EPM - Earnings call 2 2024 | Evolution Petroleum Corporation

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Operator

Good morning, and welcome to the Evolution Petroleum Second Quarter Fiscal Year 2024 Earnings Release Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Brandi Hudson, Investor Relations Manager. Please go ahead.

Brandi Hudson

you. Thank Petroleum's Earnings Evolution QX Fiscal to Call. XXXX Welcome Treasurer. President Executive and Officer; joined Officer Stash, by Bunch, Chief Loyd, Kelly and Financial Chief Officer; I'm Mark and Chief Vice President, Senior Ryan Operating the We released our yesterday. XXXX second market results quarter closed financial fiscal after our release Please information results. for concerning refer to additional these earnings press

of X, access can Please in today's that and statements any release speak note be information provided call section may in February Investors later accurate You the earnings today's only time-sensitive any at as and XXXX, date. our website. of date, information not our a

Our our discussion information. update and These forward-looking filings. differ may SEC uncertainties the those of available assumptions are statements management's and subject to Actual We to results today beliefs obligation will from undertake contain no forward-looking risks, any materially currently in based expected. statement. described on forward-looking assumptions statements as

non-GAAP adjusted today's on update measures including closest in to today's ongoing some discuss and and measures, to any prepared our of team be can be plans our as management begin will our of returns, release. adjusted call, our a these questions. Mark comments. opening of they available with financial Reconciliations found Ryan earnings answer and certain Kelly EBITDA to quarter maximizing relate shareholder GAAP brief income. provide After highlights. measures properties will may strategy we call comparable will During review will an the fiscal provide our remarks, the net

being call is conference this reminder, recorded. a As

that, available of be webcast to to the today's wish it of our I on will call turn Investors you to over the a section Kelly. will replay If listen website. With call,

Kelly Loyd

Thanks, Brandi.

heightening portfolios. become few among evolved need over urgency the become having and and so Being and the dividend correlation organic crucial. to and enhance the our of multiple October acquisitions price the more commodities to pricing, flexibility work make past. accretive through superior years, have to Evolution to we has commodity Evolution. has strategy more nimbly commodities of and scale cycle growth February of single and past investment commodity collectively, of exposure the outsized XXXX able markets SCOOP/STACK. expected and for The to of fittingly, From an remains economic XXXX, with obvious the share call has X latest of of proven volatility participated pure-play shareholders. breakdown commodity has price regionalized efficiency the having and the the while protect X has will Over with our single to multiple close $XXX the this for million of Similarly, the transactions, elevated adding increased component our price putting in basin, in effect shortening has our major industry the increased valuation acquisitions,

on Evolution which These which can the locations. X different and points. recently bring by upside transactions undrilled We locations, hundreds uncorrelated depending share added many in favorable value During we've to share to gain our us $X.XX most while virtually borrowings, sales million XX remained major exposure transactions choose years which or in many participate of These dividends other product NGLs, locations, share we over that time, with these paid time. pricing largely both and unchanged. of gas oil, shareholders our of shareholders will another into of per $X.XX all the we either cash count down paying Since $XX and provide per experienced markets, to versus returned in undeveloped natural share major ago, began have over have X repurchases. of have at sell outsized also has

our wells Delhi in example, already an have X X producing in Field. we Chaveroo and drilled As the field

repurchases supporting year use is and/or give So an all to flow to to the operational drive remains growing goal dollar standpoint been shareholder our evolved who consecutive Mark of avoiding dividends. by sheet. dividend maximize recent base, same dilution XXXX, payments, and over-leveraging our total execute it some and cash as we have That the returns every while carefully it of counting asset while will over has paid our to methods balance on an from update to our share evaluating now, since enhanced producing strategy. continue our goal you our replenishing our actions our significant hand or will I'll we and strategy first be XX

J. Bunch

Kelly. repeat on focus read press release, what won't and Thanks, you bother notable items. just the in I to we'll

Asset, Denbury has Overall, online At we us. has but the For some Assets, performance significantly ONEOK to in an gas with production Grassland issues online, Grassland Basin from for this system can of X of our continued to Delhi, sales to rate November. was and in the these although the a affected our for At wells well production more the as by by weeks current system fiscal largely day. decline Exxon flattened experience field. felt per down BOE shut reduced expected resulting back from of transition At gathering are facilities, and was due production our wells impacted ongoing somewhat quarter. Barnett to few not being average back Dome Hamilton production normal than downtime we of field seamless to was historical see rate. Williston EnLink to our quarter and wells be almost work, during third XXX for back impacted its the strong operator field, the December the Currently, Barnett all

to certified the year. with and carbon will enhanced We that ours priorities believe expected capture official continue this process recovery become our Delhi coinciding to a of for be Exxon's storage with utilization end designated site fiscal with align oil

The the polar NGL exchanger that last We we provide did hit very during weather and the increased Delhi not experience at production Louisiana, interruptions year this on installed expected the plant. Northern plant. will heat updates than vortex downtime any cold recent performed more at appropriate. when despite well

X X brought Delhi and we are our In infill pleased In locations to last performance. pleased to by end some on proposed are here. we we As the After fracked announce second drilling first facility early producing and to process, call, cleanup though wells. in in finished wells plugs artificial the on it's the online soon. February, the XXXH expect up. hope process results XXXH we mentioned minor XXXH at future and very new The the and on X lift is the Even field, quarter. modifications, existing all the first cleaning the Chaveroo additional installing for see brought the with before was of and drilled more very, we wells facilities earnings modified out its begin we're and very of encouraged currently the

on We available. project it as will becomes this information provide important

Finally, on effective the X, January of Oklahoma nonoperating in the a acquisition we November working announced X interest Central date. SCOOP/STACK with in

and for been up drilling the in the average process. of locations. day, are paid seller XXX roughly DUCs Currently, assets of have be converted X% per to DUCs an effective working consist As with wells XX producing XXX X producing their to date, producing gross proved and X,XXX developed by XX to interest, BOE

PUDs In pay that will on spudded. the addition, XX EPM been CapEx have

strategy come. asset drilling for and maintain after pricing closing. to view by on long-life accretively acquisitions of highlights discuss both evolving on that crucial to or enhancing downswings based is turn increase I'll our a to We current through commodity the making the years ability over the quarter. as shortly an to Ryan reviewing rate of we begun attractive other for the We it proposals this during undeveloped fit locations perfect drill production our at bit. to have return This adding of production also adding do

Ryan Stash

Mark. Thanks

on As Brandy released the we comments on mentioned the will results. yesterday, quarter. more current focus our earnings highlights which of our My earlier, contains information mainly

we in revenues adjustments properties had updates and $XX approximately in to of this million, quarter total net $X adjusted quarter, September the $X.XX. were see a was also impacts don't $X.X by covering Negatively We by $XXX,XXX nonrecurring beginning million from top operator related period income Earnings of Barnett of received further our adjustments. of and impacting XX-month per $XXX,XXX. million. EBITDA these therefore, EBITDA affected income ownership approximately before line revenue, taxes to This the from XXXX. negatively impacted and ownership share net These expect adjustments adjusted reduced each

liquidity On of cash at facility. spent $XX.X drilling undrawn X the with we between the related ended $XX $X.X development side, million CapEx credit to in million the and and of quarter million the We an hand on Chaveroo. primarily completion wells

Chaveroo the our EBITDA. brief expect asset close uptick the Going of the SCOOP/STACK target to hedges in enter We a forma use into comply entered in timing and our forward, remain fully to plan to of end of below under to acquisition SCOOP/STACK facility to we additional capital our hedges acquisitions our needs We credit facility. prices with credit leverage capital expenditures Xx oil terms acquisition. during of borrowings into pro our on and plan for and and working to related January at

We complete XX% of acquisitions. expect on to once oil the our a be required SCOOP/STACK to and hedge XX-month we basis rolling gas production

hedging natural as capitalize to the contango beyond gas However, currently the on available, consider depending available market. terms such may months in XX we on structures is hedging

amount maintaining commodity hedging goal to maximum reduce our Our downside for of available. program while continue upside will price risk the

$X.XX over current a in December now at quarterly Xth be the On declared and which the our hand paid consecutive front, to consecutive for comments. XXnd shareholder Kelly and paid closing $X.XX XXst and to dividend it March, dividend mark will Xth we and return I'll another dividends level. in dividends

Kelly Loyd

At come. the runway every our by increasing accomplished to returns of weighing eye for towards use always maximizing strategy of an with Thanks, our of extending work Evolution, put all shareholder dollar Ryan. of we dividend many or to years stakeholders, the for we total our carefully

$X.XX of with our returning the have record shareholders to per S&P XXX XX years. than paying track We last peers, over stronger over and a cash of the yields share dividends

into and cover ample We while spending to our see one to a our dividend shareholders. return capital capacity much cash environment our in maintaining are lower like price we can which company today, building commodity

have rock Thank material we've set building moderator the balance returning We continue to turn approach this assets strategically much. base, the In remained very dilution. of cash and our shareholders. session. no resilient you our facilitate I'll that, a consistent had begin built to to it to over has diverse, build to and solid Q&A With sheet to and complement designed

Operator

Instructions]. [Operator

Northland will from Schafer of question first Our come Donovan Capital.

Donovan Schafer

second November on first, X made like SCOOP/STACK your of effective versus date. for based revenue I acquisition go million at the that, the $XX So back you giving in in November from That's are own revenue in quarter reported. you for production fiscal the and just December my looks additional modeling, the the in results why million you I correct I when $XX And right it and line. mistake had

with it's as I to do for error accounting be you'll that just share any you incremental you rough close, your acknowledge to when discount discount us wanted be? draw us So a sense in give the now my purchase need clear you you you But that price can close how this Could to transaction? on much might the revolver that order production for what might there. to expect

Kelly Loyd

acquiring So this the up companies and can what the acquiring works of later settlement with you true you do if we're preliminary you're of companies finals. X happens is, a Not the the honestly, statement times do that all it accrue, accruals. way a on, is then actually then lot that

very will that estimate comes entities. in what will So the it some price have amongst the the but purchase coming will different when a in. solid of be real-time timing Ultimately, we reduced for be little of a be

gas many actual draw it one go it, actual a days bit So days there, for statement and XX between closing preliminary would How and may takes be is out the up the Ryan? little which settlement down final -- production.

Ryan Stash

Don, we're statement now, honest. settlement the to reviewing be

answer close mentioned, Kelly week. as have we we are likely to not may set yet for but an quite So next still you, unfortunately,

going for the versus operators. a what lag then. all And it's better It's on have generally be going their we'll depend a XX-day to revenue so they've And just month. received answer to

production. So sitting if November in February through at end would you're only January, of they through looking here probably the have gotten

there months of production So they're be still a of that may couple older.

Hopefully, the So too that's as may the be is preliminary big not on final. not adjustment confusing. as

Kelly Loyd

or the your But off. could little either think don't It be net-net, number out, washes bit was when one I a way way, it other.

Donovan Schafer

And turning fiscal then talk about quarter. want to I third to

seen as in hit don't extreme and in mid-January, about some we've and as impacts. Texas conditions were some other were there Reuters winter fairly freeze maybe the talking So were severe weather and North that they Dakota there think Louisiana. past, also I but outlets some

I of But the freeze almost days for like couple acted at think a and it production shockingly, state-wide couple because XX% but to the of a think, so Bakken, think, I for Bakken actually was like I LNG only, or processing, the bad was something. days.

talk So I'm FQX? what or have how expect impact can you production through if curious that impacts just events we those for to should may

J. Bunch

year, This water as affect was at all. storms have we us that storm the new the is as any Actually, it didn't we had the winter you're Mark referring didn't in, at the the Bunch. this Delhi, have past. Like plan at issues because to much heat exchange in you're

about Williston, there days. was only that shutdown, was back it very brought quickly. was for And At X everything some So great. was but online

one In get the really years, been there was as good. of But about the back has in is of X this X, online about time quickly. reaction everything days, was And unable but time in the Barnett, real of amount then that fast. back the got say production everything I'd were past they that on problems quickly. came back on time, So Barnett same they the pretty to

the fairly say minimal. effect I'd So is

Donovan Schafer

I squeeze in last if then one can question. And

It You ones your for it's the Bakken doesn't piece are relatively exposure all companies there other guys guys, things but a that smaller relevant. so There considered, Bakken. lower and -- have some pure-play still the to it's you some say of out peers. pie of

the asked In some gee, about, some the Bakken comes really from we So improve going online. any the to Canada. that's I online, could this Alberta pipeline come And I've to just folks But production the of Canada. in impact Trans want past, was pricing congestion about capacity us. or no, to don't like, seeing capacity that impact have when got answer it where I actually we're new now for usually was by Mountain in alleviating positive think opposite expected the talk kind

in producers that but the production, delayed. Alberta then started capacity ramping So got pipeline

actually puts got so the this that's production some seems you in And like Dakota. pricing North Canadian regional on like excess downward pressure it

you forward? just of as would how So think seeing them? the Or could talk can guys for actually pricing And those expect you are going a you where to you just things I'm about this impacts Do case it curious, is unfold normalize the area? capacity back crude production and that in benefit historical the the to online get the was in whatever at discount comes we region? the end day, once that

Kelly Loyd

the In I it think Kelly. is this Williston, So you've framed correctly.

of on lot years, was talked about a for it think I I there to been think, that mile thought Trans was, have supposed They then section X.X December. Mountain people in up. it larger some ran while a Canada, they caused obviously, which delay but ramp projects in think I some into where Nations First of these for takes issue, a them to

that So the be in had expectation production up ramping Trans December. in on would people been Mountain

nowhere to area flows seen really with you go. that So increased into have going

affected So little quarter versus bit this yes, our a Williston past differential quarters. was

read was us Trans to a of Dome our be Trans then with a on down we of really a Canadian lot as Hamilton Select, WCS, from should think Western barrel to have system, and property. We oil trades that barrel. be somewhere which $X issue. Trans about on, I it Mountain of up on go other system so the Again, months a whole effect the there. will Dome effect And Hamilton June, and having as able in Mountain to place will Canada do throughout for think differentials I couple incremental expect, Mountain would east that. differential on some was versus excited absolutely being much the as our we're move Anyway, go. oil that Canadian Dome. market opening $X thought have have not the comes think alleviate should I it for or better positive people a the Hamilton towards that

Operator

The White Capital. next of from John question ROTH comes

John White

going of potential the in So you prospect? Chaveroo Have it's connection to talked about with well. see number good that locations

Ryan Stash

including that now, averages wells just XX or X Yes. X per about basically, X over They're roughly drilled. locations close spread we out it we to total the -- Right year. have

measured program. So drilling it's a

John White

potential, sounds bit quite That's of a like. it

Ryan Stash

that's and us to the interested because gives Yes, so in were and out running that on biggest drill we us like in fits the and see there slowly, project brought operators the want actually room it They'd doesn't a program. X capital of why it our reason year. lot up like race like to everything

John White

income And have on is to benefits? that designation, tax this going positive carbon any capture

Kelly Loyd

us. We're out. say, John, time. trying a they it to end have across pond. expect to what the wicket more until there. COX that's likely, they're We will is this some it affect something as June us a happen will impact the don't direct of to it's -- we get Either of what the sticky happen And telling is figure will or it we have price that

that don't researched. know, think be of can't I of anything would negative because to I it. happen still So

there's So I potential that. upside only think with

Operator

question of Next Robertson from Water Jeff Research. Tower comes

Jeffrey Robertson

on encourage drilling some of of leverage then and now obvious assets outlays. on that new trying curious overall top influence where these strategy reduction on controlling between the you the own just assets SCOOP/STACK Chaveroo I'm X allocating some your perhaps assets the dividend. on maybe I'm acquisition into wondering focused now capital acquisition, versus the the control you in over of of you have fits your with activity non-op that have how all choices have having Kelly, capital all traditionally some to

Kelly Loyd

a with of acquisitions the with Delhi, additional couple takeaway, on we really on really, with there, our to going with acquisition plus What assets Chaveroo, now that We this favorable excited PUDs. we've we from what now and have it different? I with trade to acquisition, record locations flexibility. Largely be but the portfolio wins, needed PDP by honestly, way, these doing would say, locations. Well, again, lot their super with I flexibility we whole what's or options Williston SCOOP/STACK had SCOOP/STACK a be the maintain can you have? have encouraged these Well, may wells we've by what had market some the there's that production, still a and also additional in side, them. terrific the and do be comes look, what's value. at about the in which, going an of flexibility, -- sell the increase more you're couldn't a the our you drill got flexibility But wondering, of on And we there. we're them, investment have is locations past non-op, we purchase that.And more can

another So going really CapEx shareholders. viable fit dynamic. for the of best work we it's again, tailor interest do, to go our to for to put will as this us to what expected obviously tool nicely just with It be we'll we're forward. our But

Jeffrey Robertson

you either to trying place of of opportunities see nonoperated because owners where Do that's their are the of acquisition taking some reposition like assets the industry, in SCOOP/STACK consolidation more the portfolios.

Kelly Loyd

with We acquisitions as lot. look need as really great a it And yes. to we spoken like get always do, return together the at Honestly, doesn't to a these Jeff, in know, the look we've at expect here. we them. We pricing have you come you past,

we excited accretive with what very. of there. out Evolution, will acquisition here, never but not here be have we're They're the out We yes. evaluating, constantly we're So game. We're at

Operator

over concludes conference closing our I question-and-answer Kelly Loyd remarks. back like to This for any turn session. would the to

Kelly Loyd

you. Thank

our we're think to on. the expect really on have have here production strongest one. of as which I by program have now there Plus acquisitions the drilling tell going quick flexibility. Chaveroo in working our ever we've Delhi now not going we're we Kelly Chief of Beatty at And week, here, Evolution, SCOOP/STACK significant low excited SCOOP/STACK the next at Officer. exciting We really our to I with Williston has close going hundreds a we've Just and we The some Accounting at fantastic you, locations and really remiss investment what's successes what interest upside obviously, had. would about I'll that with PUDs. got team this and be recent mentioning

So on appreciate today. I call yes, joining here, us we're the everyone and happy

Operator

and now Thank attending conference now you The concluded. has today's may for disconnect. you presentation

Evolution Petroleum (EPM) 7 Feb 242024 Q2 Earnings call transcript