Evolution Petroleum (EPM) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total revenues of $10.4 million for the quarter, an increase from $9.5 million in the prior quarter, driven by a 9.5% increase in LLS oil prices, despite a 6.7% decline in NGL prices [15] - Net income for the quarter was $3.3 million, compared to $2.4 million in the previous quarter, resulting in earnings per share of $0.10 versus $0.07 [17] - The company maintained a strong balance sheet with $32.4 million in positive working capital and no debt [11] Business Line Data and Key Metrics Changes - Total BOE volumes increased by 3.2%, led by a 23% increase in NGL volumes [15] - Improved performance of producing wells resulted in a 200,000 barrel or 2% positive revision in oil reserves, while the NGL plant saw a 100,000 barrel or approximately 16% positive revision in NGL reserves [10] Market Data and Key Metrics Changes - The company benefits from premium Louisiana Light pricing over NYMEX WTI, which has contributed to consistent cash flows and dividends [8] - The Delhi field, which comprises about 85% oil and 15% NGLs, has sub-$20 lifting costs, providing a high operating margin [21] Company Strategy and Development Direction - The company is focused on acquiring compatible developed oil and gas properties to support its dividend policy and grow shareholder value [12][26] - The management emphasizes fiscal discipline and is looking to take advantage of opportunities in a tumultuous acquisition and divestiture market [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to grow and sustain dividends, with a focus on long-life producing reserves [26] - The company anticipates a mild decline in production of about 4% to 5% in the upcoming year, with potential uplift expected from the Phase V development [48] Other Important Information - The company has paid out $59 million in cash dividends since December 2013, with a current yield of 6.4% [11][23] - The company has an active share repurchase program, with $2.4 million remaining in a $5 million buyback program [23] Q&A Session Summary Question: Acquisition strategy under new leadership - The new CEO indicated a disciplined approach to acquisitions, focusing on long-life oil and maintaining dividend sustainability as the top priority [30][32] Question: Purchase CO2 volumes for FY 2020 - The CEO projected purchase CO2 volumes to be in the low 80s million per day, down from previous estimates [34] Question: Valuations in the A&D market - The CEO noted that current valuations for PDP properties are more attractive, with some properties being offered at PV-12 to PV-15 [39][41] Question: Production profile and CapEx budget - The CEO mentioned that production is expected to see a mild decline, with potential uplift from Phase V development starting in late next year [46][48] Question: Severance tax holiday status - The CFO confirmed that the severance tax holiday is still over 10 years away, providing future benefits for the company [50]