Good morning and welcome to Genie Energy’s, second quarter 2013 earnings conference call. All participants will be in listen-only mode. (Operator Instructions). Genie Energy assumes no obligation either to update any forward-looking statements that have been made or they may make or to update the factors that may cause some actual results to differ materially from those that are already forecasted. Please note that the 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 that this event is being recorded. I would now turn the conference over to Claude Pupkin, Genie Energy’s Chief Executive Office and the Genie Energy management team. Please go ahead, Mr. Pupkin. Genie Energy assumes no obligation either to update any forward-looking statements that have been made or they may make or to update the factors that may cause some actual results to differ materially from those that are already forecasted. Please note that the 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 that this event is being recorded. I would now turn the conference over to Claude Pupkin, Genie Energy’s Chief Executive Office and the Genie Energy management team. Please go ahead, Mr. Pupkin.

Thank you operator. I would like to welcome investors to the Genie Energy earnings call for the second quarter of 2013. As you know, the retail energy side of our business is highly seasonal and the second quarter is typically characterized by sales in electricity and natural gas, at levels well below the peak summer cooling months and winter heating months respectively. While this quarter was no exception with the usual sequential decrease in gas consumption, our gross margin EBITDA and bottom line results were disappointing, following below last year’s second quarter levels and below our internal expectations. The shortfall reflects the confluence of factors that Geoff and Avi will address in their remarks. On a more positive note, our second quarter top line results benefited from IDT Energy’s consistent year-over-year growth in Electric RCEs, again demonstrating that this is a business with attractive growth prospects. As deregulation opens up additional retail energy markets in various states in a fashion that fits our business model, we’re well positioned to enter new markets and compete for new customers and market share. At Genie Oil and Gas this was a workhorse quarter rather than a show horse quarter. We made steady progress in all fronts, but without passing many significant milestones. Let me provide you with an update on each of the projects. At AMSO, our Oil Shale project in Western Colorado, you may recall from our last quarterly call that the pilot test we started to operate in March was suspended when the down-hole electric heater failed before the project could attain steady state operations. For a variety of reasons, the electrical heating system was never intended to be used beyond the pilot test phase of the project. So we stepped back and took a hard look at electric heaters in…

Thank you Claude. As Claude mentioned, IDT Energy’s financial performance for the second quarter fell short of expectations in certain metrics and I will get into the causes of that later. Nevertheless in the second quarter, IDT Energy continues to benefit from the consistent growth in consumption by our customer base in recent quarters. Our electric residential customer equivalence or RCE, which reflect the trailing 12-month consumption history of our meter base was 263,000 at June 30 of this year, a significant increase from 204,000 a year earlier and 243,000 on March 31 of this year. Gas RCEs increased slightly to 94,000 from 88,000 a year ago and 86,000 at March 31. The increase in electric RCEs is significant. RCEs are more indicative of the true signs of our customer base, since unlike meter count alone, it captures the migration of our customer base to the relatively higher consumption electric meters we have been acquiring in Pennsylvania and Maryland, compared to our traditional and lower consumption customer base in New York, and therefore more accurately reflects the likely trends in future consumption than meter counts alone. The electric meter served essentially flat year-over-year, increasing to 314,000 at June 30, 2013 from 313,000 a year earlier and decreasing from 319,000 at the close of the previous quarter. Gas meter served reached to 161,000 on June 30 from 182,000 a year earlier and from 166,000 from the prior quarter. This is predominantly due to our focus on acquiring customers in new markets and the fact that until now the Pennsylvania, Maryland market presented, are primarily electric meter customers. When combining the churn in the customer base, this resulted in some erosion of our gas meters account. In total IDC Energy served 475,000 meters as of June 30 compared to 485,000 at March…

Thank you Geoff and thanks to everyone on the call for joining us this morning. My remarks will cover our financial results for the second quarter of 2013, the three months ended June 30. All comparisons in my remarks are to the results for the year ago period, the three months ended June 30, 2012. As in prior quarters, Genie Energy’s revenue, direct costs and gross profit was generated entirely by IDT Energy. So I will begin where Geoff left off and address IDT Energy’s financial performance. IDT Energy’s revenues for the second quarter increased 28.7% year-over-year to $55.1 million from $42.8 million in the second quarter of 2012. Electricity revenues increased 27.4% to $45.1 million from $35.4 million, reflecting both the 20.2% increase in kilowatt hours sold and a 6% increase in revenue per kilowatt-hour sold. Gas revenues increased 35.3% to $10.1 million from $7.4 million and accounted for 18% of total revenues. The recent growth in our customers has been predominantly in territories where we only sell electricity and not natural gas, significantly reducing he relative contribution of gas sales to IDP energy’s total revenues. Many of the territories where we have application spending are dual-meter or gas only; therefore that picture can begin to change as we further expand our geographic footprint. Therms sold decreased 2.6% year-over-year as our gas meter count declined, but revenue per therm sold increased to 38.9%, driven by continued increases and the price of natural gas in the commodity markets. Gross profit was $10 million in the second quarter compared to $11.6 million and gross margin was 18.1% compared to 27.2%. The gross profit from electricity was $6.7 million, a decrease from $9.5 million in the second quarter of fiscal 2012. The increase in total kilowatt hours sold was more than offset…

Thank you. (Operator Instructions). Our first question comes from Marco Rodriguez with Stonegate Securities. Marco Rodriguez – Stonegate Securities: Good morning guys. Thank you for taking questions. In your prepared remarks I was wondering if you could talk a little bit more about the IDT Energy and electricity, cost of electricity. You guys talked about the significant cost increase in electricity. I believe this is the second quarter in a row where you’ve mentioned this factor. Yes, the way I understood the business model being kind of a variable rate pricing plan, you were able to kind of minimize your commodity exposure. Is this no longer the case here?

Hi, this is Geoff. Thank you for your question. It certainly is the case. Our business model has been built and continues to grow based on a low risk low exposure type of scenario. We are buying in the stock market and we sell predominantly variable rates to our customers. That allows us, that should we choose to recoup immediately, any increase in cost that we may incur in the stock markets and pass it on to our customers. For us however, what we’ll do and there’s a process in place that prior to actually responding immediately to price increases. What we need to do is we need to take a look at several additional factors and then decide how, when and if to pass on those cost increases immediately. And those factors include our churn rate, those factors include where the competition is, where the other rates in the markets are. So in general, no – in general and specifically also, the model continues to work the way that it was built. The one hiccup that we had in this quarter and I relate to it as such, because it has since been fixed and we do not expect to see it in the future. The problem was that in some of the newer markets, specifically in PJM, there was a systems error, there was a systems process issue that did not allow all of our, some of our price changes rather, to take effect immediately; that’s been fixed. So we see the model continuing to work the way that it needs to. Marco Rodriguez – Stonegate Securities: So can you kind of help us understand; I mean what’s the degradation in the margin here because of the increasing price in commodities, electricity here. You also mentioned competition, trying to keep yourself competitive with local utilities. So how much of the degradation here is from competition and how much was from this software issue.

Avi, do you want to address that?

Sure, so we are not specifically breaking out between the various issues, but I think the way to approach it is similar to what Geoff descried before, which is that it’s not necessarily an across the board margin degradation issue. I think it’s a combination of factors like we discussed, which is that as we moved into newer markets and newer utilities, we are seeing that each one is unique and it relates to the specific margins we are able to see there, just specifically as the mix has shifted into Pennsylvania. So that’s one factor and we talked about that over the course of the number of quarters. And we’ve also been fairly upfront in terms of how in different types of commodity price environments, our ability to earn margin shifts around a little bit. And this was a particularly difficult commodity price environment for us, where with rising pricing and the utility able to offer prices, either blow our cost of places in certain scenarios given their hedging programs that work against them in different commodity price environments, but in this particular one make it a little bit more difficult for us, and then in addition those factors were exacerbated by the systems issue that you have preferred to, that didn’t allow us to be as precise as we usually are in terms of pricing in certain of these markets. So we are not providing a specific breakdown, but this quarter, its fairly consistent with what we expected to see in this kind of environment, absent the one-time nature of that systems issue. Marco Rodriguez – Stonegate Securities: Okay. Then in terms of EBITDA guidance for the year for IDT, you’re maintaining the $25 million for the fill fiscal year, can you talk a little bit about how you are thinking about how you are going to get there, given just the first half performance.

So, this is Geoff again. I’ll start with this and Terry, please feel free to add any additional information. This is our retail energy business. It’s a very seasonable business and I think Avi had mentioned this in the beginning of his remarks, where we noticed that this quarter happens to be during the course of the year. It does happen to be the weakest quarter in terms of EBITDA and net income generation. So based on how the first half of the year started out and with an assumption I believe that the rest of the calendar year will see an average, whether average consumption type of rest of the year compared to previous years, we do believe that given that type of environment, that with the group of the expansion and growth of our CE in some of the other markets, we saw this quarter, a very large increase in our CEs or otherwise of the group of the consumption, the average consumption for meter. So even with the possibility of some of the lower margin for units that we’ve seen previously, the throughput should help us – the higher throughput with the addition CE should be able to get us there.

The only think I would add to that is that despite the things we discussed for this quarter and it was a particularly challenging one, the EBITDA relative to last year at this time, but for the same quarter, a year in which we were able to come in at the guidance level, we were only by $0.5 million behind. So fortunately this took place as Geoff mentioned, in the quarter where typically we’re not doing as much EBITDA relative to the course of year. So we are still fairly confident that we’ll be able to deliver on the guidance we’ve been discussing. Marco Rodriguez – Stonegate Securities: And so if I heard you correctly. So the factor that’s really going to drive the second half or is your continuing training on the RCEs. The fact that you’re moving into more singe family homes where you have a higher footprint, higher consumption, is that correct?

I think that certainly for right now, that is correct, that’s accurate. There is several different balls that we’re juggling at the same time that are for us, the key underlying assumptions for the business. And the markets are volatile based on different times during the year. Different underlying criteria impact the model differently. So yes, I would certainly say that what has helped us is the fact that we have seen some very significant growth in the RCEs over the last three quarters. Our hope is that we are still sided by holdups with getting licensing approved to new territories. That would certainly, with some movement, with some of those utilities, that would also in terms of not only RCE growth, but if we can start to market in some of these territories and start to see some good meter growth as well, that would be helpful as well. Without trying to overcomplicate this any more, obviously what type of weather we’ll see for the rest of this month, as the final month of summer, and then more importantly looking at what type of weather and what type of commodity pricing the commodity market will see for the winter will have a major impact on the model, both B2B, to positive side and to the negative side. If you look at the market today, it’s quite interesting what’s happening with the price of the stock market financial gas and what that’s doing and driving electricity as well. But yes, I think it’s a combination of the RCEs; it’s a combination of getting normal, seasonable weather, consistent weather and I mean these are all important contributors. Marco Rodriguez – Stonegate Securities: Got it, okay. And then in terms of GOGAS, can you talk a little about your expectations of operational expense trends for the remainder of the year and can you also please discuss your expectations of CapEx spend for that.

Sure. So as it relates to the remainder of the year, what we are expecting to see is that for AMSO, IEI and Genie Mongolia for things to remain relatively in line with where we right now, with the single entity where those cost arrive, being within our fact depending on the rate of our ability to permit the exploration program we are looking to do. So fundamentally we are looking, we’re thinking things are going to stay relatively flat from most of GOGAS with some increase in Afek. As we look out on a more long term basis, obviously it’s going to depend on the rate of success in the projects. As we have discussed, its really specifically to the activity of IEI, we expect to be within this, still look in this permitting cycle for quite some time, still into the 2014 timeframe. Mongolia is going to depend on the rate of success we have in executing on our exploration program within the joint geological survey and Afek is the area where we expect and we are hopefully that we’ll be able to significantly increase the spending rate, assuming that the wells are permitted and that we are able to execute on that kind of a program. Marco Rodriguez – Stonegate Securities: Okay, that’s helpful. And just coming back here again to IDT Energy, can you just discuses a little bit about what’s going with the licensing and lack of approval for new territories.

Yes, I mean – unfortunately there is not a lot of information to give. Meaning, we have currently – if we look at the landscape of what’s in Q right now, lets look at various states and jurisdictions. So Washington DC is probably the closest new market for us. Its actually fairly well deregulated right now. The only additional item that we’ve been waiting for – we did receive the state license, we are in Q4, both the individual utility license for the gas and electric, but probably the biggest factor there is that approximately a year, a little less than that, they finally approved the purchase of receivables, the POR program. That program only takes effect on October 1 and therefore even if, and we hope to receive the final individual utility licenses prior to them, and assuming that we do, we’ll still wait to October 1 to actually start to active market there, because we don’t want that, the receivable risk. If we look at a series of license that we’ve been waiting for at least two years, we can point through the gas licenses, the predominant gas licenses within the state of Pennsylvania. If you recall about two years ago, a little bit more than two years ago, when we first received our electric licenses in Pennsylvania that was a major driver of growth, not only in terms of absolute meters, but also in terms of the RCEs, which we continue to enjoy right now. We are not exactly sure for all the reasons for the delay, but we are hearing that we did hire an outside council with regulatory focus. We are starting to hear some positive whispers and we hope there is no guaranty, but we hope that the frame time that we can expect to receive the licenses should be late fall early winter, if things continue to go along. So it’s really as stated before, each state, each utility has their own, everyone has their own specific issues. Marco Rodriguez – Stonegate Securities: Got it. And according to your guidance, $25 million guidance for IDT Energy, is that assuming that DC and the net gas for Pennsylvania go as plan in terms of your expectations to enter those markets in the second half of this year.

No, the answer is not really. However even if – what I don’t want to create an expectation is that if we do get the licenses complete and we start to market it within territories, that’s really any new territory that we enter and we see this to a very large degree and comment as an example in Illinois. What we have to do is, we have to be very careful about any new market that we open up. As Washington DC geographically is a very different market, it works on a different ISO than our core territories. So even when we do become licensed and we start to market, what we do is we spend several months extensive testing in terms of our proven acquisition channels, in terms of the various products that we sell, and we try to find the right mix, understand the underlying consumption that we know so well in our markets today and see how they compare in these markets and then make a proper adjustments for the program. And only after I would say at lease a quarter or so of real testing, if we start to find some real stickiness for customers with payback models that make sense, that’s almost start to aggressively market. So right now the answer is no, it does not. Marco Rodriguez – Stonegate Securities: Got it. Thank you guys very much. I’ll jump back in queue.

Okay.

(Operator Instructions). All right, as there are no more questions at the present time, this closes our question-and-answer session and conference call. Thank you for attending today’s presentation. You may now disconnect.