Here we go. This is the group that runs the company. I'm the together, and we go. There are other people involved. That's why goes, and we talk about that. business back in exist anymore. Anadarko, Bottom, Occidental. We're a pure Permian producing horizon. Trick is and figure out how. Certainly in the Permian mostly classified a conventional reservoir, meaning it's in shale or carbonate. As you get deeper, the deepest, most exciting one is probably Camp. It's declines fast, it's expensive to drill. The Permian today, couple numbers for you, it. It would tell you the biggest is the South Justis. That field today makes more than $4 million. How big the Permian is. I'm going to give you a glimpse of it because us. We bought this thing, and we've got two Permian fields.
We bought a second one in the middle of 2025. We have damn near 20,000 acres. If we had the premium creme de la creme, premium A-plus, premium acreage, and there just was a federal lease sale, everybody could see what are people valuing Permian acreage. You would see that the top bidder was Matador Resources. They paid $220,000 an acre. If you multiply $220,000 an acre times 20,000 acres, we have a $4 billion asset. It's not the case. We don't have the best stuff. Okay. We certainly don't have the worst stuff. Okay. I'd say we're little left of middle. Would you say we're worth $2 billion? Probably not. You have to do a lot of work to get there, but somebody for acreage not drilled paid $220,000 an acre, and the market is heating up.
When we talk about, I'll say our pathetic earnings, and I'll say trailing earnings is not going to give you a reason to invest in us, but I'm going to show you why we should be the hot ticket. Okay. Although I did see one. I don't know, to the organizer, I'm going to say, why were we sandwiched between drug testers, employment drug testers, and marijuana sellers? That's the crowd that we're grouped with. I'm going to try to appeal to each of you knowing that's what you came to see. All right. Between these two fields, and we're in Eddy and Lea County. Those are the hot counties in New Mexico. In Lea County is the South Justis Field, where we have 5,000 acres.
Eddy County and this entire area where you can see there's 20-plus counties in Texas that make the Permian. When you get over here to Roosevelt and Chaves County, it's petering out. You're in core Permian here, and certainly you're in core Permian over here in West Texas. We have 750 wells. We make 1,000 barrels a day. Actually, these numbers aren't quite right. I'm just going to run this by you. In the South Justis Field, we have PDP proven reserves that you'll see in the neighborhood of 35 million barrels. No, sorry, not 35 million barrels, $35 million in a PDP PV-10. If you go to the probable reserves, which is expansion of the waterflood, if we just keep expanding the waterflood in almost 100% of our production in Grayburg-Jackson Field is SRV waterflooding reserves.
Those patterns total 98, we have 250 we can go to. We have another 2.5x Waterflood patterns to go. If you do the math, you would say, well, your 1,000 could go to 2,500, and that is about what we think. Those patterns cost about a quarter million each for us to do, and we are cash-starved in capital. We also have a more attractive investment, which is the new drilling in the San Andres. We have a 92-well program from a farm-out to an outfit called Virtus, which is fully funded. We do not have to raise a dime to drill 92 wells. It is in the terms of the farm-out agreement, and the terms specify we get a three-well carry. The first three wells are free. Those wells will spud next month.
The balance of the wells, we have a backend participation at 150% return on the drilling costs. Now, that 150% does cut into our revenue if we had the money in a vault, and we could just fork it over to drill those wells. In this conference, if somebody wants to make a return less than 50%, I am looking for a drilling fund. If the cost of that money net to us is over 150%, no thanks. I hope that sort of makes sense. You got that one? Okay. The other one we have is the continuation of the waterflood response or waterflood patterns at a quarter million per pattern. If you multiply 250 bucks or 250,000 x 150 additional patterns, if we did that organically, it is going to take us five, six years to get to that.
My plan is to self-fund that using the revenue from the San Andres horizontal wells. Okay? I hope I am not blowing by people there. In the case of the South Justis field, which is in Lea County here on the corner of the border between New Mexico and Texas, we have got something like 200 idle wells. Our plan there is simply to turn on the idle wells. KKR used to own that property. It just was not interesting enough for them. Atlantic Richfield put in a waterflood. The waterflood did not do that great. For us, we find excitement in 10-barrel-a-day wells, and we are getting an average of 10 barrels a day out of those wells. It costs us about 30, 40 grand to run tubing, a pump, and maybe replace some joints of sucker rod. All of this for us is rod pump wells. Okay?
In 2025, what do we do? This is part of the secret, I think, of why we are a good investment. Even though we only make 1,000 barrels a day and a meager, I will say a break-even situation, we retired and eliminated $41 million of senior debt and seller debt. All of our assets right now today, we do not have $1 of senior debt. None of it is collateralized. If you are from Texas Bank or you are from Amegy Bank or one of those banks, everything we have is available to be collateral.
Now, it was not our intent when we started this thing to be debt-free, and we are far from being debt-free. We have trade debt and other kinds of debt and hangover debt from being a public company, owed to CPAs, owed to law firms, audit firms, and that total is a little north of $20 million.
We're trying to get that down. You might say, well, how did you raise $45 million? How did you raise $45 million with what we have? Well, we did it with ORRI purchase, ORRI sale. We acquired an overriding royalty from the seller, CSE Partners out of Dallas. We took that ORRI and sold it the same day for $50 million after buying it for $13 million. That's the short story. There's more detail than that, but I just say, we're not that shrewd, but we could see the future, and we could keep our mouth shut about the San Andres, which we had to. The San Andres is the key to the Grayburg-Jackson. It's a mother lode. It's a massive carbonate that fracks well. There are a lot of other operators that do it, and we have a very experienced drilling crew.
It was their excitement, the Virtus' excitement about our San Andres formation, which occurs, I'll say between two and 4,300 feet in our field, where they felt we could drill 92 wells at an average 500 barrels a day a well. You multiply that out, what number do you get? You're getting close to 30,000 barrels a day. We had to sell off 65% of it to them to raise, I'll say roughly the $41 million. There's more detail than that, but that gives you a glimpse of it. I did that to get the debt load down. Okay? We also, at the same time, eliminated preferred shares that had a $27 million redemption value. For shareholders, that's important. Had we not bought out that $27 million preferred shares, we would have diluted the crap out of our stock, and it would've been devastating.
We didn't make a big deal about it. We kind of silently got rid of this problem, and it's gone. Okay? This resulted in, we had carry forward losses because you're a SPAC, but we couldn't cover up all of the gain, so we ended up with a $14 million gain in 2025 that went to retained earnings. All right? This farm-out agreement is 92 horizontal wells if it's one shelf in the San Andres. There may be four shelves. You can multiply that times four. It's crazy upside. This upside won't be quantified and won't be publicly released till we know for sure, and we're running tests right now. We put this, it was publicly available, that we ran tests out there. We used vertical wells by perforating them in the San Andres, fracking them, and seeing what they'll come back as.
Those results are confidential. We call that tight holing. I'm tight holing you guys, but I will say we're going to absolutely drill wells. That's the best I can reveal. On this South Justis field, we bought this thing really for nothing. It was a neglected field. It was in the Permian, also has stacked pay, also has farm-out opportunity. This is our model back here with the Grayburg-Jackson. Buy it for the PDP, pay nothing for the upside, produce the conventional, waterflood it, come down to the stacked pay, develop it, go with horizontal wells, farm it out, pay nothing, and generate a good return. That's our plan. Okay? That's our model. We've got this field, and we have a third field that we expect to get done this year as well. Bigger than this. Oil prices impacted 2025, however, we're hedged.
We got criticized because we hedged 75% of our production probably too early. We are hedged anywhere between $62 and $75. Of course, the $75 looks smart, but you can only get $75 as a hedge if oil prices are north of $85, $86, to be no-cost hedges. We have no-cost hedges that average, I'll say just under $70. Now we look like we're kind of smart, and if anybody believes that peace in the Middle East is now certain and it's done, they're nuts. Just wait till after the mid-year elections. Anyway, I think now all of you would have an understanding of our business platform. Buy Permian, develop the conventional, low decline, low cost, farm out the deep rights, which is the expensive play, be a participant in it, and if we can set it up right, don't spend any money.
We just happen to have somebody hungry enough to want our deep rights. I'll just say we cut a fat hog, for us. How's it look going on further? We should double production this year. It's kind of a no-brainer. Net oil production, and that will happen with the three wells that cost us nothing. We have a three-well carry that we immediately get the benefit of. In the oil terms, three-well carry means we pay nothing, they pay everything, and we take our share, which is 35% working interest, 27.5% net income interest. However, we're going to drill 10, 12 wells in Q4.
I do either have to put up that money, the 35% working interest in these wells cost three and a half million dollars a shot, or wait until the oil production pays out 150% of the drilling cost and then kick in with my 27.5% backend ride. Okay? The Grayburg-Jackson is a water injection. We were down a year due to a four-inch waterline that was out, and we had 14 flow lines we had to replace. When we're buying these things, I'll say for under market, it comes with problems, like flow lines and pumps and, frankly, bathrooms that aren't working. We have to go fix it. We spent a lot of money doing things to make it a safe operation. We issued our 2025 financial results unaudited, and that's out there.
Like I said, trailing earnings isn't the reason to be interested in us. The reason to be interested in us is a massive horizontal well development at Grayburg-Jackson, a massive reactivation of idle wells at South Justis, and additional farm-out opportunities from everything we buy. I'll just say a full pipeline of acquisitions. This is average oil price. I'm not going to go through all this. I already talked about the hedging. We're hedged at 75% through 2027, and we have no bank forcing us to do that. However, we think that the best value for money for shareholders is not to be doing stock sales and convertible notes. We prefer to do debt. Right now, until our stock is north of $2, we're looking for reasonably priced debt. SOFR + four , SOFR + five, SOFR+ six, that kind of thing. Lifting costs.
We're generally at $27, $25 a barrel lifting cost. We're making money, good money, at $60. We make good money even at $55. That's why we chose to start hedging. As soon as we'd get hedges above $60, we said, let's take it. Our G&As are high. Our G&As are high. We're trying to get our audit fees down. We're trying to get our legal expenses down. Insurance costs, we're trying to get down. When you're a SPAC and you go public, you just get taken to the cleaners. I'll just say it like that. Because we're new kids, we don't understand how all things should work, and we're getting smarter, but this is our goal, to have reductions of $1 million in G&As, and we're close to that. This is looking in the rear-view mirror. This is what 2025 did.
Interest rates dropped way down because we wiped out most our debt. We really made a crazy improvement to the balance sheet. We had $50 million in debt plus another $30 million in preferred shares, all of it wiped out for about $20 million in debt. We worked safe. Again, we have almost no decline curve. We finished a waterline that was plaguing us. We're looking at volumetric funding. That's what ORRIs are. An extreme volumetric funding is just to sell the property, or a piece of the property, or a formation, or a working interest. We like those methods of raising capital. We signed that farm-out. I already spoke about that. Why are we good at long-term investment? Balance sheet is solid.
We got a horizontal drilling plan that actually started now because we're doing vertical well workovers to test completion methods, 20/40 sand, 30/50 sand, cross-linked polymer, low-temperature resin. All those things are terms in a frack job that we need to get to fine-tune. We believe we have it figured out. We're liking 30/50 sand, we're liking cross-linked polymer. That's what the vertical wells are telling us. That's it. I'll go Q&A for the couple of minutes we have. I do have a booth, anybody can come around and we can chat, now that we know everybody, except those who are tardy, you can just come over to booth number 414. Any questions? Yes, sir.
What's your cash burn?
What is the cash burn?
Yeah. Annually.
Other than every dime we make every month? We're roughly pulling in $2 million a month and we spend $2 million a month. If you want to know the categories where it's burnt, it's almost 1/3 , 1/3 , and 1/3 . G&As is taking $600,000, $700,000. LOE's taking $600,000, $700,000. The balance of that is almost covering either the trade debt, it's really debt service. If I can wipe out all the trade debt, then we actually run a little further negative because we don't have any real cash for capital. Any capital that we're burning, like if we're trying to reactivate a well, we gently press on the ELOC that we have with White Lion. We trade normally over 1 million shares a day. We're probably a standout in that category. We traded one day over 300 million shares. We have huge retail share interest. It's unbelievable.
The feedback that we get from investors is, we try to get to know the investors like all of you, except those of you that were tardy. We're as transparent as we're allowed to. That answer it? Anything else?
Yes, sir.
What was the average price that management bought stock at?
$2.
$2?
Yep. $2. All of us are underwater, and you heard me say before, till we're north of $2, we don't really want to press on the stock liquidation button. Last year was a tough year, but I'll say we skirted all the dangers. We're a stable company. We're going to be in business a long time. Until we did the deal on September 9th, it was precarious. My goodness, it was a glorious deal that we cut.
My son, who's in the investment banking, he said, "Dad, you sold magic beans." I didn't sell magic beans, but it's tough to sell drilling rights to a formation that you don't have a standing well producing at that moment, because it's just risk. It's fraught with risk. You don't know till you drill that horizontal well and you see what it makes. Virtus is very careful, but it has been funded over $100 million. Somebody other than me believes this thing is real. I thank all of you. I'll turn it over to the moderators to put the next one in. Oh, thank you.