Evolution Petroleum (EPM) - 2025 Q3 - Quarterly Report

Forward-Looking Statements This section outlines cautionary language for forward-looking statements, detailing factors and assumptions that could cause actual results to differ - The report contains forward-looking statements on topics such as capital spending, acquisition strategy, production estimates, commodity prices, and dividend payments[9] - Key assumptions include future commodity prices, access to credit, and expectations consistent with historical experience and industry trends[13] - Readers are warned that these statements are subject to significant risks and uncertainties, with actual results potentially differing materially[10][11] PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents Evolution Petroleum Corporation's unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity changes Condensed Consolidated Balance Sheets Total assets decreased to $156.4 million, liabilities increased to $84.7 million, and stockholders' equity decreased to $71.7 million Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total current assets | $19,794 | $21,723 | | Oil and natural gas properties, net | $133,514 | $139,685 | | Total assets | $156,394 | $162,877 | | Total current liabilities | $22,522 | $15,813 | | Senior secured credit facility | $35,500 | $39,500 | | Total liabilities | $84,734 | $81,750 | | Total stockholders' equity | $71,660 | $81,127 | Condensed Consolidated Statements of Operations The company reported a net loss of $2.2 million for Q3 FY2025 and $1.9 million for the nine months, driven by derivative losses and higher interest expense Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $22,561 | $23,025 | $64,732 | $64,650 | | Income (loss) from operations | $1,586 | $2,084 | $2,835 | $5,503 | | Net gain (loss) on derivative contracts | $(3,802) | $(1,183) | $(3,223) | $(1,183) | | Net income (loss) | $(2,179) | $289 | $(1,939) | $2,845 | | Diluted EPS | $(0.07) | $0.01 | $(0.07) | $0.08 | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $22.6 million, investing outflow decreased to $10.1 million, and financing shifted to a $13.4 million outflow for the nine months Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,596 | $14,742 | | Net cash used in investing activities | $(10,053) | $(52,141) | | Net cash provided by (used in) financing activities | $(13,388) | $29,432 | | Net (decrease) in cash | $(845) | $(7,967) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail accounting policies, operations, acquisitions, credit facility, derivatives, equity, and subsequent events like the TexMex Acquisition - Acquisitions: The company closed SCOOP/STACK Acquisitions in February 2024 for approximately $39.1 million and entered a joint development agreement in September 2023[42][44] - Credit Facility: As of March 31, 2025, $35.5 million was outstanding under the $50.0 million senior secured credit facility, with all covenants in compliance[54][55] - Derivatives: A net loss of $3.2 million on derivative contracts was reported for the nine months, including a $0.2 million realized gain and a $3.4 million unrealized loss[70] - Stockholders' Equity: The company paid $12.2 million in dividends and raised $3.1 million from its ATM equity program during the nine months[84][85] - Subsequent Events: The TexMex Acquisition closed on April 14, 2025, for approximately $9.0 million, and a $0.120 per share dividend was declared on May 12, 2025[106][108] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses business, developments, and financial performance, noting a 5% production increase, flat revenues, and a $3.4 million unrealized derivative loss Executive Overview The company aims to maximize shareholder returns from diversified US oil and gas properties, with a 5% production increase offset by flat revenue and derivative losses - The company's strategy focuses on maximizing shareholder return from a diversified portfolio of long-life oil and gas properties[111] - For the nine months ended March 31, 2025, production increased 5% year-over-year, but revenues remained flat due to lower commodity prices[120] - Financial results were negatively impacted by a $3.4 million non-cash unrealized loss on derivative contracts for the nine months[121] Liquidity and Capital Resources As of March 31, 2025, liquidity included $5.6 million cash and $14.5 million available credit, with FY2025 capital expenditures projected between $12.5 million and $14.5 million - As of March 31, 2025, liquidity comprised $5.6 million in cash and $14.5 million available under the Senior Secured Credit Facility[131][136] - The company anticipates extending its credit facility maturity to April 2028 and increasing total commitments to $65.0 million[132] - Fiscal year 2025 capital expenditure budget is projected between $12.5 million and $14.5 million, excluding potential acquisitions[140] Results of Operations This section analyzes the company's financial performance for the three and nine-month periods ended March 31, 2025, detailing changes in revenues, costs, and production Q3 FY2025 vs Q3 FY2024 Performance | Metric | Q3 2025 | Q3 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues (in thousands) | $22,561 | $23,025 | (2.0)% | | Net Loss (in thousands) | $(2,179) | $289 | (854.0)% | | Avg. Daily Production (BOEPD) | 6,667 | 7,209 | (7.5)% | | Avg. Realized Price per BOE | $37.60 | $35.10 | 7.1% | Nine Months FY2025 vs FY2024 Performance | Metric | 9M 2025 | 9M 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues (in thousands) | $64,732 | $64,650 | 0.1% | | Net Loss (in thousands) | $(1,939) | $2,845 | (168.2)% | | Avg. Daily Production (BOEPD) | 7,033 | 6,651 | 5.7% | | Avg. Realized Price per BOE | $33.59 | $35.35 | (5.0)% | Item 3. Quantitative and Qualitative Disclosures about Market Risks The company identifies energy commodity price risk, managed with derivatives, and interest rate risk from its variable-rate Senior Secured Credit Facility - The company is exposed to energy commodity price risk, partially mitigated by derivative instruments[175] - Interest rate risk arises from variable rates on the Senior Secured Credit Facility, tied to SOFR or the Prime Rate[177] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[179] - No material changes occurred in internal control over financial reporting during the quarter ended March 31, 2025[180] PART II. OTHER INFORMATION This section covers other disclosures, confirming no material legal proceedings or risk factor changes, detailing equity repurchases, and noting other items as not applicable Item 1. Legal Proceedings The company reports no material pending legal proceedings, referencing Note 10 of its financial statements for general claims - The company reports no material legal proceedings, referencing Note 10 of the financial statements[181] Item 1A. Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - The company refers to its Annual Report on Form 10-K for a detailed description of risk factors[182] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section summarizes equity security purchases for Q3 FY2025, noting shares were acquired solely for employee tax withholding on vested stock awards Issuer Purchases of Equity Securities (Q3 FY2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | — | $— | | February 2025 | 13,288 | $5.12 | | March 2025 | 741 | $4.90 | Other Items (3, 4, 5) The company reports no defaults upon senior securities, no mine safety disclosures, and no other information for these items - Item 3, Defaults Upon Senior Securities, is Not Applicable[186] - Item 4, Mine Safety Disclosures, is Not Applicable[187] - Item 5, Other Information, reports 'None'[188] Item 6. Exhibits This section lists documents filed as exhibits with the Form 10-Q, including credit facility agreements and officer certifications - A letter agreement dated March 7, 2025, related to the Credit Agreement with MidFirst Bank, was filed as an exhibit[190] - Certifications from the Principal Executive Officer and Principal Financial Officer under Sarbanes-Oxley Act Sections 302 and 906 are included as exhibits[190] Signatures The report is signed and authorized by CEO Kelly W. Loyd and CFO Ryan Stash on May 14, 2025 - The Form 10-Q was signed on May 14, 2025, by Kelly W. Loyd (CEO) and Ryan Stash (CFO)[195]