EPM - Earnings call transcript Q4 2024 | Evolution Petroleum Corporation

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Operator

Good morning, and welcome to the Evolution Petroleum Fourth Quarter and Fiscal Year 2024 earnings release conference call. [Operator Instructions]. I would now like to turn the conference over to Brandi Hudson, Investor Relations Manager. Please go ahead.

Brandi Hudson

Thank you. Fiscal earnings Petroleum's Evolution to QX 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 financial We released our the fourth quarter closed results year yesterday. and market after full fiscal XXXX information refer Please additional our results. press earnings these to for release containing

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

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

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

As being a recorded. this reminder, is conference call

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

Kelly Loyd

good and everyone. Thank you Brandi, morning,

this gas portfolio ourselves in has natural and this revenue our fiscal growth. natural year, that for the understood volatile is face while year gas adaptability prices of simultaneously record importance balancing future fiscal of our In key. year we the Following of proven production XXXX, positioning

this of million for the the and part by and proved generated X.X liquids with of driven locations with we equivalent As a fiscal record two to barrels year, transformative oil revenue of production yet added be booked. result, SCOOP/STACK that majority reserves transactions in Chaveroo

we well drilling transactions, highlighting very fiscal SCOOP/STACK benefits building like cash executing in track the inventory, today's operational liquids years to record drilling our locations I'd at and achievements This for sites flow fiscal upon be we XXX production strong locations strategic come, adding call key for bolster investments region, Test XXXX. to the year, to our these shareholders. significantly With 'XX of Site within initial expect expanded multiyear as year start over of three our Chaveroo as V XX-plus by at our for Delhi.

are and and to with Our curves XX locations. participated in Chaveroo original economic noteworthy our stronger in expectations, provide are well than as We efforts in highly especially the above performing assets many exposure predicted. us our higher and type both returns production at drill by efficient, estimates. wells focus calendar generating Similarly, of both These SCOOP/STACK, Site believe we which opportunities. San our SCOOP/STACK are V initial Test durable testament collaboration with wells we early strategic aiming wells three three our drilled Andres exceeding our development in we Chaveroo, initiated high-return an ExxonMobil, wells Delhi, a horizontal have first on first year-end. with to results At of initial to growth the of

income a oil validates initial for development storage of fiscal the carbon net certified leverage the and during year. million Exxon's million $XX also with further has to our drive EBITDA. year, this allowed we benefits Meanwhile, fiscal million in within throughout further for recovery, to of Evolution. acquisition executing targeted aligned I'm announce with XXXX, generated said, of has remain their strategic allocation we utilization of Evolution. expectations. capital Denbury, we And us following stated pleased ratios our disciplined $XX have investments been Delhi incremental priorities enhanced approach will this site and are no we our to revenue, well As adjusted All assets believe key despite as believe which $X capture that dilution

this via flow the Evolution's of of was All generating the it we've supports strategy to core facing Consistently natural accomplished gas tenet continued environment of pandemic. while capital price our dividends. lowest a since as COVID-XX shareholders cash seen return remains

marking to quarterly this September, We I'm over paid dividends a $X.XX decade. XXth pay dividend consistently pleased quarter, another have proud payment. announce consecutive we dividend for will are And to our in very that

is have runway often program to sustaining in CapEx. further years with And for assets I program. portfolio recent dividend that of requirements with our The the face As diversification provides SCOOP/STACK the dividend even prices. low-decline and maintenance low diverse in our the supported stated, commodity of minimal assets the of strategy for our our confidence Chaveroo, and come, by we our have our us dividend of fluctuating extended additions require

value As creating focus remains for we long-term the our shareholders. look future, our on to

committed capital returns and maximizing to management shareholder are deployment. total We through diligent efficient,

we asset strategy is program. simple: cost make supports base, our continue disciplined on current expanding and that management regions, ensure focus our our every in For high-return decision dividend

market assets gas for various portfolio balance production, conditions. built oil of that natural a positioning have us We well and strong

and of to continued is shareholders, for continue best our your all hard We thank M&A to and both want that proven our on you, well will additional shareholders. we base can we continue of what support. to further to team our growth. our for pursue drive investment as course, thank as work We've fronts, and opportunities their within execute will asset evaluate I organic for also dedication current

Mark. the detail. of more call growth We our that, Evolution about I'll to to and turn the positioned well come. deliver Mark to Petroleum future Bunch, to the operations are years believe and we in excited are strong our over returns COO, sustainable review in With

J. Bunch

morning, to review release and listeners encourage press quarter will earnings details across filings on from additional base. for good our Kelly, asset you, remarks the everyone. operational and my and focus our highlights I Thank key

in gross with X gross And these producing. turned wells currently the currently line During of today, additional quarter, are progress. SCOOP/STACK operators of XX in as wells our three XX in wells

three production oil we acreage. in were have proved date exceeded Overall, producing. participate original at production Chaveroo time From in the approximately wells gross to XX line across that developed and by to three agreed June new turned wells XX%. on effective wells the horizontal February forecasted converted has we our the of acquisition the field, completed XX, drilled through Additionally, X. gross were actual In

our due losses, we with our are EURs high drill fluid early working XXXX. fiscal locations the interest XX% quite full XXXX, While share fiscal begin than in horizontal the higher to block These X. unusually to results well as than to we four for in wells QX happy In expected plan to expectations. cost complete the in more operations expected approximately drilling original and are XX% participate are

We have in locations QX that preliminarily begin in XXXX. to additional agreed block estimated well drilling fiscal six horizontal are to X

of We purchased at bringing X advance, also locations number blocks drilling Chaveroo. and PUD in the XX to X total

compared end July. February The X a of of resumed and systematically in increased quarter. and resuming purchases ONEOK was was remained due fourth and COX quarter blocks. XX% per BOE additional our full replaced Basin costs year-over-year future increasing quarter. to XXXX. $XX,XXX fixed per quarter. the COX to during operator participate well. preventative X,XXX production up development The acreage natural to All a to expect horizontal sales Williston gas compressor ago NGL full Future was at net X% fiscal from We in the during are year with recycling quarter the pipeline XX%, in during power reduced COX and production production of compressors down natural was for downtime from of most combined early for up at the prior second quarter quarter for which of the quarter day, this taken up COX recycle May, fiscal Delhi, NGLs The gas back oil quarter. the came online grassland said, throughout the in injection field-wide offline volumes fiscal maintenance by net outages system, purchase affected with days, anticipates XXXX one XX% which COX At

offset contribution call downtime to that, more Stash, and results drilling over to and Ryan.? declines than price gas strong to will review I the Ryan With CFO, Our turn detail. the maintenance. our natural related more from our acquisitions in financials

Ryan Stash

everyone. good Mark, morning, and Thank you,

also to $X.X EBITDA quarter costs. XX% due driven The to Net fourth of from operations liquids compared for gas natural partially of diversification increase the had As ago $X asset and focus Brandi will released cash more yesterday, quarter gas year used million, ago Cash million, we quarter year-over-year. our largely $XXX,XXX contains earlier, on operating offset lower mainly natural the the the for low income reduced in we increased financial resilience of in oil and comments the XX% increased Overall, $X to fiscal to by to earnings mentioned of total an information increased to by our demonstrated by up materially historically In million improvement was primarily flow which adjusted QX, results. My fiscal highlights on fourth year our period. revenues $XX.X compared quarter. and revenue, the results pricing. revenue revenue and million the increased base. our driven

since mentioned this earlier, year, pandemic. environment lowest the we gas the Kelly pricing faced As natural COVID-XX

while maintaining and quarter to our year quarterly dividend. of continue operations positive cash we multiyear However, from another flow generate

On our borrowings with ended hand in in the and in facility. the development Chaveroo side, million SCOOP/STACK $X.X credit cash fields. million development the and CapEx, primarily on $X.X million We the to spent we $XX.X related of on quarter

of quarter, cash reductions $X totaling During SCOOP/STACK November date from received received the effective net during flows the the related properties closing X, between date. we purchase the XXXX, to period cash payments price the million and for

We of to with add in the hedges facility. comply terms to our order continue credit

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

add mark $X.XX XXXX, dividends. will to it ninth such, September per shareholders a XXXX. approximately the per paid consecutive the share opportunistic comments. shareholder has share dividend additional at September we back return, will With $X.XX declared stock to on Directors of Kelly consecutive $XXX.X will of continue be dividend to or over the This date, of price monitor closing Board to for XX, dividend Evolution market back XXth common respect million returned hedges. may cash common and the and As cash on current X, hand I'll now in which quarterly stock level. To the

Kelly Loyd

it in and natural this control XXXX, by of commodity XXXX beyond. Evolution. moves of to we that, and sum operator it that with challenging a cyclical liquid position key To the our Ryan. and don't and much. Thanks, the is macro I'll in fiscal environment Thank diversify for year prices. The turn to making 'XX With levels to begin gas portfolio responded a reality up, very was record to drive investment contended Q&A we revenue fiscal over session. to We for you production ourselves

Operator

[Operator first Schafer comes Instructions] Today's Donovan with Northland Capital. question from

Donovan Schafer

want First, to the I guys you V Test that starting. ask Site with are about ExxonMobil

in where Field? nomenclature remind sometimes different just us is you that can So think is at looking the sources Delhi varies. I

And helping so place kind that's so SPE is the and X area Just here, the going the it with papers like isolated of Test to it that X, talks of was town Or talking like recover things, other water with of Phases Or and is is. on in back me about V. the dip? kind Northeast of this we're and towards side forth. curtain? where Is the this some kind down this And Site X up Southwest X, there?

Kelly Loyd

Kelly. apologize Sure. I of let Donovan, couple this detail going been into weather on more a a get for bit I'm But to that. under just my the here. I've voice. things. quickly, Mark is little

to So that proud. second, I And feel brave this real that's all of women how the sound it on Americans those makes anniversary, if want us funny, actions acknowledge the X/XX as why. tragic hours, men event years and months, I quickly, just just after in and

So I'm going look, and this ahead for answer Mark Donovan, you. let with to go that,

J. Bunch

Probably question. be good everybody. and does updated you need to from hear it to good Donovan, for

Okay.

excuse the eastern So town the the -- me, actually on Site the but development, towards Delhi. of really is west -- current the of is it's of city side Delhi V Test side of

towards town Delhi. it towards so of -- it's further And extension just so the -- of an Delhi

Donovan Schafer

developed? more not So but broadening much phases phase, kind of new existing whole been as of what already incremental an so of a like have

J. Bunch

That's correct. It's just stacking current on development. the to

Donovan Schafer

Got it.

COX big developments then with And on are material Okay. the new into any carbon Because are for the I And the and things even changes. are that kind just more of them? or further sequestration, down mover bigger around conversations of there certified potential real think in conversations phases? queue having are could expanding be the about capture moving they of Or real getting terms in needle things those those forward? kind

J. Bunch

in Site so V. They're still it's in area the Donovan. latter, about, like Test be. more further planned running for room talking And the even the there's lot talking down about the basically, that works right I potentially not queue, mean production -- drilled. the what is wells be to depends the last that could upon we're out now a I are mean thing we're how

Kelly Loyd

go Site And there. they to CapEx add over just a little with now the efficient, is sort it. and associated with for there believe drill full do cost-effective, bunch that's V most way it and project return to most they've just over a was migrated Test has -- to been COX that Don, it ahead color. of more producers Previously, discovered is there. what What whole flood highest COX of

off going how see on the that So that. we're and more to start come results many with then from

really. So high return about we're stuff excited

Donovan Schafer

That sense. makes

Okay.

So like because quarter, COX understand were scaled quarter-over-quarter, the injections, Delhi XX% I itself material there a quite field. amount Production was was no recycling bit. on still back down in focusing a that's and

So number quarter-over-quarter again at the that just up quarter? just all basic -- injecting are like that, that terms operators to and Would a pressure? expect a the go know net you're of COX taking Delhi, moving actually cause the guess there everything, is anything And or Or said you kind I any be for that you're reservoir mean, you or causing different will fine orienting in that down, the for a issues on of ourselves like pick a drop I second volumes like quarter lower? I level, does as reservoir? think to with pieces in would at out like said would COX can like and I next you basis, down related material it recycling fiscal capture that volumes, that or -- get a not stay is when stuff? if potentially a carbon would in even And of follow sequestration mean that? penalty up

Kelly Loyd

Okay.

the levels. So way buying if yes, is we it's number back your -- on to still answer things. of up to recycling full than normally question COX. One, the And all less were

time brought on last that you we So COX of actually where we And COX. saw that flattening -- was bit the the it we normally COX decline. on -- back injecting we of back going then start the to as look we weren't of stuff the we at a COX buying the really When purchases, trend last that do do. fit the buy purchased we'll back Delhi be up. significant weren't We the outage quite bought production expect when with because get when COX, doesn't up because like -- will kind forward. quarter, a We it of

you like the look we your realistic. and way work so back quarter kind would more like feel previous be there of that from And

they reservoir-wise, As we wells know as particular that would don't did of we were some of the the that were data, down I to I shut users. believe like that voidage selectively any And I far in what were producing kind suspect one have COX reducing because things operator minimized that that the happened meant but way was extra injections. therefore, the COX don't actually reservoir. effect high creating hard that of that

be an to of before idea probably your kind are look back you once where fully start up. last a back injections think the but the COX get answer of quarter long might that to to question, So should to way I

Ryan Stash

recycled so Just to of further there Donovan, me and that, I down. wrong, were Mark, think the three correct if I'm one them in compressors was plant

J. Bunch

There's X. actually of one was X, them There's down.

Ryan Stash

And that want we `Okay. injecting recycled down, the is. as rates still the And still said, just not purchase you line to. at we're was COX,

that expect QX. early We

Donovan Schafer

credits just could or the sequestration we way Okay. how what capture how that? carbon clarity get you on would be from there the for clarification -- that question, monetized is in more on guys, and my And then any certification, last any timeline

Kelly Loyd

it, working exact for when anthropogenic timeline talking We're it. have be begin Okay. will about an We still on still don't injected. to COX

there, that's still we but have on, still some time Don. So more some working

Operator

our And next at White from question John Capital. today comes ROTH

John White

that to and recent Congratulations the some is list diversified on fourth going fiscal Are operators a quarter want quarter. of activity forward. SCOOP/STACK more a planned operators? during there it that of I the Really nice XX all X dominating are like details seeing more on wells. activity? or the drilling X get or activity

Kelly Loyd

Yes.

really kind about of half dominating the that's not maybe one probably, that, doing it, have X wells. operator We they're think, I but that after are

John White

who And is that?

Kelly Loyd

Camino. and Canvas

John White

you've mentioned that Yes, Okay. before.

Kelly Loyd

misspoke. sorry, Canvas The I and I'm Continental. last was one Continental.

John White

are Yes. formations Yes, completed? being what Continental. Generally,

Kelly Loyd

Woodford and Miss.

John White

The usual suspects?

Kelly Loyd

Correct.

John White

horizontal And they're all wells?

Kelly Loyd

have Yes. a Springer couple wells, And we too. of

John White

then going and you're going calendar in the wells XQ XXXX, going as correct? is to they're four at to that horizontal fiscal four Chaveroo, And going and XQ to get you're get hor same start XXXX,

Kelly Loyd

That's correct.

John White

Okay. it like gotten then up. lot at have And cleaned looks Delhi a things of

that. on congratulations So

Operator

Research. Robertson today Water Jeff Our next question comes Tower from with

Jeffrey Robertson

year Chaveroo, down I'm down also about a the beginning talk pretty doing how which quarter? fourth the And Mark, was a There your quarter fluctuations. you level Basin, big trying quite quite the just from Can were quarter, the whether Williston was up field, not to think or quarter-to-quarter wondering all your purchase COX the more to in look in should compared your overall fiscal some change bit about for your XX% LOE fourth were you will not third. lack in normal about year LOE what LOE that to for had and in or whether that least of a I'm that was LOE at will you bit? and of from in Delhi reflects which second a ago? just return

Kelly Loyd

Okay. Yes, I can answer that.

So first. let's question answer Delhi

The weren't like more lined You're purchase change COX in main Chaveroo, the on fact initially we At is what was looked just for OpEx production. out things line actually an there buying because correct. of getting that really the was down. issue

when around like know a bounce of did, of we on like that, bring bunch it kind you there's costs how wells is lot. You a first

production X issue also, or for early some X it And We had lost had back got then where on. about an on, we we weeks.

be the we And really per bit Williston, probably to doing because good needed And electrification LOE the BOE at with little lot have we're up I'd to lower making now over lot And look things picking going a they've going a There's to be to that job of a I average, credit be done needed that a be production, well done as fixed. work that expect typically, projects expect in reduction see we also it. we And Williston, down. -- dollars they to are bought a the the on And less think work so done. like in when on that the operator well. high. of then forward, from dramatically to rates we they're

Jeffrey Robertson

fiscal can Ryan, you talk 'XX? think about LOE where you will average or Mark in

J. Bunch

Yes.

I think of Delhi to So your return I think -- point, more levels. we're see kind historical to to going

thing period. year-ago And around averaged last kind kind of same of last we barrel, with so at per just $XX quarter, the looking our

area $XX So minus plus kind barrel, of I I state. that be in a would something assume going steady would or would more be that forward of, probably think, would

Jeffrey Robertson

resume quarter and fiscal activity well little capital, with with 'XX, in And quarter a fiscal think that 'XX share out? spending. second can fourth again Ryan, I capital assume to line of But of the you then drilling an in where then on set fiscal -- full the lumpiness in just bit spending year will estimate of for of will you the cause

Ryan Stash

Sure.

a we've starting So obviously, more control that the Chaveroo and fiscal block. million right of does development have includes And So to wells -- really the next drilling that kind drilling is $XX.X talked range we 'XX. the million about over, X now, something of that include $XX.X have year we and right? completing for kind of

that Now fiscal that depending the slip in timing, could following on year.

a other been obviously, that, The of with piece them conversations fairly drilling of the SCOOP/STACK. operators big is had plans. forthcoming their have with lot and We've

our we the pricing on And based are to that to I if budget what SCOOP/STACK. lower kind soft, continues might us. expect as you But have of So towards told We just trend be on visibility know, dynamic. they've don't as end, basing right? the much that's

Jeffrey Robertson

If about today, With more funding can how think I an in. one about talk you the respect acquisitions you where acquisition? can and is to balance sheet slip

Ryan Stash

Yes.

from debt of we've that kind a pro So around which is tried and of right basis, of business sort to, manage hasn't turn a we're perspective, -- right, leverage, now, around on a to forma changed. the what

they've that $XX can Our of But and conversations any really expanding will to sort on credit total into It's self-selective, have we and them much borrowing give are more right. base which of willing how thought with liquidity, sort single right. mid-first about is additional based kind been potentially much million, and -- get it's facility they and how had right. us to have looking company, of

the really be that marketplace. if we equity that If have we And something of that we accretive, we debt So I a would could a And as find makes that's obviously, we basis is in to to well. expand accretive, then was we sort really, the do to could sense facility and to the option, would the very deal credit shareholders go that for other think right. were always do look up deal on a there. feel look certainly

and base probably accretive. looks So equity be looking combination an really think it'd of if of depending deal the it the a expansion the raise potentially to size on I borrowing of

Operator

question Bruce of And Brown our comes today next Capital. from Brown

Bruce Brown

June? what you on ABL the it fiscal since to the the through all -- end was quarter, we're at the in is wanted just way almost check Fellows, reduced has been from of with -- first it

Ryan Stash

No.

works base, our but like a said, be million, would yet, -- our it's haven't we fall So is redetermination so is reason which it which base we is which no borrowing believe borrowing different. done to have way I that the $XX any

what that's under. a right look sort hedge. That's to around going we other that's at our we'll the of just covenants around number, that And last how is is, much call really there have what is The value. -- collateral been margin was determines number we And redetermination in million, in $XXX of coming forward. affect And that obviously, of again, doesn't more October. lines just here little along liquidity. But up sort hedging that the

Bruce Brown

I what was extent your ABL June number? curious has to XX since as your been reduced

Ryan Stash

of expect we hasn't borrowing as It below point And to base at this again, all. don't down the XX%. go

Bruce Brown

But not you're Right. is what been the part outstanding saying. reduced has

Ryan Stash

was misunderstanding. I Sorry,

see So see -- you'll did yes, in million. put put here we press -- we And release file in our can we you our this XX-K so out, pay week our down here. $X we'll out

So year. from year our of million the went -- we $XX.X fiscal the million at at $XX.X end to end of the

Bruce Brown

what Right. currently? asking I it is was

Ryan Stash

same. the still currently It's

Bruce Brown

It's still the same.

it. got Okay, Thanks.

Operator

White next our a John at Capital. ROTH follow-up And question from is

John White

the I a attack. say But terrorist was of question. have don't the well just to appreciated your I on done. That anniversary wanted Kelly, comment X/XX I

Kelly Loyd

-- Thanks, and I the women, felt I it's important heroism man. yes, men to don't to know, the moving of I said, something. was say it John. It's like responders, the

John White

It done. was well

Operator

conference like management remarks. turn closing back question-and-answer our session. to the over any team concludes the for I'd this to And

Kelly Loyd

us with always, We just want call. appreciate as time the you. we And you for on to being thank and your all taking

questions, more to you. Thank any have contact hesitate us. don't you If

Operator

call. thank conference today's you today's concludes This for We you. Thank presentation. all attending

your have wonderful disconnect lines, now may a You day. and

Evolution Petroleum (EPM) 11 Sep 242024 Q4 Earnings call transcript