation helped progress our business development efforts, and we are further down the contract cycle than we have been in the last 3 years. In light of this, now let's discuss our key midterm projects briefly, which include Malaysia, China and Latin America. Our goals in Malaysia have not changed. We are in continued discussions with Petronas regarding GoM data sales, which is the Gulf of Mexico data sales that we acquired last year, and other potential SFD projects. And we are also in discussions with other state oil companies in the country. In September, we were invited by BGP, a subsidiary of China National Petroleum Corporation, or CNPC, to participate by -- at its annual (sic) [ biannual ] 2018 BGP Technical Seminar in Beijing, China, where over 200 industry experts came together. NXT has been in discussion with BGP executives and geoscientists for the last 3 years, making technical and commercial presentations. The companies have visited their respective headquarters. BGP invited NXT to consider further business opportunities and has introduced the company to their country managers worldwide. NXT's forward strategy is to secure SFD contracts with BGP and its affiliates, which could be in the form of hiring SFD fee for serving -- service, sorry; joint bidding on projects; multi-client surveys using special purpose vehicles, SPVs; and potential participation with the affiliates in oil and gas projects, also via an SPV. Latin America remains to be a very important market segment for NXT. We are actively seeking SFD projects in Colombia, Peru and Mexico, waiting on the new changes that are occurring in the various countries. We will continue our updates as warranted. This quarter, NXT presented at the National Oil Company Assembly in Amsterdam, which generated a number of new interest from multiple oil and gas companies in attendance. We are following up with these opportunities, which is allowing NXT to fill the top of its sales funnel. As discussed during our second quarter conference call on the technology front, we are delighted today to report that NXT has received a new patent in the United States regarding the new sensor design we termed as Cascade configuration. Management believes that the company's Cascade sensor will provide enhanced stability for identifying trapped fluid bodies indicative of potential hydrocarbon accumulations, along with improved reliability and flexibility during SFD survey operations. Before I conclude, I need to mention our Sri Lanka situation. Unfortunately, as a result of recent political changes in the government in Sri Lanka, our contract negotiations there have been put on hold. We continue to assess the situation as to when they can be renewed. We are very hopeful that this political crisis will pass soon. In conclusion, NXT is pursuing a number of strategic contract opportunities today. I am confident that our efforts will materialize into future success. On behalf of our Board of Directors and the entire team of -- at NXT, I want to thank you, all of our shareholders, for their continued support. I would like to ask our operator, Retta, to open the line for us and take a few of your questions. Thank you.

[Operator Instructions] The first question is from Peter Mork.

First off, just -- I think, coming back to contracts and revenue, you gave a lot of detail, and I really appreciate it. But I wonder if we could even drill down just like a little bit more in terms of what are your -- given the business development push that's been happening as you guys highlighted since February, what are some of these key prospects that could come? And I know you don't want to say something's done until it's done. But just given that this call is our last until you guys report your year-end numbers, which is months away, what should we be looking to? And any additional details you can give.

Thank you very much, Peter, for your question, and I will turn your question over to Sajid Sayeed.

Thanks, Peter. Yes, we are actively pursuing new potential opportunities, particularly in Africa, and continuing to move forward projects in Asia as well that we have been engaged with for so long. But given the market and political climate, some have progressed well and some have been slow. As a result, we have expanded our efforts into new areas, such as Africa, as the market has created a need and because we increase our overall chances of winning new SFD contracts. So some of the prospects that we have been really engaged within -- very closely involved in the last few weeks or months, should I say, have been in Nigeria and in Ghana. And we have made a lot of progress, significant progress, and we are working very closely with them. And we are hoping that these things should materialize.

How about -- with those 2 in particular, are they -- just in terms -- I don't know how much you're able to divulge in terms of the contracts, but just in terms of payments, is it the typical cost? Is there commissions, et cetera? Are these the same type of deals that we've seen in the past?

There are a fee-for-service, where the national oil companies will be paying for the survey. We are addressing a very critical need in both these countries in Nigeria and Ghana that the national oil company has been struggling to accomplish. And our technology has been positioned in a very advantageous manner, where they will be paying for a fee-for-service program, which will be further on expanded into many other areas if -- should these things materialize as they expected. We are very confident that -- with the progress there. But more than this, I'll not be able to divulge further details at this point.

Okay. One just kind of commentary before I jump on to the -- I have 1 more question. But it would be helpful just to put up given that -- again, this will be just given the longer filing time for your year-end results, it'd be helpful to get investor presentations maybe more regularly just so investors could see what -- as things transpire, just to get what updates you're able to give on the contract front. And I guess the next question, just in terms of oil price volatility. Oil has been up recently. It's been down -- how is -- is that affecting the contract process at all? Or is -- are these longer-term goals that companies have, and it's just -- is it affecting your view in any way?

Not really. We have been monitoring the market, of course. We've been watching the industry very closely. They are -- of course, the oil prices have been fluctuating, but the base average has increased over the years. Exploration budgets are still constrained, though, at many levels, but we are seeing more companies willing to invest necessary capital and exploration if they can improve success through the aid of strategic innovative technologies and techniques. So we are keeping a very close eye, and we are finding these pockets in the market that we are focusing on. We continue to focus towards these companies, where SFD's application can deliver a significant technical advantage, along with cost and time savings. Hence, the engagement and the traction that we are seeing with certain prospects in Indonesia, in Malaysia and in Western Africa that we're seeing a lot of -- watch the activities and progress and more collaborative work that's been going on in the last few weeks.

Also, there is an interesting trend right now that national oil companies want a control of, especially the onshore development because it costs less and it's much quicker to move the hydrocarbons. And it is not -- the specialties are not required for the drilling like it is offshore, for example, in Nigeria. So both GNPC and NNPC are very interested in developing the onshore opportunities. I just mentioned to you that, basically, there is -- nothing is just around the offshore area. There are some operations onshore. But about 100,000 square kilometer area is completely unexplored in Nigeria and over 100,000 square kilometer in Ghana. So these opportunities are very important for us because they are looking for cost-effective innovative methods to reduce the cost. And national oil companies in those areas are not too rich, but we are very pleased to work with them.

Great. And then last question, just on the patents. So a year ago, the first patent was granted. It sounds like another one was granted this past quarter. Are there others in the works? And you alluded to the fact that it's helping with the contract process, in essence. Any more in the works? And are you seeing some more interest in the technology with the grants of these patents recently?

I think that the granting of the patents, especially the United States patents, is -- was pivotal to change the views of the geoscientists with respect to this technology. It's very important for us to understand that a exploration manager is not going to be able to use very easily or recommend the technology to be used if it's not patented. So I think that, that has contributed significantly to our progress. And we have being granted now, in 7 different countries, patents. And we are waiting for the European Union, which includes 38 countries. We answered all their questions now, and we're just simply waiting on them. And also waiting on Brazil, India, and I think there's 1 more country left. But we have the main patents in Japan, China. That's why, for example, the Chinese took a look at the patent. And they came over here, and they were very, very pleased. But it took us 3 years, I mean, it's something that we have to do. And all the steps that we are making now is bringing us closer to a contract, and that's what we care about.

When you mentioned you had a visit from them, when was that? Was that this past quarter?

Yes. It was the past quarter, yes. They came here. We went there. No, they came here first, and then we went there. They invited us to this conference, which is unbelievably extensive and useful for NXT. And I think that there's going to be a cooperation between the country -- the national oil companies and Chinese national oil companies, Sinopec, CNOOC, CNPC and also BGP, which is the largest seismic company in the world now. So we view this as a tremendous opportunity for NXT.

The next question is from [ Charles Davison ].

We're very appreciative of all the work that everybody is doing. It's been a long grind for -- certainly for the investors, and I'm sure it is for you guys as well. One of the questions that I have, for some time now, we've been talking about Mexico. It's been now a couple of years since, I believe, the offshore leases were granted. And it seemed at that time that there were some very encouraging forward statements relative to us being involved in the Gulf in Mexico, and perhaps you or Sajid could comment on that.

Actually, Enrique will be asked to comment on this because he's the head of the Latin America.

Than you, Charles. Good to meet you. This is Enrique Hung. Mexico, it's a very nice place to do business. And the thing is that the government just -- it's changing. And the date for the -- to release most of information that we've been following up very closely is December 1. But we are already in contact with many of the good players on Mexico. Basically, what's going to happen is that PEMEX is going to be stronger in the new policies of the government, and we will -- that's where we have the contract in 2012. In the other hand, the data that we have there is being used as pilots and demos for companies that are licensing or have blocks in this 2-year-old license bid round. So this data is very useful to do demos, we have shown confidentially to some of the closer clients worldwide. This is not only in Mexico, but clients that have national oil companies from other parts of the world. And this is like the place that we can use to pay more and you show the capabilities of the SFD data, which is very strong. We have some giant examples that we can really share with the clients, and they get blown away. In the same way, as long as you go in South America, some other players also have blocks in Mexico. And they go there to see the most recent data in the advent of the new sensor just patented and a good example of how the data show the whole -- how this technology works. So that's basically what we use in Mexico for. We're expecting to have a good success. The CNH, with the regulatory body in Mexico, is aligned with us. They are also pushing to sell this data because they can get their commission. So everything is in place and waiting for the new government.

Okay. Well, that sounds quite encouraging. And relative to that as well, we're talking about the agents in Mexico. And I know we have agents in -- the company has agents in other countries as well. Are you pretty much solely relying on the agent's follow-up? Or does the company have a physical presence, periodically meeting with the governments and the national oil companies and whatever?

Yes. Thanks, Charles. We are not entirely relying on agents anymore. Our long-gone strategy has been -- I mean long since that has been to directly be engaged with the authorities because we strongly believe that nobody can represent ourselves than ourselves than as opposed to agents. The agents have been very instrumental and very tactical with that approach to open key doors and corridors for us. And we have been directly involved with the CEO of PEMEX, with the head of CNH and the necessary authorities over there. And we are directly engaging with all the necessary decision makers within the hierarchy. So yes, we -- to answer your question in brief, we are reliant in agents to some extent, but we are holding the bull by the horns ourselves and directing the strategy through.

I certainly like that attack better. And are we actually personally being there? When you talk about the CEO of PEMEX, for example, is this by telephone or by e-mail? Do we personally visit him? Or how does that work?

We are in his office. We are in their office, face-to-face meetings. Enrique looks more and more like a Mexican now, been -- have been traveling frequently to Mexico, and he meets these authorities face-to-face. George has met the CEO twice already. As the new CEO, we are waiting to meet him as well. So these are all face-to-face meetings and direct one-on-one conversations.

That's fine. I know we have somewhat limited resources, both personally and financially, within the company at this point in time, but I would assume that we're probably spending more time on those near-term opportunities that you were talking about. I'm very appreciative of the long-term things we're looking at as well. We need to keep the pipeline full, but I would assume that there's a greater emphasis on those short-term opportunities.

Yes, Charles. That is correct. We want to close the contract. That's all that remains now. So we want to make our shareholders happy. And trust me, it is going to feel very good as well for ourselves personally. Everybody here has their countries that they work on. They have the leaders that lead the people and making sure that everything is followed up, and we get closer and closer to close contracts. And thank you very much for your questions, Charles.

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

A follow-up to Charles' question. The easiest sale to make is from an existing or previous customer. And so it's now been about 3.5 years since you had the contract in Bolivia, could you perhaps give us an update on what's going on in Bolivia?

Yes. Hello, this is Enrique Hung again. Bolivia, we even grow papers with them. We followed up very closely. If you look at the -- or maybe you're not aware of it, but the drilling of the recommendations done in 2012 started coming up -- or the news of that started coming up last year and this year. So the process of exploration is 4 years to 5 years. And Bolivia doesn't escape from that principle, and they are still evaluating what we've done. We know, because of our [ recommendations ], they have redesigned some of the geophysical programs, and they already have saved money with the SFD results that we gave in the 2015. Therefore -- but nevertheless, we are using the same recipe that we use in Bolivia in Peru. Exactly the same road, we're running the same path. Now we're going a little bit faster because we got access to the President and CEO of Perupetro, which is the regulator in Peru. And we have been asked to make equivalents of the technical units for the license terms that we have in Colombia, Brazil and Argentina and as well as in Bolivia. So we're working very hard on that, focusing in Peru. Peru has great opportunities, have 400 structures without evaluation that we're planning to focus and to try to save their money and time.

I would like to add, Jerome, thank you very much for your question, that in Bolivia, unfortunately, the supporter who like the technology has been fired because we told them not to drill 2 prospects, and they did, and they are both [indiscernible]. So it's almost like a restart when you have to press the restart button. But I think that all in -- all down in Latin America now, in Colombia, Peru, Brazil, all these countries are paying attention. And we had been supported by Bolivia when we ask for reference and so on, but there is no problem there. But Bolivia itself is under reconstruction, the national oil company.

Yes. And I recall it was prior to Bolivia, you had a contract in Florida. It was around I'm guessing 2013 or '14. It was, I think, about $0.5 million contract. Presumably, they've had a chance to drill that now. So has there been any follow-up with them?

Yes. What happened was that the Kerogen company, as usually happens, it was sold. Riverstone sold the company. And there's a new king on the block, and we have received the e-mail from them that he wants to schedule a call. The former CEO of Kerogen, who is a -- who have done the first $4 billion deal with Encana in Canada, is now going to become a supervisor in some of the African undertakings that we are doing for SFD quality -- data quality control and so on. So as you can tell, they don't have any issues or problems working with us. But the company has been sold, and we are waiting on when they are going to drill.

They haven't drilled our opportunities yet.

Yes. They haven't drilled. There are 2 of them slated to be drilled, but they haven't done it yet.

And a year or 2 back, you were talking about renewed emphasis in Canada with some of the developments that have been happening offshore in Newfoundland. Have you been pursuing those opportunities as well?

We have looked into the Newfoundland opportunities, and we are looking at other opportunities that has to do with helium, for example. And also, we are looking at new projects that are significant projects. And we are talking to investment bankers to create the potential vertical vehicle. For that, I'm just looking at the people here. You know what you can see and what you cannot see.

But presumably, the offshore in Newfoundland would represent a large opportunity largely in your own backyard. Would not be something worth pursuing with a little more...

We are pursuing. We are in touch with a few prospects out there, and we are pursuing them. There has been a lot of seismic activity that's going on that are individually led by the IOCs in the area. We are trying to engage and [ induce ] the local government as well because we do fall into the environment-friendly bracket, and we fit -- we had a good fit. We have a few engagements right now that we are pursuing and we're talking to. So we are working on that for sure.

Thank you. There are no further questions registered at this time. I would now like to return the meeting back over to Mr. George Liszicasz.

Thank you very much, and thank you for participating in our third quarter 2018 investors conference call. And I wish you the best to you and to your families on Thanksgiving next week. And hopefully, we're going to be -- this next week, yes? And hopefully, we are going to have some good results to report to you on our next investors conference call. Thank you so much.

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