EPM - Earnings call transcript Q1 2019 | Evolution Petroleum Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. This is the conference operator. Welcome to the Evolution Petroleum Corporation’s First Quarter Fiscal 2019 Earnings Release. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to David Joe, Chief Financial Officer. ahead. go Please

David Joe

good Petroleum’s and quarter, and to welcome September Thank call morning, for Evolution earnings XXXX. first our the XX, you everyone, Fiscal ended XXXX

financial We operating results for will and the discuss quarter.

today call Interim Engineering and Steve and the on Development. and me is Herlin, the CEO; President Chairman Vice Senior Bob Hicks, Business Board of of Joining

November to time If date. XX, provided recorded be available will you call, today’s it via that note to wish Please may a today or by XXXX. listen be the going any of replay information later website to at accurate until sensitive a replay and not company’s shortly statements and are

Our to results and going are Actual results based Herlin. expected. risks trends the filings subject the news discussion key highlight beliefs to Delhi now fiscal on available SEC. forward-looking available described Since remainder to management’s over with uncertainties call the release, statements turn of and on numbers will for of everyone XXXX. are that those detailed and in are today an and assumptions in from our listed update I’m call yesterday’s will to information. contain may statements currently readily in Bob These materially overall this differ forward-looking

Bob Herlin

Thanks, call. David. of Welcome quarter to earnings everybody to XXXX fiscal our first

revenues share. can you per million $XX.X of and with had see or earnings quarter $X.XX As from $X.X great our Evolution earnings yesterday, a of million release

it due from extended up received the field the results Enduro. of hold to operating portion our an breakup But completed. program small a but Production to we recently for period we strong the and continues still was course, infill income from excellent. Delhi were joint expect be transaction Of to not revenues fee that that from our

It gas of decade. V Light Delhi calendar COX sometime be favorable in natural in V a as oil there believe being repeating a Sweet XXXX. flood cost to XXXX. liquids high our Delhi expect anyways of at very receives there forward, extended are oil valuable remain in to improved repeating field position half latter areas very production does calendar in price. several contain far Louisiana low components and next is prices as tied in be in level operator Phase pricing for very development bear we compared realized, more development transportation sometime Therefore, a should If industry the commodity of additional to peers. to begin Phase favorable – with the Looking we the our that the We the

acquire to efforts Our additional to long-life complement Delhi continuing. reserves developed are

following growing We a with approach disciplined dividend to criteria shareholders. of and goal are the our specific cash sustainable a very

Enduro disappointed the philosophy or color little compromise call of to criteria to completed. growth exciting careful for financial the And of with turn I’m going transaction March and any While David? searching process results. process for financial the to on this board that, deal The XXXX. hope from we back before on get not our did a that phase, through we our end will next stray or take our the not engaged CEO we to are company close, is just a our in operating more to complete and over David

David Joe

quarters. Bob. and quarter Evolution you, follows excellent that this Thank worth financial It’s another in turned reiterating successive-performing three

December quarter X/X expected current metrics continue and beyond. are on LLS pricing through quarter stable based our perhaps, this the premium and present ended of production into poised financial from Delhi, forward, XX Looking to the of

oil prices. XX hills day. for oil COX cubic increase end per cost record volumes $XXX,XXX below rates Evolution, the the resulted XX% Looking quarter. improvement factors production the normal oil prior are the to current into Recall of barrel, the oil drilling quarterly combined in normal. COX quarter-over-quarter seen quarter, Total increased Since of prices $XX.XX oil revenues in quarter, quarter, injection also volumes further quarter. per prior COX we million the thus quarter realized X.X% compared up a that feet level were have due in two two on for the quarter. quarterly record were prior to volumes by are the COX the revenues in crude infill in X% prior from below higher reasons: purchased These purchase the to which Realized comes program, were

purchased trend cubic fact, carried averaged million COX XXXX per that In July XX into September day. August feet volumes and The well. as

our of sales up, for lease received at Recall revenues of oil to prices in current pipeline transportation the taxes quarter-over-quarter million. costs. mentioned, lifting cost the expenses operating were prices $XX.XX, Mcf plus was quality XXX% directly the I of per cost and Total are oil BOE flat $XX.XX X% in as purchased metrics relatively and interest X.X%. liquid-producing generated to positioned in Other $X large operating majority $XX.XX is field per long-life field. I BOE. specifically XX% of or With realized any price oilfield. commodity of were of field this part fixed, oil per contract, these Secondly, COX revenues BOE. a directly that margins will by the increase margins Delhi we price tied the alone our speak operating uniquely per for of BOE, of increases impressive believe an which the is With per the operating volumes asset costs quarter

we closing the year drilling remainder for CapEx program Delhi, and $X.XX Phase and $X.XX majority to of on the million XXXX. for $XX inception dividend $X.X share the $X.X which is to be projects. returning of at stock out fiscal quarter since estimated for annum, efforts to anticipated the As or per The infill currently yesterday’s shareholders in infrastructure million $X.XX company the recorded yield of cash paid Bob to committed previously V modest rate were price. December breakup The the million the to dividends our expenditures The cash quarter. Evolution. the fee net was to mentioned, has program’s remains million X.X% $X for is in million in per to related and acquisition capital collected current Enduro nearly the a shareholders based

working of all Our strong remains building million is of almost $XX substantially, cash. position at very which capital with of quarter, and liquidity the end the

$X.XX income dividend fund We we have at of fund to opportunities. oil remains drilling our XXth facility dividend gas development well closing remarks. and the of field turn dividend quarterly and I’m reserve reported share, going credit to reinvestment completion new paid over quarter growth Evolution consecutive some Bob development next net the program Delhi, and Delhi continued declared or positioned of In the call $X.X set record and an million back revenues now at undrawn infill future $XX.X program. summary, per million base the the $XX this pursue in for quarterly and the into of to with million, to

Bob Herlin

Thanks, David.

in effort discussed Evolution disciplined. calls to that we’ve seeking is producing last the actively acquire dividend. reserves grow and long-life past is very year, would our This additional over support diversity As and provide

to some resource that, Operator, questions. these line. undue that open and and fit We risk opportunities positioned think pursue with not we’ll you we’re cash the criteria. opportunities. can we’re those pursue uniquely take our With untapped our leverage And to only credit take I line, excessive or will ready

Operator

[Operator with Capital ahead. Please Instructions] first Jeff Our Northland Grampp from Markets. comes go question

Jeffrey Grampp

kind until Bob, Is hoping, more if a Was to maybe flattish, you of it fair expectation? the largely in moving guys trajectory get flat like sounds out, it on kind calendar growth cards of to a on best maybe can little production V that XXXX. of bit Is Phase little bit comes incrementally, fair– kind but the forward. play the a color comment maybe of of kind

Bob Herlin

initial every Later safest we doing I various some decline. year Each say. production the think The the phases developed more field really and thing one was did probably Yes, are they that’s still so flat. like are in mature we’re probably phases. phase, are seeing normal to phases quite in phase

before plant, that have year also parts reservoirs that operator extend significant just that is the with physical component right for reserves, decade then areas of is probably of flat through Phase developed the developed calendar at takes to phase flooding our them a added. that’s real single I we’re flat and, of to now, field at five start Delhi those capacity in we’ve it of while whatever, one next brought the and production with side think then XXXX in we percolate in. it participate to recycle level of should opportunities So proved program next start because the looking current basically make really for which our the the decade. be tax because time, the we’ll then production for of in the just could showing end really V our now, characteristics this decline. injection. to plan. kind the that a got that and have we into to year, be on V, solid the of of handle don’t period think reservoir start with could improvements are profile have And added then quite Phase maybe the calendar flood, COX of a oil. areas all short reservoir the or don’t year or doesn’t two as And – year. way not new three, we south looking and we infill we’re us keep in field proved the currently current honestly, that into sense pretty calendar a we production the we Right through whatever. the course, And the going amounts and much mean next takes of kind we easily there then be to middle the that But because plant, of think of do while XXXX pressure for that the But seeing some flat other several that any you’re slight thinner But additional and to next can end on described the increasing And we’re proved expecting affect there response with and up are can in a COX production, two,

really – think one those and it So seeing to we that Delhi, just of better always that good a when you I when And over high-quality fields better been have time. get about we’ve field, tends good it’s consistently.

Jeffrey Grampp

And talk sounds follow-up, the on like of rates you about, the quarterly COX above the bit were a purchased just exiting purchased what my little kind was. guyed volumes, for average

good of said that think the that million kind $XX million a guys number and running quarters? change I run day. gets could $XX next number for a that to like you kind all rate is of – And million is program good infill or few So think as range, – that $XX Is at up about? is that the

Bob Herlin

That’s number think a good to about.

David Joe

$XXs I what is from operators think mid good number report to us. million

Bob Herlin

in going once we that’s the probably late me years see that area we’re period whole of will would Phase it the of gets of so field to increase purchases increase part the COX sometime for Yes, doing XXXX, probably while time injection because XXXX be initial going and would pardon fill-up a for we a a V off. small or actually, in a bit of late new

Jeffrey Grampp

really Sure, appreciate sure helpful you guys. okay

Operator

White next from comes John Roth Our Instructions] Capital. question ahead. Please with [Operator go

John White

that to not nice and get sure that it’s LLS about worry basis blowouts pricing. Well, can

Bob Herlin

the guess direction. we have I it’s in basis other a Well, blowout, but do

John White

Touché.

of As color you’re assumption some us day the and you’re all market knows wellbore focused under on conventional if that and every I M&A could you think vertical and the – kind in I’m give reserves production. everybody on day

and you just seeing? could observations clarify what some on If that you’re offer

Bob Herlin

Sure.

traditional these the going We’re competitor say clearly your, be to not shale price. I for a days, in

in privilege of We can embedded we get we just bunch that spend We wells. who share the are. an more to We want into order shareholders. a a We of to into want spending of to cash our return for capital are capital don’t our immediate generate don’t lot of business spend capital. drilling to the with just want

a So that that the does of there. large carve are amount out deals out

our areas We Again, where political also take risk regulatory and for to just shareholders. want that get don’t risks. don’t to exposed significant are want there we to

Wyoming, that Oklahoma, kind areas the interest North of of so And Montana, areas type. Texas, Dakota, defines that to of

just other going – plus We’re avoid avoid – we’re things to the a of but to other Mexico, just New – areas lot are more a going of we’re that risky. lot the

mostly to the like for have some development We of do for maintenance We are opportunity. definitely type allow looking PDP an opportunity reserves. primarily but to CapEx

looking is the we lots look are is. deals said, of job of you in That is at He Steve As are busy deals. constantly. Hicks' and at that. we very We what’s XX% really at lots actively market,

looked great point have negotiations. We detail at in several the to of deals

anything. close dollars a We dollars closed marked on with that ran that valuable a obviously, into That than We us, Enduro. was fit for haven’t creditor. would great our been think more on a just got, to as bidder degree. were very playing It a have I

but – opportunities So similar are we of nature. looking for the

guns. are get the so for a next – going our a we’re are we’re would the actually, year we shareholders. We very that But optimistic to that or deal to in pretty very done to be going stick impactful

anything going are do to not stupid. We

for ourselves. We’re not to compromise important going set the that we’ve on criteria

John White

thinking got of you have as patience. in that and a of was rigorous and lot Well, to emphasized, I experience line analysis perform you’ve I and with lot what a you’ve appreciate it’s

wish the hunting. we that now you’re seat the and all driver’s So best you in good

Bob Herlin

advice. Well place do in looking this the a I’m phase. CEO look of and to the ability the interim just to next being in and will that provide plan shoulder growth We over us couple the position to having old take on temporarily. I’m next into months having here Chairman forward new CEO, my back

and a somebody this is lot in great a done. We excited opportunity get deal energy with it, to are for think we to of about pretty a come

John White

deal. on luck on at a good CEO luck Well and finding good finding

Bob Herlin

Thanks John.

Operator

Portfolio Our next Guru. ahead. go Jim from Collins with question Please comes

Jim Collins

Fantastic in terms on almost both David. field XX realization morning, quarter of Good margins. Bob. margins, morning, of Good both

is question we’ve on – then my back bit since obviously, So pricing. pull a crude

hedging, are uses at about board for me not process or walk the whether to the So And prices? you to point the about looking in do at what you you hedging? are the which thinking just think can through terms levels in process, lock of which and decide at

Bob Herlin

Sure.

I spreader with has have down against come has that to That Louisiana First, down the lot as want prices which Sweet, point nearly Light sell out we a come that not much. widened. WTI,

statement. probably a but fairly not can still month. the we’re believe So David its current getting accurate to that I $XX if in the correct barrel, close me more

and So else we still the almost we’re a pretty seeing that exposure price have good everybody don’t differentials basis does. oil to same

go for a circle characteristics been participants are about talk that standard item every going as term. to very board for do what look of we what feel about still hedging That prices So reasons. and I we low consistently time around a we far and think hedging a as of oil the there the about think? bullish that One in number meeting. do hedging we’re every fairly of goals, at agenda we is long all has a all being it, we appetite We think

need have for we prices Second, pay. tremendous no We really locking don’t to have honestly. have oil that in quite we debt

– cash for twice is flow need is dividend. cash Our free what the flow we

the think price the secure that, look a isn’t at We lot for among there’s now. binding it just especially we of upside to board. so oil need So don’t enthusiasm still a you have potential really when

now, hedging the for the some a right then, priority that take transaction, we debt, company. not And a change the we So some. might obviously, it’s is – strong on do

Jim Collins

Right.

is question, aspect sort what quite the terms think Same about At dividend? dividend talked On is are point what strong. what the increasing about the the of and in coverage, of other that, do of... levels you you which the process

Bob Herlin

we do suspect next we’ll the cash excess minimum because very on time in or make cash in last at board were quarter some right dividend. have all this didn’t be I just have looking excess that Quite Yes, really that activities we does focused M&A increase closely now, do two lot at in the we so discussing sense. honestly, flow. a put more into and of we meeting It the the

we future. I the right I comfortable not-too-distant easily dividend think in level, are now, the current where see increase with but an can we’re

Jim Collins

dividend supporting – but purpose Is obviously that look transaction... statements they look you at have corporate should acquisitions MLP, of growth. at we different do supporting sort dividend expressed should the with the potential look how we a And or that at of of if the you structure,

Bob Herlin

a Quite have – we are very honestly, we mindset. similar

in flow as you’re idea MLPs C the cash to old Our sense upstream of the corp the goal the that going being tax and assets you with to very a can difference is – – the direct buy with shareholders, legislation, we especially efficient. be

for the don’t of the near structure We We have tax have we rate have shareholders. MLP don’t MLPs a consequences complexity average low and that tax offer. the

obviously, the otherwise have potential to lot a C we of with that I corp have But holders bandwidth We our be similar a idea participate shareholders. universe production flow flexibility we’re the of large the much or to not think a chunk returning overall able buying that MLP. wider sense and the and more wouldn’t of focus it that stock is the on in probably with focused cash taking yes, very of

leverage. think that one not is believe do we in massive difference I significant However,

Our a to shareholders not come. think I take it’s that for meet sleep what want. definitely depth. We what can not dividends what we that It’s being that’s we for We – application knowing sure want. lot like not and the able boards don’t years to to has wants we of at night better going just do just that risk. and

Jim Collins

great, That’s thank lot a thanks and you Bob David.

Operator

conference now the would concludes to Joe back turn to This over any remarks. I for the David like question-and-answer session. closing

David Joe

to great I Bob participation now. wish Bye Steve for time feel a everyone, to questions. myself, with and everyone your today season. contact Thank free holiday want or you, and any

Bob Herlin

Thanks.

Operator

concludes call. conference today’s This

disconnect a and you your Thank lines. day. may participating You have pleasant for

Evolution Petroleum (EPM) 10 Nov 182019 Q1 Earnings call transcript