EPM - Earnings call transcript Q1 2020 | Evolution Petroleum Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Evolution Petroleum Fiscal 2020 First Quarter Earnings Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, the CFO, David Joe. Sir, the floor is yours.

David Joe

Thank you. Good morning, and welcome to Evolution Petroleum's earnings call for our fiscal 2020 first quarter ended September 30, 2019. Joe, Officer David Evolution. is name Chief of Financial My is the President And on today Jason joining me Officer. call Brown, Executive and Chief

you shortly to it If replay until company's listen of XXXX. recorded to call, X, today's website a via would going by replay available December to the be wish

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

available management's today beliefs statements and information. will on based discussion Our of currently contain assumptions forward-looking

risks differ and key in call to that those forward-looking are the the described subject These focus results, statements This and uncertainties our on comments SEC. Hamilton listed are on expected. and primarily will Actual materially Dome with operations filings acquisition. results may from

to and the over I would now Executive like Chief to like and to call welcome turn President Jason now - Brown. Officer, turn would

Jason Brown

David. again, morning, Evolution's XXXX And First Thanks, Quarter today thank you good everyone. Call. for and joining us Fiscal Good Earnings morning, for

prices the $X.XX generate to to we continues Evolution our of industry. have declared I'm cash and payable the now dividend throughout December XXth report on have commodity consistent capital quarterly XXth pleased that dividend distributed share results XXXX. despite spending environment quarterly the consecutive per low XX, and financial lower

of owned of Merit retain field working entities Hot entities the by from of announce and interest to XX.XX%, a $X.X working interest cash. in XX.X% purchased the ownership will Hamilton vast that that Springs delighted the also Wyoming, revenue a the I'm County, field operate in has a is revenue successfully Evolution Energy balance majority XX.XX% interest. the in or to located net non-operating interest, Dome which controlled Merit for continue million Merit

to and support dividend. gas in qualities the long-life to field dividend decline production and geologic acquire many our operational shares This relatively and specific searching related contribute policy with and should criteria evaluating its and/or asset, reserves, Delhi our been has that Field, quite risk, for time. meet low our which Evolution some our properties low oil materially developed opportunities current

solid way is is to in step our growing believe our we in shareholders. a This accretive a first business that

addition from to while over proved the asset, daily diversification G&A to adds production Field and our DD&A it XX% XX% In XX% more and respectively. lowering by our reserves, XX%, our giving single and per our to company Delhi than all BOE

pipeline in also net revenue year will per industry somewhat region Delhi than expense Dome lower, worth and as operating It's norm. is higher Although price include market higher improving realized that or barrel interest, a X. capacity noting not while next Delhi, the the than result is we is believe over such Hamilton the oil stronger to that royalty the interest does

then by With the our M&A run And call that, I'll briefly turn call to financials. David wrap back about the landscape. through strategy, our speaking up to now over the I'll outlook and

David Joe

will I on Please for of Jason. our share quarter our some afternoon see financial the Thanks, press yesterday further highlights September XX. our results details release ended quarter. fiscal of

income from in extent, lesser million to Lower revenues the decline drivers less quarter, and operations. primary million sales single-digit comparative each the of volumes. in to Operating which a compared generated revenues prices $X.X were commodity the of $X.X periods, for were when

and per remained revenues $XX Despite that, barrel at margins per healthy the $XX Delhi BOE operating per respectively. BOE very and equivalent,

during approximately from decrease quarter. equivalent from decrease a per X,XXX day quarter, the averaged a of Delhi the at barrels the prior X% and quarter X% reduction year-ago Gross oil

as wells. have calendar. trend high the to ambient temperatures cooler seasonal limited to the this We high arrived recycle This temperatures Oil during impacted quarter, production capacity. flip causing produce COX capacity resulted ratio in by was limited gas-oil on anticipate

the seen by rich NGL not prior were in resulting higher solutions rates of NGL complications reviewing to higher The sustained return currently modifications the spring year caused a this dedicated gas to in of in due separation is operator quarters. to facility. volumes Facility to

to The - BOE the Production per $X.X quarter, in prices. the production a $XX.XX of quarter are the which the to BOE, prior year-ago from decline cost the to lower is from decrease Delhi about equating current $X.X XX.X% million oil due were which decreased a costs, from XX% million primarily Field in tied in cost and quarter. quarter, prior COX

down million per volumes the prior Mcf current feet in with volumes quarter about per X.X% COX of COX. cubic feet day due The XX% cubic to the day, XX.X decrease quarter. COX decline XX Purchased were COX purchased million in decline together a was per in from cost cost in

each DD&A tax our to expense income flat this XX.X% rate lower share. and compared in post income true-up in to we net periods. current comparative to income $X.XX of quarter a quarter essentially to The of and due due a lower or adjustment. Both G&A provision of current quarter for the lower-than-expected - the million earnings all, $X.X effective pretax tax were were the reported year-end All in expenses per return provision

an shares excellent during quarter, shape of and opportunities average price repurchased quarter, subsequent a $XX of of of capital stock $X.XX. poised We The of approximately at to average the in is working cost remains XX,XXX million. cost additional and financial XXX,XXX an at repurchased the with company growth $X.XX $X.X million an for shares new or

previously There $X is remaining million buyback $X.X approximately million program. stock on approved a

was reserve-based recently and credit Additionally, $XX remains facility million, borrowing at reconfirmed undrawn. base this our elected

in water V expansion incurred to we of $X.X source of XXXX about capital COX costs for quarter, in the net consisting current maintenance well During net remainder unit, field. million projects, costs the side spending flood additionally Evolution. of curtain of into Phase the capital of $XXX,XXX of $X.X for The water related for completion preparation to expectation the about the a is the million million $X eastern for roughly capital fiscal and

calendar X expectation XXXX. our Site will is operator continue in Test It to that the fund

completion million we XXXX. have budgeted costs V such, our As of Phase fiscal $X in

with cash for review of operations continued share have shareholders dividends value and quarter and our our In September performance net financial we and a This base. excellent completed our end, maintaining ended Delhi first continuing strength, balance sheet successful quarter of reinvestment for into fiscal creating acquisition, results subsequent repurchases, our with strong and asset financial to XXXX. create XX, summary, Field, continued diversification our income to concludes

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

Jason Brown

on assets continues funding opportunities retaining its Thanks, to company David. for growth to while and The current new of dividend positioned further financial development fund be to sufficient capitalize resources program. producing

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

a further assets company value. long-life enhance and or is excited reserves grow opportunities support provide dividend, and will we acquisition diversity Evolution Hamilton will shareholder to that the Although evaluate Dome, to continue our producing add to

The our and leverage. the pursue that growth remain do company uniquely we'll company the to opportunities those take very market We'll effort is disciplined, positioned risk so. to fit we'll and will allows criteria. only to look This not opportunities, and excessive pursue undue advantage where take

ready we're With to that, questions. take

Operator

Jeff Instructions] go Northland [Operator Capital. Grampp to at first We'll

Jeff Grampp

there? however disclose you PDP, start evaluated Acquisition, First year-end was to we at, kind that? the could PV-XX don't have or deck guys of Jason, I if now, or want you being, or curious, guys know do strip

out you genesis can the the was competitive about broadly, basis here? more maybe as if as transaction or of it's process on kind far a just of now take an that the just kind transaction through talk or of this unsolicited And us

Jason Brown

I Jeff. with Thanks, It's pretty start Sure. nebulous a the number. PV-XX.

it pick You you give an want one. and me give oil that to out, you price we'll

Our also priority is year-end, us I not in really the helpful were what for here. SEC, think, that it's which something, not reserves sort that's probably and is our of number

at flat been lot that decline, that PV-XX This If well are next generally a for looking us reserves through years. XXXX, It's XXX are wells is as for you're going over decade. is be a steeper the XXXX, this producing to driver in a pancake.

necessarily straight thoughts PV-XX. IRR our the not here So are in

we environment. we're don't Although that high price oil probably a bullish, in we're think

the down road. So that we like further

we'll don't it's to know specific throw we out I but us. PV-XX, that So accretive think

I in transaction. not about opposed More it - a is you overall double valuation, this but read And grand write think this single importantly, like more as material our agree, to This mentioned it is a small slam. - of morning I you adds. terms or being which a I up a

the that substantial market per share I for it's of we and long the are also reserves, DD&A and as and was this think production, the G&A important, us for our very we of in mentioned. And this, that ways. really It barrel, accretive, shows It It shows the But earnings per our in on different our close. moving. a metrics we us gets can the all transact. number that can life

bought genesis of In through this EnergyNet. we of terms the transaction, the

that a And So competitive things this competitive - to reputation that and for something this being close. go is of process is us, into number the that process. is that. I'm of substantial bidding able pleased There's

- which And the accommodating known buying the think through into happy to my Barr over Richardson can their and were of records. and they you We field and go and that were a for that I the you're decade when going back I've So important Merit days. RBC that's in marketplace diligence, very we were through drive do able office your to due get cooperative.

records. it and But impressive, could both responded was in being that to kind and in of was do. able we we All do field-wide office shape, by very said we what tip-top

get of important more in under our is the that reputation that we business. the very So those belt,

sold also genesis having the done with this transactions was bought. of and in So EnergyNet, many

helpful both was involved. with that this think that I So were in process parties

Jeff Grampp

you wondering deal? detail. follow-up, was into Great, And really last comfortable for you my guys. I was weaning guys for call, are appreciate positive that. I how great. you Great flow think another I deal mentioned

assimilate maybe back think or of think out? and kind play a about Or we find guys deals? kind should we you guys watch in two to right transaction the being accretive Should this this you about taking to trying quarter market of

Jason Brown

guy, But don't avoid different in a might and digest this a a had particular pause situation, bit. here. the And They're bad they're definitely operated market. to big great situation to the trying we operators. non-op them. know a if just It in a Merit. I really you're - operator, as We it's operator. same going think little there's were to be We're the be

situations. So control these a you in have lot don't of

So working big right about we is with situation. a type deal, feel of very and this comfortable the really operators

much, of slow a us opposed the it operations. amount as would down, terms in So it's much different situation that assuming to

pretty in that, particular and this into accounting we're quickly integrate it looking deals. our at already one, going So other to systems we're in

lag we're appreciate that, sort do might [ph] the of I looking no, anticipate So that. wouldn't but deals, to staff in although any at continuing

Operator

Management. Asset do We Olson question Instructions] [Operator have Karlin from a Tyler at

Tyler Olson

if take you have wondering of of size, the in have what you was on that to variant size sense] And in might Merit the just was a more max PV be interest? kind this working [do bigger be sell? Or right Just if And the to at of targeting? acquisitions? what's kind you'd looking appetite these a you now willing that future,

Jason Brown

Tyler, you're for question. going breaking part bit. the answer I'm to first the Thanks little a up of try it. just to

I But is to second, what were your was bigger general, The in sell. or a - this I piece we this of, to willing clarification. understanding wanting is might need take a just Merit think

their with time same a buyer was and particular a in them. terms period a active for both being And of This and with is multiple stuff. market fund the that very an down, at of was in a you're pretty event them. familiar which time buyer probably They've for a the active winding reputation - I funds strong structure one of long think seller common

want funds. for to have course, They many And it over be XX. this years. have They operated of in for they

they So particular certain just is owned interest. this down, opportunity which anticipate, was available. a I that yes, winding have that's by is why the would It a funds came

to that to year, active that within in interested I'm continuing there's but going be we over couple general, field next particular be more sellers. would think as pursuing over not certainly years, they're unwind the But that this of next sure the if be well. in will I that

I'm a going appetite So going it may other that how right? the that is this Is ask the Was relationship have and opportunities second of acreage, for big lead an to fields. to Tyler, - you us forward? acquisition in to great question. establish to to some other repeat

Tyler Olson

try to No, with not of size just that to million going specifically, but acreage you're the [indiscernible] $XX I think it Or keep [indiscernible] are range? and you…

Jason Brown

the not side, it. acquisition acreage Yes, got side,

I think drivers that are forward - more the going quality-driven.

debt. important it's low stay that us to think I for

less means that than turn EBITDA. think I of a

bank. the We cash have in

revolver. undrawn an have We

So to sweet you're we'd the in for to stock, range. million We're we sort going of of to that not - $XX the $XX million But don't things. than I see know. larger $X.XX I I probably spot get think like space, to do to in and kind million, play use us think playing larger have in don't that, we'd that. with

things So and of doesn't business substantial cash. I think our for debt out plenty like of place this, is that grow too much a us in us there's to which extend

Tyler Olson

Thinking - is it on over continue dividend, to the growing flat try keep it or time?

Jason Brown

No.

up pretty to think quarter. can until We I don't go keep we're we now. at we it know $X.XX committed right that want $X.XX to a

$X.XX. up back the to $X.XXX being able give 'XX we the linchpin is back in $X.XX that dividend. - down you If feel a last in that's back have years, our XXXX, and to over then to consistently $X.XX quarter few It's up look like got down and did we dip to quickly company to

had dip and for and will say, the down, still gas. delivered a that oil dividend. we just $XX I a when down we to below barrel about had was dipped apocalypse Oil

a earned that. quite of to give we like credibility bit feel So we continually

not we well. forward. going back $X.XX time, it's know at a can to big, That's until or $X.XX we And but below not intention that - big up priority. to as $X.XX our sustain probably go the that move And same

question that does So your answer there?

Tyler Olson

for Yes. Thank the you details.

Jason Brown

Okay.

Operator

closing appear comments. I'll conference questions any further Instructions] for There or to time. Mr. to the additional [Operator you no at Brown. this turn back be

Jason Brown

you other participation your any Thank an call providing on to update February you. contact the of you feel to me questions. free I Please today. look with forward XXXX. for in Thank with

Operator

conference. thank today's Ladies your and participation. conclude for gentlemen, will We you that

at You a disconnect have this may time, great and day.

Evolution Petroleum (EPM) 10 Nov 192020 Q1 Earnings call transcript