Evolution Petroleum Reports First Quarter Fiscal 2022 Results and Declares Quarterly Cash Dividend for Second Quarter
Evolution Petroleum reported a net income of $5.2 million for Q1 FY2022, a 135% increase from the prior quarter. The company produced 5,843 BOEPD, up 33% quarter-over-quarter, and increased Adjusted EBITDA by over 80% to $8.5 million. Revenue rose 38% to $18.9 million, driven by higher production from the Barnett Shale assets. A quarterly dividend of $0.075 was declared, a 50% increase from the previous quarter. Cash balance increased to $8.0 million, with a strong balance sheet and no net debt.
- Net income rose to $5.2 million, up 135% from the previous quarter.
- Adjusted EBITDA increased by over 80% to $8.5 million.
- Total revenue increased by 38% to $18.9 million.
- Produced 5,843 BOEPD, a 33% increase from the prior quarter.
- Declared a quarterly dividend of $0.075, a 50% increase.
- Lease operating costs increased to $8.6 million from $7.6 million due to rising volumes.
- Oil production was adversely affected by CO2 purchase suspensions during the previous year.
-Net Income of
HOUSTON, TX / ACCESSWIRE / November 9, 2021 / Evolution Petroleum (NYSE American:EPM) ("Evolution" or the "Company") today announced financial and operating highlights for its fiscal 2022 first quarter ended September 30, 2021. Evolution also declared a quarterly dividend for the second quarter of fiscal 2022 payable December 31, 2021.
Key Q1 Fiscal 2022 and Recent Highlights
- Produced 5,843 net barrels of oil equivalent per day ("BOEPD") during the current quarter, up
33% from the quarter ended June 30, 2021 (the "prior quarter"); - Generated net income of
$5.2 million ($0.16 per diluted share) in the current quarter, more than double net income of$2.2 million ($0.07 per diluted share) in the prior quarter; - Increased Adjusted EBITDA(1) more than
80% to$8.5 million from$4.7 million in the prior quarter; - Continued to fund all operations, development capital expenditures, and cash dividends out of operating cash flow;
- Grew cash balance to
$8.0 million and maintained strong balance sheet with no net debt(2) as of September 30, 2021; - Paid 32nd consecutive quarterly cash dividend on common shares of
$0.07 5, an increase of50% over the prior quarter; - Declared the next dividend payment of
$0.07 5 per share, payable on December 31, 2021; and - Amended the Company's Senior Secured Credit Facility (the "Credit Facility) effective November 9, 2021 to increase the borrowing base on the Credit Facility by
$20 million to a total borrowing base of$50 million with an elected commitment amount of$40 million .
(1) Adjusted EBITDA is Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization and is a non-GAAP financial measure; see "Non-GAAP Information" section later in this release for more information including reconciliations to the most comparable GAAP measures.
(2) Net debt represents the Company's outstanding debt of
Jason Brown, President and Chief Executive Officer, commented, "We are pleased to report another quarter of solid performance and cash generation that continues to support our operations, capital investment, and cash dividend strategies that are designed to directly benefit our shareholders. Contributing to our first quarter fiscal 2022 results were higher production volumes and an increase in commodity prices from which we fully benefitted as we remained unhedged. Higher production volumes are primarily tied to receiving our first full quarter of production from our Barnett Shale assets. We continue to be pleased with our newest asset and remain encouraged by commodity prices. The higher commodity price environment also led to increased field activity among our operators, which allowed performance of economically attractive workover projects. Our financial success during the first quarter provides further support of our long-term strategic objectives centered around free cash flow generation and providing a meaningful cash return to our shareholders. Our operational and financial success, coupled with our disciplined and conservative business strategy, have allowed us to provide consistent quarterly cash dividends for the past eight years. We continue to evaluate additional opportunities to add attractive assets that would support this strategy."
Mr. Brown concluded, "We believe providing our shareholders with a meaningful and sustainable ongoing cash return on their investment in Evolution is critical to the long-term success of our business. In further support of our commitment to continuing sustainable business practices, last week we publicly released our comprehensive inaugural Corporate Sustainability Report. We view our Environmental, Social, and Governance, or ESG, programs and initiatives as a key part of our strategy and another opportunity to further differentiate Evolution in the marketplace. We believe our focus on ESG best practices will prove beneficial, now and in the future, as we use them to inform our evaluations of accretive opportunities to further grow our strong asset base and reserves."
Financial and Operational Results for the Quarter Ended September 30, 2021
Evolution reported total revenue for the first quarter of fiscal 2022 of
Total production for the first quarter fiscal 2022 was 5,843 BOEPD, an increase of
Lease operating costs increased to
Depletion, depreciation, and amortization ("DD&A") expense increased
The Company's general and administrative ("G&A") expenses were
Net income for the current quarter was
Adjusted EBITDA increased
Operations Update
Net production at Delhi in the current quarter was 118,228 BOE, a
The average oil price per barrel realized by Evolution at the Delhi field during the first quarter of fiscal 2022 was
Hamilton Dome production volumes increased
The average oil price per barrel realized by Evolution at Hamilton Dome during the current quarter was
Net production of the Barnett Shale assets was 382,115 BOE for the current quarter versus 240,009 BOE in the previous quarter, an increase of
Balance Sheet, Capital Spending and Liquidity
At September 30, 2021, cash and cash equivalents totaled
For the three months ended September 30, 2021, Evolution paid
As of September 30, 2021, working capital was
On November 9, 2021, Evolution entered into the Eighth Amendment to its Credit Facility (the "Amendment"). The Amendment, in lieu of the fall re-determination, increased the Company's borrowing base to
Cash Dividend on Common Stock
The Board of Directors declared a cash dividend of
Conference Call
As previously announced, Evolution Petroleum will host a conference call on Wednesday, November 10, 2021 at 2:00 p.m. Eastern (1:00 p.m. Central) to discuss results. To access the call, please dial 1-888-506-0062 (Toll-free United States and Canada) or 1-973-528-0011 (Toll International). The access code for the call is 750105. To listen live via webcast over the internet, go to http://www.webcaster4.com/Webcast/Page/2188/43337 or visit www.evolutionpetroleum.com for a link to the webcast. A webcast replay will be available on Evolution's website following the call. An audio replay will also be available two hours after the end of the conference call through December 10, 2021, and will be accessible by calling 1-877-481-4010 (United States & Canada); 919-882-2331 (International) with the replay pin number of 43337.
About Evolution Petroleum
Evolution Petroleum Corporation is an oil and natural gas company focused on delivering a sustainable dividend yield to its shareholders through the ownership, management, and development of producing oil and natural gas properties onshore in the United States. The Company's long-term goal is to build a diversified portfolio of oil and natural gas assets primarily through acquisition, while seeking opportunities to maintain and increase production through selective development, production enhancement, and other exploitation efforts on its properties. Our largest assets are our interest in a CO2 enhanced oil recovery project in Louisiana's Delhi field, our interest in a secondary recovery project in Wyoming's Hamilton Dome field, and our recently acquired interests in Texas' Barnett Shale. Additional information, including the Company's annual report on Form 10-K and its quarterly reports on Form 10-Q, is available on its website at www.EvolutionPetroleum.com.
Cautionary Statement
All forward-looking statements contained in this press release regarding current expectations, potential results and future plans and objectives of the Company involve a wide range of risks and uncertainties. Statements herein using words such as "believe," "expect," "plans," "outlook," "should," "will," and words of similar meaning are forward-looking statements. Although our expectations are based on business, engineering, geological, financial, and operating assumptions that we believe to be reasonable, many factors could cause actual results to differ materially from our expectations and we can give no assurance that our goals will be achieved. These factors and others are detailed under the heading "Risk Factors" and elsewhere in our periodic documents filed with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.
Company Contacts
Jason Brown, President & CEO
Ryan Stash, SVP & CFO
(713) 935-0122
JBrown@evolutionpetroleum.com
RStash@evolutionpetroleum.com
Evolution Petroleum Corporation and Subsidiaries
Consolidated Condensed Statements of Operations
(Unaudited)
| Three Months Ended | ||||||||||||
| September 30, | June 30, | |||||||||||
| 2021 | 2020 | 2021 | ||||||||||
Revenues | ||||||||||||
Oil | $ | 8,858,463 | $ | 5,379,161 | $ | 8,492,223 | ||||||
Natural gas liquids | 4,562,218 | 216,026 | 2,582,610 | |||||||||
Natural gas | 5,458,329 | 189 | 2,628,245 | |||||||||
Total revenues | 18,879,010 | 5,595,376 | 13,703,078 | |||||||||
Operating costs | ||||||||||||
Lease operating costs | 8,625,167 | 2,397,924 | 7,577,204 | |||||||||
Depreciation, depletion, and amortization | 1,527,812 | 1,410,888 | 1,326,603 | |||||||||
Impairment of proved property | - | 9,602,620 | - | |||||||||
Net loss on derivative contracts | - | 334,966 | - | |||||||||
General and administrative expenses* | 1,939,909 | 1,278,698 | 1,798,521 | |||||||||
Total operating costs | 12,092,888 | 15,025,096 | 10,702,328 | |||||||||
Income (loss) from operations | 6,786,122 | (9,429,720 | ) | 3,000,750 | ||||||||
Other | ||||||||||||
Interest and other income | 2,477 | 14,426 | 4,535 | |||||||||
Interest expense | (50,612 | ) | (22,032 | ) | (42,625 | ) | ||||||
Income (loss) before income tax provision | 6,737,987 | (9,437,326 | ) | 2,962,660 | ||||||||
Income tax expense (benefit) | 1,519,586 | (2,302,178 | ) | 746,440 | ||||||||
Net income (loss) attributable to common shareholders | $ | 5,218,401 | $ | (7,135,148 | ) | $ | 2,216,220 | |||||
Earnings (loss) per common share | ||||||||||||
Basic | $ | 0.16 | $ | (0.22 | ) | $ | 0.07 | |||||
Diluted | $ | 0.16 | $ | (0.22 | ) | $ | 0.07 | |||||
Weighted average number of common shares outstanding | ||||||||||||
Basic | 33,533,990 | 32,955,656 | 33,510,337 | |||||||||
Diluted | 33,533,990 | 32,955,656 | 33,510,337 | |||||||||
* For the three months ended September 30, 2021 and 2020, and June 30, 2021, non-cash stock-based compensation expenses were
Evolution Petroleum Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(Unaudited)
| September 30, 2021 | June 30, 2021 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 7,954,878 | $ | 5,276,510 | |||||
Receivables from oil and gas sales | 16,304,234 | $ | 8,686,967 | |||||
Receivables for federal and state income tax refunds | 3,107,638 | 3,107,638 | ||||||
Prepaid expenses and other current assets | 928,593 | 1,037,259 | ||||||
Total current assets | 28,295,343 | 18,108,374 | ||||||
Property and equipment, net of depreciation, depletion, and amortization | ||||||||
Oil and natural gas properties-full-cost method of accounting, of which none were excluded from amortization | 57,369,403 | 58,515,860 | ||||||
Other property and equipment, net | 9,555 | 10,639 | ||||||
Total property and equipment, net | 57,378,958 | 58,526,499 | ||||||
Other assets, net | 58,742 | 70,789 | ||||||
Total assets | $ | 85,733,043 | $ | 76,705,662 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 10,404,928 | $ | 5,609,367 | ||||
Accrued liabilities and other | 654,270 | 947,045 | ||||||
State and federal taxes payable | 1,676,460 | 37,748 | ||||||
Total current liabilities | 12,735,658 | 6,594,160 | ||||||
Long term liabilities | ||||||||
Senior secured credit facility | 4,000,000 | 4,000,000 | ||||||
Deferred income taxes | 5,838,077 | 5,957,202 | ||||||
Asset retirement obligations | 5,661,868 | 5,538,752 | ||||||
Operating lease liability | 10,417 | 20,745 | ||||||
Total liabilities | 28,246,020 | 22,110,859 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Common stock; par value | 33,632 | 33,515 | ||||||
Additional paid-in capital | 42,737,334 | 42,541,224 | ||||||
Retained earnings | 14,716,057 | 12,020,064 | ||||||
Total stockholders' equity | 57,487,023 | 54,594,803 | ||||||
Total liabilities and stockholders' equity | $ | 85,733,043 | $ | 76,705,662 | ||||
Evolution Petroleum Corporation and Subsidiaries
Non-GAAP Reconciliation - Adjusted EBITDA
(Unaudited)
Adjusted EBITDA is a non‑GAAP financial measure that is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks, and others, to assess our operating performance as compared to that of other companies in our industry, without regard to financing methods, capital structure, or historical costs basis. It is also used to assess our ability to incur and service debt and fund capital expenditures. Our Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner.
The Company defines Adjusted EBITDA as net income (loss) plus interest expense, income tax expense (benefit), depreciation, depletion and amortization (DD&A), stock-based compensation, other amortization and accretion, ceiling test impairment and other impairments, unrealized loss (gain) on change in fair value of derivatives, and other non-cash expense (income) items.
| Three Months Ended | ||||||||||||
| September 30, | September 30, | June 30, | ||||||||||
| 2021 | 2020 | 2021 | ||||||||||
Net income (loss) | 5,218,401 | (7,135,148 | ) | 2,216,220 | ||||||||
Adjusted by: | ||||||||||||
Interest expense | 50,612 | 18,243 | 42,625 | |||||||||
Income tax expense (benefit) | 1,519,586 | (2,302,178 | ) | 746,440 | ||||||||
DD&A | 1,527,812 | 1,410,888 | 1,326,603 | |||||||||
Stock-based compensation | 197,826 | 300,351 | 319,591 | |||||||||
Other amortization and accretion | - | (1,695 | ) | 10,868 | ||||||||
Impairments | - | 9,602,620 | - | |||||||||
Unrealized loss (gain) on derivatives | - | (816,610 | ) | - | ||||||||
Other non-cash income | - | (11,612 | ) | - | ||||||||
Adjusted EBITDA | $ | 8,514,237 | 1,064,859 | 4,662,347 | ||||||||
Evolution Petroleum Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Unaudited)
| Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) attributable to common stockholders | $ | 5,218,401 | $ | (7,135,148 | ) | $ | 2,216,220 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation, depletion, amortization and accretion | 1,527,812 | 1,410,888 | 1,326,603 | |||||||||
Impairment of proved property | - | 9,602,620 | - | |||||||||
Stock-based compensation | 197,826 | 300,351 | 319,591 | |||||||||
Deferred income taxes | (119,125 | ) | (2,160,340 | ) | 1,603,067 | |||||||
Net loss on derivative contracts | - | 334,966 | - | |||||||||
Payments paid for derivative settlements | - | (1,096,472 | ) | - | ||||||||
Other | (2,169 | ) | 3,816 | (1,021 | ) | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Receivables | (7,617,267 | ) | (57,175 | ) | 1,450,747 | |||||||
Prepaid expenses and other current assets | 108,666 | 83,150 | (6,635,110 | ) | ||||||||
Net operating loss carryback | - | (512,042 | ) | (545,573 | ) | |||||||
Accounts payable and accrued expenses | 4,639,889 | 250,421 | 3,151,721 | |||||||||
Income taxes payable | 1,638,712 | 122,206 | (712,802 | ) | ||||||||
Net cash provided by operating activities | 5,592,745 | 1,147,241 | 2,173,443 | |||||||||
Cash flows from investing activities | ||||||||||||
Acquisition of oil and natural gas properties | - | - | (18,297,013 | ) | ||||||||
Development of oil and natural gas properties | (390,370 | ) | (153,205 | ) | (288,711 | ) | ||||||
Acquisition deposit | - | - | 2,325,000 | |||||||||
Other assets | - | - | - | |||||||||
Net cash used in investing activities | (390,370 | ) | (153,205 | ) | (16,260,724 | ) | ||||||
Cash flows from financing activities | ||||||||||||
Common stock dividends paid | (2,522,408 | ) | (823,846 | ) | (1,675,748 | ) | ||||||
Common share repurchases, including shares surrendered for tax withholding | (1,599 | ) | (7,348 | ) | - | |||||||
Borrowings under credit facility | - | - | 7,000,000 | |||||||||
Repayments of credit facility | - | - | (3,000,000 | ) | ||||||||
Net cash used in financing activities | (2,524,007 | ) | (831,194 | ) | 2,324,253 | |||||||
Net increase (decrease) in cash and cash equivalents | 2,678,368 | 162,842 | (11,763,028 | ) | ||||||||
Cash and cash equivalents, beginning of period | 5,276,510 | 19,662,528 | 17,039,538 | |||||||||
Cash and cash equivalents, end of period | $ | 7,954,878 | $ | 19,825,370 | $ | 5,276,510 | ||||||
Supplemental Information on Oil and Natural Gas Operations (Unaudited)
| Three Months Ended | ||||||||||||
| September 30, 2021 | September 30, 2020 | June 30, 2021 | ||||||||||
Revenues | ||||||||||||
Oil | $ | 8,858,463 | $ | 5,379,161 | $ | 8,492,223 | ||||||
Natural gas liquids | 4,562,218 | 216,026 | 2,582,610 | |||||||||
Natural gas | 5,458,329 | 189 | 2,628,245 | |||||||||
Total revenues | $ | 18,879,010 | $ | 5,595,376 | $ | 13,703,078 | ||||||
Production volumes | ||||||||||||
Oil (Bbl) | 133,929 | 145,657 | 136,301 | |||||||||
Natural gas liquids (Bbl) | 157,593 | 23,724 | 101,535 | |||||||||
Natural gas (Mcf) | 1,476,219 | 130 | 963,221 | |||||||||
Equivalent (BOE) | 537,559 | 169,403 | 398,373 | |||||||||
Daily production volumes | ||||||||||||
Oil (BOPD, net) | 1,456 | 1,583 | 1,498 | |||||||||
Natural gas liquids (BOEPD, net) | 1,713 | 258 | 1,116 | |||||||||
Natural gas (BOEPD, net) | 2,674 | - | 1,764 | |||||||||
Equivalent volumes (BOEPD, net) | 5,843 | 1,841 | 4,378 | |||||||||
Realized prices | ||||||||||||
Oil price per Bbl | $ | 66.14 | $ | 36.93 | $ | 62.30 | ||||||
Natural gas liquids price per Bbl | 28.95 | 9.11 | 25.44 | |||||||||
Natural gas price per Mcf | 3.70 | 1.45 | 2.73 | |||||||||
Equivalent price per BOE | $ | 35.12 | $ | 33.03 | $ | 34.40 | ||||||
CO2 costs | $ | 917,049 | $ | - | $ | 1,455,780 | ||||||
Other lease operating costs | 7,708,118 | 2,397,924 | 6,121,424 | |||||||||
Total lease operating costs | $ | 8,625,167 | $ | 2,397,924 | $ | 7,577,204 | ||||||
CO2 costs per BOE | $ | 1.71 | $ | - | $ | 3.65 | ||||||
All other lease operating costs per BOE | 14.34 | 14.16 | 15.37 | |||||||||
Lease operating costs per BOE | $ | 16.05 | $ | 14.16 | $ | 19.02 | ||||||
CO2 volumes (Mcf, gross) | 4,522,020 | - | 7,468,100 | |||||||||
CO2 volumes (MMcf per day, gross) | 49.2 | - | 82.1 | |||||||||
DD&A of proved oil and natural gas properties | $ | 1,425,868 | $ | 1,362,085 | $ | 1,247,659 | ||||||
Depreciation of other property and equipment | 1,084 | 1,810 | 1,570 | |||||||||
Amortization of intangibles | - | 3,391 | - | |||||||||
Accretion of asset retirement obligations | 100,860 | 43,602 | 77,374 | |||||||||
Total DD&A | $ | 1,527,812 | $ | 1,410,888 | $ | 1,326,603 | ||||||
Oil and natural gas DD&A rate per BOE | $ | 2.65 | $ | 8.04 | $ | 3.13 | ||||||
SOURCE: Evolution Petroleum Corporation
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FAQ
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