Evolution Petroleum at Sidoti Micro Cap Conference: Strategic Focus on Acquisitions

On Thursday, 21 August 2025, Evolution Petroleum (NYSE:EPM) presented at the Sidoti Micro Cap Virtual Conference, emphasizing its strategic focus on building a portfolio of long-life, low-decline assets to support a sustainable dividend. The company highlighted its successful acquisition strategy and diversification efforts, while also addressing market challenges and future opportunities.

Key Takeaways

• Evolution Petroleum is committed to acquiring long-life, low-decline assets to enhance cash flow and maintain dividends.
• Recent acquisitions, such as SCOOPSTACK Minerals and Tex Mex, are expected to boost cash flow and production.
• The company maintains a diversified asset portfolio across multiple states, balancing oil and natural gas production.
• Evolution Petroleum is bullish on the natural gas market, anticipating increased demand from data centers and LNG exports.
• The company employs a non-op business model, operating efficiently with a small team and focusing on strategic capital allocation.

Financial Results

Evolution Petroleum reported a current dividend yield of approximately 9.8%, with a quarterly dividend of $0.12 per share. The company has achieved over a 100% return on acquisitions since the Hamilton Dome deal, with a production mix of 56% natural gas, 15% natural gas liquids, and 29% oil. The enterprise value stands just under $200 million, reflecting its strategic growth and asset diversification.

Operational Updates

The company’s non-op business model allows it to operate with only 11 employees, enabling a lean and scalable structure. Evolution Petroleum’s assets span several states, including Louisiana, Wyoming, Texas, North Dakota, and Oklahoma. Notable projects include the Chavaroo Drilling Partnership, which has seen seven wells drilled, exceeding type curves, and the SCOOPSTACK Minerals acquisition, which offers significant upside potential.

Future Outlook

Looking ahead, Evolution Petroleum plans to continue its focus on accretive acquisitions of long-life, low-decline assets. The company is optimistic about the long-term prospects of the natural gas market, driven by industrial demand and LNG exports. Evolution Petroleum aims to maintain a strong balance sheet by balancing debt, equity, and internal cash flow, with a target net leverage of no more than 1.5 times.

Q&A Highlights

During the Q&A session, the company discussed its acquisition pipeline, noting a favorable environment for deals. Evolution Petroleum prioritizes both operator and field quality when evaluating potential acquisitions. The company employs hedging strategies to manage commodity price exposure, using collars and swaps to secure stable cash flows. Debt management remains a priority, with plans to fund acquisitions with debt and pay it down using free cash flow.

In conclusion, Evolution Petroleum’s presentation at the Sidoti Micro Cap Virtual Conference highlighted its strategic focus on acquisitions and market opportunities. For a detailed understanding, refer to the full transcript below.

Full transcript - Sidoti Micro Cap Virtual Conference:

Steve Furazani, Analyst, Sidoti: Good afternoon, everyone. Welcome back to Sidoti’s Virtual Investor Conference. I’m Steve Furazani, an analyst at Sidoti, and pleased to be joined by Evolution Petroleum. I’ll introduce the speakers in just a moment. But first, I’d like to remind everyone as the room seems to still be filling in.

If you do have questions, we expect time remaining after the presentation. Press that q and a button at the bottom of your bark at the bottom of your screen, type in the questions, and we’ll get to absolutely as many as we can, time permitting. With that being said, let me welcome Evolution Petroleum, the ticker is EPM. We’re joined by president and CEO, Kelly Lloyd, and CFO, Ryan Stash. Gentlemen, it’s all yours.

Kelly Lloyd, President and CEO, Evolution Petroleum: Thanks, Steve. I appreciate it. Good afternoon to everybody. It’s nice to see you here. So Evolution, who are we?

What what do we do? We are a company that is really we are focused on unlike some of our peers, our focus is on our dividend. We put together a portfolio of assets that we have designed for long term sustainable dividend payments. That’s how we look at the world. That’s what we wanna go through when we evaluate acquisitions.

They need to have a great return, but additionally, they need to be accretive to our dividend per share. So over the last ten years, we’ve paid out over 130,000,000 in dividends. Our current yield right now is about 9.8%, but that dividend payout is over $4 a share that we’ve paid out over the last you know, since 02/2013. So our asset base started off with one field in Louisiana, the Delhi field. Over time, as you can see, we have now added several others.

All of these, as as Ryan will get to in his portion of the presentation, we have done so this is what our expertise is. We evaluate deals. We look at how they’re gonna fit strategically, how they fit into our dividend program, and we’ve done a great job of folding them in. Our enterprise value today is, just under $200,000,000. And like I said, our dividend yield is about 9.8% currently.

We are a non op business model, and I’m not sure everybody always understands what that means. I’ll tell you effectively what it means is that we’ve been able to put together that portfolio of assets, with only 11 people. It allows us to run really lean. We have several professionals. We’ve we’ve got the engineering side who are absolutely critical to evaluating the assets in the ground and what they’re gonna produce over time and how they’re going to positively affect our ability to pay our dividend.

We’re a public company, so we have our public accounting staff. We have a support person. We have investor relations in Brandy, Hudson who’s on with us. And then on top of that, the rest is all strategy. How does it fit together?

How does it work? And this allows us to leverage that g and a and go into all of these other operations. Had we operated in all of our eight sort of different asset areas, we would probably need to have 80 plus people. So it’s it’s very effective for us, and we’re we’re very happy with that. It’s scalable.

We can diversify both geographically and by commodity base without having to add a lot of G and A. So as I mentioned, we started off with one area. The company was founded, we’d like to say it’s the first great deal we did, in the Delhi field, with an operator, called Denbury. Very c o two flood, very long life, low decline, just a a tremendous operation. But as you guys may know, Louisiana is subject to hurricanes.

It also has a lot of heat, and it gets it can get cold. People don’t believe it, but it really can. So we quickly decided, alright. We need to diversify and have more than just one asset. So in 02/2019, we added our Hamilton Dome, which is up in Wyoming.

It’s it’s another oil field. It’s been producing since the early nineteen hundreds, very low decline. Terrific for what we aim to do, which again is have a really long runway for paying our dividend. After that, it became apparent that, listen, oil and gas are gonna move independently of each other. So we tried to find something very uncorrelated to oil, so we went with the Barnett Field in, Texas.

The original, if you will, natural gas shale play. When you think about shale plays, think of high declines. Well, they start off that way, but if you buy them many, many years into their production, they get to that tail sort of decline, which is perfect for us. Again, long life, low decline natural gas uncorrelated to the other markets we had. From there, we’ve moved on and done several more.

We bought the Jonah Field, and we bought the Williston Basin field. Williston is obviously the Barnett excuse me. It’s North Dakota and oil focused. Really a great play. You’ve seen tons of good wells going on there.

We bought that on a PDP basis, meaning proved developed producing, already making oil up there really good. The Jonah Field, again, intentionally designed to buy natural gas that would flow west into California where you can see some dislocation, in the market there as we did in early two thousand twenty three, late two thousand twenty two. Prices there, again, they have very limited gas storage there. No really new pipelines or additional supply coming in. So it’s gas on gas competition.

And when there’s demand, the prices can get very high there. Intentionally wanted that sort of uncorrelated gas market. We also have entered into a a partnership in the Chavaroo field. We decided on a strategic basis, there are gonna be great times to make acquisitions, which I think we’re living in over the last couple years. There’s also gonna be great times to put money into the ground.

Sometimes that’s your cheapest acquisition. So we needed to have that arrow in our quiver. So the Chavaroo drilling partnership that we have there, we’ve drilled seven wells now, and they’ve they’ve they’ve just exceeded our type curves, and and we’re very happy with that and very happy with our partner there. Latest couple deals we’ve done, we did the SCOOPSTACK, is in Oklahoma. Again, very heavily PDP weighted.

There are still a lot of wells being drilled, but there we’re a very small working interest. We like to say that we would rather have, instead of 20% of five wells, we’d rather have 5% of 20 wells. It increases your diversification, lowers your risk of any single well risk. And I think on average there, we’re about 3%, three or 4% working interest. We recently bought a deal that we call Tex Mex.

Not very creative. It’s in Texas and New Mexico. Again, the the field in New Mexico, which is the majority of the value there, has been producing since, I believe, the nineteen seventies. Very low decline, long life stuff, fits our profile perfectly. A little bit of upside there is just simply based on improved operations and some additional water flooding.

The kind of upside you don’t really wanna pay for, but you get it with it and the long life low decline fits our assets perfectly. We most recently, you may have seen bought a a minerals interest in SCOOPSTACK. Some of it overlaps what we already had in in our SCOOPSTACK area, which is great. It it just improves our netbacks and our net interest there. Minerals deals, if if you know, have no lifting costs.

They only have very marginal costs. They make money in almost any price environment. Additionally, we put 80 plus percent of the value on that on the proved developed producing, already making oil and gas, But there are a multitude, I mean, over 650 potential locations which can be drilled by other operators, and we have we we pay no AFEs. There’s no authorization for expenditure that comes to us. We just participate in the upside as they get drilled.

So really a a sweet deal for us that fits what we wanna do very well. Art again, we went from one asset. Now we have a very diversified portfolio of assets. Over here, this does not include the results of Tex Mex and the latest minerals deal because our fiscal year end is 06/30. So these will be lumped into our newest reserve report, will come out when we report earnings later in September.

As you can see though, 56% natural gas, 15% natural gas liquids, 29% oil. Again, a a very diversified, production stream. One of the things I wanna talk about, is is natural gas. Right? Currently, The The US is producing roughly a 107 BCF per day.

What we’re looking at here are pretty conservative numbers that AI, data centers, additional power draws that will be funded by a whole stream. It’s gonna use solar. It’s gonna use wind. It’s also gonna have to use natural gas. And so what we projected here is natural gas’s portion of that incremental demand load for electricity.

Conservatively, it’s about another 10 Bcf per day. Probably more realistically, it could be another 20, but we’ll call that, you know, sort of 15 between now and 02/1930. Additionally, we have seen this wave one build out go from zero LNG exports from The US to 15 by sort of ’23. Now the second wave of the LNG build out is is well and truly underway. We already have a couple BCF on that in place, and we have several other long term contracts in place which have been funded.

So this this new build out here is underway. And as you can see, that takes you from about ’15 to ’28 or 30 BCF a day. So what does that all that mean? That means currently, like I said, record demand, record production of natural gas at roughly a 107 BCF a day. And we’re talking about adding another 30 over the next five years, four or five years.

So there is that is a tremendous amount of incremental demand that is coming on and less weather related than your typical natural gas demand, more industrial, which is great as as far as we can see. So we’re we’re really excited about the long term case for natural gas. On the oil side, you know, demand has typically it grows anywhere from one to 3% globally, and it it’s tied to GDP and various other things. But, you know, people have been espousing the decline of oil demand for for many, many years, and it’s it’s proven robust throughout all of these environments over the years. So we’re happy with where oil’s going.

Natural gas, I think we’ll see a sort of sea change in demand over the next few years. Again, it just shows that the storage is not over overly stored by any means. We probably need more storage, frankly, in natural gas as we go forward. From here, I’d like to hand the presentation over to our chief financial officer, Ryan Stash.

Ryan Stash, CFO, Evolution Petroleum: Thanks, Kelly. So I’ll talk about, you know, how do we grow our asset base. You know, as kinda Kelly has mentioned, you know, one of the ways we grow it obviously is acquisitions, and we’ve done that, very successfully. We’ve we’ve added recently, as you mentioned, also some organic growth via our, partnership with Padevco for our Chavaroo asset. But but, really, you know, we’ve grown the asset primarily through doing accretive acquisitions at, you know, at good prices.

And, you know, we’ve we’ve certainly tried to time them. You can’t always be perfect. We’ve had some good success as we bought the gas assets as as Kelly has talked about. You know, we knew at the time gas was was much lower, and we had a we had a strong outlook on gas and wanted to diversify into the gas side. So with our acquisitions of, you know, the Barnett and the Jonah Field, we’ve done really well.

And I’ll show you in a slide here, which is how well but we’ve done really well on a return basis by buying those assets. Obviously, you know, the the the really, the acquisitions themselves is on on this slide is is how do we look at Right? Long life, low decline, production dominated assets, always be accretive. You know?

If you ask us what’s the one metric we wanna look at when we buy something, it’s accretion to cash flow per share. I mean, ultimately, that drives how we can pay the dividend and grow the asset base going forward. So that’s the primary metric we look at, when we look at an asset to buy. You know, the market access is important. You know, that’s one way, as Kelly’s mentioned, you know, we had, you know, the Barnett gas asset, which primarily prices, excuse me, off of, Henry Hub or, you know, it’s priced off Houston Ship Channel in the past.

Now it’s more, contract tied to they call it NGPL, PEXOKE, and the Mid Con, but it’s really more Gulf Coast pricing, because that’s where the gas goes. Our Jonah asset, you know, goes to the West Coast, so it’s tied to California pricing. So it’s a different dynamic on the West Coast when it can be a really cold winter like it has been a couple winters ago. You can get real big blowouts and for gas prices, we experienced, which can create, you know, obviously, a big profit. I mean, obviously, we sold gas one month for $50 in MCF a couple years ago, which is kind of unheard of.

But the way the storage works in California, it’s not that uncommon to see that happen, you know, once every three or four years. And so that’s really why we we wanted to get that access to. We sort of talked about diversification and the and the the ability of the non op model to allow us to diversify. You know, if you got get the question a lot. Well, what’s the ultimate ultimate commodity mix?

What are you guys looking for? There’s not really an answer per se. We really we’re value buyers. Right? So we look at deals, oil or gas, that we think has, again, good access to markets.

It’s it’s priced appropriately with the right amount of PDP versus upside. And so we’re not beholden to buying gas or oil. We buy whatever whatever we see on the market that we think is good value at the time. Ultimately, we do wanna remain somewhat balanced, but I we’ll buy the right at the right time. You know, efficient operators, you know, the the operators are sort of pretty important to us.

You know, we have good relationships with all of the operators in in in in our portfolio. And, generally, with the exception of kind of Kelly mentioned the SCOOPSTACK where we’ve got a lot of operators at a small working interest. A lot of our other assets have a larger interest with minimal operators. So we have monthly meetings with the majority of our operators, like Exxon or Denbury, we meet with on a monthly basis. You know, Merit, who offers our Hamilton Dome asset, we meet with on a monthly basis.

Diversify, who operates Barnett. So we meet with a lot of our large operators, and we have good insight into what they’re gonna do and and are able to see what’s going on with the asset. So this is a slide I kind of alluded to. So what we did is, you know, we can tell you guys that we’re good at at buying assets, but unless you really show it, it’s hard to really tell. And so what we did is we took since Hamilton Dome you can see the the kinda orange dots represent when we bought the assets.

That blue kinda area chart is how much we we paid for the assets. Right? So you can see the step change, and this is cumulative. Right? And then a little green line, well, what’s the operating cash flow?

What what have we received from the assets? And what you can see is since we started buying assets from Hamilton Dome through the end of last kind of last calendar year, we’ve done very well. Right? We we’ve certainly paid back all our acquisitions. You know, if you look at kind of how you might look at investment, you know, more than three times multiple of invested cash flow that we think we we’re gonna get in plus over a 100% rate of return, right, when we take what we’ve made versus, you know, what we had in our in our prior reserve report.

So, you know, we think the acquisitions and and our track record sort of speaks volumes, I think, what team can do and how we’ve evaluated assets here. This was is just kind of a graphic depiction of of how we’ve grown kind of the asset field over time. And we sort of talked about, you know, starting with Delhi and recent most recently adding Tex Mex, but we’ve we’ve really been able to grow the production quite a bit. Right? We’re saying three times since 2019.

So the production has grown a lot. It’s diversified. You know, we’re no longer one operator, one field, one commodity. Right? We’re multiple fields with a lot of different operators and a good mix of commodities, which is which is what we wanted to build the company for.

You know, the dividends, as we mentioned, here’s here’s our kinda history of the dividend. You can see, overall, we’ve tried to maintain as consistent as possible, but the important thing is, you know, we’re gonna protect the balance sheet. Right? So when we’ve had periods of very low oil prices back in 2015, you can see then really in COVID in in 2020, we have cut the dividend when needed to to protect the balance sheet. So, ultimately, you know, if we’re we’re not gonna sacrifice, again, the balance sheet at the expense of the dividend.

But I think we build an asset base now, and Kelly would agree, that’s very resilient even in lower commodity prices. So we raised a dividend up to current 12¢ back in September 22. And if we had kind of an overlay of commodity prices, yes, they did pretty well kinda late twenty two, twenty three. But over the last twelve to, you know, eighteen months, they have have not done well. Right?

One commodity or the other has not performed where, you know, we’ve been able to keep the dividend flat, really just as a testament to the diversified asset base. On kind of this chart here, which is kind of one of the last charts before we’ll go into maybe talk a little bit about kind of the acquisitions we’ve done recently. You know, as funding the way we funded it has been really, as you can see, primarily through internally generated cash flow, so doing good deals and debt. You know, we’ve kept kind of our our we’ve historically, as you could tell, we’ve almost had no leverage. Right?

Once we started buying assets, we started to take on some leverage. We’re able to pay that debt down, and that’s sort of the way we’ve we’ve managed our business. And you can see the share count, obviously, you know, we do have an ATM at the market program in place that we’ve sold, you know, over the last, call it, you know, ten months or so, about $4,000,000 in total, and that’s really just to fund the acquisitions and all the acquisitions we’ve done and to maintain the balance sheet. But overall, our share count, you know, when you add in the buybacks that we’ve done as well, has has maintained relatively flat. So we’ve done we’ve grown our asset base quite a

Kelly Lloyd, President and CEO, Evolution Petroleum: bit without really diluting the shareholders much at all. And this does not include Tex Mex or our latest Scoop Shack minerals deal. Yeah.

Ryan Stash, CFO, Evolution Petroleum: You wanna sum it up, Kelly?

Kelly Lloyd, President and CEO, Evolution Petroleum: Yeah. Sure. So, hey. Look. Key takeaways, I think Ryan went through a lot of these, but just long life, low decline, fifteen plus year reserve life.

Right? I mean, this is very important for us as we look to extend that dividend fairway. Positive free cash flow throughout the commodity cycle. I mean, look, you can just look at natural gas prices the last couple years being, in the mid to low twos. Now oil has dropped about 20% since its peak, and we’re still able to very comfortably maintain our dividend throughout the entire commodity price cycle.

Our our our dividend is we focus on total shareholder return, really set up by our ability to keep paying our dividend throughout the entire commodity price cycle. We are primed for continued execution. As you can just see, we just did a deal, for about $17,000,000, just closed, the other day. We are a proven non op buyer. We see deals.

People come to us because they know we have a reputation for being, able to close on deals and and do a good job. We have a drill ready attractive set of locations, both in our Chevro and ScoopStack. So when you do see prices, at sort of above marginal replacement value, which I would say for crude is gonna be 75 ish in natural gas. Again, given that we need to grow to meet the coming industrial demand that’s coming on, it’s gonna be sort of $3.50, really probably $3.75 to meet that demand. We have plenty of great drillable locations that that meet that, which again are very low CapEx for us.

So this is this is what we do. We have the financial flexibility. We have the great engineering team who can quickly evaluate deals, between all of our connections for having been in this industry for a long time. We see deals that other people don’t. And importantly, I would say, as you compare us to some of the other non op publics, our future call of capital from people coming to us saying, hey.

You have this working interest. You owe us a bunch of money. We are heavily dominated with PDP, approved, developed, producing, already producing assets. So we try to keep our our potential drilling outflows, our CapEx very low. So it’s a differentiator that we focus more on what’s already producing and have that as upside, not as a crucial part to us continuing to go forward.

As Ryan mentioned, we might just quickly go into a couple of our recent acquisitions. We’ve gotten several questions about this. So our SCOOPSTACKMinerals. Right? This is the one we just closed, and I think it’s a really interesting deal.

Again, as I mentioned, we had the SCOOPSTACK asset. We know it very well. Had a chance to bring in little to no cost, producing minerals that we bought for just under 17,000,000. We valued that based on the proved developed producing stuff for 80 ish percent of that, and then about 90 locations that we put a lot of value on. There are a whole bunch of other locations that probably don’t meet our 30 plus percent IRR.

If we were to drill it, we wanna have 30 plus percent IRR to drill it. But other people, in our mind, other people have been and are currently drilling wells that are 20 to 30% rate of return. And as a minerals owner, we don’t have to pay anything for those. We just get the royalty interest on that. So we’re really excited

We we think that has the potential to be an absolute home run. Really excited about this latest acquisition we just closed on. And the one before that is our Tex Mex. Again, it’s about 440 net BOE per day. We bought this at a very attractive discount rate of highly accretive to where we trade or or what we do.

So the cash flow that this spits off in excess of any money we put in for any kind of CapEx, or or workovers is very accretive and adds to our ability to continue to fund our dividend, going forward. So, again, guys, we’re we’re super happy to have you here on the presentation, and, I think we’re gonna turn it over to q and a now.

Steve Furazani, Analyst, Sidoti: Excellent. Thanks so much, Kelly and Ryan. Appreciate the informative presentation. Looks like you did. And that last last bit, looks like you covered several of the questions that were asked.

But I’d like to remind everyone, we got about five minutes left. Press the button at the bottom of your screen, the q and a, type it in, and we’ll get to as many as we can. I mean, the obvious question that came in, which is what’s the acquisition pipeline looking like now in this environment? Are you seeing you you talked about you see a lot of deals, other people don’t. You probably are as good as anyone to ask this question.

Are you seeing more deals, less deals? What are the prices like? If you can sort of give a general overview of what’s out there.

Kelly Lloyd, President and CEO, Evolution Petroleum: Sure. So, yeah, I mean, it’s a it’s a great question. And, I would say that right now is is and over really the last kinda year and a half has been one of the best environments, for making acquisitions that I’ve seen. Prices aren’t so low that sellers don’t wanna sell, and they’re not so high that everybody wants to demand. You pay them out as if it’s gonna be high forever Yep.

Which is really a sweet spot for us. We do think, again, that the current strip certainly on well, honestly, on both commodities is kind of, certainly with oil below, marginal replacement value, which, again, if you buy something that declines 40% in the first year like a lot of people do, you got a real chance to to get yourself backwards. But if you buy long life low decline, knowing that the best cure for low oil prices is low oil prices, you you know, again, if it stays prices stay in the sixties for the next, you know, six, twelve months, it it it doesn’t affect us that much because at some point, the cycle’s gonna turn and that thing will pay off very quickly, which we have both seen and executed on, several times in the past. And and on natural gas, I mean, this is a a strip. It’s interesting.

Current prices, obviously, spot is a little bit below three right now, but the current prices where we could actually hedge some of these out at, and and our pricing acquisitions are are very attractive. I don’t know if, Ryan, you wanna add to that? Or

Ryan Stash, CFO, Evolution Petroleum: Yeah. I mean, I I was gonna say, I mean, I saw a question come through on on hedging. And, you know, it is relevant. And, historically, we’ve hedged very, very little. We wanted to one, we’ve carried no debt, so we haven’t had a need to hedge.

But, you know, we wanted to make sure that, you know, investors got exposure to commodity prices. Now, you know, as we’ve taken on some debt, bought some more assets, now we have a little bit of drilling, you know, the one the bank requires us to hedge now. But, two, know, you we think it’s prudent, right, with the dividend to hedge and be opportunistic about it. So as Kelly mentioned on the gas side, we’ve been pretty aggressive in adding hedges and and have actually pretty good. We’ve got you know, this year, we’ve got, you know, swaps at $3.60 or above and some some callers with $4 floors.

You know? We honestly just put on some hedges second half of next year for $4 on a swap. So, you know, if you look at where spot is versus where we can hedge, it makes a lot of sense to hedge gas. So we’ve been 60% hedged on gas, call it over the next, you know, twelve months at least just to make sure, you know, we can meet those prices even if the spot market continues to move. You know, the oil side is a little more challenging.

You know, we’ll add opportunistically on the oil side, but we do have the flexibility with our bank to hedge, looking to hedge on a on a BOE basis. So we can choose to hedge oil or gas just as long as we hit kind of a 50% threshold for that.

Steve Furazani, Analyst, Sidoti: I’m assuming you primarily use collars if it was oil and then maybe a mix of collars and swaps on gas?

Ryan Stash, CFO, Evolution Petroleum: Yeah. For oil, yeah, we we will we have used some swaps. I mean, right now, we’re over the next twelve months, if we can get anything with a $60 floor above, you know, we’ll look at that with maybe a little bit of a a you know, maybe some swaps on the low sixties mix in there. We do have some pretty nice existing swaps this year that are, you know, high sixties to 70, which we’re pretty happy about. Yeah.

You know, on the gas side yeah. So gas side, we typically will hedge. We’ll call it the winners, or the first quarter, January to March, and kinda swap the the rest of the year. So that gives us some nice optionality.

Steve Furazani, Analyst, Sidoti: Excellent. The question I hear a lot about non ops is when you’re looking at a deal, how much do you have to weigh the operator versus the quality of the field?

Kelly Lloyd, President and CEO, Evolution Petroleum: So, you know, certainly, there is a minimum threshold. Right? We we only want to deal with operators who are gonna be, you know, both both environmentally and safety and sound and do everything right, from that perspective because it it would you know, listen. You can throw money away if if you end up, you know, with a bad operator. So we certainly won’t do that, but the quality of the field, is very, very important.

Mhmm. So we we have to look at both. But, and I guess I could envision a field that was was awesome and the operator was terrible that we might pass on a deal like that, but I haven’t actually encountered that yet.

Steve Furazani, Analyst, Sidoti: Fair enough. Where would you go for a really good deal in terms of net leverage while knowing you wanna protect the dividend? Dividend?

Ryan Stash, CFO, Evolution Petroleum: Yeah. So, you know, we we’ve said we’ll probably we might go up to one and a half times net leverage.

Steve Furazani, Analyst, Sidoti: You know? So remaining extremely conservative.

Ryan Stash, CFO, Evolution Petroleum: Yes. We wouldn’t go any higher than that. Right? And and, generally, what we’ve done is fund it with debt, like I pay it down with free cash flow, and, you know, issue some equity on the ATM, which is, you know, the lowest cost form of equity capital we can do, really.

Steve Furazani, Analyst, Sidoti: Okay. There were some questions to go. Unfortunately, we’re already out of time. This went it was a very, very half hour. Let me give you a minute if there’s some some closing comments you wanna you wanna leave with everyone.

Kelly Lloyd, President and CEO, Evolution Petroleum: Sure. I’ll just say this. We thank everybody here for their interest, and I think you can tell we kinda like talking about our company. We we have a great platform. I think we got the best team in the business.

And honestly, our our results of these acquisitions, I think, bear that out. So if anybody has any more questions, please feel free to to contact Brandy Hudson in our and she will she will get back to us, and we’re happy to take some time to do it. But we thank everyone for coming. And like I said, the last thing I’ll leave you with is what we’ve done over the last couple years of fairly depressed natural gas prices and currently low oil prices is put together a very robust portfolio that can maintain our current dividend at 12¢ per share per quarter or 48¢ a year a year. That sort of leaves us with some hyper jet fuel.

If all we do is get to what I would consider the marginal replacement value of 75 or even seventy and three fifty to three seventy five, the the direct effect that this new sort of portfolio we’ve put together, the EBITDA effect on that is is kind of we would consider it kinda jet fuel. So we we put together something that can maintain the dividend at these lower commodity prices, but the upside is is tremendous when you get to replacement value.

Steve Furazani, Analyst, Sidoti: Jet fuel. I’m writing that down. I feel that. Thanks so much, Kelly Lloyd, Ryan Stash. I hope everyone found this as informative as I did.

And if you can’t reach out to them, reach out directly to us to us at Sidoti, and we’ll certainly forward any questions. I know there are a lot of really good questions in the queue today. We’ll certainly make sure Kelly and Ryan get those. Thanks, everyone, and I hope you enjoy the remainder of the conference. Thanks, Kelly.

Thanks, Ryan.

Kelly Lloyd, President and CEO, Evolution Petroleum: Thank you, guys.

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