Good day, ladies and gentlemen. And welcome to the Pure Cycle's Fourth Quarter 2017 Earnings Call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your hosts, President and CEO of Pure Cycle Corporation, Mark Harding. Sir, the floor is yours.

Thank you, thank you very much, and I’d like to extend a welcome good morning to you all, and welcome you to our fourth quarter and fiscal year end 2017 earnings presentation. For all of you who have not been able to get over to our website, the presentation that our deck is going to be on our website, on the new website that we have, you can see that on the homepage. If you can click on that, open up that presentation, I'll try and note the transition of the slides as I work through the presentation. So we will begin by our favorite slide, our Safe Harbor statement. Noting that presence that are not historical facts contained or incorporated by reference in this presentation are forward looking statements then the meaning with that from Private Securities Litigation Reform Act of 1995. So with that, what I'd like to do is just for a quick intro, for those of you who are new to the company, give you an overview of the company itself. We are a wholesale water and wastewater provider. We generate revenue through providing wholesale water and wastewater services to a number of different type of customers, extending the gamut from residential customers to retail customers, commercial customers and industrial customers. We supply a large amount of water to the oil and gas industry for frac water. We provide – we own land, where we own about 930 acres of master planned, fully-entitled property along the Interstate 70 corridor and I'll detail that a little bit more in my presentation. And then we also own some royalty revenues, some oil and gas royalty mineral interest, and we get royalty revenue from developed – wells that are developed into our royalty mineral estate. So the next slide,…

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And our first question comes from Bill Smith from William Smith and Co. Sir, please state your question.

Thank you, Mark, congratulations on all of your accomplishments there, they are very good.

Thanks, Bill.

Can you talk a little bit about some of the other builders surrounding Sky Ranch like Horton and Lowry, on your, I think it was Slide 4 or 5. How many homes they’re selling on a, on say, on a monthly basis or yearly basis, in terms of what the demand looks like in that same area?

That’s a great question. And so, to give you kind of some penetration, and there is that slide on Slide 5, that kind of illustrates some of the neighboring areas. I guess, I can give you the – a broad outline of Richmond, because they have given us, really some anecdotal numbers on that and they’ve been doing very well in that community. I think that they’ve been doing something close to 12 to 15 homes a month in that area. Some of that stuff is going to be seasonal. So they see a little bit more demand over maybe, some from April through October timeframe, but they are starting to run out of inventory of lots there, which I think is going to bode well for when we start to deliver lots, so that they can continue the penetration to what they’ve seen. They’re very accustomed to this particular submarket. So I think they’re excited that we have existing inventory in this area as well. There is some other activity that’s going to be occurring in the Sidonia part where I think we have another homebuilder that’s just broken ground in that area. They have, I’m not sure what the total number of lots that they have, but I think they have a couple of years’ worth of lots in that area. But this seems to be one of the fastest-growing submarkets in the Metropolitan area, and I think it has a lot to do with the lot availability, the price points. I think these lots are being delivered in the City of Aurora, which will be a little bit higher price point than ours, just because of some of the cost structure developing in the City of Aurora compared to our particular jurisdictions Arrapo County, so we’re excited about being able to do that type of activity, similar sized product and hopefully, be very competitive in terms of not only the delivery of lots but then home prices for the builders themselves.

Right. And so Richmond, are they the largest participant in this – of the three partners that you have for the first 500 homes?

Yes, yes. They have about close to 200 lots. And I think then Taylor Morrison and KB split fairly closely the balance of the remaining lots.

Great. And just to remind me again, what’s the price of the lots? And what do you think the price is going to be?

So on average, we can model this out at about $70,000 a lot. It varies depending on the size of a lot, the frontage of – the front footage of lot, some of the lots are 45 feet, some of the lots are 50 feet. So some are between $65,000 and $75,000, depending on the size of the individual lot.

Okay. And just one other thing. On the Aurora Reservoir, any update there on the discussions on the possible sale of your reservoir to Aurora?

No, do not. It’s a transaction where we’re looking for opportunities to monetize additional assets that we have on the Lowry Range. City has expressed some interest to do that, as have others. So we are working with a number of different groups that have expressed interest on that, and seeing what that might look like for opportunities for us, either just to sell it outright, sell it and participate, jointly develop it, or any number of combination of structures.

Right. And then, other acquisitions like Wild Pointe, what does the pipeline look like for other possible acquisitions?

So there are – we probably have three different groups that we’re talking to right now. There’s a subset, I think, oftentimes, I kind of reference there maybe as many as 80 to 90 different water providers in the Metropolitan area, and really, the 95% of them serve less than 5,000 connections. So these are all fractionated, small world or just a small water utilities that are either small municipally owned, small districts or even still continue to be owned by developers. And so those are kind of the targets that we’re looking for. We have some areas of influence where they’re more attractive to us than other areas, so we want to kind of concentrate on some of the acquisition surrounding systems to the Wilde Point system. And then some that are in the I-70 corridor as well, and see if there’s an opportunity for us to leverage our water resources and bring additional resources and operating expertise to these small districts. So can’t get too detailed about those, but to we are – we certainly do have our nets out for opportunities.

Okay. Thanks, Mark.

You got it.

Thank you. And our next question comes from Bill Cunningham [Private Investor]. Sir, please state your question.

Hi, Mark. Congratulations on getting the due diligence done. That’s great news.

Yes. Thanks, Bill.

I have two questions. One is, when do you actually expect to see physical work to start with home construction? And the second has to do with the accounting on this, will there be any revenue this quarter reported, now that you’ve got the due diligence done? Are there any deposits or anything along those lines will be happening? Or is that going to be further down the line?

I will – so let me take the second one first, in terms of due diligence, deposits and things like that. So yes, there are additional diligence deposits. So what happens is, the builders have put up certain funds at the close of signing the agreement. And then we had the diligence period, which just completed, and then they’re responsible for placing additional funds into escrow, so those two things have happened. So we have seen that those funds are now deposited. Then the next components are going to be once we deliver platted lots. And so it should be maybe another 60, 75 days before we complete the platted lot deliveries and really, the platted lot deliveries include a lot of the physical infrastructure. So before you can get a platted lot, you’ve got to have every road, every easement, every sidewalk, every fence, every park, all your lot lines defined. And so there’s a tremendous amount of engineering that goes into delivery of those final plats. And you can imagine, when you get 506 individual lots, together with all of the drainage parcels and the parks and the open space and the common areas, that’s a ton of information that our engineers have been compiling, and then the city has been reviewing and going back and forth on comments. And so, let’s take a look at that, maybe in that 70- to 90-day period where we’ll have finished lots on that basis. During this period of time, one of the things that we’ve also been doing is taking a look at the grading profile, the drainage profile, the improvements that need to be made and some of the earthwork. And so what we like to do in this particular market is, we do like to have a lot of that earthwork being done over the winter, when you have challenging weather conditions here in Colorado. So some of that work can still be done thought the winter. So we hope after we’ve gotten a couple more comments back, were processed through the county with our improvements and the grading plan and our drainage plan, that we can then be cleared to get a grading permit. And so if that’s the case, then we hope that we can be breaking ground on this sometime in the January or February time frame, and then be working that – those lots in making the initial 200-lot pad spaces available for us to be rolling into the better weather seasons here in Colorado, into the spring and summer, so we can start to work on delivering finished lots to the homebuilders.

Okay. And as far as collecting deposits, does any of that count as revenue or will strictly go on the books as a deposit for future services?

Yes, it will only – actually, we would only book that at such time as that money is released to us or one of the milestone deliveries.

Okay. And actually, one more question for you. I noticed on the commercial property, there’s one parcel where you have labeled Home Depot. Is that just an example, or do you actually have something with Home Depot for that?

Yes, that’s clearly to be illustrative as to the type of box to our realtor – box store operator, the real – retail operator. Didn’t quite get that out.

Okay. Okay, very good. Thanks very much.

You bet. Operator [Operator Instructions] And there appear to be no further questions at this time.

Okay. So again, do want to thank you all for your continued confidence in what it is that we’re doing. Certainly, this has been a very exciting year for us, and so we look forward not only to adding to that from our successes at Sky Ranch, and then our continued opportunities for providing water for our oil and gas partners in this. Couple of announcements. I do have a couple of conferences that we’ll be presenting at. I’m actually headed to Dallas this afternoon, presenting at the IDEAS conference down in Dallas tomorrow, and then we’ll be at the LD Micro Conference on December 5, in Los Angeles. So those are a couple of conferences. I know typically, we have a water conference in New York City this time of year, and the NYSSA has booked 20 consecutive years of its water conference, and I think they quit while they were ahead on the 20th anniversary last year. So I’m thrilled to have the opportunity to do to LD Micro Conference this year because it always competed with that water conference in New York. So for those of you that find yourselves in L.A. or in Dallas, please stop by and I’d love to say hello, and see if we can’t give you a little bit more detail and answer any questions you might have about how we’re progressing and the opportunities we have before us. So with that, I will bid you all farewell, and thank you very much for your continued support.

Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.