Earnings call transcript: Evolution Petroleum misses Q4 2024 forecasts

Evolution Petroleum Corporation Inc. reported its fourth-quarter 2024 earnings, revealing a miss on both earnings per share (EPS) and revenue. The company posted an EPS of -$0.06, falling short of the forecasted $0.085. Revenue came in at $20.28 million, below the anticipated $23.51 million. Following the announcement, shares saw a slight decline of 0.75% in after-hours trading. According to InvestingPro data, the company maintains a significant 9.06% dividend yield and has consistently paid dividends for 12 consecutive years, demonstrating its commitment to shareholder returns despite earnings volatility.

Key Takeaways

• Evolution Petroleum reported a 4% year-over-year revenue decline.
• EPS and revenue both missed analyst expectations.
• Production volumes increased by 10% due to new acquisitions.
• Stock price fell by 0.75% after the earnings release.

Company Performance

Evolution Petroleum experienced a challenging quarter, with revenues decreasing by 4% year-over-year. Despite a rise in production volumes by 10%, driven by the SCOOPSTACK acquisitions, the company faced lower realized commodity prices, down approximately 12% compared to the previous year. This performance reflects broader industry challenges, including fluctuating commodity prices and market volatility. InvestingPro analysis indicates the company maintains a FAIR overall Financial Health score of 2.36, with particularly strong profit and cash flow metrics, suggesting resilience despite current headwinds.

Financial Highlights

• Revenue: $20.28 million, down 4% year-over-year
• EPS: -$0.06, compared to the forecast of $0.085
• Cash on hand: $11.7 million
• Credit facility borrowings: $39.5 million
• Total (EPA:TTEF) liquidity: $22.2 million

Earnings vs. Forecast

Evolution Petroleum’s earnings missed expectations, with an EPS of -$0.06 against a forecast of $0.085. This represents a significant deviation from analyst predictions, highlighting the company’s struggles with lower commodity prices and operational challenges. Revenue also fell short, coming in at $20.28 million versus the expected $23.51 million.

Market Reaction

Following the earnings announcement, Evolution Petroleum’s stock declined by 0.75% in after-hours trading. The stock’s performance reflects investor disappointment with the earnings miss, although the decline was relatively modest. The company’s stock remains within its 52-week range, with a low of $4.59 and a high of $6.285. Notably, InvestingPro analysts maintain a positive outlook, with price targets ranging from $6.50 to $8.25, suggesting potential upside. The stock generally trades with low price volatility, making it an interesting consideration for income-focused investors. Get access to 7 more exclusive InvestingPro Tips and comprehensive analysis through the Pro Research Report.

Outlook & Guidance

Looking forward, Evolution Petroleum plans to maintain its capital expenditure budget between $12 million and $14 million for the fiscal year. The company is focused on acquiring high-quality, low-decline assets and is evaluating multiple acquisition opportunities. Future guidance projects an EPS of $0.12 for fiscal year 2025 and $0.13 for fiscal year 2026.

Executive Commentary

CEO Kelly Lloyd emphasized the company’s adaptability and strategic approach, stating, "Our ability to adapt to market conditions, capitalize on strategic opportunities and drive consistent returns has been central to our long term success." Lloyd also highlighted the company’s disciplined acquisition strategy, noting, "We generally try to do things on a digestible basis."

Risks and Challenges

• Fluctuating commodity prices could impact future earnings.
• Operational challenges, such as downtime due to equipment failure, pose risks.
• Market volatility and potential geopolitical tensions may affect commodity markets.
• The company’s reliance on non-operated assets could complicate production accounting.

Q&A

During the earnings call, analysts inquired about Evolution Petroleum’s acquisition strategy and its focus on both existing and new core areas. The company confirmed its interest in potential acquisitions and addressed concerns about production accounting challenges associated with its non-operated asset model.

Full transcript - Evolution Petroleum Corp Inc (NYSE:EPM) Q2 2025:

Conference Operator: Good morning, everyone, and welcome to the Evolution Petroleum Fiscal Second Quarter twenty twenty five Earnings Conference Call.

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: All participants are in a

Conference Operator: listen only mode. Please also note today’s event is being recorded. At this time, I’d like to turn the call over to Brandy Hudson (NYSE:HUD), the company’s Investor Relations Manager. Ma’am, please go ahead.

Brandy Hudson, Investor Relations Manager, Evolution Petroleum: Thank you. Welcome to Evolution Petroleum’s fiscal second quarter twenty twenty five earnings call. I’m joined today by Kelly Lloyd, President and Chief Executive Officer Mark Bunch, Chief Operating Officer and Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer. We released our fiscal second quarter twenty twenty five financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results.

You can access our earnings release in the Investors section of our Web site. Please note that any statements and information provided in today’s call speak only as of today’s date, 02/12/2025, and any time sensitive information may not be accurate at a later date. Our discussion today will contain forward looking statements of management’s beliefs and assumptions based on currently available information. These forward looking statements are subject to the risks, assumptions and uncertainties as described in our SEC filings. Actual results may differ materially from those expected.

We undertake no obligation to update any forward looking statements. During today’s call, we may discuss certain non GAAP financial measures, including adjusted EBITDA. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release. Kelly will begin today’s call with opening comments. Mark will provide an update on our properties and plans as they relate to our ongoing strategy of maximizing shareholder returns.

And Ryan will provide a brief overview of our fiscal second quarter highlights. After our prepared remarks, the management team won’t be available to answer any questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today’s call, it will be available on the Investors section of our website. With that, I will turn the call over to Kelly.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Thank you, Brandy, and good morning, everyone. Our team continues to execute a disciplined strategy that balances organic growth with high quality acquisitions, all while maintaining a strong financial foundation. Our ability to adapt to market conditions, capitalize on strategic opportunities and drive consistent returns has been central to our long term success. As we sit here today, I would describe the outlook for M and A as highly encouraging. We’re currently evaluating multiple acquisition opportunities, all of which have the potential to enhance our long term growth strategy and further improve our cash flow generation right from the get go.

We’re seeing opportunities for negotiated transactions across several fronts, all at highly compelling valuations that if we are able to close will be materially accretive. In the last five years, we have invested over $118,000,000 in shareholder capital to grow production by 200% and expand our portfolio with hundreds of high quality undrilled locations, all secured at exceptional value. We take great pride in our track record of acquiring assets at attractive valuations that deliver meaningful cash flow and long term shareholder returns. And thus, we are confident in our ability to deliver on these initiatives and drive cash flow towards our dividend program for years to come. The energy market remains dynamic, presenting both challenges and opportunities.

While the first half of fiscal year ’twenty five has been marked by significantly lower realized commodity prices versus the same period in fiscal year ’twenty four, particularly for natural gas, we are excited about the expectations for the rest of the year. Natural gas prices throughout the futures curve look much more favorable and look to have staying power as the outlook for increased demand only gets stronger with expected easing of LNG export restrictions and increased commercial and residential demand for natural gas fired electricity. The front month pricing of crude oil has tended to roll month over month towards spot pricing, bucking the obvious backwardation in the WTI futures curves. With supply and demand remaining fairly tight and threats of increased sanctions and other potential disruptions remaining ever present, we see this trend as likely to continue. All of this makes for a very promising setup for the second half of our fiscal year ’twenty five.

Despite this volatility, our diversified portfolio continues to demonstrate resilience, allowing us to sustain strong production growth and effectively manage market fluctuations. Our ability to navigate these market conditions through a combination of strategic investments and disciplined capital management remains a key differentiator for Evolution. Our total production grew 10% year over year to 6,935 BOE per day, reflecting strong contributions from our geographically and commodity type diversified portfolio of long life, low decline producing assets and our organic growth components. This double digit production growth was in spite of temporary downtime in Williston and Chabarue that resulted in approximately 90 BOE per day of deferred production for the quarter. The downtime issues have since been resolved with rates fully restored by January.

In the SCOOPSTACK, which we acquired based on accretive metrics to the then existing production exclusive of any future new drills has and continues to impress with results from new wells that have been drilled and or completed since the acquisition. Our partnership at Chabarufeld with its measured pace is progressing nicely as planned. With overall well results coming in at or better than expectations and an estimated 300 plus additional gross locations between Scoop Stack and Chabarue, these properties represent the most exciting current components of our organic growth portfolio, which is a crucial component to our more stable proved developed production base in driving future cash flows and feeding the company’s dividend machine for many years to come. We’re pleased to announce that this quarter marks our forty sixth consecutive dividend payment, maintaining our quarterly payout at $0.12 per share for the past eleven quarters. This consistency underscores the strength of our asset base, our ability to generate reliable cash flow and our commitment to returning value to shareholders through all market cycles.

To date, Evolution has returned approximately $126,600,000 or $3.81 per share back to shareholders in common stock dividends. In fiscal Q2, we returned $4,100,000 to shareholders through dividends. Looking ahead, we remain focused on driving long term shareholder value through disciplined asset acquisitions, strategic drilling expansion and return of capital. Our focus on high quality, low decline assets ensures sustainable growth, supports our dividend program and positions us to thrive amid commodity price volatility. With a strong portfolio, a history of disciplined capital allocation and a commitment to shareholder value, we are well positioned to continue executing on our strategy for years to come.

With that, I’ll turn the call over to our COO, Mark Bunch, to review our operations in more detail. Mark?

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Thank you, Kelly, and good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings press release and filings for additional details across our asset base. Three new wells at SCOOPSTACK were brought online during the quarter, adding to the seven gross wells completed in fiscal Q1 twenty twenty five. We also agreed to participate in eight additional horizontal wells positioning us for continued production additions in the region. Since the effective date of the acquisitions, a total of 32 gross wells or 0.5 net wells have commenced first production.

We continue to outperform our type curves as well. Our production in fiscal Q1 was higher than Q2 due in large part to inclusion in Q1 of unaccounted for production related to prior periods. With the ongoing activity at SCOOPSTACK and the Oklahoma statutes that allow operators to delay payment on first production to working interest owners for up to several months, we could have the same thing happen in future quarters on newly drilled wells. However, with many operators, we’re able to gain access to near real time daily production, thus allowing us to account for new well production during the same period. At Shaveru, production this quarter was temporarily impacted by gas interference issues in the downhole pumps, which reduced flow rates.

The operator resolved the problem inexpensively and production has stabilized back to its forecasted levels. At the January, we commenced drilling on the four new gross wells in our second development block. As of today, we had finished two wells out of the four and expect to finish drilling the remaining two wells by early March. Completions are scheduled to start in April. We have preliminarily agreed to six additional horizontal wells in Drilling Brock 3, which are expected to come online in early fiscal twenty twenty six.

At Delhi, CO2 Injections resumed during our fiscal second quarter and contributed to our production growth. Following the quarter end, one new producing well was drilled at Test Site 5. We’re awaiting the results. In the Williston Basin, a compressor failure on a third party operated gathering system caused temporary downtime for approximately thirty days at the start of fiscal Q2, leading to lower natural gas and NGL sales for the period. Oil volumes were impacted by delays in year end sales in December, which were subsequently sold in January.

Looking ahead, we remain focused on maintaining reliable production, optimizing efficiency and ensuring the long term value of our Williston assets. At Hamilton Dome, Jonah Field and Barnett, production has performed as expected for the quarter and we are pleased with the results. With that, I will turn the call over to our CFO, Ryan Stach to review our financials in more detail. Ryan?

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Thank you, Mark, and good morning, everyone. As Brandy mentioned earlier, we released our earnings yesterday, which contains more information on our results. Now, I’d like to go through our fiscal second quarter financial highlights. In fiscal Q2, we had total revenues of $20,300,000 down 4% year over year. The decline in revenues was a result of lower realized commodity prices, which were down approximately 12% year over year.

However, we were able to largely offset the lower commodity prices with a 10% increase in production volumes due to our SCOOPSTACK acquisitions in February 2024 and subsequent drilling and completion activities as well as new wells at Cheuvreux that came online at the same time. We have continued to add hedges to meet the requirements of our credit facility and protect cash flow. Our ongoing goal for the hedging program continues to be to reduce downside commodity price risk, while preserving the maximum potential upside. Accordingly, we will continue to monitor the market and may add additional opportunistic hedges. On the balance sheet, as of 12/31/2024, our cash on hand totaled $11,700,000 providing us with a strong financial position.

Borrowings under our credit facility stood at 39,500,000 supporting our ongoing operational and strategic initiatives. Total liquidity including cash and borrowing capacity amounted to $22,200,000 ensuring financial flexibility as we continue to execute our growth strategy. We declared a quarterly cash dividend of $0.12 per share payable on 03/31/2025. This marks our forty sixth consecutive quarterly dividend underscoring our commitment to returning capital to shareholders and maintaining a stable and reliable dividend policy. I’ll now hand it back over to Kelly for closing comments.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Thanks, Ryan. It should be clear that our strategic initiatives, both through acquisitions and organic development, have positioned Evolution for continued success. Our track record of acquiring high quality, low decline assets at compelling valuations, expanding our drilling portfolio and maintaining financial strength reinforces our long term growth trajectory. Looking ahead, we remain focused on disciplined capital allocation, maximizing shareholder returns and sustaining our dividend program. With this approach, we are very confident in our ability to navigate market conditions, execute on strategic opportunities and drive meaningful value for our shareholders well into the future.

With that, I’ll turn it over to the operator to begin the Q and A session. Thank you.

Conference Operator: Thank you. We will now begin the question and answer session. And the first question will come from Boobe Brooks with Northland Capital Markets. Please go ahead.

Bobby Brooks, Analyst, Northland Capital Markets: Hey, guys. I just wanted to ask first, obviously, it seems like M and A is still top focus for the team and seems like the pipeline is really healthy. I just wanted to get a sense of would you guys be comfortable doing multiple transactions at once and or maybe it’s in a short window of a month or two where you guys execute a couple or would you or the preference would be to rather space it out? Maybe also if

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: you could just give us

Bobby Brooks, Analyst, Northland Capital Markets: a sense of the size of these targets in your pipeline, are they similar to what you’ve done in the past or bigger?

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Yes. Thanks, Bobby. Appreciate the call. In general, right, I would say most of the things that we are taking a quick look at deep look at, frankly, are in line with what we’ve done in the past, nothing sort of out of bounds on that front for the most part. We generally try to do things on a digestible basis.

So if it turned out that doing one or two in serial sort of back to back order made sense from how you finance it all this and it was very digestible and still highly accretive to our dividend per share, it would be something absolutely we would consider. But it has to be the right deal and they both have to make sense together if we went that way.

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Yes. I mean, I would just add, Bobby, I mean, if you look back historically, we did our Williston and Jonah deals pretty close within a couple of months of each other, right? So certainly something we’ve done in the past. And as Kelly said, it would just need to be the right two types of deals or multiple deals, but there’s certainly a chance we could do that.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Yes, our SCOOPSTACK and our CHAVEROO partnership were very close in timing as well. Again, the cash flows needed for those and received from those will be the main contributing factor.

Bobby Brooks, Analyst, Northland Capital Markets: Got it. And then maybe just it seems like the pipeline it seems that it’s just accelerating a bit kind of the opportunities and for the opportunities such for M and A targets. Could you maybe just discuss a bit as to why that maybe I’m reading into it too much, but seems like there’s an acceleration. Why is that could you maybe just give us a sense as to why that is happening from like a macro perspective?

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Yes. It’s always interesting to tell. You think at this point in time in the commodity cycle, there ought to be a ton of deals going on. And we’ve seen certain times when there’s really nothing out there. Sellers are just expecting some current price to last forever or they’re expecting some futures price that, yes, sure, you’ll make money on the futures price, but you’ll have to lose money right now to do the deal.

Sometimes they just don’t line up buyers and sellers expectations. And we just happen to be at a point right now where we are finding that we can make a reasonable offer and a buyer will a seller will make a reasonable response to it. So again, it just seems like sometimes all the stars line up and sometimes none of them do.

Bobby Brooks, Analyst, Northland Capital Markets: Got it. And then maybe just the last one for me. I think, Mark, you mentioned kind of the dynamic that in the SCOOPSTACK where there’s a bit of a delay that the operator can pay out the non op guys. But then you said that that could be in the future and that could be an impact in the future, but it’s balanced off with something else. Could you just kind of rehash that statement?

I wanted to understand kind of what that balance is.

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Yes. It basically boils down to knowledge because we the problem is we only have a small working interest in most of these wells, say 2%. So we don’t have these tight relationships with the operators that we have in our other areas. Well, what’s happened sometimes is wells we’ll participate in wells, but we won’t get information about being online until after until we like get the first check, which might be for like four or five months of revenue. And we didn’t accrue for it because we didn’t know or we didn’t know the number we might have known it’s online, but we might not know the numbers because we couldn’t get the information.

Now the good news is going forward, we’re getting more available data electronically from operators that participate in the system that we subscribe to. So that probably gets better over time, but occasionally that could still happen. So it’s just realizing revenue in a period in a quarter that maybe after it already produced.

Bobby Brooks, Analyst, Northland Capital Markets: Got it. Thank you, guys. And congrats on the quarter and I’ll return back to the queue.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Thanks, Bobby. Thanks.

Conference Operator: The next question will come from Jeff Grampp with Alliance Global Partners (NYSE:GLP). Please go

Jeff Grampp, Analyst, Alliance Global Partners: ahead. Good morning. Wanted to start first on the Scoop Stack side of the business for you guys. You talked about continuing to have some above average results. Can you give us a sense any materiality there relative to either type curve or expectations you had for some of these new wells?

Thanks.

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Yes, sure thing. So it looks like on average, we’re about 10 high on our what we’re actually what’s actually occurring is about 10% above our type curve for gas and we’re like pretty much dead on, on oil.

Jeff Grampp, Analyst, Alliance Global Partners: Got it. That’s really helpful. Thank you. And on Chavarou, so I think you mentioned, Mark, April for completions to begin on these upcoming wells. Should we expect much of any contribution in fiscal Q4 from those wells?

Or I know there’s typically a flowback period for those where you don’t get much of any oil. So just I guess trying to level set expectations for what kind of Okay,

Mark Bunch, Chief Operating Officer, Evolution Petroleum: great.

Jeff Grampp, Analyst, Alliance Global Partners: Okay, great. If I can sneak one more, maybe this is for Ryan or whoever else wants to take this. CapEx, I know when you guys came into the fiscal year was budgeted kind of in now like 12 to 14 range. I think in that ballpark, obviously kind of way underspending that on a run rate basis in the first half of the fiscal year. Is that range still pertinent or how should we think about capital spending in the back half of the year?

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Yes. I mean, it’s going to be back half weighted, Jeff. I mean, it’s the majority of it being obviously drilling and completion at Chabarue. And I think as we mentioned too in kind of in our remarks in the press release, there’s some activity in SCOOPSTACK. So we do have some money budget in SCOOPSTACK.

But as we said, we’ve had other AFEs come in that we maybe weren’t expecting and some maybe get pushed. But there is some we are going to expect some capital there. And then majority of our drilling and completion costs for Shabru in this four wells is going to happen in the second half of the year.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: But we haven’t seen any reason to adjust that overall.

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: No, the range we still feel comfortable with.

Jeff Grampp, Analyst, Alliance Global Partners: Got it. Okay, perfect. Thank you guys. Appreciate it.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Thank you, Jeff.

Conference Operator: Our next question will come from John White with Roth Capital. Please go ahead.

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Good morning, everyone. Thanks for all the updates on the call. Hi, John. Appreciate the call. Yes.

On the subject of acquisitions, are you concentrating on existing core areas or could we see you open up a new core area with an acquisition?

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: I would say that some of what we’re looking at has a bit of an overlap and then some of the stuff would be really new core areas. But as you know well as a non op rather than if you were an operator, it would require a whole new team and you’d have to have a team for new Area X, whereas for a non op, that doesn’t really apply to us. So it’s not a G and A bump that would you might expect from somebody who’s operating in a new area. That’s the beauty of us and our model being non

Conference Operator: And the next question will come from Jeff Robertson with Water Tower Research. Please go ahead.

Jeff Robertson, Analyst, Water Tower Research: Thanks. Mark, on a micro level, the interference you spoke about at Chavarot, was that on the new wells that have been drilled or was that on existing producing wells?

Mark Bunch, Chief Operating Officer, Evolution Petroleum: That was on the three producing wells that we had.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: From drilling block one? Yes.

Jeff Robertson, Analyst, Water Tower Research: Does that issue make you think any differently with how you complete or stimulate the upcoming four wells?

Mark Bunch, Chief Operating Officer, Evolution Petroleum: It doesn’t affect the stimulation. On the completion side, it could we are looking at different ways to lift it. As opposed to doing an ESP, we could try like a jet pump or something like that. But we have to we kind of have to figure that out. The nice deal is, is we’ve found an inexpensive way to kind of get around the problem if we need to.

Of get around the problem if we need to. And we could also just so we could end up deciding that the best bet is still to do ESPs. That work is still left to be done.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: And Jeff, I mean, for context, it’s a real simple kind of plumbing problem. Lay a line and dump some water down the backside.

Mark Bunch, Chief Operating Officer, Evolution Petroleum: And in this particular case, the line was already laid from the facility back to the wells. Anyway, we just had to separate it out so that we could dump water down the backside on each of the wells. It was really inexpensive.

Jeff Robertson, Analyst, Water Tower Research: Okay. Kelly or Ryan, the last two acquisitions that Evolution completed, obviously, added some organic growth in both the SCOOPSTACK and the Chavarue. When you think about the profile of the company today, would you like to add inventory? Would you like to add PDP? Would you is the best outcome of mix?

Can you can you just talk about it at a high level, how you think about where the asset base is today and what you’d like to accomplish with incremental acquisitions?

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: So where we sit today, I mean, listen, Jeff, in the way we looked at it, certainly the way

Jeff Robertson, Analyst, Water Tower Research: we looked at Scoop Stack,

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: we bought that because frankly, like Mark mentioned, is performing better than we thought. Upside that frankly like Mark mentioned is performing better than we thought when we acquired it. So I would say we’re never going to turn down great opportunities for additional upside. And anything we look at, we like to have some ability to have some upside. However, it is something that we are focusing on now would be immediately cash flow accretive.

So whatever we do is going to be high on the PDP front And again, we’ll get that lagniappe as you guys down in New Orleans like to say from additional upside.

Jeff Robertson, Analyst, Water Tower Research: If I can ask one more. Ryan, you talked about the balance sheet. I think you all issued a little bit of equity in the quarter under your ATM program. Can you talk about how you think about financing alternatives between debt and equity for acquisitions at this point?

Ryan Stasch, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Yes. So I mean from a balance sheet perspective and a leverage, we feel we’re within kind of our stated target, right, one times leverage. So I think you can anticipate any acquisition we do if we added some debt, we would stay within those bounds. And so we’re obviously in consultation with our lender and others just to make sure we have the availability we would need to consummate an acquisition. If it were to be a large acquisition, we obviously have said before, if it’s large and accretive and it makes sense, we could look to use potentially some more into the ATM or issuing equity in the market, again, as long as it’s accretive to the shareholders and it makes sense from a free cash flow per share, which is obviously what we’re really focused on.

Jeff Grampp, Analyst, Alliance Global Partners: Okay. Thank you.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Yes. Thanks, Jeff.

Conference Operator: This concludes our question and answer session. I’d like to turn the conference back over to Kelly Lloyd for any closing remarks.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: We just want to thank everybody for taking time out of your busy day to join us and happy to have you here. We are always available for any follow ups. So thank you again.

Conference Operator: And with that, the conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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