Financial Data and Key Metrics Changes - For Q2 2022, net income increased by 31% to $6.8 million or $0.20 per diluted share, compared to $5.2 million or $0.16 per diluted share in the previous quarter [10] - Adjusted EBITDA rose by 20% to $10.2 million from $8.5 million in Q1 2022, with adjusted EBITDA per BOE at $22.32, a 41% increase from the prior quarter [23][34] - Total revenue grew to $22.3 million, an 18% increase from the previous quarter [34] - Cash position improved to $13.6 million, a 71% increase from September 30, 2021 [11][26] Business Line Data and Key Metrics Changes - Production in Delhi decreased by 8% to 108,245 BOE or 1,177 BOE per day, impacted by CO2 purchase suspensions and maintenance [14] - At Hamilton Dome, net production increased by 2% to 3,021 barrels or 413 barrels of oil per day due to restoration efforts [16] - Barnett assets saw a 25% decrease in production to 285,761 BOE or 3,106 BOE per day, affected by operator decisions to maximize cash flow [17] Market Data and Key Metrics Changes - The company benefited from higher commodity prices as it was unhedged during the quarter, leading to increased cash flow generation [8] - Natural gas revenue reached $9.2 million for Q2, driven by production mix adjustments [35] Company Strategy and Development Direction - The company aims to operate within cash flow while paying meaningful cash dividends to shareholders, with a focus on geographic expansion and targeted acquisitions [8][44] - Recent acquisitions in the Williston Basin and Jonah Field are expected to enhance the longevity of the dividend payout program [9][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business and economic environment, declaring a third-quarter dividend of $0.10 per share, a 33% increase from the previous quarter [21][22] - The company anticipates continued cash flow generation and plans to maintain a strong balance sheet while pursuing strategic acquisitions [30][70] Other Important Information - The company amended its credit facility to reflect the acquisition of Barnett Shale assets, increasing the borrowing base to $50 million [27] - The company plans to hedge a portion of its production to protect cash flows and maintain compliance with its credit facility [32] Q&A Session Summary Question: What is the current rate on the credit facility, the interest rate? - The current interest rate is 3%, which is LIBOR plus 2.75% with a 25 basis point floor [74] Question: Looking at the two acquisitions, is there likely to be more activity in the Williston Asset compared to Jonah? - Yes, the Williston Asset is expected to have more operational activity, while Jonah will be limited to operational optimization [77] Question: Can you explain the optionality in the Williston acquisition? - The company has the flexibility to propose wells and can choose to drill or not, providing significant optionality in operations [88] Question: Is the operator continuing to ramp up CO2 injection? - CO2 injection has been ramped up to about 105 million cubic feet per day, with expectations to stabilize production over the next 18 to 24 months [84]

Financial Performance - Total revenues for the three months ended December 31, 2021, were $22,338,361, a significant increase from $5,768,152 in the same period of 2020, representing a growth of approximately 287%[15]. - Net income attributable to common stockholders for the six months ended December 31, 2021, was $12,050,573, compared to a net loss of $19,845,155 for the same period in 2020, indicating a turnaround in profitability[19]. - The company reported earnings per share of $0.20 for the three months ended December 31, 2021, compared to a loss per share of $0.38 in the same period of 2020[15]. - As of December 31, 2021, the net income attributable to common stockholders was $12,050,573, compared to a net income of $6,832,172 for the three months ended December 31, 2020, reflecting a significant increase[24][25]. - Generated net income of $6.8 million ($0.20 per diluted share) in the current quarter, an increase of 30.9% from the prior quarter net income of $5.2 million ($0.16 per diluted share)[113]. - Net income attributable to common stockholders for the three months ended December 31, 2021, increased by $19.5 million to $6.8 million compared to the same year-ago quarter[162]. Revenue Sources - Oil revenue for the six months ended December 31, 2021, was $19,440,608, compared to $10,841,944 for the same period in 2020, marking an increase of 79%[38]. - The company recorded natural gas liquids revenue of $2,586,758 for the three months ended December 31, 2021, up from $305,200 in the same period of 2020, reflecting an increase of 748%[38]. - Oil revenues increased by 79.3% to $19.4 million, while natural gas liquids revenues surged by 1,271.6% to $7.1 million compared to the same period in 2020[165]. Assets and Liabilities - Cash and cash equivalents increased to $13,597,156 as of December 31, 2021, up from $5,276,510 as of June 30, 2021, reflecting a growth of approximately 158%[11]. - Total assets rose to $87,161,108 as of December 31, 2021, compared to $76,705,662 as of June 30, 2021, marking an increase of about 13.5%[11]. - Accounts payable increased to $8,188,421 as of December 31, 2021, from $5,609,367 as of June 30, 2021, representing a rise of approximately 46%[11]. - Total accrued liabilities decreased from $947,045 as of June 30, 2021, to $572,260 as of December 31, 2021, a reduction of 40%[51]. - The company’s total prepaid expenses and other current assets were $852,636 as of December 31, 2021, down from $1,037,259 as of June 30, 2021, indicating a decrease of 18%[43]. Stockholder Equity and Dividends - The company’s total stockholders' equity increased to $62,126,491 as of December 31, 2021, compared to $54,594,803 as of June 30, 2021, reflecting a growth of about 13.7%[11]. - Common stock dividends paid for the three months ended December 31, 2021, amounted to $2,522,381, compared to $837,264 for the same period in 2020, representing an increase of over 200%[25]. - The total stockholders' equity at December 31, 2021, was $62,126,491, up from $57,487,023 at September 30, 2021, indicating a growth of approximately 8.5%[24][25]. - A quarterly cash dividend of $0.10 per share was declared on February 3, 2022, payable on March 31, 2022[102]. Operational Efficiency - Operating costs for the three months ended December 31, 2021, were $13,717,940, down from $21,678,418 in the same period of 2020, a decrease of approximately 37%[15]. - The company incurred development capital expenditures of $0.6 million for the six months ended December 31, 2021, compared to $0.2 million for the same period in 2020, representing a 200% increase[44]. - Total lease operating costs rose to $10.67 million, a 255.5% increase from the prior year, with lease operating costs per BOE increasing to $23.40[153]. - The company reported a 9.9% decrease in total DD&A expense, with the oil and natural gas DD&A rate per BOE dropping by 69.0%[156]. Acquisitions and Future Plans - The company plans to continue focusing on the development of oil and natural gas properties to enhance future revenue streams[10]. - The company aims to build a diversified portfolio of oil and natural gas assets primarily through acquisitions and selective development[27]. - The company completed the acquisition of non-operated oil and natural gas assets in the Williston Basin for $25.9 million, funded with cash on hand and $16.0 million in borrowings[101]. - The company entered into a definitive purchase agreement to acquire non-operated interests in the Jonah Field for $29.4 million, expected to close on or about April 1, 2022[104]. Tax and Compliance - For the six months ended December 31, 2021, the company recognized an income tax expense of $3.3 million with an effective tax rate of 21.3%, compared to an income tax benefit of $5.5 million and an effective tax rate of 21.7% for the same period in 2020[75]. - The company anticipates receiving a $2.4 million receivable for income tax refunds related to Enhanced Oil Recovery credits within the next twelve months[77]. - The company maintained compliance with financial covenants under the Senior Secured Credit Facility, including a maximum total leverage ratio of not more than 3.00 to 1.00[85]. Market Conditions and Risks - The company is actively monitoring the impacts of the COVID-19 pandemic on its operations and has implemented business continuity plans to minimize disruptions[30]. - The company is exposed to interest rate risk but does not use derivative instruments to manage this exposure[186].

Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA of $8.5 million, representing an over 80% increase from the fourth quarter of fiscal 2021 [10][24] - Net income for the first quarter was $5.2 million or $0.16 per diluted share, compared to $2.2 million or $0.07 per diluted share in the previous quarter [34] - Total revenue grew by 38% from the prior quarter, primarily due to a full quarter of production from Barnett Shale and a 2% increase in realized commodity prices [31] Business Line Data and Key Metrics Changes - The company produced 5,843 net BOE per day, which is about 33% higher than the fourth quarter of fiscal 2021, mainly due to the Barnett Shale assets acquisition [9] - Net production at Delhi was 118,228 BOEs, about 1,285 BOEs per day, showing a slight decrease of around 3% compared to the prior quarter [12] - Production from Barnett Shale assets was 382,115 BOEs or 4,153 BOEs per day, a 59% increase compared to the fourth quarter of fiscal 2021 [16] Market Data and Key Metrics Changes - The company benefited significantly from higher commodity pricing as it remained unhedged during the first quarter [10] - The acquisition of Barnett Shale has increased the company's exposure to natural gas, coinciding with a sharp increase in natural gas prices [19] Company Strategy and Development Direction - The company aims to operate within cash flow while maintaining and potentially increasing cash dividends to shareholders [20] - The focus remains on evaluating additional accretive opportunities for long-term growth and shareholder benefit [20] - The company plans to continue its commitment to sustainable business practices and ESG initiatives as part of its growth strategy [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate cash flow and provide meaningful returns to shareholders through dividends and acquisitions [38] - The company is optimistic about future growth opportunities and plans to assess a variety of transactions [42] - Management noted the importance of maintaining a prudent approach to dividend increases due to market volatility [58][59] Other Important Information - The company declared a dividend of $0.075 per common share, a 50% increase over the prior quarter, and plans to pay this dividend on December 31, 2021 [21][23] - The company expects to pay off its $4 million drawn from its credit facility during the fiscal second quarter [26] Q&A Session Summary Question: Are there more Hamilton Dome workovers coming in the next quarter? - Management indicated that while there may be some additional workovers, the current quarter's expenses were higher than normal due to maintenance and reactivation efforts [44][46] Question: What is involved in the final settlement with Tokyo Gas? - The final settlement involves reconciling cash flows received from January 1 to the closing date, which is expected to be a positive cash inflow for the company [50][52] Question: Why did the board not increase the dividend despite strong cash generation? - Management explained that the board is cautious about increasing dividends too aggressively to avoid future reductions, emphasizing a long-term view on dividend policy [57][58]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company reported a significant financial turnaround with a net income of $5.2 million, driven by increased revenues [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets grew to $85.7 million, and stockholders' equity increased to $57.5 million as of September 30, 2021 Balance Sheet Items | Balance Sheet Items | September 30, 2021 | June 30, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $28,295,343 | $18,108,374 | | **Total Assets** | $85,733,043 | $76,705,662 | | **Total Current Liabilities** | $12,735,658 | $6,594,160 | | **Total Liabilities** | $28,246,020 | $22,110,859 | | **Total Stockholders' Equity** | $57,487,023 | $54,594,803 | [Consolidated Condensed Statements of Operations](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) The company achieved a net income of $5.2 million, reversing a prior-year loss, fueled by a 237% surge in revenues Key Metrics | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Total Revenues** | $18,879,010 | $5,595,376 | | **Income (Loss) from Operations** | $6,786,122 | ($9,429,720) | | **Net Income (Loss)** | $5,218,401 | ($7,135,148) | | **Diluted EPS** | $0.16 | ($0.22) | - The company recorded **no impairment of proved property** in the current quarter, whereas a **$9.6 million impairment charge** was recognized in the prior-year quarter[15](index=15&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash from operations increased significantly to $5.6 million, resulting in a $2.7 million net increase in cash Cash Flow Activity | Cash Flow Activity | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $5,592,745 | $1,147,241 | | **Net Cash from Investing Activities** | ($390,370) | ($153,205) | | **Net Cash from Financing Activities** | ($2,524,007) | ($831,194) | | **Net Increase in Cash** | $2,678,368 | $162,842 | | **Cash at End of Period** | $7,954,878 | $19,825,370 | [Notes to Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Key disclosures include revenue growth, the absence of impairment charges, an increased dividend, and a larger credit facility - At September 30, 2020, the company recorded a **$9.6 million ceiling test impairment charge**; no impairment was recorded at September 30, 2021[47](index=47&type=chunk)[46](index=46&type=chunk) - The company paid a cash dividend of **$0.075 per share** for the first quarter of fiscal 2022, compared to $0.025 per share in the prior-year quarter[54](index=54&type=chunk) - Subsequent to the quarter end, the company amended its Senior Secured Credit Facility, increasing the **borrowing base to $50 million**[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong performance to higher commodity prices and production, resulting in higher net income and cash flow [Executive Overview](index=20&type=section&id=Executive%20Overview) Production rose 33% to 5,843 BOEPD, net income doubled sequentially, and the credit facility borrowing base increased - Produced **5,843 net barrels of oil equivalent per day (BOEPD)**, a **33% increase** from the prior quarter, mainly due to the Barnett Shale acquisition[108](index=108&type=chunk) - Generated **net income of $5.2 million** ($0.16 per diluted share), more than doubling the $2.2 million from the prior quarter[108](index=108&type=chunk)[111](index=111&type=chunk) - The Senior Secured Credit Facility's borrowing base was **increased by $20 million to a total of $50 million**, effective November 9, 2021[108](index=108&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity strengthened with increased cash, a larger credit facility, and a higher quarterly dividend - As of September 30, 2021, the company had **$8.0 million in cash and cash equivalents**[122](index=122&type=chunk) - The Senior Secured Credit Facility had a $30 million borrowing base with $4 million drawn, which was subsequently **increased to $50 million**[123](index=123&type=chunk) - The quarterly dividend was **increased to $0.075 per share**, effective for the quarter ended September 30, 2021[129](index=129&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Revenues surged 237% year-over-year due to higher production volumes and commodity prices, leading to significant net income Revenue by Product | Revenue by Product | Q1 FY2022 | Q1 FY2021 | % Change | | :--- | :--- | :--- | :--- | | Oil | $8,858,463 | $5,379,161 | 65% | | Natural Gas Liquids | $4,562,218 | $216,026 | 2,012% | | Natural Gas | $5,458,329 | $189 | n.m. | | **Total Revenues** | **$18,879,010** | **$5,595,376** | **237%** | Realized Prices | Realized Prices | Q1 FY2022 | Q1 FY2021 | % Change | | :--- | :--- | :--- | :--- | | Oil price per Bbl | $66.14 | $36.93 | 79% | | NGL price per Bbl | $28.95 | $9.11 | 218% | | Natural gas price per Mcf | $3.70 | $1.45 | 155% | - Total lease operating costs **increased 260% to $8.6 million**, primarily due to the inclusion of the Barnett Shale assets[142](index=142&type=chunk)[144](index=144&type=chunk) - The company recorded **no proved property impairment** in the current quarter, compared to a **$9.6 million impairment** in the year-ago quarter[151](index=151&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risks](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) The company reports no material changes to its market risk disclosures from its most recent Annual Report on Form 10-K - Information about market risks **did not change materially** from the disclosures in the Annual Report on Form 10-K for the year ended June 30, 2021[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2021, the company's **disclosure controls and procedures are effective**[160](index=160&type=chunk) - **No changes in internal controls** over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[162](index=162&type=chunk) [Part II. Other Information](index=30&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - The company has **no legal proceedings** to report[164](index=164&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company refers to the risk factors disclosed in its Annual Report on Form 10-K, with no new risks reported - The company refers to the risk factors detailed in its **Annual Report on Form 10-K** for the year ended June 30, 2021[165](index=165&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company acquired shares from employees to cover tax obligations and has $1.0 million remaining in its repurchase program - The company received **353 shares of common stock** from employees to pay payroll taxes arising from the vesting of restricted stock at an average price of **$4.53 per share**[166](index=166&type=chunk)[167](index=167&type=chunk) - The company has a share repurchase program with a maximum value of **$1.0 million remaining** that may be purchased[167](index=167&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) Subsequent to the quarter's end, the company amended its credit facility to increase the borrowing base to $50 million - On November 9, 2021, the company entered into the Eighth Amendment to its Senior Secured Credit Facility, which **increased the borrowing base to $50 million**[170](index=170&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files - The exhibits filed with the report include the **Eighth Amendment to the Credit Agreement**, CEO/CFO certifications, and Inline XBRL documents[173](index=173&type=chunk)

Company Strategy and Goals - The company focuses on delivering a sustainable dividend yield through the ownership, management, and development of producing oil and natural gas properties[39] - The long-term goal is to build a diversified portfolio of oil and natural gas assets primarily through acquisition[39] - The company plans to experience growth through acquisitions and development activities, but this may strain its financial and operational resources[161] Asset Overview - Producing assets include interests in the Delhi Holt-Bryant Unit, a CO enhanced oil recovery project, and the Hamilton Dome field utilizing water injection wells[40] - The company also has interests in the Barnett Shale, a natural gas producing shale reservoir, and overriding royalty interests in two onshore central Texas wells[40] - The company holds a 23.9% working interest and a total net revenue interest of 26.2% in the Delhi field, which is operated by Denbury Onshore LLC[41] - The company acquired a 23.5% working interest and a 19.7% revenue interest in the Hamilton Dome field on November 1, 2019, aligning with its strategy to add long-lived reserves[42] - The Barnett Shale Acquisition on May 7, 2021, included approximately 21,000 net acres with an average working interest of 17.3% and an average revenue interest of 14.2%[43] Production and Reserves - As of June 30, 2021, total proved reserves at the Delhi field were 8.5 MMBOE, comprising 6.5 MMBOE of oil and 2.0 MMBOE of NGLs[57] - Average gross daily oil production at the Delhi field was 4,281 BOPD and 977 bbls NGLs per day, totaling 5,258 BOEPD for fiscal 2021[53] - The Hamilton Dome field averaged gross daily production of 1,987 BOPD for the year ended June 30, 2021, with total net proved reserves of 1.9 MMBOE[61] - The Barnett Shale assets had total net proved reserves of 13.1 MMBOE as of June 30, 2021, with an average net daily production of 4.3 MBOE per day from the acquisition date[70] - As of June 30, 2021, total proved reserves were estimated at 23,386 MBOE, consisting of 8,420 MBbls of oil, 6,871 MBbls of NGLs, and 48,571 MMcf of natural gas[76] - Developed producing reserves accounted for 92% of total proved reserves, while undeveloped reserves made up 8%, totaling 1,813 MBOE[76] Financial Performance - The company returned $4.3 million in cash dividends to shareholders in fiscal 2021, totaling over $74.5 million since the inception of the dividend program in December 2013[46] - The company recognized a net loss of $16.4 million, or $(0.49) per common share, primarily due to proved oil and gas property impairments of $24.8 million in fiscal 2021[49] - The company funded operations, development capital expenditures, and dividends from operating cash flow, generating $3.7 million in operating income before impairments[47] - The average price per barrel of oil for the fiscal year ended June 30, 2021, was $47.60, compared to $44.76 in the previous year, reflecting a 4% increase[93] - Total production costs for the fiscal year ended June 30, 2021, were $16,587,052, with an average cost of $18.70 per BOE[93] Market and Price Risks - The company is heavily impacted by movements in natural gas and oil prices, which significantly influence revenue, profitability, and access to capital[136] - The company’s revenues are concentrated in three assets: the Delhi field in Louisiana, the Hamilton Dome field in Wyoming, and the Barnett Shale in Texas[138] - In fiscal 2021, production was negatively impacted by the operators of the Delhi and Hamilton Dome fields due to financial strains and lack of investment[141] - Denbury, the operator of the Delhi field, announced a restructuring plan to eliminate $2.1 billion of bond debt, which may improve future operations[144] Operational Dependencies and Risks - The company does not operate the Hamilton Dome field or the Barnett Shale assets, making it dependent on the operators' success for revenue and growth[146][147] - The company maintains insurance for its oil and natural gas properties, but not all losses are insured, retaining certain risks[129] - The future annual capital cost of complying with regulations is uncertain and may be influenced by unpredictable changes in regulatory requirements[127] - The company’s growth is partially dependent on the success of its future development program, which involves numerous risks and substantial uncertain costs[150] Financial and Stock Market Considerations - One purchaser accounted for approximately 62% of the company's total oil revenues for the year ended June 30, 2021, indicating a significant reliance on a single buyer[153] - The company’s oil and natural gas reserves are only estimates and may prove to be inaccurate due to various uncertainties in the estimation process[154] - The estimated discounted future net cash flows from proved reserves are based on the 12-month average price, which may not reflect actual future prices and costs[155] - The company may be required to write down the carrying value of its oil and natural gas properties if oil and natural gas prices are depressed, which could adversely affect financial covenants under its credit facility[156] - The company plans to plug four wells in the Hamilton Dome field in the first half of fiscal year 2022[98] Regulatory and Cybersecurity Risks - Government regulations regarding oil and natural gas operations may change, potentially increasing costs and affecting operational feasibility[171] - Cybersecurity threats pose risks to the company's operations, potentially leading to financial losses and operational disruptions[180] Stock Performance and Shareholder Information - The company's stock price ranged from $2.75 to $5.15 during the fiscal year ended June 30, 2021, indicating significant volatility[197] - As of June 30, 2021, executive officers and directors owned approximately 8.0% of the common stock, with significant shareholders like Blackrock and Arrowmark each holding around 6.1%[199] - The average daily trading volume of the company's stock was 169,054 shares in fiscal 2021, compared to 155,691 shares in fiscal 2020, reflecting limited liquidity[200] - The company has the authorization to issue up to 100 million shares of common stock and 5 million shares of preferred stock, which could dilute existing shareholders[204] - The quarterly dividend was reduced from $0.10 to $0.025 per share during the 3rd quarter of fiscal 2020, with a subsequent increase to $0.05 in the 4th quarter of fiscal 2021[205] Derivative and Financial Instruments - The company is exposed to interest rate changes, with borrowings under the Senior Secured Credit Facility bearing interest at LIBOR plus 2.75% or the Prime Rate plus 1.00%[310] - The company entered into NYMEX WTI oil swaps covering approximately 42,000 barrels per month at a fixed price of $32 per barrel to mitigate commodity price volatility[311] - The company faces risks related to the availability and cost of oilfield services and materials, which could impact production and project economics[183] - The company relies on third-party services for marketing its oil and natural gas, and any unavailability could adversely affect financial conditions[186] - The ongoing COVID-19 pandemic has significantly impacted demand for oil and natural gas, affecting prices and overall business operations[192] - The company is exposed to market risk on open derivative contracts related to potential non-performance by counterparties[312] - The policy is to enter into derivative contracts only with creditworthy institutions deemed competitive market makers[312] - For fiscal 2021, the company did not post collateral for derivative contracts as it was an uncollateralized trade[312] - Derivative activities are accounted for under ASC 815, which requires every derivative instrument to be recorded on the balance sheet as either an asset or liability measured at fair value[312]

Financial Data and Key Metrics Changes - The company recorded revenues of $5.8 million for the quarter, a 3.1% increase from $5.6 million in Q1 [13][18] - The net loss for the quarter was $12.7 million, or $0.38 per diluted share, primarily due to a $15.2 million noncash impairment [24] - Cash flow exceeded the quarterly dividend before hedge payments, ending the quarter with $19 million in cash and no debt [18][26] Business Line Data and Key Metrics Changes - Lease operating expenses increased by 25% to $3 million, driven by resumed CO2 purchases at Delhi [20] - Realized NGL prices increased by 36% to an average of $12.36 per BOE [19] Market Data and Key Metrics Changes - The company noted a decrease in the 12-month trailing average price for crude oil used in their ceiling test, dropping from $43.63 per barrel to $39.54 per barrel [21] - The operator at the Delhi field has delayed the Phase V development project for 12 to 24 months due to current oil price volatility [25] Company Strategy and Development Direction - The company is focused on growing through acquisition opportunities and maintaining a strong balance sheet to ensure long-term sustainability [8][9] - The management is strategically looking for additional low production decline, long-lived reserves to enhance assets and support dividends [31] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the recent increase in commodity prices but acknowledged ongoing volatility due to the COVID-19 pandemic [7][8] - The company is encouraged by the plans of their operators for 2021 and expects increased production as oil prices rebound [27][29] Other Important Information - The company has issued its 29th consecutive cash dividend of $0.025 per share and plans to increase the next dividend by 20% to $0.03 per share [14][18] - The last of the company's hedges rolled off in December, allowing them to participate in the recent uptick in prices [12][22] Q&A Session Summary Question: Comments on CO2 injection volumes for the year - Management expects CO2 injection volumes to stabilize around 75 million cubic feet per day, with potential increases in late September or October [35][36] Question: Incremental production from curtailed or shut-in assets - Management indicated that Hamilton Dome is expected to see an increase in production with the activation of 11 wells, potentially pushing production over 2,000 barrels per day [39] Question: M&A opportunities and dynamics - The company is seeing an increase in marketed deals and a tightening of the bid-ask spread, indicating a more favorable environment for acquisitions [46][48] Question: Role of the board in M&A processes - The board has been actively involved in the M&A process, meeting weekly to review potential deals and ensuring thorough technical evaluations [54][57] Question: Gas-centric acquisition possibilities - The company is still considering gas projects but emphasizes the need for favorable midstream marketing conditions [63][66] Question: ESG concerns and potential CapEx - Management believes they are in a favorable position regarding ESG issues and do not foresee significant CapEx requirements to address environmental concerns [70][72]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements for the period ended December 31, 2020, reflect a significant downturn compared to the prior year, reporting a net loss of **$19.8 million** driven by lower commodity prices and impairment charges [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets decreased to **$64.7 million** by December 31, 2020, from **$92.1 million** at June 30, 2020, primarily due to a decline in oil and natural gas properties Consolidated Condensed Balance Sheet Summary (Unaudited) | Balance Sheet Items | Dec 31, 2020 ($) | June 30, 2020 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 25,055,350 | 25,316,698 | | **Total Property and Equipment, net** | 39,284,754 | 66,529,920 | | **Total Assets** | **64,702,008** | **92,138,236** | | **Total Current Liabilities** | 3,481,123 | 4,278,859 | | **Total Liabilities** | **11,473,282** | **18,013,754** | | **Total Stockholders' Equity** | **53,228,726** | **74,124,482** | [Consolidated Condensed Statements of Operations](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) The company reported a net loss of **$19.8 million** for the six months ended December 31, 2020, primarily due to a **$24.8 million** impairment charge and a 39% decrease in total revenues Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended Dec 31, 2020 ($) | Three Months Ended Dec 31, 2019 ($) | Six Months Ended Dec 31, 2020 ($) | Six Months Ended Dec 31, 2019 ($) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | 5,768,152 | 9,381,615 | 11,363,528 | 18,533,830 | | **Proved Property Impairment** | 15,189,459 | — | 24,792,079 | — | | **Income (Loss) from Operations** | (15,910,266) | 2,249,764 | (25,339,986) | 5,523,783 | | **Net Income (Loss)** | **(12,710,007)** | **1,764,918** | **(19,845,155)** | **4,557,738** | | **Diluted EPS** | **(0.38)** | **0.05** | **(0.60)** | **0.14** | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to **$1.2 million** for the six months ended December 31, 2020, from **$8.2 million** in the prior-year period Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended Dec 31, 2020 ($) | Six Months Ended Dec 31, 2019 ($) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 1,223,957 | 8,174,058 | | **Net Cash from Investing Activities** | (182,935) | (10,418,590) | | **Net Cash from Financing Activities** | (1,668,458) | (8,372,033) | | **Net Decrease in Cash** | (627,436) | (10,616,565) | | **Cash at End of Period** | 19,035,092 | 20,935,968 | [Notes to Unaudited Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) Notes detail significant accounting policies, including a **$24.8 million** impairment, credit facility reduction to **$23 million**, and reduced dividend payments - The company recorded ceiling test impairment charges of **$15.2 million** for the three months ended Dec 31, 2020, and **$9.6 million** for the quarter ended Sep 30, 2020, driven by a decrease in the 12-month average WTI price from **$47.37** to **$39.54** at Dec 31, 2020[48](index=48&type=chunk)[49](index=49&type=chunk) - Quarterly cash dividends were reduced from **$0.10 per share** in Q2 FY2020 to **$0.025 per share** in Q2 FY2021, with total dividends paid in the six months ended Dec 31, 2020, being **$1.7 million** compared to **$6.6 million** in the prior-year period[56](index=56&type=chunk) - On November 2, 2020, the company's credit facility borrowing base was redetermined and reduced to **$23 million**, with no amounts outstanding as of December 31, 2020, and maturity extended to April 9, 2024[79](index=79&type=chunk)[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the impact of low oil prices and COVID-19, leading to a **$15.2 million** impairment, while highlighting strong liquidity and a recent dividend increase [Executive Overview](index=20&type=section&id=Executive%20Overview) The company recorded a **$12.7 million** net loss for Q2 FY2021, heavily impacted by a **$15.2 million** impairment, yet increased its next dividend and maintained strong liquidity - Key highlights for Q2 FY2021 include paying the 29th consecutive quarterly cash dividend and increasing the next dividend by **20%**, ending the quarter with **$19.0 million** in cash and no debt, resuming CO2 purchases at the Delhi field, and amending the credit agreement for more flexible covenants[105](index=105&type=chunk) - A **$15.2 million** impairment was recorded at December 31, 2020, as capitalized costs exceeded the full cost valuation ceiling, driven by a decrease in the 12-month trailing average crude oil price from **$43.63/bbl** at September 30 to **$39.54/bbl** at December 31[111](index=111&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains **$19.0 million** in cash and an undrawn **$23 million** credit facility, with a recent dividend increase and delayed Delhi field development Liquidity Position as of Dec 31, 2020 | Component | Amount ($) | | :--- | :--- | | Cash and cash equivalents | 19.0 million | | Credit Facility Borrowing Base | 23.0 million | | Borrowings Outstanding | 0 | - The Board of Directors adjusted the quarterly dividend from **$0.10** to **$0.025 per share** in the quarter ending June 30, 2020, and subsequently increased it by **20%** to **$0.03 per share** for the quarter ending March 31, 2021[125](index=125&type=chunk) - The Phase V development project at the Delhi field, with associated future development costs of approximately **$8.6 million**, has been delayed by the operator for twelve to twenty-four months, with an expected start in calendar year 2022 or 2023[128](index=128&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Revenues for the three months ended December 31, 2020, fell **38.5%** to **$5.8 million**, resulting in a **$12.7 million** net loss due to lower prices, production, and a **$15.2 million** impairment Three-Month Operational Comparison (Q2 FY21 vs Q2 FY20) | Metric | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $5.8M | $9.4M | (38.5)% | | Equivalent Volumes (BOEPD) | 1,797 | 2,124 | (15.4)% | | Equivalent Price per BOE | $34.87 | $48.00 | (27.4)% | | Lease Operating Costs | $3.0M | $4.2M | (29.0)% | | Net Income (Loss) | ($12.7M) | $1.8M | (820.1)% | Six-Month Operational Comparison (H1 FY21 vs H1 FY20) | Metric | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $11.4M | $18.5M | (38.7)% | | Equivalent Volumes (BOEPD) | 1,819 | 2,017 | (9.8)% | | Equivalent Price per BOE | $33.94 | $49.94 | (32.0)% | | Lease Operating Costs | $5.4M | $7.3M | (26.2)% | | Net Income (Loss) | ($19.8M) | $4.6M | (535.4)% | - The company recorded a proved property impairment of **$24.8 million** during the six months ended December 31, 2020, primarily due to the decline in oil prices over the preceding twelve months, which lowered the full cost accounting ceiling[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risks](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risks) The company's market risk disclosures remain consistent with its 2020 Form 10-K, with no open derivative contracts as of December 31, 2020 - The company is exposed to energy commodity price risk, counterparty risk, and interest rate risk, monitoring commodity prices to assess the need for derivative instruments but not engaging in speculative trading[168](index=168&type=chunk)[170](index=170&type=chunk) - As of December 31, 2020, the company did not have any remaining open derivative contracts[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2020, with no material changes to internal controls - The CEO and CFO concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective[172](index=172&type=chunk) - There were no changes in internal controls over financial reporting during the quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[175](index=175&type=chunk) [Part II. Other Information](index=32&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[177](index=177&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company refers to its Annual Report on Form 10-K for the fiscal year ended June 30, 2020, for a detailed description of its risk factors - For a detailed description of risk factors, the company refers to its Annual Report on Form 10-K for the year ended June 30, 2020[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not purchase any common stock under its share repurchase program during the quarter ended December 31, 2020 - The company did not purchase any common stock in the open market during the quarter ended December 31, 2020[179](index=179&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Sixth Amendment to the Credit Agreement and CEO/CFO certifications - Key exhibits filed include the Sixth Amendment to the Credit Agreement, CEO/CFO certifications (Rule 13a-14(a) and Section 1350), and XBRL data files[182](index=182&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-32942 EVOLUTION PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) Nevada 41-178199 ...

Financial Data and Key Metrics Changes - The company recorded revenues of $5.6 million for the first fiscal quarter of 2021, representing a 67% increase from the prior quarter [9] - The average daily net production decreased by approximately 4% to 18.41 barrels of oil equivalent per day due to CO2 purchase suspensions and maintenance downtime [16] - A significant non-cash impairment charge of $9.6 million was recorded, primarily due to lower oil prices [19][22] - The net loss for the quarter was $7.1 million, or approximately $0.22 per diluted share, compared to a net loss of $2.3 million, or $0.07 per diluted share, in the prior quarter [26] Business Line Data and Key Metrics Changes - The company focused on cash flow and total shareholder return, maintaining a long-standing dividend program, marking the 28th consecutive quarter of cash dividends [8][10] - Lease operating expenses increased by about 4.9% to $2.4 million, primarily due to increased activity at Hamilton Dome and Delhi fields [24] Market Data and Key Metrics Changes - The average realized oil price was approximately $37 per barrel, with Delhi's realized oil price about $2.20 per barrel below WTI [16][17] - The company expects continued volatility in oil prices due to the global COVID-19 pandemic affecting supply and demand [7] Company Strategy and Development Direction - The company aims to create long-term shareholder returns and is well-positioned to take advantage of potential opportunities arising from the current market conditions [8] - The company plans to invest in the development of Phase 5 at Delhi, with expected expenditures of approximately $1.9 million in fiscal 2021 [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value of the company's asset portfolio despite the current challenges in the oil and gas sector [14][23] - The company anticipates a gradual increase in production as CO2 volumes are restored at Delhi, which is expected to help arrest the decline in oil production [36] Other Important Information - The company maintains a strong liquidity position with $19.8 million in cash and an undrawn credit facility of $23 million [30] - The CFO, David Joe, announced his retirement, with Ryan Stash appointed as his successor [32][34] Q&A Session Summary Question: Can you touch on deal flow and asset characteristics? - Management indicated interest in both oil and gas assets, particularly long-life oil assets like Hamilton Dome and Delhi, while also exploring gas opportunities in East Texas and North Louisiana [45][46] Question: What is the outlook for cash taxes? - Management expects not to be a cash taxpayer in the current fiscal year due to projected losses, but cash taxes could return if oil prices rise significantly [50][51] Question: Will the income tax receivable be collected? - Management confirmed expectations to receive the income tax refund from federal taxpayers, primarily related to previous tax credits [52][53] Question: Can gross production volumes be provided? - Management stated that gross production volumes would be included in the upcoming 10-Q filing [55]

Evolution Petroleum Corporation (NYSE:EPM) Q4 2020 Earnings Conference Call September 10, 2020 10:00 AM ET Company Participants David Joe - Chief Financial Officer Jason Brown - President and Chief Executive Officer Conference Call Participants John White - ROTH Capital Jeff Grampp - Northland Capital David Snow - Energy Equities Incorporated Andrew Bond - AGP Alliance Global Rich Howard - Boiling Point Resources Operator Good day, ladies and gentlemen and welcome to Evolution Petroleum Fourth Quarter and F ...