Thanks so much for being with us today. It is my pleasure to introduce to you Eugene Woychyshyn, the President and CFO of NXT Energy Solutions.
Good morning. Today, I want to talk to you about NXT Energy Solutions and our product, Stress Field Detection, or better known as SFD. SFD de-risks hydrocarbon exploration for our customers. Today, I will explain why SFD saves time, money, and improves exploration success for our customers. My name is Eugene Woychyshyn, and with me is Mr. Michael Baker at the table here, representing the company. First, I just want to spend 20 seconds on this slide. Please read it carefully. It talks about the risks with the company and also with that, the potential rewards. I would recommend that you do read this. You can go see Mike after the presentation, and he will give you a copy of this. We are here all week, and we can discuss in more detail any questions you have. NXT is headquartered in Calgary, Canada.
SFD, as I said previously, provides our clients with rapid airborne identification of hydrocarbon accumulations. The key here is rapid. We can get recommendations to clients in months, not years. SFD is a prospective-level tool like seismic and works together with seismic, and with seismic, increases success rates for our clients to up to 81%. We do SFD surveys around the world in diverse geographical areas. It does not matter if it is onshore, offshore, near the mountains, in the desert. What has changed? Because we have been around for a while. Why are we positioned for growth? Let us take a look back at 2025. We had revenues of CAD 16.4 million versus CAD 600,000 the year before. Operating cash flow of CAD 1.2 million, which implies that, and is true, that we are starting to become self-sustaining from a cash basis.
We did three SFD surveys last year versus historically, one every two or three years. That is a big, big step change for us. The next important step is the base that we are working from. At the end of last year, we acquired all the rights to the SFD technology. That is 100% owned by the company. We now have nominal debt, and we have optimized our costs, both operating efficiency and on general administrative costs. We have spent the last couple of years figuring out how to do the surveys quicker and how to support them. Financially, last year, we had a free cash flow of CAD 0.07. At September 30th, our share price was CAD 0.30. We currently, as we speak, have two active surveys going on.
We finished the acquisition for a survey in Africa in August, and the team in Calgary is doing the interpretation right now. As of tomorrow, as per our press release, we should be starting another survey in South Asia. Just briefly, and I will talk about it in more detail, is the competitive advantage. What do we bring to our clients? We are fast or rapid, we are effective, I have talked about the 81% success rates, and affordable for our clients. Finally, we are clean. We do not create a mess or leave a mess behind when we do a survey. Did I go too far? Okay. What do we do? We find trapped fluid beds of hydrocarbons. If you look at this graph, and I think that is the there is our Cessna Citation 560.
It flies in regional lines or grid lines, and we have sensors on board that will, and I will show you a signal in the next slide, but will find accumulations of hydrocarbons. This is a structural trap, and this is what seismic is very good at finding, and this is where most of the oil historically has been finding these.
As we move forward and looking for new oil, stratigraphic traps are much harder to find on seismic, but SFD doesn't really see any difference in the two and finds them both. That is one of the key advantages we bring, and that is really what we are doing. We are flying the jet, and we are saying there is an anomaly in this area. As I had said, the easy oil has been found, and SFD provides that extra advantage. Here we have what is a typical output from our sensors.
This is an output from a line flown in the Gulf of Mexico over the Zama field in 2017. You can see there is a change in the signal where the lines have dropped. It is called voltage. That, for our interpreter, is an indication that there could be a hydrocarbon accumulation. We flew the east-west line here, and that is what you see there. We also flew it north-south because we did a grid. I forget the exact spacing, but we did a big part of the Gulf of Mexico during the bid round in 2017. We identified the anomaly. We reported that to CNH, which is the Mexican regulator. A couple of months after we did this, which is a Talos Sorry?
Two years.
Two years. Talos made the discovery, and it is consistent with where we had the anomaly. Right here is the seismic from that Talos had done, and it is in the same area. Just an example of what we do. We did that in literally almost, I think it was over four weeks in 2017. What is happening in the market? You just have to look at the recent headlines. Diesel prices are going up. There is all the turmoil in the world. The supply of oil and gas is not keeping up with the demand. I do not have to say too much more about that because we are all living it right now. The world needs 104 million barrels a day, and that is just not being replaced with new discoveries. Our clients need a solution.
What that solution is, or one part of the solution is we have SFD. Again, we are low impact, we are better at targeting, and we do this at a lower cost versus traditional methods. A little more about the competitive advantage of SFD. As I said earlier, when using SFD and other G&G data, we can improve client success rates up to 81% versus historically 30%. That is a big difference, almost three times. More importantly, which we do not get a lot of credit for, is when we tell clients not to drill, and they save that CAD 5 million, CAD 10 million, depending where they are drilling. Again, what do we bring into competitive advantage? We bring efficiency, we decrease the risk, and we are rapid and environmentally friendly.
Also, with the information we provide, we provide information to the executive team that they can use this to make capital decisions on where they are going to drill. A little more on our recent strategic accomplishments and what we have changed to set the base as we move forward. Again, just to emphasize this, we have unencumbered ownership of the technology. There are no royalties, there are no licensing fees, there is no time limit. It is all ours and ours to develop. We completed that acquisition last December. As of September 28th, and with a little help with our improved cash flow, we paid out the capital lease on our aircraft. The two items we need, excluding the people, we have full control of the assets to deliver our technology. Commercial turnaround, CAD 16.35 million last year, three surveys. We currently have two ongoing.
The reason you are listening to me and not our CEO is because he is currently helping manage one of the surveys. Always the priority is the fundamentals and the business. Things are happening. Again, one of the big advantages of us is environmentally friendly. We do not leave or create a mess. Just a little bit on the commercial side. As I said earlier, we had completed the acquisition of the fourth African survey for SFD. That is a repeat business. One of those was actually a data sale a couple of years ago. We are currently starting a survey in South Asia, which should be completed in a week or so, and results delivered in December, as well as the African survey.
We will complete the last part of a Pakistani survey that we flew last December and January, and that will get completed in December. This leads to the next slide here about the verticals. So our growth opportunity. We have over 50,000 line kilometers of data that has been flown over the years in Western Canada. We are currently reviewing that data. We are evaluating the anomalies and selecting top prospects to rank them and to acquire the hydrocarbon rights. From there, we will use low capital intensive methods to develop those opportunities. We are very excited about this. Almost a year ago, we got a CAD 2 million investment to invest in this, and it is the next stage of using the technology to uncover hydrocarbon resources in our own backyard in a safe political environment. So just some key trading facts.
You can read all the details, but just want to highlight, at September 30th, the share price was CAD 0.30. Long-term debt is down to CAD 500,000 at a 4% interest rate, so we are not going to pay that off fast and take advantage of that. Working capital at June 30th, CAD 2 million. So that is a comfortable position, and I do note even last year, we had free cash flow of CAD 0.07. Right at the end of June, it was a negative CAD 0.01, but I remind you, we have got two active surveys going on, and we will hope to see that number improve as we get to the end of the year. Part of the reason we have the lower the CAD 0.01 negative cash flow is just the nature of the business.
It often takes three, four months to plan the surveys that are going on right now, so there is a timing lag. Our team, I will not go through the details, but the important point here is we have got a very strong team that understands the technology, are functional experts in oil and gas, and actually in all functional areas, and we have all worked internationally. I myself have spent 10 years in these regions. My colleagues also have spent a lot of time there, so we know where we are doing the work and understand the cultures. So just a summary of what I said here. One, we have unencumbered ownership of the methods to deliver the SFD results to our clients. So we own the technology, we own the aircraft. Exploration impact, 81% success rates. In term, oops, wrong button. The revenue and balance sheet.
We have got a clean balance sheet, uncomplicated, nominal debt, and revenues last year of CAD 16 million on three surveys. So we have got two in process right now. So that is it. I welcome you to come see us during the week, either at our table or as we are walking around here, if you have got further questions or reach out to us. So take your time, review the information, and thank you.
As you are. What is the objections? What is the pushback when you go to an energy company and they say, "Eugene, that looks great, but we are going to go use the old-fashioned, more expensive, less efficient technology." Why is flying 50 planes a day doing surveys? What is the pushback you are getting there?
To summarize the question, and correct me if I have not summarized it, is why is the technology not being taken up by, or why is it not being accepted, given all the benefits it brings? Yep. There is a couple reasons. Oil and gas technology, or the industry, is very conservative. If you go to the super majors, they want to spend years understanding the technology. It takes a long time there. The national oil companies, where we do a fair amount of work, as well as small, independent, are willing to take the risks, and to sort of answer your question, or to counter it, where it is changing is, in Africa, we now are doing the fourth survey with the same company.
We are doing in South Asia, in that region, have been talking to, and have now done two surveys, or are doing a second survey with neighbors, so the adjacency concept. But the third reason, I used to be a purchasing manager, is if you go do seismic and you get a dry hole, you are not going to get into too much trouble because that is what happens. You expect bad success rates. But you go spend a couple million CAD in SFD, it does not work, harder to justify that even though you probably spent 5% of the monies. That is the other barrier we have been dealing with.
In a lot of the third world countries and all that, we are already wired, so they are using It takes time to break into the industry because of that. But when you are over in Africa, there is not much else. They are not wired for. It is much more expensive. It is a cheaper way to do it.
Yeah. The comment was the third world countries, they don't have the same funds or history with the older technologies. That's exactly what it is. Also they have some non-commercial objectives just to feed money into their treasuries, and that's also why they're willing to take the risks of a new technology. Yep.
You mentioned you've completed three surveys, and you have two ongoing. Or how many surveys have you completed? Because you're claiming an 81% success rate, so 81% of-
Okay. We did, what's the exact number? 36-
39.
39. Nope.
He is referring to the revenue that they are getting in 2025.
Oh, got you.
The question is, what is our 81% calculated on? It is based on, we have done 39 recommendations over the last 10, 15 years for companies to drill. Of those 39, 31 have been commercial discoveries, and nine have I don't think any of them were actually dry, but they were not commercial. One of them I know for sure was water.
For context, the industry average in the existing technologies, with the exception, obviously, SFD, but the existing type of technologies is less than 50%.
Okay. Other questions? Yes.
With the engagements that you have, do you feel like there's a bias factor in that? Because they're hiring you to go do the survey, they kind of know maybe there's something there. Do you feel like there's a difference in the nature of those surveys versus the surveys that you benchmark against?
The question is, would there be a bias with the-
A sampling bias.
Yeah, a sampling bias on some of the surveys. I would say no. The African surveys, yes, we are going into areas that are geologically prospective. I have only been in the industry for about five years, but it is amazing what is underground. But in the case of the African surveys, we are into wildcat areas, so there either has been very little seismic. But when we do the surveys, we run into two conditions. One is there has been no seismic or very little G&G. So we fly an area, and we often will do regional lines. That is what is happening in Africa. So we did regional lines a couple of years ago, and there are prospective areas. Now we are doing grid surveys to focus in. And with that, they are going to take that, and they are going to do seismic.
When you combine the two and integrate them, which is the last part of our process, that is where we come up with the drilling recommendations. The other is they have done seismic, and they have got prospects, and then we will help rank those prospects that they found on seismic of what has got the greatest potential.
What is the split between those two different kinds of engagements of the 39?
That is a question I would have to find out.
Okay.
But 50/50 probably is not that far off.
Sorry. One kind of follow-up. What's the false positive rate? Is there a false positive rate? You've done 39 surveys. Was there any false positives in those 39?
Was there any false positives in the 39?
Yeah, the technology. What's the false-
Yeah, that's
False positive. Or is it you just not in the right spot, but the oil's there? Or what
Well, the technology is going to locate the pressurized trap fluid body. The drill bit's going to determine whether or not it's actually hydrocarbons.
Okay.
The purposes of the technology being to measure the stress and identify the areas to focus your two expensive drills.
All right. Basically,
If we're hired in some examples to confirm something that they already believe is there, we're not going to count that.
Okay.
We may need to find that as a false positive because it's not really a positive as, say, if we discovered a pressurized trapped fluid body that's commercialized in a purely wildcat zone. It's not going to compare to that with the islands and prairies.
Okay.
So-
I understand.
We discount that or take that number away because we do not believe that that is a fair number. It is like it should have been a hit instead of It should not have been an error, it should have been a hit.
The technology. You mentioned, I thought I heard something about the Gulf. The SFD technology is land-based, or can it detect these pockets in land and ocean?
The question is, can we detect anomalies over land or water? We can do both. We have done both types of surveys, including the one in Florida, I believe that was all offshore, what, 15 years ago. Some of the African ones have been offshore also.
Thank you so much. That is all the time we have. You are welcome to ask additional questions outside.