HOUSTON, Feb. 16 /PRNewswire-FirstCall/ -- Evolution Petroleum
Corporation (NYSE Amex : EPM) today reported financial and
operating results for the three months ended December 31, 2009, the
second quarter of the Company's fiscal year ("Q2-10"). Oil and gas
volumes in Q2-10 increased 22% to 31,238 barrels of oil equivalent
("BOE"), or 340 BOE per day, compared to the three months ended
December 31, 2008 ("Q2-09"). Oil and gas revenues in Q2-10
increased 16% to $1.2 million compared to $1.0 million for Q2-09,
due to the increase in sales volumes, partially offset by a 5%
decline in blended oil and gas prices from $40.29 per BOE in Q2-09
to $38.46 per BOE in Q2-10. The increase in volumes was the result
of drilling and work-over operations in the Giddings Field in
central Texas. Sequentially, volumes were 11% lower and revenues
were 3% higher in Q2-10 compared to Q1-10. Lower sequential
production volumes were in large part due to constrained production
from the Hilton-Yegua well due to suspected blockage within its
lateral section and downtime in other wells due to operational
issues, which have since been corrected or are expected to be
corrected shortly. The revenue increase was due to a 15%
improvement in blended product prices realized in Q2-10 versus
Q1-10, primarily due to improved natural gas prices. Net loss in
Q2-10 declined 30% to $0.7 million, or $(0.03) per share, compared
to a net loss in Q2-09 of $1.0 million, or $(0.04) per share.
Improved results in Q2-10 over Q2-09 were primarily due to a 25%
reduction in G&A expenses and 3% higher revenues. Results for
both periods included $0.55 million and $0.50 million,
respectively, in non-cash depreciation, depletion and amortization,
plus non-cash stock-based compensation expense of approximately
$0.42 million and $0.58 million charged in Q2-10 and Q2-09,
respectively. For the first six months of fiscal 2010, net cash
provided by operating activities was $0.3 million, compared to $6.4
million for the first six months of fiscal 2009. The prior period
was higher primarily due to 85% higher realized product prices and
the collection of a $4.1 million of income taxes receivable.
Working capital was $5.7 million on December 31, 2009, as compared
to $7.6 million at June 30, 2009. The $1.9 million decrease was
primarily due to investments in oil and natural gas properties. The
company ended the fiscal second quarter with no outstanding debt
and sufficient working capital to complete its fiscal 2010 capital
budget. Robert Herlin, President and Chief Executive Officer,
commented, "Per our operating plan, we continue to cover our
overhead expenses from Giddings operations, while utilizing our
working capital to upgrade and test our development projects in
Oklahoma and South Texas." The Caney Shale vertical test well in
Wagoner County, Oklahoma, is producing at a steady 25 mcf/d without
water and no apparent decline, confirming that the Caney Shale can
contribute commercial gas volumes as an add-on to Woodford
production. The Woodford Shale vertical test well exhibited a
strong initial gas rate with the expected rate of dewatering.
Testing will resume as soon as the associated water disposal well
is deepened to expand capacity. Separately, Evolution is planning a
vertical well test of its medium depth Woodford/Caney Shales in
Haskell County, Oklahoma, before the end of the fiscal year. In
South Texas, the Company expects to begin oil production shortly
from the first two wells in its Neptune project, following
completion of a water injection well. Evolution has identified an
additional 112 potential drilling locations there. Field work in
South Texas, as in Oklahoma, has been hampered by unusual levels of
bad weather. Mr. Herlin further added "The Delhi enhanced oil
recovery project appears to continue on schedule with strong rates
of CO2 injection and we expect first oil production by mid-2010.
Our proprietary artificial lift technology continues to operate
successfully in our two test well sites, and we are in discussions
with other operators about demonstrating our technology on their
wells. Our operating plan for fiscal 2010 includes testing and
proving commerciality of our Oklahoma gas shale, South Texas infill
oil and our lift technology projects, and we appear to be on
schedule on all fronts. We are also moving forward on our plan to
monetize up to 29 proved and probable undeveloped drilling
locations in the Giddings Field, through one or more industry joint
ventures." In the Giddings Field, operating costs have declined
due, in large part, to the completion of the dedicated water
disposal well drilled in the first quarter and placed into service
during the second quarter. The approved capital budget for fiscal
2010 provides for a number of well workovers to maintain or
increase production, including a lateral cleanout of the
Hilton-Yegua well scheduled for the third fiscal quarter.
Production Volumes and Prices: Net volumes for Q2-10 were 13,019
barrels ("Bbl") of oil, condensate and natural gas liquids ("NGL")
and 109.3 million cubic feet of natural gas ("MMCF"), or 31,238
BOE. This is an increase of 22% over volumes for Q2-09 of 14,780
Bbls of oil, condensate and NGLs and 65.0 MMCF of natural gas, or
25,609 BOE. The average realized price of oil increased 30% to
$74.47 per barrel in Q2-10 from $57.37 per barrel in Q2-09, while
the average realized price of NGLs increased 33% in Q2-10 to $40.66
per barrel from $30.63 per barrel in Q2-09. The average realized
price of natural gas fell 29% to $4.25 per Mcf in Q2-10 versus
$5.99 per Mcf in Q2-09. On a BOE basis, the blended effective price
received declined 5% to $38.46 in Q2-10 from $40.29 in Q2-09, due
to lower average natural gas prices and Q2-10 sales including a
higher portion of natural gas, offset in part by higher oil and NGL
prices. Costs and Expenses Lease operating expenses ("LOE"),
including production severance taxes, for Q2-10 increased 15% to
$0.39 million, but declined on a per BOE basis to $12.37 compared
to $0.34 million ($13.09 per BOE) for Q2-09. The gross increase was
primarily due to the addition of three producing wells and ad
valorem taxes assessed in calendar year 2009. Depreciation,
Depletion & Amortization Expense ("DD&A") was $0.55 million
($17.27 per BOE) for Q2-10 compared to $0.50 million ($19.31 per
BOE) in Q2-09. The reduction in the DD&A rate was due primarily
to a reduction in projected capital expenditures associated with
proved undeveloped locations in the Giddings Field. General and
administrative ("G&A") expense declined 25% to $1.3 million for
Q2-10, as compared to $1.7 million for Q2-09, due to a decrease in
non-cash stock-based compensation expense, which was $0.42 million
(34% of total G&A) and $0.58 million (35% of total G&A) for
Q2-10 and Q2-09, respectively, a 28% reduction in personnel costs
from approximately $750,000 to $540,000 due to a reduction in staff
and estimated annual bonus payments, and a reduction of legal fees
of approximately $115,000 due to the settlement of the Delhi
litigation in July 2009. Conference Call Evolution Petroleum will
host a conference call today at 10:30 a.m. Eastern Time (9:30 a.m.
Central) to discuss its fiscal second quarter 2010 results. To
access the call, please dial 480-629-9773 and ask for the Evolution
Petroleum call at least 10 minutes prior to the start time. The
conference call will also be broadcast live via the Internet and
can be accessed through the investor relations section of
Evolution's corporate website, http://www.evolutionpetroleum.com/,
where it will also be archived for replay. A telephonic replay of
the conference call will be available until February 23, 2010 and
may be accessed by calling 303-590-3030 and using the pass code
4220160#. For more information, please contact Donna Washburn at
DRG&E at (713) 529-6000 or email at . About Evolution Petroleum
Evolution Petroleum Corporation
(http://www.evolutionpetroleum.com/) acquires known, onshore oil
and gas resources and applies conventional and specialized
technology to accelerate production and develop incremental
reserves and value. The Company is well positioned to continue its
development projects in CO2 based EOR, bypassed resources and low
cost shale gas. Principal assets as of July 1, 2009 include 3.9
MMBOE of proved and probable reserves in the Giddings Field of
Central Texas, 0.5 MMBO of proved and unproved reserves with 90+
additional locations in South Texas, 13.6 MMBO of probable reserves
in the Delhi CO2 EOR project in northeast Louisiana, 17,780 net
acres of leases in shallow gas shale in Eastern Oklahoma and a
proprietary artificial lift technology intended to extend the life
of horizontal wells with oil or associated water production.
Additional information, including the Company's annual report on
Form 10-K and its quarterly reports on Form 10-Q, can be accessed
on its website. Cautionary Statement All statements contained in
this press release regarding potential results and future plans and
objectives of the Company are forward-looking statements that
involve various risks and uncertainties. There can be no assurance
that such statements will prove to be accurate and actual results
and future events could differ materially from those anticipated in
such statements. The Company undertakes no obligation to update or
review any forward-looking statement, whether as a result of new
information, future events, or otherwise. Important factors that
could cause actual results to differ materially from our
expectations include, but are not limited to, those factors that
are disclosed under the heading "Risk Factors" and elsewhere in our
documents filed from time to time with the United States Securities
and Exchange Commission and other regulatory authorities.
Statements regarding our ability to complete transactions,
successfully apply technology applications in the re-development of
oil and gas fields, realize future volumes, realize success in our
drilling and development activity, prices, future revenues and
income and cash flows and other statements that are not historical
facts contain predictions, estimates and other forward- looking
statements. Although the Company believes that its expectations are
based on reasonable assumptions, it can give no assurance that its
goals will be achieved and these statements will prove to be
accurate. Important factors could cause actual results to differ
materially from those included in the forward-looking statements.
Company Contact: Sterling McDonald, VP & CFO (713) 935-0122
Lisa Elliott / Jack Lascar / DRG&E / 713-529-6600 - Tables to
Follow - Evolution Petroleum Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited) Three Months
Ended Six Months Ended December 31, December 31, 2009 2008 2009
2008 ---- ---- ---- ---- Revenues Crude oil $456,375 $407,194
$959,497 $1,986,264 Natural gas liquids 280,212 235,293 565,523
990,738 Natural gas 464,715 389,295 846,309 969,766 ------- -------
------- ------- Total revenues 1,201,302 1,031,782 2,371,329
3,946,768 --------- --------- --------- --------- Operating Costs
Lease operating expense 369,928 313,406 734,774 649,310 Production
taxes 16,459 21,776 34,826 107,772 Depreciation, depletion and
amortization 550,142 504,291 1,167,899 1,149,173 Accretion of asset
retirement obligations 15,200 6,124 29,538 11,861 General and
administra- tive* 1,253,596 1,662,627 2,506,712 3,127,467 ---------
--------- --------- --------- Total operating costs 2,205,325
2,508,224 4,473,749 5,045,583 --------- --------- ---------
--------- Loss from operations (1,004,023) (1,476,442) (2,102,420)
(1,098,815) Other income Interest income 13,785 17,782 29,009
91,428 ------ ------ ------ ------ Net loss before income tax
benefit (990,238) (1,458,660) (2,073,411) (1,007,387) Income tax
benefit 288,298 454,889 666,646 152,053 ------- ------- -------
------- Net loss $(701,940) $(1,003,771) $(1,406,765) $(855,334)
========= =========== =========== ========= Loss per common share
Basic and Diluted $(0.03) $(0.04) $(0.05) $(0.03) ====== ======
====== ====== Weighted average number of common shares Basic and
Diluted 27,092,954 26,399,988 26,869,488 26,646,149 ==========
========== ========== ========== * General and administrative
expenses for the three month period ended December 31, 2009 and
2008 included non-cash stock-based compensation expense of $424,800
and $584,525, respectively. General and administrative expenses for
the six month period ended December 31, 2009 and 2008 included
non-cash stock-based compensation expense of $816,436 and
$1,108,250, respectively. Evolution Petroleum Corporation and
Subsidiaries Consolidated Balance Sheets (Unaudited) December 31,
June 30, 2009 2009 ---- ---- Assets Current assets Cash and cash
equivalents $2,312,212 $3,891,764 Certificates of deposit 1,651,835
2,059,147 Receivables Oil and natural gas sales 542,738 532,318
Income taxes 2,095,126 - Other 61,245 172,314 Income taxes
recoverable - 2,055,802 Prepaid expenses and other current assets
148,260 162,441 ------- ------- Total current assets 6,811,416
8,873,786 --------- --------- Property and equipment, net of
depreciation, depletion, and amortization Oil and natural gas
properties - full-cost method of accounting, of which $11,082,567
and $9,819,465 at December 31, 2009 and June 30, 2009,
respectively, were excluded from amortization. 29,801,618
28,751,178 Other property and equipment 123,271 150,697 -------
------- Total property and equipment 29,924,889 28,901,875
---------- ---------- Other assets 53,007 53,162 ------ ------
Total assets $36,789,312 $37,828,823 =========== ===========
Liabilities and Stockholders' Equity Current liabilities Accounts
payable $747,476 $690,639 Accrued liabilities 100,028 171,052
Royalties payable 262,127 218,477 State taxes payable - 157,736 ---
------- Total current liabilities 1,109,631 1,237,904 Long-term
liabilities Deferred income taxes 3,095,161 3,721,317 Asset
retirement obligations 758,027 664,710 Stock bonus (Note 5) -
370,440 Accrued compensation 210,000 - Deferred rent 79,746 77,858
------ ------ Total liabilities 5,252,565 6,072,229 ---------
--------- Commitments and contingencies (Note 10) Stockholders'
equity Preferred stock, par value $0.001; 5,000,000 shares
authorized; no shares issued or outstanding - - Common stock; par
value $0.001; 100,000,000 shares authorized; issued 27,949,283
shares and 27,318,517 shares as of December 31, 2009 and June 30,
2009, respectively; outstanding 27,161,083 shares and 26,530,317
shares as of December 31, 2009 and June 30, 2009, respectively
27,949 27,318 Additional paid-in capital 17,611,155 16,424,868
Retained earnings 14,779,665 16,186,430 ---------- ----------
32,418,769 32,638,616 Treasury stock, at cost, 788,200 shares as of
December 31, 2009 and June 30, 2009. (882,022) (882,022) --------
-------- Total stockholders' equity 31,536,747 31,756,594
---------- ---------- Total liabilities and stockholders' equity
$36,789,312 $37,828,823 =========== =========== Evolution Petroleum
Corporation and Subsidiaries Consolidated Statements of Cash Flow
(Unaudited) Six Months Ended December 31, ------------ 2009 2008
---- ---- Cash flows from operating activities Net loss
$(1,406,765) $(855,334) Adjustments to reconcile net loss to net
cash provided by operating activities: Depreciation, depletion and
amortization 1,167,899 1,149,173 Stock-based compensation 816,436
1,108,250 Accretion of asset retirement obligations 29,538 11,861
Deferred income taxes (626,156) (219,008) Deferred rent 1,888 1,888
Other 213,118 3,118 Changes in operating assets and liabilities
Receivables from oil and natural gas sales (10,420) 1,658,525
Receivables from income taxes and other 71,745 4,031,914 Prepaid
expenses and other current assets 14,181 113,942 Accounts payable
and accrued expenses 139,474 (314,436) Royalties payable 43,650
(282,051) State taxes payable (157,736) - -------- --- Net cash
provided by operating activities 296,852 6,407,842 -------
--------- Cash flows from investing activities Development of oil
and natural gas properties (2,222,654) (4,723,006) Acquisitions of
oil and natural gas properties (58,141) (2,033,874) Capital
expenditures for other equipment - (26,602) Purchases of
certificates of deposit (1,350,000) (1,500,000) Maturities of
certificates of deposit 1,757,312 - Other assets (2,963) - ------
--- Net cash used in investing activities (1,876,446) (8,283,482)
---------- ---------- Cash flows from financing activities Proceeds
from the issuance of restricted common stock 42 90 Purchase of
treasury stock - (882,022) --- -------- Net cash provided (used in)
by financing activities 42 (881,932) --- -------- Net decrease in
cash and cash equivalents (1,579,552) (2,757,572) Cash and cash
equivalents, beginning of period 3,891,764 11,272,280 ---------
---------- Cash and cash equivalents, end of period $2,312,212
$8,514,708 ========== ========== Our supplemental disclosures of
cash flow information for the six months ended December 31, 2009
and 2008 are as follows: Six Months Ended December 31, ------------
2009 2008 ---- ---- Income taxes paid $166,015 $15,000 Income tax
refunds and carry backs received $ - $4,052,631 Non-cash
transactions: Decrease in accounts payable used to acquire oil and
natural gas leasehold interests and develop oil and natural gas
properties $(153,661) $(285,333) Oil and natural gas properties
incurred through recognition of asset retirement Obligations
$63,779 $107,751 Common stock issued in lieu of a portion of 2008
cash bonus accrued as a short-term liability at June 30, 2008 $ -
$168,462 Evolution Petroleum Corporation and Subsidiaries Condensed
Operating Data (Unaudited) Three Months Ended December 31,
------------ % 2009 2008 Variance change ---- ---- -------- ------
Sales Volumes, net to the Company: Crude oil (Bbl) 6,128 7,098
(970) (14)% NGLs (Bbl) 6,891 7,682 (791) (10)% Natural gas (Mcf)
109,316 64,973 44,343 68% ------- ------ ------ --- Crude oil, NGLs
and natural gas (BOE) 31,238 25,609 5,629 22% Revenue data: Crude
oil $456,375 $407,194 $49,181 12% NGLs 280,212 235,293 44,919 19%
Natural gas 464,715 389,295 75,420 19% ------- ------- ------ ---
Total revenues $1,201,302 $1,031,782 $169,520 16% Average price:
Crude oil (per Bbl) $74.47 $57.37 $17.10 30% NGLs (per Bbl) 40.66
30.63 10.03 33% Natural gas (per Mcf) 4.25 5.99 (1.74) (29)% ----
---- ----- --- Crude oil, NGLs and natural gas (per BOE) $38.46
$40.29 $(1.83) (5)% Expenses (per BOE) Lease operating expenses and
production taxes $12.37 $13.09 $(0.72) (6)% Depletion expense on
oil and natural gas properties (a) $17.27 $19.31 $(2.04) (11)% (a)
Excludes depreciation of office equipment, furniture and fixtures
and other equipment of $10,799 and $9,794, for the three months
ended December 31, 2009 and 2008, respectively. Evolution Petroleum
Corporation and Subsidiaries Condensed Operating Data (Unaudited)
Six Months Ended December 31, ------------ % 2009 2008 Variance
change ---- ---- -------- ------ Sales Volumes, net to the Company:
Crude oil (Bbl) 13,698 19,933 (6,235) (31)% NGLs (Bbl) 15,762
18,745 (2,983) (16)% Natural gas (Mcf) 220,696 126,119 94,577 75%
------- ------- ------ --- Crude oil, NGLs and natural gas (BOE)
66,243 59,698 6,545 11% Revenue data: Crude oil $959,497 $1,986,264
$(1,026,767) (52)% NGLs 565,523 990,738 (425,215) (43)% Natural gas
846,309 969,766 (123,457) (13)% ------- ------- -------- --- Total
revenues $2,371,329 $3,946,768 $(1,575,439) (40)% Average price:
Crude oil (per Bbl) $70.05 $99.65 $(29.60) (30)% NGLs (per Bbl)
35.88 52.85 (16.97) (32)% Natural gas (per Mcf) 3.83 7.69 (3.86)
(50)% ---- ---- ----- --- Crude oil, NGLs and natural gas (per BOE)
$35.80 $66.11 $(30.31) (46)% Expenses (per BOE) Lease operating
expenses and production taxes $11.62 $12.68 $(1.06) (8)% Depletion
expense on oil and natural gas properties (a) $17.22 $18.92 $(1.70)
(9)% (a) Excludes depreciation of office equipment, furniture and
fixtures, and other of $24,293 and $19,618, for the six months
ended December 31, 2009 and 2008, respectively. DATASOURCE:
Evolution Petroleum Corporation CONTACT: Sterling McDonald, VP
& CFO of Evolution Petroleum Corporation, +1-713-935-0122, ; or
Lisa Elliott, , or Jack Lascar, , both of DRG&E,
+1-713-529-6600 Web Site: http://www.evolutionpetroleum.com/
Copyright