Geoffrey Rochwarger - Vice Chairman and Chief Executive Officer of Genie Oil E&P Michael Stein - Executive Vice President and Chief Executive Officer of Genie Retail Energy Avi Goldin - Chief Financial Officer.

Aaron Shafter - Great Mountain Capital Management LLC.

Good morning and welcome to Genie Energy’s Third Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation by Genie Energy’s management, there will be an opportunity to ask questions.

[Operator Instructions] In this presentation, Genie Energy’s management team will discuss financial and operational results for the three months ended September 30, 2015.

Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, whether general or specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates.

These risks and uncertainties include, but are not limited to, specific risks and the uncertainties discussed in the reports that Genie Energy files periodically with the SEC.

Genie Energy assumes no obligation, either to update any forward-looking statements that they have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast. Genie Energy earnings release is available on the Investor Relations page of the Genie Corporation website, www.genie.com.

The earnings release has also been filed on a Form 8-K with the SEC. Please note this event is being recorded. I’d now like to turn the conference over to Geoff Rochwarger, Genie’s Vice Chairman and CEO of Genie E&P. Please go ahead, Mr. Rochwarger..

Thank you, operator. Welcome to Genie Energy’s third quarter 2015 earnings conference call. On today’s call, I will provide an update on our oil and gas exploratory operations in Northern Israel. Michael Stein, the CEO of Genie Retail Energy will follow with the review of that business’s operational results.

Avi Goldin, Genie Energy’s CFO will then discuss our financial results. At the conclusion of Avi’s remarks, we would be delighted to take any questions you have.

For those new to our story, in April of 2013, the Government of Israel awarded Afek an exclusive petroleum exploratory license, covering 396.5 square kilometers in the Southern portion of the Golan Heights.

In February of 2015, we began drilling the first exploratory well pursuant to drilling permit issued by the Northern District Planning and Building Committee.

The exploratory drilling program covers many of the 10 wells over three years, and has intended to help us develop the data we need to determine the size and commercial viability of the resource. We have now completed drilling two wells.

The analysis from the completed wells suggests that the resource is in multiple strata and in some portion of the licensed area, it’s up to 350 meter spec. We’re very encouraged and pleased by what we have learned to-date.

But I want to emphasize that we are still early in the exploratory program, with drilling completed at only two wells and no flow test yet conducted. We’re not yet in a position to answer fundamental questions regarding the size of the resource and its commercial potential. However, we continue to make operational progress.

As I report to you, we’re wrapping up the drilling of our third well, Ness 6. Our improving knowledge of the license areas lithology and sub-structured composition has allowed us to refine our drilling approach.

We expect that this will enable us to continue to make our operations more efficient, as our exploratory program progresses, beginning with our next well that we expect to spud towards the end of November. At this point, we have just begun our logging program in Ness 6. The analysis of the logs will feed into our evolving reservoir model.

Based on our positive drilling results in log analysis, we initiated planning of a series of well flow tests that should significantly contribute to our understanding of the reservoir characteristics and provide early indications of potential production techniques and of the production costs profile.

Last quarter I mentioned that we were working with Baker Hughes, an UK-based OTC group to design a well flow test program that can be used on any of our wells and that would fully confluent to the guidelines of our exploratory drilling permits. I’m pleased to report that the flow test program design has now been completed.

And we’re in the process of seeking the final approval to begin our first well flow test program that will test multiple target zones on one of the previously completed wells. We hope to begin this program before the year is out.

The results of the well flow test in combination with the results from our cutting large core samples and other drilling instrumentation will eventually serve as a basis for a third-party estimate of the potential size of the resource. On the regulatory front, our initial drilling permit will expire in February.

On Monday of this week, we received preliminary approval of a two-year permit extension from the Northern Regional Planning and Building Committee that would allow us to complete the exploratory drilling program, including the drilling of up to 10 wells and the execution of as many as four well flow tests, both key elements of our program.

While the committee’s decision is not final until the exploration of these 60-day public common period and maybe challenged by our opponents, I’m optimistic that we will prevail. As we progress in our exploratory program, the complexity of the operation has increased exponentially and with it our need for technical expertise.

As a result, we have built strong relationships with some of the industry’s leading service providers, while simultaneously strengthening our internal capabilities by bringing on experienced and qualified engineers for drilling, reservoir modeling, and production planning.

These expert personnel are not only helping us to fine-tune our ongoing exploration program, they’re helping us better understand and plan for potential production program down the road based on the available data. That concludes my update. We remain very excited by the potential of the resource, although, there remain many hurdles and uncertainties.

We believe that the ongoing drilling results and flow test will significantly enhance our understanding of the resource in the coming months. Now, I would like to turn the call over to Michael Stein, to discuss this quarter’s operational results for Genie Retail Energy..

Thank you, Geoff. I’m pleased to report that Genie Retail had a strong and positive quarter. We grow our meter base, increased revenue, expanded our gross margin, and delivered a solid level of adjusted EBITDA. In short, we’re firing on all cylinders.

Gross meter adds totaled 74,000 for the quarter, an increase of 18,000 over the level attained in the year ago period, and 5,000 meter decrease compared to the very high level we achieved in the second quarter. We’ve now achieved robust year-over-year meter growth for two consecutive quarters.

We’ve utilized several different approaches to increase the rate of gross meter acquisitions, and improved set of acquisition incentives, our green energy offerings and new sales channel and perhaps most importantly an expanded portfolio of smart budget offerings with fixed rate characteristics.

The increase in gross meter adds was partially offset by higher levels of churn. Average monthly churn climbs at 6.7% from 6.2% in a year ago quarter and 6.3% in the prior quarter. This increase is not unexpected since churn typically increases at the rate of gross meter adds rises.

Despite the uptick in churn, net new served increased by 1,000 meters to 388,000 at September 30, a 2.9% increase over the total at June 30. RCE’s increased at even faster percentage rate than meters climbing 3.5% over the June 30th total to 260,000.

The rate of RCE increase reflects our focus on acquiring new meters in territories with higher average consumption rates, particularly in the common territory in Illinois, as well in some select utility territories in New Jersey, Pennsylvania, and Upstate New York.

To wrap up, Genie Retail Energy has put together two strong quarters and it’s growing nicely. I’m pleased with the progress we have made and believe we have a strong platform for continued growth. Now, Avi Goldin will discuss the third quarter’s financial results..

Thank you, Michael, and thanks to everyone listening in for joining us this morning. My remarks cover our financial results for the third quarter of 2015, the three-month period ended September 30. Except where I indicate otherwise, all comparisons in my remarks are to the results for the corresponding period in 2014.

As in my remarks from previous quarters in my remarks, I will discuss only the year-over-year comparison to remove from consideration seasonal fluctuations that are characteristic of our Retail Energy business.

The third quarter was a very strong one for Genie, notable for the strong margins delivered by our Retail Energy business and increased investment in the oil exploration project at Afek. As expected, Genie Retail again generated all of Genie Energy’s revenue, direct cost of revenues, and gross profit.

In the second quarter, Genie Retail increased revenue to $52.2 million and $46.2 million in a year ago quarter with the growth primarily coming from sales of electricity. Electricity revenue climbed $49.4 million from $42.5 million, driven by increases on our electric meter served, consumption per meter, and revenue per kilowatt hour sold.

During the quarter, meter served averaged 18,000 more meters in the year ago quarter. These meters on average also consumed more electricity than in the year ago quarter. Average consumption per meter increased 5.2%.

The warmer summer this year and our focus on acquiring new meters in a relatively high per meter consumption territories drove the per meter consumption increase. In our key operating states, cooling degree days increased between 30% and 45% on average compared to the third quarter a year ago.

Revenue per kilowatt hour sold increased by 2.3% compared to the third quarter a year ago. Sales of natural gas generated $2.3 million in revenue compared to $2.8 million in the year ago quarter. Average revenue per therm sold decreased 10.1%.

Consumption per gas meter declined 8.7%, and we supplied gas of approximately 2,000 fewer meters than in the year ago quarter. Gross margin increased to 41.8% from 38.6%, driven by strong margins on the electricity side of the business.

We benefited from increased sales per kilowatt hour sold, which increased by 2.3% compared to year ago quarter and a decline in the underlying commodity cost by approximately 6%.

As we have noted previously, due to the way utilities and other competitors price their offerings, we generally are able to capture stronger margins in falling commodity price markets. The margin on gas sales were not particularly impactful this quarter, declined slightly as we adapted to a more difficult competitive environment.

Consolidated SG&A expense fell to $15.9 million from $18.9 million in the third quarter of 2014, including non-cash compensation of $1.2 million and $4.9 million, respectively.

SG&A expense at Genie Retail climbed to $13.3 million from $12.2 million, primarily as a result of increased gross meter acquisitions, higher personnel expense, and utility charges. Corporate G&A decreased to $2.1 million from $6.4 million in the year ago quarter, primarily the result of decrease in non-cash compensation.

You might recall then in the third quarter of last year, we booked the non-cash compensation related to a new arrangement with our Chairman and CEO, Howard Jonas.

Research and development expense, which has been driven primarily by GOGAS’s oil shale exploration, operations in Mongolia, and in Israel’s Shfela Basin decreased to $400,000 or $1.5 million a year ago, reflecting our decision to focus on opportunities in Northern Israel in the Retail Energy side of the business.

At this time, the Shfela project is on hold and operations in Mongolia have been scaled back significantly. Exploration expense incurred entirely by Afek the $1.5 million virtually the same as a year ago quarter. Pursuant to the successful efforts accounting method, we used to account for oil and gas activities that we previously adopted.

The capitalized exploration expense is $6.8 million compared to zero in the year ago quarter, and $6.7 million in the second quarter of this year. On a consolidated basis, adjusted EBITDA was $5.2 million compared to $900,000 in the year ago quarter on the strength of Genie Retail’s increased contribution and the reduction in R&D expense at GOGAS.

Genie Retail contributed $8.7 million in adjusted EBITDA compared to $5.8 million in the year ago quarter. The higher level of electricity consumption and increased gross margin more than compensated for the increase in meter acquisition costs. GOGAS had negative adjusted EBITDA of $700,000 compared to negative adjusted EBITDA of $1.6 million.

At Afek, the negative adjusted EBITDA was $1.8 million compared to $1.6 million in the year ago quarter.

Adjusting for non-controlling interest, net income attributable to Genie common stockholders after preferred stock dividends for the third quarter is $2.5 million, or $0.10 per diluted share compared to a net loss of $4.8 million, or a loss of $0.22 per diluted share in the year ago quarter.

Even with our step up level investment in Afek, our balance sheet remain strong. At September 30, we had over $69 million in cash, cash equivalents, restricted cash, and certificates of deposit. Our working capital totaled $88.6 million and we continue to have no long-term debt. That concludes my remarks for the third quarter financial results.

As always, we’re happy to take any questions about the business that you may have. I’ll now turn the call back to the operator for Q&A.

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] And the first question comes from Aaron Shafter with Great Mountain Capital Management..

Hi. Good morning and congratulations on your successful quarter. My question – you answered most of my questions on the Afek. My one question remaining is, previously and your project in Shfela Basin, you said that you had planned on selling off the find [ph] if you were able to develop it successfully.

Do you have the same plans for the find in the Golan, and how would you do it? Would it be an IPO of Royalty Trust or something else?.

Thanks – Thank you very much for the question. So there are a lot of strategic conversations going on. Some of them involved looking for direct capital, some of them involved looking for partners that will be able to provide both operational and capital support.

And also we’ve obviously considered pretty much all of the different capital markets type opportunities for the project.

I would say that at this point those are things that we’re looking at probably a little bit further down the line, as we have the success and the information that we’re looking to get from the well test program and the additional drillings, which we think will enhance those conversations..

Okay. That’s all..

Thank you. [Operator Instructions] There are no more questions at this time. I would like to turn the call back over to management for any closing comments..

Thank you all for joining us and we look forward to speaking to you after the end of the fourth quarter..

Thank you. This concludes our question-and-answer session and conference call. Thank you for attending today’s presentation. You may now disconnect..