Earnings call transcript: Evolution Petroleum Q1 2025 results miss expectations

Evolution Petroleum Corporation Inc. reported its financial results for the first quarter of 2025, revealing a net loss that fell short of expectations. The company reported an EPS of -$0.07, missing the forecasted EPS of $0.09. Revenue also came in below expectations at $22.6 million, compared to the anticipated $23.88 million. Following the announcement, Evolution Petroleum’s stock saw a minor decline of 0.67%, closing at $4.47. According to InvestingPro analysis, analyst price targets range from $5 to $8.25, suggesting potential upside despite current challenges. The stock is currently trading near its Fair Value based on comprehensive analysis of multiple valuation metrics.

Key Takeaways

• Evolution Petroleum reported a net loss of $2.2 million, translating to an EPS of -$0.07.
• Revenue dropped by 2% year-over-year to $22.6 million.
• The company’s stock price decreased by 0.67% in the aftermath of the earnings report.
• Natural gas revenue increased significantly by 33% year-over-year.
• Oil revenue experienced a decline of 19%.

Company Performance

Evolution Petroleum’s performance in the first quarter of 2025 highlighted several challenges, including a decline in total production by 7.5% to 6,667 BOE/day. Despite a 7% increase in average realized commodity prices, the company faced a net loss due to lower-than-expected revenue and increased operational costs. The acquisition of Tex Mex and the addition of new wells in Chabaroo were notable developments, although the overall financial performance did not meet market expectations.

Financial Highlights

• Revenue: $22.6 million, down 2% year-over-year
• Net loss: $2.2 million or $0.07 per share
• Adjusted net income: $800,000 or $0.02 per diluted share
• Adjusted EBITDA: $7.4 million, compared to $8.5 million in the prior year
• Cash and cash equivalents: $5.6 million
• Revolving credit facility borrowings: $35.5 million

Earnings vs. Forecast

Evolution Petroleum’s actual EPS of -$0.07 fell short of the forecasted $0.09, marking a significant miss. The revenue of $22.6 million also missed the forecast of $23.88 million. These figures indicate a challenging quarter for the company, as it struggled to meet market expectations.

Market Reaction

Following the earnings announcement, Evolution Petroleum’s stock experienced a slight decline of 0.67%, closing at $4.47. This movement reflects investor disappointment with the company’s financial performance, particularly the missed earnings and revenue targets. The stock remains closer to its 52-week low of $4.05. InvestingPro analysis reveals a current ratio of 0.88, indicating potential liquidity challenges, while the company’s overall Financial Health Score remains "FAIR." With a market capitalization of $148.47 million, EPM operates with a moderate level of debt, as evidenced by its debt-to-capital ratio of 0.19.

Outlook & Guidance

Looking ahead, Evolution Petroleum is focusing on gas-weighted opportunities and actively pursuing acquisitions in the oil and gas markets. The company plans to maintain its dividend of $0.12 per share and has expanded its credit facility to $65 million, with an extended maturity to April 2028. The delay of the third Chabaroo development block to fiscal 2026 indicates a strategic shift in capital allocation.

Executive Commentary

"Our third quarter results underscore the strength of our diversified long life asset base," stated Kelly Lloyd, CEO. "We will continue to deploy capital with discipline," Lloyd added, emphasizing the company’s commitment to strategic investments and acquisitions.

Risks and Challenges

• Declining oil revenue poses a significant challenge for Evolution Petroleum.
• The company’s high level of revolving credit facility borrowings could impact financial flexibility.
• Market volatility in commodity prices may affect future revenue and profitability.
• Potential delays in project developments could hinder growth prospects.
• Macroeconomic pressures, such as inflation and interest rate changes, could affect operational costs.

Q&A

During the earnings call, analysts inquired about the company’s acquisition strategy and the performance of new wells in Chabaroo. Executives expressed optimism about M&A opportunities and highlighted potential cost savings at the Delhi field. The positive outlook on Chabaroo well performance was also a focal point, indicating confidence in future production capabilities.

Full transcript - Evolution Petroleum Corp Inc (EPM) Q3 2025:

Conference Operator: Good morning, everyone, and welcome to the Evolution Petroleum Fiscal Third Quarter twenty twenty five Earnings Call. Also note today’s event is being recorded. At this time, I’d like to turn the call over to Brandi Hudson, the company’s Investor Relations Manager. Ma’am, please go ahead.

Brandi Hudson, Investor Relations Manager, Evolution Petroleum: Thank you. Welcome to Evolution Petroleum’s fiscal third 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 Stash, Senior Vice President, Chief Financial Officer and Treasurer. We released our fiscal third 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 website. Please note that any statements and information provided in today’s call speak only as of today’s date, 05/14/2025, 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 statement. During today’s call, we may discuss certain non GAAP financial measures, including adjusted EBITDA and adjusted net income. 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 and review of the company’s ongoing plans and strategy. Mark will provide an update on operations during the quarter and Ryan will provide a brief overview of our fiscal third quarter financial highlights.

After our prepared remarks, the management team will 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, everybody. Our fiscal third quarter results demonstrated Evolution’s commitment to disciplined capital allocation and strategic execution. We stayed grounded in our core strengths, allocating capital prudently to high quality, low decline assets, maintaining our long standing dividend and generating positive cash flow. Our diversified portfolio, robust hedging strategy and measured approach to development is enabling us to weather market volatility while continuing to deliver long term value. Subsequent to quarter end, we closed the Tex Mex acquisition and brought online four new wells in our second Chabaroo development block.

Together, these additions are currently contributing more than eight fifty net barrels of oil equivalent per day and are expected to meaningfully benefit our fiscal fourth quarter production and cash flow, especially when coupled with the recent strength in natural gas pricing. We also expect to see production adds from ongoing activities in our SCOOPSTACK area. The Tex Mex acquisition, which closed in April, adds approximately four forty barrels of oil equivalent per day of stable low decline production with a balanced commodity mix of 60% oil and 40% natural gas. The $9,000,000 transaction was completed at a very attractive valuation of approximately 3.4 times forward adjusted EBITDA based on current strip pricing, underscoring its strong near and long term accretion even amid recent oil price volatility. The portfolio consists of producing wells across New Mexico, Texas and Louisiana and aligns with our long term strategy to own cash generative low risk assets.

Consistent with our disciplined approach, we structured this transaction to preserve the strength of our balance sheet. The $9,000,000 purchase was funded through a combination of cash on hand and a modest $2,000,000 draw on our credit facility. We are now working closely with the operator to evaluate low cost reactivation opportunities that could provide additional long term upside. This marks our seventh highly accretive acquisition in six years and we continue to see an encouraging M and A market even more so now amid oil price volatility. In the last six years, we’ve invested $136,000,000 to grow production by more than 3.5 times, all while returning capital to shareholders with our quarterly dividend.

With a well established track record, we remain confident in our ability to source, evaluate and integrate high quality non operated assets at incredible value. Taking a look at the broader energy market, as we all know oil prices softened during April, falling nearly $12 a barrel in one week to sub-sixty dollars However, natural gas prices have strengthened of late, providing a partial offset to the softness in crude prices. Our diversified commodity exposure helped mitigate the impact of weaker oil revenue. Our third quarter natural gas revenue rose 33% year over year to $7,800,000 and NGL revenue was up 14% to 3,000,000 partially offsetting a 19% decline in oil revenue. This volatile market environment underscores the value and resiliency of our diversified portfolio.

We remain well hedged on oil with approximately 40% of oil volumes hedged at prices above $70 through the fiscal year end providing a strong safety net that supports both our CapEx program and dividend. Operationally, our operators executed well despite some temporary disruptions during the quarter. Total production declined 7.5% year over year to 6,667 barrels of oil equivalent per day, primarily due to planned maintenance at Delhi and weather related downtime in Barnett. Overall, we are maintaining our focus on operational execution and continue to make meaningful progress across our various development programs. As I mentioned earlier, we drilled and completed four new gross wells in the second Chavaroo development block which were brought online shortly after the quarter ended.

While it’s still too early to fully assess how the wells will perform, we’re encouraged by the efficient execution drilling and completing the four wells for less than budget and the highly positive initial results. Mark will have more updates to share across our portfolio shortly. In terms of capital allocation, dividend sustainability remains a top priority for us. On May 12, our Board declared a cash dividend of $0.12 per share of common stock, marking our forty seventh consecutive quarter of issuing a dividend and our twelfth consecutive quarter at $0.12 per share. It’s important to underscore that this dividend was not declared as a one time event.

Despite the ongoing volatility in commodity prices, the Board’s decision reflects our confidence in Evolution’s ability to sustain dividends at this level over the long term. Our ability to generate strong operating cash flow driven by our diversified portfolio of assets enables us to meet our capital requirements, repay debt and continue to return capital to shareholders. To date, Evolution has returned approximately 131,000,000 or $3.93 per share to shareholders in common stock dividends. Looking ahead, our strategy remains focused on preserving financial flexibility, sustaining our dividend and pursuing opportunistic growth. The fruits of our disciplined acquisition and development strategy during fiscal Q3 will be made obvious in our fiscal fourth quarter when we will see the effects of our Tex Mex acquisition and our four new Jabaluru wells begin to contribute to our quarterly results.

While we are committed to long term development, we recognize that there are optimal times to develop new wells and optimal times to acquire new assets. In light of the recent market volatility, we in coordination with our operating partner at Chavaroo have made the decision to delay the start of our third development block to later into our fiscal year twenty twenty six. We believe it’s prudent to now focus our development activities toward gas weighted opportunities, particularly in the SCOOPSTACK. This disciplined strategy enables us to preserve near term cash flow while positioning us to resume development when oil prices are more favorable. By maintaining a measured development approach in a low price environment, we are effectively preserving long term resource value for our shareholders.

In the interim, we’re actively pursuing opportunities in what we view as a highly attractive market to acquire oil weighted low decline producing assets or natural gas properties with favorable hedging potential. All said, our decision making will remain grounded in disciplined capital allocation, financial flexibility and a commitment to delivering long term value for our shareholders. With that, I’ll turn the call over to our COO, Mark Bunch to review our operations in more detail.

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Mark? Thanks, 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 details across our asset base. At SCOOPSTACK, thirteen gross wells have come online fiscal year to date. We have another five gross wells in progress.

Since the effective date of the acquisition, a total 35 gross wells or 0.6 net wells have been brought online. At Chabaroo, as Kelly mentioned, we successfully completed and brought online four new gross wells in the second development block of the field. All four wells were drilled and completed on schedule and under budget. Since production commenced about two weeks ago, it is too early to assess production trends, but so far initial rates have significantly exceeded our expectations. We will continue to monitor these wells closely and we’ll provide an update on performance in the coming quarter.

At Delhi, production was temporarily affected by planned maintenance at both the Delhi Central Facility resulting in the shutdown of the entire field for a few days and the NGL plant for approximately two weeks. At the end of the quarter, the decision was made to switch from purchasing approximately 80,000,000 cubic feet per day of CO2 to injecting additional water instead. Exxon will continue to inject approximately 300,000,000 cubic feet per day of recycled CO2. We believe this will be the most economical way to run the field and will significantly reduce operating costs while maximizing cash flow. In the Williston Basin, we experienced good run time for the quarter.

Production was up quarter to quarter due to the deferred oil sales and third party gathering system issues experienced in the prior quarter. The Williston field continues to generate solid returns. At Hamilton Dome, production remained steady throughout the quarter with no notable operational activity or downtime. The field continues to perform reliably, delivering consistent oil volumes in line with expectations. Jonah also remained steady during the quarter with a temporary dip in volumes during February.

Strong winter natural gas pricing contributed positively to its overall cash flow for the quarter. Barnett Shale delivered consistent cash flow generation in the third quarter despite some brief downtime in January due to winter storms. Production remained steady overall with improved pricing for natural gas and NGL serving as a tailwind. These favorable pricing dynamics helped offset broader commodity price weakness and underscore Barnett’s continued role as a valuable contributor to our diversified portfolio. With that, I will turn the call over to our CFO, Ryan Stash to review our financials in more detail.

Ryan?

Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Thank you, Mark, and good morning. 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 third quarter financial highlights. In fiscal Q3, we had total revenues of $22,600,000 down 2% year over year. The decline was driven primarily by volumes, partially offset by a 7% increase in average realized commodity prices, driven by stronger natural gas and NGL prices.

The decrease in production volumes was largely due to downtime at Barnett in January due to winter storms and one week of planned maintenance at Delhi, partially offset by higher production from a full quarter of contribution from SCOOPSTACK compared to the prior year period. Net loss for the third quarter was $2,200,000 or $07 per share compared to net income of $300,000 or $01 per share in the year ago period. After excluding the impact of unrealized hedging losses, adjusted net income for Q3 was $800,000 or $02 per diluted share compared to $1,000,000 or $03 per diluted share for the prior year period. Adjusted EBITDA was $7,400,000 compared to $8,500,000 in the year ago period. The decrease was primarily due to lower revenue volumes and higher total operating costs due to CO2 purchases at Delhi, which were suspended in February 2024, but were resumed last October.

However, adjusted EBITDA for Q3 was 30% higher than Q2, primarily as a result of higher commodity prices, especially natural gas and NGLs. Our hedging program remains a key pillar of our risk management strategy. We believe our proactive approach to hedging coupled with our diversified portfolio position us well to navigate continued volatility while sustaining our dividend and meeting capital commitments. We will continue to monitor the markets and opportunistically add hedges as necessary to preserve long term cash flow stability to support our dividend. We have negotiated with our lender to provide additional flexibility for our hedging program to allow us to hedge additional gas volumes instead of crude oil to meet the hedging obligations under our credit facility.

At 03/31/2025, cash and cash equivalents totaled $5,600,000 and borrowings outstanding on our revolving credit facility were $35,500,000 giving us total liquidity of $20,100,000 In fiscal Q3, we paid $4,100,000 in common stock dividends, made $4,000,000 in repayments on our senior secured credit facility, paid $1,800,000 in deposits for the Tex Mex acquisition and incurred $4,400,000 in capital expenditures. During the quarter, we also sold a total of approximately 200,000.0 shares of common stock under our at the market sales agreement for net proceeds of approximately $1,100,000 after deducting less than $100,000 in offering costs. In regard to our revolving credit facility, we have received approval from our lender, Mid First Bank, to extend the maturity of our facility to April 2028 and increase their total commitments from $50,000,000 to $55,000,000 Also, we expect to receive $10,000,000 in additional commitments from a new lender, Prism Bank, which will bring our total commitments to $65,000,000 We currently expect to close on the additional commitments and the maturity extension during our fiscal fourth quarter. Yesterday, we declared a quarterly cash dividend of $0.12 per share payable on 06/30/2025 to stockholders of record on 06/13/2025. This will be our forty seventh 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. Evolution continues to perform well operationally, financially and strategically. Our third quarter results underscore the strength of our diversified long life asset base and our ability to meet all capital commitments, debt repayment and return capital to shareholders. This reflects the benefits of a balanced portfolio that can both flourish in favorable pricing environments and withstand cyclical lows. As we look ahead, our priorities remain unchanged, maintain and look to grow our long standing dividend, preserve financial flexibility and grow free cash flow.

We will continue to deploy capital with discipline prioritizing acquisitions and focusing development on natural gas weighted areas while deferring oil weighted drilling to optimize value and timing. Backed by a resilient business model and consistent execution in addition to the hard work and diligence of our team and guidance of our Board of Directors, Evolution’s low cost non op business model is well positioned to navigate commodity cycles and deliver long term value to our shareholders. With that, I’ll turn it over to the operator to begin the Q and A session. Thank you very much.

Conference Operator: We will now begin the question and answer session. Our first question comes from Jeff Grampp with Northland Capital Markets. Please go ahead. Good morning, guys. Thanks for the time.

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

Jeff Grampp, Analyst, Northland Capital Markets: you talked about some encouragement in the M and A market. I’m hoping you could touch a bit on bid ask spreads that you’re seeing as we tend to see oil prices get weaker. I know bid ask spreads can kind of widen and make it challenging to get deals done. But it seems like you’re still encouraged nonetheless. So curious to get your thoughts there.

And then just if you’re seeing any divergence in terms of oil versus gas weighted acquisitions, are there any trends or themes you can share in that regard? That’d be helpful. Thanks.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Sure, Jeff. Look, the way I kind of look at it, if you go on the oil front, I mean, if oil is going to follow the strip, which is sort of what we use in our budgets for, say, the next twelve eighteen months, I think we can all have a very strong estimate that domestic crude oil production is going to decline and the returns just aren’t enough for enough profitable wells to be drilled at the strip price. The country has got so many new wells with super high declines nationwide. I mean, unless you have a major demand shock, which I don’t think we’re going to, these tariffs seem to be more of a negotiating tool than trade killers, you’re going to have to have crude production will go down and then you’re going to have to have it go back up. And the only way to do that is via the price mechanism.

So prices will go higher. So if we’re out there negotiating on the strip, on long life low decline step, really like where we are on that. And again, if it only like Tex Mex, right, it’s only going to decline 7% and you buy it on a today’s strip. And if you’re expecting in a couple of years or less prices to move back up, it’s a heck of a place to want to go acquire. And so we are seeing stuff out there.

We’re seeing, some of this is led by funds coming to the end of their life and needing to monetize. So you’re always going to have that sort of activity and just natural stuff. You’ve seen some acquisitions. Guys need to get rid of their noncore stuff, which is great, right where we want to be. So you’re seeing that.

And on the natural gas side, I mean, it’s the opposite, right? You have a really nice favorable strip going forward. So guys are willing to get paid discount to that because they know they’re getting a decent price right now. So if we can lock in a reasonable discount to that on low decline stuff for a couple of years of hedging or so, then yes, I mean, that fits right in our wheelhouse. So I don’t know if that exactly answers your question, but that’s sort of how we’re looking at the world in M and A right now.

And we’re seeing lots of opportunities across both sides.

Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Yes. I would just Jeff, would just add, one of the areas we’re seeing activity is SCOOPSTACK, which is nice because we obviously have a position there. But if you’re looking at areas that have a nice mix of oil and gas, I think you’re still seeing folks go to market because there’s optionality throughout there. And so we’re encouraged by seeing some activity at least in SCOOPSTACK for sure.

Jeff Grampp, Analyst, Northland Capital Markets: That’s super helpful. Thank you, guys. And at Chavaroo, I’m curious, it seems like wells came in cheaper and I know it’s still early, but performing better. So, good news on both fronts.

But can quantify at all how much under budget those wells were? And then on the production side, it’s still super early, but is there anything different about either the location of these wells or the completion technique that could explain the early time positive results? Or is this just kind of general bell shaped curve where you’re to have some wells above type curve, some wells below that sort of thing?

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Okay. Yes. Hey, Jeff, it’s Mark. Thanks for calling in by the way. And see your first question was about how can we quantify how much below AFE.

We think we’re a little bit below 5% below AFE, which is really good out here. And on the quantitative if I can say the word, quantifying the performance of the wells, we’re about seven miles away from the 500 wells, which is the first three wells we drilled. Jennifer wells are off to the east and it’s a different part of the reservoir. We didn’t encounter as much fracturing. So, part of the issue with being able to drill it within cost was that we didn’t have a lot of drilling problems when caused by fracturing.

But honestly, it’s also if you really know the truth, if you really look around, it’s kind of like a bell shape. You’re right. It’s a distribution of performance for these wells and it’s going to vary throughout the field as you move around. And so you’re really just trying to like do the average of the wells. But these wells have come on really, really good.

They’re probably about 50% high right now to what we expected them to be producing on average.

Jeff Grampp, Analyst, Northland Capital Markets: Super helpful, Mark. Thanks. To be clear, was nothing different that you guys did on this second batch of wells in terms of completion practices or lateral lengths or anything that would explicitly explain at least the early time results we’re seeing?

Mark Bunch, Chief Operating Officer, Evolution Petroleum: Not what we think. I mean, did have some lateral lengths on the initial round of wells that were shortened like the five zero four. One of the last we drilled was shortened quite a bit is about half the normal lateral length. But it also had really good fraction which gives a lot of productivity. Mean really honestly the completion technique and the drilling technique was very, very similar to the last time.

We did do some things that would optimize cost and help us out there. Especially in the case where we lost a lot of fluid, we were able to reduce our drilling fluid cost by a lot. So, but honestly, it’s really just it was the same practice, reservoir rock that we hit.

Jeff Grampp, Analyst, Northland Capital Markets: All right. That’s super helpful. Thank you, guys.

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

Conference Operator: And the next question comes from Chris Degner with Water Tower Research. Please go ahead.

Chris Degner, Analyst, Water Tower Research: Hi, guys. Thank you. I’m here for Jeff Robertson today. And just wanted to just a quick question on the Delhi EOR project. And it looks like there’s been a shift from CO2 floods into more of like a waterflood type of a development.

I’m just curious if you have any views on what the impact might be on LOE over the longer term development of the field? Thank you.

Conference Operator: Chris, this is Kelly.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Thank you very much. Look, and I’m glad you brought it up because I’m not sure everyone is sort of paying attention to this. When Exxon decided to stop adding purchased CO2 to the field, honestly, we’re kind of like, hallelujah. We’ve been asking Denbury to do this for the last couple of years now. But I’m sure Exxon didn’t really listen to us at all and came to this decision on their own accord.

But this is what we really wanted for the last couple of years, maximize efficiency of the recycled CO2, replace the voidage with increased water instead of purchased CO2. It’s on the order of 405 hundred thousand dollars per month of cost savings to us and we don’t expect much if any difference in performance. In the past, when you saw CO2 purchases go down, it wasn’t replaced by more water injection. It was just a loss in pressure. Now they’re going to use additional water injections to replace that pressure at a way cheaper cost.

Mean, it’s just a much more economical way to run the field and we think this is very exciting.

Conference Operator: That’s great to hear. Thank you.

Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Just to give on the LOE side, when we look at earlier, one thing you could do is obviously look back earlier last year when the line was down, right, on the cost side. And we were probably in the $25 per barrel plus or minus category there when that line was down. So going forward, obviously, production is not right because when you’re looking at a per barrel metric. But as Kelly said, looking at about 500,000 per month or on a go forward basis, call it, in the mid-20s on dollar per BOE for LOE cost.

Conference Operator: Awesome. Thank you. And the next question comes from Poe Brat with Alliance Global Partners. Please go ahead.

Poe Brat, Analyst, Alliance Global Partners: Hey, good morning. I just wanted to if you could break out the net increase in production. It looks like you’re sort of citing $8.50 BOE a day between Tex Mex and Chabaroo. I thought I heard you say Tex Mex was running about four forty. So does that imply that currently Chabaroo is running about four forty or four ten a day?

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: So, yes, I mean, the way I would look at it, right, so I think Mark said that we were significantly above our type curve. But yes, look, I’ll just tell you, all four wells, the oil rate is still climbing. Like I think Mark said, we’re sort of at least 50% above where we had these things projected to come on. So again, super exciting, but we sort of put a low ball safe number out there at eight fifty million So we want to cover our bases there.

Poe Brat, Analyst, Alliance Global Partners: Just to clarify though, that does include about four forty million from Tex Mex?

Conference Operator: Yes, it does.

Poe Brat, Analyst, Alliance Global Partners: Okay.

Mark Bunch, Chief Operating Officer, Evolution Petroleum: And that’s actually the latest number I have for Tex Mex is about four forty BOE net. So I think it may be slightly higher than that, but that’s pretty close. And the Chavaroo number that we that would be included at $8.50 is only for the new wells. Not it does not include the first three wells.

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Yes. And like I said, that’s we don’t know where it’s going to settle out. I mean, the wells are still climbing. So we’re again,

Mark Bunch, Chief Operating Officer, Evolution Petroleum: we want to put some sort of safe out there. I can tell you right now that the two added together is actually higher than $850,000,000

Poe Brat, Analyst, Alliance Global Partners: That’s helpful. Then you spent $4,400,000 in the quarter as far as CapEx. Can you give me a sense on how much you’re going to spend in the fourth quarter? And then is it too early to expect a sort of ballpark CapEx number for fiscal twenty twenty six?

Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: On the fiscal twenty twenty six, Bo, yes, it is. I mean, I think you probably saw in our press release and prepared remarks, we’re working right now with our partner, Podevco, to figure out when we would start the netbacks. And obviously, that would be a big driver of CapEx for the next fiscal year. That plus any AFEs we receive at SCOOPSTACK, which we don’t really have a feel for until we get them. I will say we are doing outreach for the operators right now in Oklahoma just as we go for our year end reserve reports.

So maybe we’ll have a better feel for their budgets. So I think it’s a little early for us to put out anything next fiscal year. We’ll likely do that at our fourth quarter call, which is generally when we’ve done it. The remainder of the year, so we do have some CapEx in the fourth quarter we expect on to get on the completion side, but we still think the overall budget that we put out for the full year is still valid. So I think that was what 12,000,000 to 14,500,000.0 So we still think we’re going to have a little bit remaining for the Chevreux wells on the completion side, possibly a little bit in SCOOPSTACK.

But outside of that, certainly don’t expect that much additional capital in the fourth quarter.

Poe Brat, Analyst, Alliance Global Partners: Okay. And then the can you just help me with the rationale for adding a new bank? Prism potentially is going to be added to your capital availability? And can you just talk about that as far as opposed to even expanding the Midlands a little bit larger?

Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Yes. So I’ve said this in the past, so obviously, I know you’re little bit new to the name. So I think our credit facility very favorable as you look at the broader market. And so what we were able to do is effectively keep those same terms, which I think, again, I think is favorable to us on both drawn spread and hedging covenants and keep them the same but add another bank. MidFirst, at kind of going from 50 to 55, that’s kind of one of their higher hold levels for the space.

So in order to get the additional capacity, which we thought was important, just to give us flexibility, we had to bring in another bank. And it was a bank that’s familiar with MidFirst and a smaller bank that was comfortable with us from a credit side and the actual facility terms as well. So I think that was kind of the reason. And obviously, MidFirst has been a great partner to work with us here. So I mean if we were to obviously go larger with a larger, more transformative deal, we’d have to bring in some other banks.

We’ve also we’ve talked about that as well. But we think this kind of intermediate step in order to push out the facility, keep the terms the same and increase the size made a lot of sense.

Poe Brat, Analyst, Alliance Global Partners: Great. Thank you so much.

Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer, Evolution Petroleum: Thank you.

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

Kelly Lloyd, President and Chief Executive Officer, Evolution Petroleum: Yes. Thank you. Like I said, we just want to thank everyone for joining us on our call. And like I said, we’re really excited about the results we began to see from natural gas prices moving up. I think our natural gas revenue was up 34% in the quarter.

And we’re excited about the opportunities in front of us and the portfolio we have. So thanks again for joining. Really appreciate it.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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