EPM - Earnings call transcript Q1 2021 | Evolution Petroleum Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Evolution Petroleum First Quarter Fiscal 2021 earnings release conference call. All lines have been placed on a listen-only mode and the floor will be open for questions and comments following the remarks. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, David Joe, Chief Financial Officer of Evolution Petroleum. Sir, the floor is yours.

David Joe

Thank you and good afternoon, everyone, and welcome to Evolution Petroleum's earnings call for our fiscal first quarter of 2021.

and for operating quarter. discuss will financial the results We the Joe, And David for company. I am CFO And joining the Chief me on Executive President Jason Officer. and Brown, call today is A of little housekeeping. bit

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

key Our These from statements with Since detailed assumptions filings readily update will oil and a discussion those had expected. would and of management's call typical available focus based spending. prices on primarily for listed will call contain yesterday's materially remaining I and welcome turn over fiscal news our XX, impairment today forward-looking are now plans the this this the write risks beliefs SEC. currently and Jason in forward-looking including to to and release, the are are we capital on in in and available numbers everyone for plans down subject Brown. Actual on that to continued information. - results uncertainties described like volatility and operations to differ statements may quarter results,

Jason Brown

quarter Thank you, earnings XXXXX fiscal call. first us David. Evolution's Good afternoon on everyone, joining and thanks today for

all to time at although we're all in the first and have continued social that, To days negotiate the safe The And you know bit arrangement, this be look ourselves together. we very working as I a wish fatigued all Evolution uncertain has staying to better quarter and forward fiscal again ahead. to best continue and we quite remote economic XX I found challenging. getting be effective to

demand. gas of know, as to supply oil and the you difficult COVID-XX balance disrupt in a oil to pandemic global particularly be continues and time sector it As continues the

state fiscal undrawn With I'm we the our that, long-standing of recorded the protect In well additional free cash on long We monitor to security, and measures XXth extended million quarter We our for cash million to of our we health. continue a COVID-XX revenues continued potential and we focused cutting cost XXXX, to by strategy from to program. efforts implementing our have better focus to best to revolver that employees’ financial prior million.XX% to $XX debt decisions issuing with our order $X.X dividend to first in our consecutive are with making opportunities ensure We take shareholder quarter. of the ongoing that announce arise our that quarter ended pleased positioned return, as dividend recently and create remain investors. years. advantage term for evidenced protect quarter on redetermined of that three $XX.X an our bank have additional revolver increase to remain

has Chapter dividend XX need. at our support capital we've the of XX had provide Delhi it positive now field field, return code cash interest process to focus We since July operator at on of Resources and which them Denbury with last restructuring inception the that emerged thought announced in that mentioned up dividend, and under towards than XXXX. to call, work This On in of to EPM restructuring. is be agreement on ultimately increase December would XXth financial of for step our Denbury attractive the XXXX, program our that it Delhi capital as million speed bankruptcy we into would In to On bankruptcy entered announced able flow and to in for concentrate paying total shareholders up another we an projects this meaningful a their they dividend September returned We our quarter's shareholder return. continue to cash consecutive will we from freeing and more Texas. $XX cash XXth, Chapter that put be be production. completed spent in the

Chapter We of XX with affected expenditures and COX field. beneficial of X terms of It to is begin payments was to not during that by expect also arrest encouraged flood Phase decline current performance. XXXX. the to in in filing, of or at expansion the improve believe are production, Delhi continuity important our will note the Delhi EPM Evolution conversation resumption continued later further fiscal our the operational historically Denbury’s Denbury We conformance

back on call during Joe’s for in announced dedicated to like at no until help him to to previously year there's I upcoming congratulate and our on board integral seamlessly Petroleum. Evolution for retirement our the our of comment that over end has turning of David, disruption and David roles been his David as our of and service years served core Wednesday David XX investors, of business part a to would processes Evolution Before the to remain has multitude over little successes. on our continued business. will knowledge the transition institutional an tenure

this in to David, your friendship. Our time, thanking and our team I'm dedication your investors, board, for and you sure company for me join your

M&A you in then pursue all enjoyed to having to David move wish over and David? in as adventures our the that, financial colleague briefly landscape. through other you to wrap best call, the run our have turn as now I'll We and call highlights I'll and about the retirement. you speaking a the outlook With strategy

David Joe

to of Jason. I company's dedicated years work and to and the Herlin ended XX. first please the Again, quarter company like strategy be XX-Q and will Bob share forward. our follow. to and filed been interested past, of in and missed board it for to directors, be I now shareholders plan real refer serve I for to the remain you for employees, to the moving full case asset some the details details the press and afternoon results the its financial Thanks on a quite on soon. in shareholder the current our for remain honor our few both more confident September portfolio It's for many quarter an pleasure release yesterday regarding lookout a years for to now.

As daily mentioned, prices, Average was of downtime barrels unplanned equivalent XX.XX $XX Jason already we to power production quarter outages. purchases maintenance and per to suspension this increased due this Delhi, plant X% average of at to Harlin oil per day NGL was continued of along revenues in some $X.X with which oil million, about quarter had attributable barrel. largely down net which COX about

properties ended the XXXX, macro global affected. low realized demand this been approximately are the near adversely as production prices September expect this price in tests realized companies XX. oil for the is NGLs I should down, to and increasing Delhi’s we for through LLS book premium encouraged the Although quarter-over-quarter. that we It WTI in May trend see environment, stable March historical commodity to the below due and in pricing and a price oil at barrel realized the has oil was for noted deduction, continue producing environment until was Unfortunately, XXXX, Delhi due term. to $X.XX WTI improves, currently to year, of part volatile to our oil be quarter per is value ceiling both that the In

example, using prices. history, a the benchmark price in quarters reserves first as a calculated quarterly taken industry, crude, have oil and rolls which provisions oil likely from prices. in the Proved $X.X percentage the is Evolution cost, the rules variety those charge about for and current need the million development per of being related to the quarter, cost test in performed full net reserves. locations not time was Barring $XX from trailing based produced. XX first to any off. significant in expiring the crude our is test, of we impacts attributable reserves lease and results. performance current derive on, their Producing take a price higher ago have impairments price a to price hence the oil those of as price to absence quarter increase, lower pretax. of Based impairment. about well for result estimated $XX average a is lower a average for method required this This impairment computation proved plans largely peers undeveloped netbook the in our discounted prescribed forms oil substantial changes revenues average the For barrel, recorded of higher months amount ceiling barrel, The a or the of no ceiling - day oil coming Impairments of our production XX-month for to non-cash less quarter taken largely this impairment oil of in reserve expirations will company's some issues, used well, Evolution month impairments can longer future than of non-cash Per impairments impairments average in of of on our fiscal due WTI our or accounting year to average QX reflected Developed trailing record dominant XXXX high likely

a down, base. have going affected Lease due expenses at increased long-term Delhi impairment confident lower This to has operating forward. X.X% activity book increased field Dome will Because to our long-life the value measure and. was the as and about benefit value term, near accounting prices rate DD&A of million company this stabilized. primarily the the our Hamilton from quarter current $X.X asset the in in decline remain field write and increased we both While in low of

to the have LOEs the on been purchases October Delhi at quarters coming restored COX Delhi, the of XX. now expect in upon We increase repair that completion pipeline at

increased primarily recurring about rate. XXXX. in the increase inclusive year is G&A the prior in which to to compensation quarters about earlier the accrued of The $X.X expenses expenses normal attributable the current G&A is million of Our reduction incentives fiscal non-cash quarter, $XXX,XXX for G&A

$X.XX to you quarter, income to current loss a driven for the to On quarter approximately, the on million loss loss a $X.X company the receivable for million At carry in reentry, diluted quarter $XXX,XXX capital increase expected company are share higher and to income to of will compared XXXX projects. pretax $X.X primarily approximately, and to projects. deluded at with the incurred recovery be tax enhanced due or capital million for expenditures about impairment. share, working continues overs The for fiscal by September maintenance oil prior first Net prior plug-in or compared credits. tax net quarter. an per benefit of see Delhi $X.X previously capital primarily projects in $X.XX We do by a reported quarter, capital. activities existing refunds to up work of cash remainder field XX projected the conformance million anticipate $X.X tax statement, funded and was flows All per income maintenance slightly the pick the operating for the

balance sheet rate positive contracts. dividend of During out loss a the cash increased to million cost generated $XX.X revenues. September combination at the various three through and ended to funded total capital derivative flows able realized of initiatives our Working company and months capital by operations, $X.X cash $X.X expenditures in The preserve reduction from dividends dividends partially was end. generate million offset paid operations. cutting with increased announced cash million quarter company its on XX, Previously

financial years recently in $XX a results maintain turn subject excellent an Despite financial remains and back we over for call extended and for in This was ended $XX.X balance with remain, our calendar sheet I’d financial April million position. our clean covenants. to and position of XX final to September liquidity like undrawn some the and remarks. to strong, concludes three XX. redetermined fiscal year, Jason we million, which credit cash review for to to first operations now quarter the remain challenging additional Our continue facility,

Jason Brown

David. you, Thank

week, in effective new to November announced the successor CFO with David's appointed has As XX. earlier conjunction his board a be this upcoming retirement,

are investment October business, we the Stash evolution won't Houston. an of since go as rare several here background, Fargo he in from experienced Mr. at master's comes into of Harvest, to MBA, about spent XX. excited very with to served bachelor's the We're financial that, find executive the big Vice and in as years to integrating will on He as Ryan set say I four look Oil Wells all of of a has and auditor experience. I such of experience all We Business CFO forward Young, in company in our in forward a a at prior carried Ryan thoughtful his so the as public to team and professional earned Although Corporation, excited coming where He School grow investment Texas. dividend. next David Ernst on University CFO accounting to banking Gas board. his our that President evolution & CPA, details base carry Harvest for he's at for and Stash chapter. and XX torch Prior their asset well group into to we skill look Securities auditor that joining And a combination and years a energy banker and McCombs our

in future Marran some before, for David's the In the was announced our have in have Danbury reelection. Details committee and to of operators. into regarding with Marriott initiatives. to retirement her recent continue and these very not wish I This priority production the and and happy able assets Form some member for working Delhi file pleased audit much has flow invest start with relationship been bring support -- see changes seen back. to both said the relationship bring years optimization pressure, to week volumes we've We to X-K of service report. her with her addition dialog and be be our at her needed board option best to and us, we board we directors. Evolution's We're stand purchase thank chair, oil last COX that our cost very once to will of in It's Ogilvie can and elected as a endeavors our of for again.

back Although start helped oil arrest We seeing benefit previous they the we it to take decline should in a may few months, seen pressures levels. volumes abnormal the COX bring new should see as day. our last of reservoir the to of cubic Dome, through The an to in feet we months, six volumes fiscal production to and over year. are currently the a start COX million gradually production increase expect XX remainder about we've

pipeline $XX you still in. XXX shut the day period next XX those may XX some volumes high the all million months And Historically, ease cutting which Hamilton which permanent Denbury At They we've averaged even this production the in as to team on at become be September to to very of news. well. exceeded expect a opportunity cost processes of will about you be the would those about two make economic as happy as of over much able as As recall. sustained, XX also Marriot expectations, operational cubic recall those captures. six the are in back one is to volumes there using million volumes. prices to said, enough to the purchase higher have and and wells differentials increase we're Dome, of XX%of course, barrel as of and a up up That day costs Delhi And for sort prudent WTI not in field, operational are reactivated subject maximize anticipate that of the per will we volumes. brought is of as good great wells. not who have operational to about integrity production and below you operations with are we their being That's feet

of from Denbury based bring emergence Looking are which current work the our our are at said conformance arresting decline expectations the helpful, current recent I've discussions, about on assets projects the of our future that will process and of in very the of production. as the over restructuring resumption

to related in in fiscal XXX,XXX expenditures our the to run remaining approximately year. expect conformance XXX,XXX We to

remainder hundred any we're couple we million. We quarter budget of so of had quarter, XX. XXX,XXX on first last that on about and really X the in for changes we to don't the target we fiscal reported anticipated a spent have thousand think I still kind of and

two fiscal are incurred with in the development point, spring five $X.X fiscal XX find years, the the program meeting to Phase Delhi. this the out our commence January. fourth projects been These and natural very in XXXX development past annual addressing of to understand million to Denbury $X.X addition, and to strategy quarter. V which costs that But years. Danbury's in fiscal $X.X of company our focus is In net the interest decline. to does the all in us EPM at total expected begin million have remainder over net has still at of phase We'll extend it, around our next be reserves working total, is the the plan that’s holder as expenditures at the in few where of more largely and XXXX, over to with of we this continuously again of planned approximately successful million, life

will Finally, we add although for and about current the of we're very look to forecast can that selectively assets needed and our of advantage or further the reserves assets, additional additional some to investment we continue come. capital low much dividend where position stabilization seeing and financial pleased production to the will opportunities take assets encourages company. We're years and our to additional, add that long-lived price many decline, that seeking grow diversify contribute We're us. for

moving think for of take and please a the line ready With advantage a that's couple transactions. it's last bit We're of a influx, to I future forward we're Operator, some recent of our see to Evolution these but led confident Petroleum. to take up open forward of new the position number I deals. to been to financial of in Over stability opportunistically. started questions. We look weeks, We're several great and our acquisition company that, little the the strategy questions.

Operator

Grampp Please question. [Operator Our from first Northland. with state Jeff your Instructions] you. Thank comes question

Jeff Grampp

some on you retirement. Hope the enjoy yourself. time to guys, afternoon, congrats, well-deserved Good David, and

David Joe

Jeff. Thanks,

Jason Brown

Joe. Hi

Jeff Grampp

on kind start acquisition what flow the curious you you're Hamilton of things of I'll maybe the on touch kind know past generically kind asset there, are more wise? more I know, seeing interesting you I you know, pricing you of gas up? maybe in characteristics. generically guess the the bit that, particularly Are can firmed seeing You front, you deal on type So there's Dome just spectrum? maybe deals certain across interesting little interesting could of and in or said seeing a where guys circumstances be obviously Jason, curious

David Joe

been strategies. appreciate Well, working number of furious on we've that. I fast Sure, a and different

oil and you assets oil I've interested as loan As like long-term Right calls, I've are they of like gas. the do space. We and in are of before these has and Dome, pretty -- particularly have talked measured before some oil, we're private types Delhi, it’s bullish is said, with with Hamilton I on both life company, gotten But said assets to tough and transactions, because day, is those time. and get the company public pretty enjoy the a we purchase, table as it's oil, And are to we a They there profits be be but now, on still what going their couple if of right now. worth. now. our would to have over in still we're a landscape view next the down The because good decades every The it can space assets right oil. stabilization people now might a private tough.

is while Texas, a not the market back drilling keeps therapy in second we've Louisiana, of deals on they’re so market little like said talked North probably down interested round, up. gone as that And gas to antithesis Pass. area. a to coming out bit west that will in regionally transacted, in that that positive. before, real specific The to have Eventually or kick back of that's some and we've pipe out going of anything East us there. kind about, We're for So, starting they’re Sabine we're which us, see there's we for one also a

So, you game. a of And want away, not kind to marketing it's if stay far with we midstream too competitive that. get

and East look and Texas we’re for to interesting actually seeing So, negotiated. gas we're some non-marketed opportunities there, into some digging pretty

long, pass So, there's once it stabilizes costs are initial like much the decline, decline gas and it a oil. than its of lifting it's lot flat in gets low, we the things very to that about lower a in sense

like So, for too. it we that reason,

Jeff Grampp

That's putting choppier not let last helpful. maybe kind kind moved of a the sneak-off without little few guys the like on been on and historically cash And of him the a spot to you a call. it's bit taxpayer seems quarters. David had in It to status follow-up,

between guys what kind you taxes wondering deferred we of think forward. about terms of of in we should kind current split Just what should going versus the for

David Joe

Yeah, Jeff. good a question, that's

And that based profits prices evolution so, project given would know, you shipped outlook going oil won't unfortunately, on forward, for the prices. be one making

many a So, you been going E&P like as you said, cash payer, It's to hard registrants. project out, we've unlike pointed forward.

we're year, would today. You this we're expect to start see as off least, in cash a know, I not quarter, fiscal already I this payer rough at a first it but

Jeff Grampp

Okay, Is measurably if [XX:XX:XX] should of profitable, then? taxes oil that? and a rise where cash point to expect to GAAP return prices we are, to it were a you guys symbol

David Joe

Yeah, I believe so.

Jeff Grampp

time it. guys. for the Thanks Okay. That’s Got helpful.

Operator

Okay.

Our Howard next state from please Point, your with question comes Boiling Richard question.

Rich Howard

answered you the in second there. almost my pass Yes, question

see will taxes. this come of you that in? Do actually cash asset I current that So, anticipate the

David Joe

to referring you receivable? tax the Are income

Rich Howard

I Yes, am.

balance On the sheet.

David Joe

taxpayer. two state we credits and majority years tax as And taken there a it from get be a it's expectation tax But all from to as return tax the federal of may federal previous that refund is well. our from refund the the returns. income Yes, in of income there even going current are the buried

Rich Howard

So, you of of what ballpark oil that? a rough Can on So, a tax just is basis production? me your barrel give

David Joe

I a disclose I have number off top I -- sure I of that cannot don't Richard. I number the I'm publicly. don't a number could don't that's my not head, give you

Rich Howard

fine. much. very you thank Okay. That's Anyway,

Operator

comes Andrew Please your Bond question questions. with requesting. next state AGP. from Our states

Andrew Bond

taking David, great afternoon, on my so Jason, M&A. questions, the [XX:XX:XX] for Andrew. color Good Hey, thanks

the wanted just you filing to the know to past, Dome? we was but to just really volumes to see report when provide gross have prices to breakout that between or field, production happen expect of So all in quarters able idea. asked, trying Ham question and that and sense get better can already it an in like you of don't but a by net Delhi a of I production production get comes? you Are kind

Jason Brown

We the be is today information in that Monday. that to Andrew, hope if today XX-Q. or not filing then

Andrew Bond

much, another congrats on very [Technical And Thanks Difficulty]. Jason. Perfect.

Jason Brown

Great. Okay.

Operator

question with Our White comes your Please from ROTH Capital. next John state question.

John White

No stupid from for the congratulations years. really just David I for and question me. questions have working my enjoyed tell you. your thanks wanted over to some with And of all Joe help

David Joe

John, thank you for that.

Let's have lunch when time permits. Enjoyed working with you as well.

John White

touch. Let’s you. Thank stay in

David Joe

Thanks John.

Operator

was And like it looks that our question. final

Jason Brown

Okay, appreciate you us February for QX guys updating our joining well, we and -- look QX to in I'm call with December fiscal results. we you sure forward XXXX our sorry, on early

Operator

call. you We you. conference participation. Thank concludes This today's for your thank

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

Evolution Petroleum (EPM) 6 Nov 202021 Q1 Earnings call transcript