Evolution Petroleum (EPM) - 2022 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements (Unaudited) The company reported a significant financial turnaround with a net income of $5.2 million, driven by increased revenues Consolidated Condensed Balance Sheets 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 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] Consolidated Condensed Statements of Cash Flows 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 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][46] - 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] - Subsequent to the quarter end, the company amended its Senior Secured Credit Facility, increasing the borrowing base to $50 million[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong performance to higher commodity prices and production, resulting in higher net income and cash flow Executive Overview 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] - Generated net income of $5.2 million ($0.16 per diluted share), more than doubling the $2.2 million from the prior quarter[108][111] - The Senior Secured Credit Facility's borrowing base was increased by $20 million to a total of $50 million, effective November 9, 2021[108] Liquidity and Capital Resources 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] - The Senior Secured Credit Facility had a $30 million borrowing base with $4 million drawn, which was subsequently increased to $50 million[123] - The quarterly dividend was increased to $0.075 per share, effective for the quarter ended September 30, 2021[129] Results of Operations 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][144] - The company recorded no proved property impairment in the current quarter, compared to a $9.6 million impairment in the year-ago quarter[151] Item 3. Quantitative and Qualitative Disclosures About Market Risks 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] Item 4. Controls and Procedures 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] - 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] Part II. Other Information Item 1. Legal Proceedings The company reported no legal proceedings during the period - The company has no legal proceedings to report[164] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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][167] - The company has a share repurchase program with a maximum value of $1.0 million remaining that may be purchased[167] Item 5. Other Information 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] Item 6. Exhibits 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]