Evolution Petroleum Corporation Announces Acquisition of Non-Operated Oil and Natural Gas Assets for $9.0 Million

Evolution Petroleum announces acquisition of oil and gas assets for $9 million, enhancing production and cash flow stability.

Quiver AI Summary

Evolution Petroleum Corporation has announced its acquisition of non-operated oil and natural gas assets in New Mexico, Texas, and Louisiana for $9.0 million, which is expected to enhance its production capacity by approximately 440 net barrels of oil equivalent per day (BOEPD). This acquisition, set to close by the end of the third quarter of fiscal 2025, aligns with Evolution’s strategy to strengthen its production base with stable, low-decline production and a balanced commodity mix of 60% oil and 40% natural gas. The company anticipates the transaction will be immediately accretive, with an estimated Adjusted EBITDA multiple of ~2.8x for the next twelve months, thus supporting its long-term goal of sustaining dividends and increasing shareholder returns. Managing the acquired assets will be a top-tier private operator, which is expected to enhance operational efficiency and add incremental production growth through low-risk development opportunities.

Potential Positives

• Adds approximately 440 net barrels of oil equivalent per day (BOEPD) of stable, low-decline production, enhancing overall production capacity.
• Transaction is immediately accretive with an estimated Adjusted EBITDA of ~2.8x for the next 12 months, reinforcing financial performance.
• Purchase price of $9.0 million is significantly lower than the estimated $15 million of Proved Developed PV-10, indicating a strong valuation advantage.
• Strengthens long-term dividend sustainability and enhances ability to generate stable free cash flow, supporting shareholder returns.

Potential Negatives

• The company’s reliance on non-GAAP measures like Adjusted EBITDA and PV-10 may raise concerns among investors regarding the transparency and comparability of its financial performance, potentially leading to skepticism about its financial health.
• Financing the acquisition through a combination of cash on hand and borrowings under an existing credit facility may suggest liquidity concerns or increased debt obligations, which could impact the company’s financial stability in the long run.
• The cautionary statement indicating various risks and uncertainties, along with the lack of assurance that goals will be achieved, may create apprehension among investors regarding the future performance of the acquired assets and overall company strategy.

FAQ

What are the strategic benefits of the acquisition by Evolution Petroleum?

The acquisition adds 440 net BOEPD of stable production, enhances cash flow visibility, and strengthens dividend sustainability.

How much did Evolution Petroleum pay for the acquisition?

The total purchase price for the acquisition is $9.0 million, significantly less than the ~$15 million of Proved Developed PV-10.

When is the acquisition expected to close?

The acquisition is expected to close by the end of the third quarter of fiscal 2025, effective February 1, 2025.

What percentage of the acquired production is oil versus natural gas?

Approximately 60% of the acquired production is oil and 40% is natural gas.

How will Evolution Petroleum finance the acquisition?

The acquisition will be financed through a combination of cash on hand and borrowings under the existing credit facility.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

$EPM Hedge Fund Activity

We have seen 59 institutional investors add shares of $EPM stock to their portfolio, and 58 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

• UBS GROUP AG added 307,738 shares (+988.7%) to their portfolio in Q4 2024, for an estimated $1,609,469
• RAYMOND JAMES & ASSOCIATES removed 164,089 shares (-90.8%) from their portfolio in Q3 2024, for an estimated $871,312
• BANK OF NEW YORK MELLON CORP removed 153,807 shares (-38.2%) from their portfolio in Q4 2024, for an estimated $804,410
• AMERICAN CENTURY COMPANIES INC added 149,130 shares (+31.0%) to their portfolio in Q4 2024, for an estimated $779,949
• KINGSVIEW WEALTH MANAGEMENT, LLC removed 100,513 shares (-100.0%) from their portfolio in Q3 2024, for an estimated $533,724
• RUSSELL INVESTMENTS GROUP, LTD. removed 91,392 shares (-14.3%) from their portfolio in Q4 2024, for an estimated $477,980
• DIMENSIONAL FUND ADVISORS LP added 89,697 shares (+6.3%) to their portfolio in Q4 2024, for an estimated $469,115

To track hedge funds’ stock portfolios, check out Quiver Quantitative’s institutional holdings dashboard.

Full Release

Strategic Benefits of the Acquisition:

• 
  Adds approximately 440 net BOEPD of stable, low-decline production.
  


• 
  Enhances cash flow visibility with a balanced commodity mix.
  


• 
  Strengthens Evolution’s long-term dividend sustainability.
  


• 
  Offers low-risk development opportunities with potential for incremental production growth.
  


• 
  ~2.8x estimated Adjusted EBITDA
  
  ¹
  
  for the next 12 months (NTM)
  
  ²
  
  , providing immediate accretion.
  


• 
  $9.0 million purchase price vs. ~$15 million of Proved Developed PV-10
  
  ³
  
  .
  

HOUSTON, March 04, 2025 (GLOBE NEWSWIRE) — Evolution Petroleum Corporation (NYSE American: EPM) (“Evolution” or the “Company”) today announced that it has entered into a definitive agreement to acquire non-operated oil and natural gas assets in New Mexico, Texas, and Louisiana (the “Acquisition”). The total purchase price for the Acquisition is $9.0 million, subject to customary closing adjustments. The Acquisition is expected to close by the end of Evolution’s third quarter of fiscal 2025 with an effective date of February 1, 2025. The Company intends to finance the Acquisition through a combination of cash on hand and borrowings under its existing credit facility.

Kelly Loyd, President and Chief Executive Officer, commented: “This Acquisition marks our 7

^th

such transaction in the last 6 years and is another step forward in strengthening our production base – aligns with our disciplined growth strategy by adding high-quality, low-decline production at an attractive valuation, estimated at ~2.8x NTM

²

Adjusted EBITDA

¹

which doesn’t include any incremental cash flows for upside opportunities. These assets complement our existing portfolio and enhance our ability to generate stable free cash flow, which supports our long-standing commitment to returning capital to shareholders. We see additional upside through reactivations of existing waterfloods and through operational efficiencies, which will further enhance long-term value.”

The Acquisition expands Evolution’s diverse asset portfolio with approximately 440 barrels of oil equivalent per day (BOEPD) of net production, consisting of a balanced commodity mix of 60% oil and 40% natural gas. The acquired assets are primarily low-decline, Proved Developed Producing (PDP) properties, characterized by a sub-7% annual base decline, ensuring stable cash flows and long-term value creation. The transaction is immediately accretive to all key metrics, reinforcing Evolution’s ability to sustain and grow its shareholder returns. The portfolio consists of approximately 254 gross producing wells across all regions. The assets will be managed by a top-tier private operator, ensuring operational efficiency and the ability to maximize value.

“We remain committed to executing our strategy of acquiring high-quality, long-life assets that enhance our production base while maintaining financial discipline,” added Mr. Loyd. “This transaction further reinforces our strong balance sheet and ability to deliver consistent shareholder value through sustainable production and cash flow generation.”

Non-GAAP Disclosure

Certain financial information utilized by the Company are not measures of financial performance recognized by accounting principles generally accepted in the United States (“GAAP”).

Adjusted EBITDA is a non-GAAP financial measure used as a supplemental financial measure by management and external users of the Company’s financial statements, such as investors, commercial banks, and others, to assess our operating performance as compared to that of other companies in our industry. We use these measures to assess our ability to incur and service debt and fund capital expenditures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The Company defines “Adjusted EBITDA” as net income (loss) plus interest expense, income tax expense (benefit), depreciation, depletion, and accretion (DD&A), stock-based compensation, ceiling test impairment, and other impairments, unrealized loss (gain) on change in fair value of derivatives, and other non-recurring or non-cash expense (income) items. The Company cannot provide a reconciliation of NTM Adjusted EBITDA without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for reconciliation. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.

PV-10 is a non-GAAP financial measure that differs from a financial measure under GAAP known as “standardized measure of discounted future net cash flows” in that PV-10 is calculated without including future income taxes. The Company believes the presentation of PV-10 provides useful information because it is widely used by investors in evaluating oil and natural gas companies without regard to specific income tax characteristics of such entities. The Company also uses PV-10 when assessing the potential return on investment related to oil and natural gas properties and in evaluating acquisition opportunities. PV-10 is not intended to represent the current market value of the Company’s estimated proved reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure as defined under GAAP. The Company also presents PV-10 at strip pricing, which is PV-10 adjusted for price sensitivities. Since GAAP does not prescribe a comparable GAAP measure for PV-10 of reserves adjusted for pricing sensitivities, it is not practicable for the Company to reconcile PV-10 at strip pricing to a standardized measure or any other GAAP measure.

About Evolution Petroleum

Evolution Petroleum Corporation is an independent energy company focused on maximizing total shareholder returns through the ownership of and investment in onshore oil and natural gas properties in the U.S. The Company aims to build and maintain a diversified portfolio of long-life oil and natural gas properties through acquisitions, selective development opportunities, production enhancements, and other exploitation efforts. Properties include non-operated interests in the following areas: the SCOOP/STACK plays of the Anadarko Basin in Oklahoma; the Chaveroo Oilfield located in Chaves and Roosevelt Counties, New Mexico; the Jonah Field in Sublette County, Wyoming; the Williston Basin in North Dakota; the Barnett Shale located in North Texas; the Hamilton Dome Field located in Hot Springs County, Wyoming; the Delhi Holt-Bryant Unit in the Delhi Field in Northeast Louisiana; as well as small overriding royalty interests in four onshore Texas wells. Visit

www.evolutionpetroleum.com

for more information.

Cautionary Statement

All forward-looking statements contained in this press release regarding the Company’s current and future expectations, potential results, and plans and objectives involve a wide range of risks and uncertainties. Statements herein using words such as “believe,” “expect,” “may,” “plans,” “outlook,” “should,” “will,” and words of similar meaning are forward-looking statements. Although the Company’s expectations are based on business, engineering, geological, financial, and operating assumptions that it believes to be reasonable, many factors could cause actual results to differ materially from its expectations. The Company gives no assurance that its goals will be achieved. These factors and others are detailed under the heading “Risk Factors” and elsewhere in our periodic reports filed with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to update any forward-looking statement.

Contact



Investor Relations


(713) 935-0122



ir@evolutionpetroleum.com

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