EPM - Earnings call transcript Q4 2019 | Evolution Petroleum Corporation

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Operator

Good day, ladies and gentlemen, and welcome to this Evolution Petroleum Fiscal 2019 Earnings Release Conference Call.

As a reminder, all lines have been placed in a listen-only mode and after today's prepared remarks you will have the opportunity to ask questions. [Operator instructions]

And now for opening remarks and introductions, I am pleased to turn the floor to Evolution’s CFO, Mr. David Joe. David. Welcome

David Joe

morning year Evolution and ended fourth Good for earnings our welcome quarter. fiscal our June and you. Petroleum’s to call fiscal Thank XX, XXXX

the results discuss the and will well financial We year year-end operating and quarter, reserves. as as for

Joe, and David and President Senior and session, the Chief and Executive Vice of today is we’ll Chief the Q&A joined Hicks, me Officer, Vice on Senior Engineering. call Officer by also Jason Evolution am I Financial joining of Brown, Steve be President President during

If you reply today's company's available going wish XXXX. to a recorded replay the October until listen shortly call, of to website to a be it via XX, or will by

at any provided and Please are note information and statements that later a date. be today accurate time-sensitive may not

of and are risks subject filings in available and forward-looking today based assumptions discussion expected. listed currently to with statements materially SEC. contain results will are information. described Our forward-looking that may management's beliefs differ These Actual from our those the uncertainties statements and on

XXXX. readily numbers Delhi focus primarily news yesterday's this release, operations detailed everyone for in available will Since key plans fiscal and an update call results, field and on on to are

over I welcome turn would to Jason and now CEO, our the like and call President to Brown.

Jason Brown

Good Evolution’s David. everyone, year-end you, earnings morning joining for for Thank fourth and XXXX us today thanks call. quarter fiscal

upon forward building call company. built. excited I'm to the fantastic Evolution earnings and the my with you first look it's As know, to join foundation team has a that

of both which earnings from Louisiana NYMEX for financial positive dependable that, received have flows Light a WTI. benefit continues consecutive of company dividend operation, the pleased results. and announce to of bedrock Strong the pricing year the to generate our company. cash to I'm the premium over solid eighth Overall, consistent With continue been and our

XXX million XXX reserve a volumes barrels value and have say give compared standardized of $XXX with million prior – to totaled results measure some proved with of of volumes million happy that oil measure color result million a equivalent to years million. I’m a of prior to press but standardized barrels a you of PV-XX PV-XX reported million. releases, on our been $XXX in of Reserve additional That’s those X value and X.X

performance from in positive approximately reserves. revision to a or the wells via producing Improved of reserves. positive about oil barrel in resulting has Performance capitalized was XXX,XXX plant a NGL in led NGL or improved revision X% modifications improved XXX,XXX XX%

to cash continues Evolution shareholder on focus return. flow and

capital, million with of debt. strong which balance most cash, we is and working positive remains Our sheet in in no $XX.X have

We out continue our dividends and energy now company. total shareholders since cash December paid to to common $XX we've another share, $X.XX performance per an a way, million of or said attractive provide as unique very our a stockholders to return of XXXX in cash for – on independent

to the Directors company team. $X subsequent to Board continues value year-end, for growing shareholders, stock. the and guide which our Evolution million remains Additionally, to of of management committed the our repurchased approximately

to acquire opportunities developed specific related support that our policy. has Looking properties compatible dividend meet evaluating forward, and and and been our Evolution oil continue will gas criteria

the back M&A opportunities. With our on I’ll outlook David briefly now through financials to and the call that, strategy and up run over our turn to wrap I’ll then about with call speaking

David Joe

quarter provide XXXX. near-term. results will to forward I’d XX, ended thus our been Thanks, to look very the has to a skill some alongside Jason. the the in That he experience He share like and for impressive to brought a I said, financial like fourth highlights of contributions it's company far. fresh Jason positive would working I our set and fiscal perspective say that June

versus million in We X.X%, have year. volumes. by X.X% volumes prices quite largely X.X% decline of increased the by oil $X.X prices, offset been quarter million prior a generated up in XX% fiscal increase this NGL BOE in past NGL total which a lead by $XX.X Total led revenues LLS volatile

million That production income costs in Overall, COX was $X the by by we quarter, primarily current lower volumes. quarter. largely to $X led in to million due improved operating lower the

Our absolute quarter-over-quarter. DD&A reflect expenses

than noting rate fiscal it's our was going worth per However, BOE. at be that the rate into X% in is DD&A to fiscal XXXX QX going and $X.XX XXXX it lower what

for which of were net income in earnings two previous been expenses per quarter. the and COX concluded. prior has expenses, We XX versus $X.X quarter. an consulting $X.X completed drilling was up those largely million fiscal quarter of million search, G&A The quarter Our the program, wells, XXXX. production for infill XX-well the in the versus of current the This in producer quarter on wells including recorded executive injection $X.XX share to equates and $X.XX during in in consisting

development Capital expenditures planned related for the complete. Phase program Delhi V is the nearly water six-well curtain infrastructure and preceding

and during begin second XXXX expected second pad the commenced our fiscal first fiscal to of is during The operations XXXX. injections quarter pad

release For year. highlights the refer the will yesterday short, another financial In fiscal solid performance. press [XXXX] and compared results, details prior for year to for afternoon to year I of full-year numbers

producing the liquid to a NGLs. oil XX% The is to I comprises would this few XXX% about like of key Delhi reiterate take a field, company. XX% of opportunity and attributes field

in this X.X%, expenses operating royalty this overriding up capital or made minimal field, bears is of an ownership type Our no of in costs. unique Keep interest interest. some mind,

XX XX.X% have a a revenue point net we carries interest. Additionally, – which XX% interest, working

already Delhi a sub-$XX has that’s enjoys Jason a tax payout, The received high very severance WTI margin. Delhi operating As until holiday savings. providing Delhi a LLS The therefore, costs, field production XX.X% oil typically lifting pricing, a mentioned, premium to oil pricing.

potentially Mengel. in development only future a and remaining rolls decline have field We we long-life field once a producing over. is in Phase single-digit VI V, the This Phase and the production expect

five-year yesterday’s current is yield dividends. based approximately is continues cash the Evolution focus shareholder-friendly years highly average company The X.X% a dividend The to yield X%. on on six of price. stock being over quarterly with closing

repurchase active an have Jason shares about mentioned, We August. July we and purchased as recently share and a XXX,XXX in program,

that in $X back approved million put was remaining program buyback place We have in a million in XXXX. $X.X originally

balance $XX.X generally cash credit but sheet remains company a opportunities. great shape strength was the we’re low of to poised excess financial in is company, to million new and leverage. remained million opposed for to facility $XX The on not Our debt-adverse, of hand, growth strengths use a in and

to my continued financial sheet year strong concludes excellent This development and shareholders In June for field. share summary, results reported XX, and with eighth continue of strength, cash value fiscal reinvestment with for the into Delhi repurchases, net ops balance financial for our year, performance we and ended consecutive create dividends fiscal continued XXXX. income review and

remarks. I over would now Jason for to back turn final the call

Jason Brown

David. you, Thank

is brought do help The As our company I’ve I’m so. me additional long-life provide to Board to actively producing and to that mentioned, acquire optimistic in will dividend. reserves diversity has ability and Evolution grow seeking and grow sustain very support the to our about

great discipline an credit Evolution’s fairly with to fiscal a line of A&D and reserves us to put untapped cash place tumultuous market. has in able take be advantage

deal but will to opportunities will or excessive a take that of flow confident a will that able in-bound seeing good and our find be only those pursue and we’ll we’re risk feel that undue for properties not us. be fit lot criteria, leverage We fit

take ready we’re that, questions. with think some to I

line the you’ll open So for up please Thank questions. if you. operator,

Operator

[Operator go you, Northland Instructions] to Please your happy open. line I’d Jason. be Thank We’ll Jeff to. first go Capital. with ahead, Grampp is

Jeff Grampp

Jason, and guys, call. morning, first Good the congrats on

Jason Brown

Thanks, Jeff.

Jeff Grampp

to qualifications the strategy kind comes And Chairman kind you your it's, leadership think know get when Was it. all of to and, we’ve you you elsewhere, for, thought Evolution’s know, it you, you you acquisition you Board based obviously of view on know, your disciplined acquisitions, world any very know, than sense at of, to modifications, different ask you I Jason, that know, curious and tweets, know, would about know, Bob, of for the acquisition wanted modest the historically much there's on if if on how the side, just had a about just under a if acquisition you experience going to put know, strategy? the how

Jason Brown

Thanks the and on was board say that. we over. went would first had it meeting our was that and great we I subject for – Well, main this so Monday

when you're and strategy think was discussion. of using topic right main you say the that I the word

seeing We’re of a lot deals are all and place. the over they

like it’s said, pretty know, We that. you I – market. like it’s As actually tumultuous

really in that happy in were We’re with of such some that not results opposed think the bids that field sales as a we good turning where to the position in and lot going and a market of terms getting we’re after fall last people

thing? you to the situations turn spend want the that willing long-life And take gas? to some and cash do waste better for willing deals them that, oil? are emerged us to we out and and in we things to we we’ll to want are debt? our going of market of. know, we box be think stay, that fit chasing of able don't have know, bank. so with more on gotten EBITDA threw narrow us. being year, that we or even you a the table. everything these we that That has situations COX distressed stressed cash to of go said, open kind You know, Are This Are not advantage of kind want lot parameters some and created not the know discussions you from to to let time stay Do we we continue to our a our all [Reason] of that

narrow of long going component. terms going So, to box. to have in I going think PDP pretty got we've life. It’s a forward, a be It’s

build and start is it, – and years is goal but that grow in the for into the increase, think priority, growing the future first dividends, that sustaining for X and many, is then, many management so future, Number the and we then, Board dividend to priority. can the secure it, have the the then, second for inventory in the sustain to I

would have I and situation. like – operated for into special to we for to to very, be would non-op, situation, this get an So, very us say being so, us we

that's and think oil. probably as like I we likely, not

greatest So, go months of be some us. the it have the those we would not we again, gas, also XX to seen were situations prices have very least to going if to the But probably in XX in very, gas at next situation looking with good into months. short-term for a

there some might – tremendous be buying opportunity. We’re

little but… So, kind down narrows of subject that bit, hopefully the a

Jeff Grampp

sense And volumes purchase perfect. I on more wondering have you on that. up, guys of I Should just side, how That’s million a range have million handle looking kind my XX type plus XXXX? know, follow the for. kind that think about that, you we operational of on minus? what had COX guys was XXX that? kind FY hovering of you of to operator should if that’s it from day we No, appreciate Or in exactly or of think for a the any

Jason Brown

Yes. to I that don’t be going it’s quite much. think

is the I efficiencies think working. a which to XXs, more get purchase been It's a which the the are XX are plant day the XX happy main for But in out the we low injection. the million COX. thinking dropping between main there. purpose clean those has sell. purifying and been million we The COX We've NGLs, gotten was plant to some of pure of reason and very COX, plant

the has volumes our new in some as see we pretty brought wells. have But higher the process on we settling fourth efficient we low that been that did out and quarter XXs. So in

Jeff Grampp

Got it.

the appreciate [indiscernible]. detail I good. Thanks Sounds and guys.

Jason Brown

Jeff. Thanks, Yes.

Operator

[Operator Instructions] We’ll Roth to John in White. the of Capital line next go

John White

board. once appointment. and your on on morning, financial all nice Glad congratulations to and again. very Good on you, to running see is The my company you Jason, results cylinders

Jason Brown

Appreciate morning. Thank that. you, John. Good

John White

properties a the is the to are seeing. main and the some there A&D I good component probable’s] trying some enjoy for the you're are I’m topic, wondering, the have you would market, state [plus PDP since only? So, valuations buy PUDs hearing and given value can people – of that of that PDP

Jason Brown

they In high. a year a I a I’ll a ago, – process stock That was there you were pretty at of those of of and too quarter their Like in I overarching guess lot was their still they thing, earlier it this, the quite pretty more minds, thought in know, last sales. to were and precipitated Yes. lot minds people John, were August was high; September, they time. prices than last price year, worth off. a lot significant sales the in but fourth fall processes there a mentioned, that I think few was close processes, pretty failed say

little be to that's to they not time, now, were probably PV-XX, our in PDP worth. consider we’re PDP that PDP, was PV-XX, too even people asking at on seeing though pretty capital a So, prices able large us asking attractive at is Evolution us only successful PV-X And time, were what bidding which to because and that cost.

that gives seeing of talking paying therapy and upside for in about you the deal or flow. So, that’s hopefully only. the question? market happened PD answer PDP sense that Does some that we’re PUD, not Again, your we’re

John White

Yes, that’s very interesting.

or are You PDP on PV-XX said PDP evaluations to ranging PV-XX.

Jason Brown

a That’s looking so right. have PV-XX right. Even we’re That’s at.

be but – So the passed the to of pipeline the from kind particularly and being one area, with location the got area it’s Permian. We of blip some of want fit but from to right gas. and in stay sort to avoid

John White

much for That more stress properties? you valuations was it. are My gas follow-up seeing is,

Jason Brown

Tremendously, for Oh! for yes sure, sure.

John White

Yes.

Jason Brown

other than distressed And regions. regionally are they more

a looking at in marketing what your game, differential, terms becomes you can you’re you think it be right. gas So, to I of – real what’s smart mid-stream when got

John White

Alright.

Jason Brown

Especially in short-term. the

John White

that I know appreciate there, get in and is tell said feedback, the Bob, him Bob Jason glad there. you're and really hello, that if driver I seat I

Jason Brown

so that not here. even He’s glad he’s

John White

Okay.

Jason Brown

about that John. happy very too He’s

John White

understand. I

Okay, very thank you much.

Jason Brown

John. Thanks

Operator

Musante Global Please we’ll line Alliance Partners. question with from is our your ahead, open. And take next Joel go

Joel Musante

of Hi, couple just I a questions. had guys.

on of least at production looks have profile the at know, what kind year, that’s like forward, going it you into going late budget CapEx Just you point. this next a

of if or you keep expect, should next flat know, or, So, you decline wondering just just with mild a over can the you couple we know, that production quarters?

Jason Brown

of with a Denbury process would saw relationship say to but Yes, important fall. They've the through locked aren’t great in non-operator, given got you know, I team. they understand. I you they those up. schedule is terms I until of the technical a that. Joel. very a appreciate their active we’re go this, course, right we’re non-operator; us think, in in which of Thanks, We’ve what budgeting

It’s an be in we it’s start to terms our of XXXX, would start that in in estimate going try this going that XXXX; to in Phase they probably to of point probably at so, to And a XXXX. fourth said it’s be in little and V. it’s CapEx of going put bit fiscal quarter our early they’re what unlikely although

I’m that happen. not sure that’s going to

year. of amount from expect of small – there. in uplift a We have We CapEx our late probably production shouldn't until any next fiscal next

X% a talking we’re I this decline we’ll year of single this little of year. think see yes, bit So, digits, probably about X%,

Joel Musante

Okay.

Jason Brown

the that you I doing that should also can have expect know, conformance widely successful. work, Phase and CapEx up we a decline, on. be lifted And V when been but think mild over, They’re for and that’s comes be going work to you that.

it being last know, well. year year anticipate it you we So, as and this was

Joel Musante

Okay.

next said late you when or about talking that would start V year, year Phase guess, we year? I up the are So, probably mean calendar fiscal does

Jason Brown

That’s likely let’s that so some that’s way. planning they’ve what May-June, I’d easily what let’s it starting. but CapEx say June-ish, would us, summer. we’re late next slide, on. got be could That We’ve in put say it for informed

led if August, or be course be, of to wouldn't would you XXXX. I July our surprised which know, fiscal that's However,

Joel Musante

right. Right,

And me remind tax – know of – a when holiday? could you you severance tax stand you might Okay. reach payout that When just to where you from on view? point that might

David Joe

Hi, Joel. David. It’s

current tax out severance investments. out, is is on based severance years also way that tax XX that plus So calculation because a holiday still

years And for out. so, an based XX escalation on investment capital, to-date and its plus plus

of – So, for on working how that that’s accretive kind us]. reminding [interest extra so the I keep people

Joel Musante

A&D like things That’s appreciate know there. know pretty had. luck – – it market. I I with all you sounds promising are the It that. Good the Okay. with you

Jason Brown

We appreciate it. Thanks, Joel.

Operator

And audience. I closing Mr. [Operator from Instructions] audience. have And at signal Sir. Brown, turn we for no have no the signals or from to time, you any back will remarks, the it we this additional

Jason Brown

an providing your Thanks, sure you you Thanks other to today, Jim. free I the forward November. for in with update appreciate call contact on with to it. feel questions. look and Thank please I everyone. me participation any

Operator

and conference. Ladies We for today’s your all thank this participation. conclude does you gentlemen,

disconnect your you rest hope now day. may of enjoy your You lines. that We the

Evolution Petroleum (EPM) 12 Sep 192019 Q4 Earnings call transcript