EPM Evolution Petroleum Corporation

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 6, 2024

Evolution Petroleum Corporation

(Exact name of registrant as specified in its charter)

001-32942

(Commission File Number)

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(713) 935-0122

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

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Item 2.02Results of Operations and Financial Condition.

On May 7, 2024, Evolution Petroleum Corporation (the "Company") issued a press release reporting its financial and operating results for the quarter ended March 31, 2024. A copy of the press release, dated May 7, 2024, regarding the Company’s financial and operating results, is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

This information is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless specifically incorporated by reference in a document filed under the Securities Act of 1933, as amended, or the Exchange Act. By filing this report on Form 8-K and furnishing this information, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by Item 2.02.

Occasionally our management discloses net income (loss) and net earnings (loss) per common share excluding selected items as well as Adjusted EBITDA. These measures are presented by our management as supplemental financial measures to allow external users of our financial statements, such as investors, commercial banks, and others, to assess our operating performance as compared to that of other companies in our industry, without regard to financing methods, capital structure, or historical costs basis. We use these measures to assess our ability to incur and service debt and fund capital expenditures. These measures are not measures of financial performance performed under GAAP and should not be considered alternatives to net income (loss), operating income (loss), cash flows provided by (used in) operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP. These measures may not be comparable to similarly titled non-GAAP measures of another company and may not be useful in comparing our performance to the performance of other companies.

Item 8.01Other Events.

On May 6, 2024, the Company approved the declaration of a $0.12 per common share dividend for the fourth quarter of 2024 to shareholders of record on June 14, 2024 and payable on June 28, 2024.

Item 9.01Financial Statements and Exhibits.

(d)   Exhibits

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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Evolution Petroleum Reports Third Quarter Fiscal 2024 Results and Declares Quarterly Cash Dividend for the Fiscal 2024 Fourth Quarter

HOUSTON, TX — May 7, 2024 (GLOBE NEWSWIRE) — Evolution Petroleum Corporation (NYSE American: EPM) ("Evolution" or the "Company") today announced its financial and operating results for its fiscal third quarter ended March 31, 2024 ("fiscal Q3" or the "current quarter"). Evolution also declared a quarterly cash dividend of $0.12 per common share for the fiscal 2024 fourth quarter.

Key Highlights

Kelly Loyd, President and Chief Executive Officer, commented, "Our Company's strong financial results this quarter demonstrate the effectiveness of our strategy to maximize shareholder returns while maintaining a rock-solid balance sheet. We have added scale, diversification, and investment flexibility to our portfolio.  The  production for a portion of the quarter from our SCOOP/STACK acquisitions and the incremental production from 19 newly drilled SCOOP/STACK wells, as well as production from the initial three wells at Chaveroo, were instrumental to our

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performance this quarter. Chaveroo and SCOOP/STACK not only bolstered our quarterly average production by more than 1,000 BOEPD but were also key to the impressive 27% increase in quarter over quarter crude oil production. Our ability to swiftly integrate these assets and capitalize on their continued development potential is a clear indication of Evolution's agility and strategic execution. The positive results from these acquisitions and our substantial inventory of drilling locations brings into focus how  the organic growth piece of our model is, and will continue to be, an excellent complement to our producing assets and our accretive acquisition strategy for many years to come.

Mr. Loyd concluded, "We remain steadfast in our commitment to delivering long-term total returns to our shareholders. This is evident in our 42^nd consecutive quarterly dividend payout in March, which was maintained at $0.12 per share.  We are pleased to announce that we will continue this trend by paying our 43^rd consecutive dividend at $0.12 per share (our 8^th consecutive at this rate) on June 28^th, highlighting our commitment to, and belief in, consistency and stability. As we continue to execute our plan and deliver long-term total returns to our shareholders, we are confident that our disciplined and strategic approach will continue to drive our success and position us for sustained growth in the future."

Cash Dividend on Common Stock

On May 6, 2024, Evolution's Board of Directors declared a cash dividend of $0.12 per share, which will be paid on June 28, 2024, to common stockholders of record on June 14, 2024. This will be the Company's 43^rd consecutive quarterly cash dividend since December 31, 2013. To date, Evolution has returned approximately $114.4 million, or $3.45 per share, back to stockholders in common stock dividends. Maintaining and ultimately growing the common stock dividend remains a key Company priority.

Financial and Operational Results for the Quarter Ended March 31, 2024

Total production for the third quarter of fiscal 2024 was 7,209 net BOEPD, including 2,187 barrels per day ("BOPD") of crude oil; 23,242 thousand cubic feet per day ("MCFPD"), or 3,879 BOEPD, of natural gas; and 1,143 BOEPD of natural gas liquids ("NGLs"). The closing of the SCOOP/STACK acquisitions in mid-February and the first production in early February from the initial three wells in the Chaveroo oilfield collectively contributed to operating results for the current quarter, increasing average production for the quarter by approximately 1,020 BOEPD.

Evolution reported $23.0 million in total revenue for the current quarter, a 10% increase from the prior quarter. Oil revenue increased 24% from the prior quarter to $14.5 million due to a 25% increase in sales volumes, while realized

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commodity pricing decreased minimally. The increase in sales volume was primarily from the SCOOP/STACK acquisitions and new production from the Chaveroo oilfield. Natural gas revenue decreased 10% from the prior quarter to $5.9 million due to a 17% decrease in realized commodity pricing, partially offset by an 8% increase in sales volumes. The decrease in realized commodity pricing was related to the overall decrease in natural gas prices as well as the decreased benefit of natural gas price differentials received during the winter at the Jonah Field, where the Company realized an average natural gas price of $3.94 per MCF during the quarter compared to $4.87 per MCF in the prior quarter. NGL revenue decreased 4% to $2.6 million, primarily due to an 11% decrease in realized pricing, partially offset by an 8% increase in sales volumes. The average realized price per BOE (excluding the impact of derivative contracts) decreased 3% to $35.10 compared to $36.25 in the prior quarter.

Lease operating costs ("LOE") increased marginally to $12.6 million in the current quarter compared to $12.4 million in the prior quarter due primarily to LOE costs added as a result of new production from the SCOOP/STACK acquisitions and the Chaveroo oilfield, partially offset by decreases in CO₂ purchases at Delhi. On a per unit basis, total LOE decreased 10% from $21.31 per BOE in the prior quarter to $19.24 in the current quarter.

Depletion, depreciation, and accretion expense was $5.9 million compared to $4.6 million in the prior quarter. On a per BOE basis, the Company's current quarter depletion rate of $8.43 per BOE increased from $7.31 per BOE in the prior period due to an increase in the depletable base due to the SCOOP/STACK acquisitions and capital expenditures since the prior quarter.

General and administrative (“G&A”) expenses, including stock-based compensation, decreased slightly in the current quarter to $2.4 million from $2.5 million in the prior quarter. The decrease was primarily due to salary expenses associated with actual and estimated annual incentive compensation reflected in the prior quarter. On a per BOE basis, G&A expenses, including stock-based compensation, for the current quarter was $3.69 versus $4.31 for the preceding quarter.

Net income for the current quarter was $0.3 million, or $0.01 per diluted share, compared to $1.1 million, or $0.03 per diluted share, in the prior quarter. As mentioned above, during the quarter we closed our SCOOP/STACK acquisitions and funded the acquisitions with cash on hand and borrowings under our Senior Credit Facility.  During the quarter, we also entered into derivative contracts to hedge a portion of our production and to comply with hedging requirements under our Senior Secured Credit Facility. The increase in commodity prices since entering into the hedges and the continued increase in forward commodity prices resulted in a net loss on derivative contracts of $1.2 million ($0.1 million realized loss and $1.1 million unrealized loss). Excluding the impact of unrealized losses, adjusted net income was $1.0 million, or $0.03 per diluted share, compared to $1.1 million, or $0.03 per diluted share in the prior quarter. Adjusted EBITDA was $8.5 million for the current quarter compared to $6.8 million in the prior quarter. On a per BOE basis, Adjusted EBITDA was $12.92 for the current quarter versus $11.78 for the preceding quarter.

Operations Update

As previously stated, the Company closed the acquisitions of non-operated working interests in the SCOOP/STACK on February 12, 2024 and the assets only contributed revenue and production for 49 days of the 91 day quarter. For the 49 days and fiscal Q3, net production there was 76 MBOE, including 30 MBBL of oil, 10 MBBL of natural gas liquids and 214 MMCF of natural gas. Average realized prices recognized for the SCOOP/STACK assets were $78.71 per BBL for oil and $2.11 per MCF for natural gas. Since the effective date of the acquisitions, 19 of 21 gross (0.48 of 0.50 net) DUC wells have been converted to proved developed producing (“PDP”) at the seller's expense and for our benefit. Additionally, we have agreed to participate in 15 gross (0.2 net) new horizontal wells across the acreage, 13 of which are currently in progress. Based on limited information, the completed wells have so far met or exceeded expectations.

In the Chaveroo oilfield, the first production on the initial three wells in the first development block began in early February with production ramping up as frack fluid was recovered. Based on the results to date, the wells have met or exceeded the pre-drill production estimates and contributed 17 MBOE for a portion of fiscal Q3, including 15 MBBL of oil. Evolution plans to participate for its full 50% working interest in four horizontal well locations in Drilling Block 2. These operations are expected to begin in fiscal Q1 of 2025. The Company has preliminarily agreed to six

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additional horizontal well locations in Drilling Block 3 that are estimated to begin in fiscal Q4 of 2025. The Company also expects to systematically participate in future development blocks, holding rights to over 69 additional horizontal well locations in aggregate. Future acreage costs are fixed at $36,000 per additional net horizontal well, spaced at approximately 160 gross acres per well.

At Jonah Field, the Company realized natural gas prices of $3.94 per MCF in the current quarter, a premium of $1.81 per MCF over the average Henry Hub price. Jonah Field continues to perform well, realizing a premium price selling into West Coast markets.

Williston Basin production slightly increased due to increased gas sales from the ONEOK Grassland System which came back online during the quarter, offset by downtime associated with the winter storm.

Production from the Barnett Shale was impacted during the quarter due to the winter storm in January. Subsequently, the Barnett Shale has resumed operations and returned production to its historical decline rate. Due to lower realized natural gas prices, low marginal wells remained shut-in, and the operator is working to further reduce operating expenses.

Production at Hamilton Dome during the current quarter was slightly impacted by workover projects at the beginning of the quarter. Overall, Hamilton Dome continues to perform strongly.

At Delhi, production was affected during the quarter by winter storms that impacted oil production and repeated downtime from rental turbine failures impacting NGL production, both of which were resolved by the end of the quarter.  The CO₂ purchase pipeline was taken offline for preventative maintenance at the end of February and the operator anticipates resuming CO₂ purchases in June 2024. The field continues to recycle and inject CO₂, the bulk of injected CO₂ volumes, therefore the Company does not anticipate a significant temporary production impact. The operator continues to review the field to identify additional projects to improve production and cash flow including the Phase V development.

Balance Sheet, Liquidity, and Capital Spending

On March 31, 2024, cash and cash equivalents totaled $3.1 million, and working capital was $7.6 million. Evolution had $42.5 million of borrowings outstanding under its revolving credit facility and total liquidity of $10.6 million, including cash and cash equivalents.

In fiscal Q3, Evolution paid $4.0 million in common stock dividends, $0.8 million for common stock repurchases, $43.8 million upon closing the SCOOP/STACK acquisitions, and incurred $7.0 million in capital expenditures. The Company borrowed $42.5 million under its revolving credit facility to fund the SCOOP/STACK acquisitions. The Company has recorded interim purchase price reductions totaling $3.3 million related to net cash flows received from the SCOOP/STACK properties for a portion of the period between the effective date of November 1, 2023 and the closing date. These purchase price reductions were accrued as a receivable on the balance sheet at March 31, 2024. Evolution expects to receive the remaining net cash flows at the final post-closing settlement occurring during the fourth quarter of fiscal 2024.

For fiscal year 2024, the Company expects capital expenditures to be in the range of $10.0 million to $12.0 million, which excludes any completed or potential acquisitions. The anticipated remaining capital expenditures for fiscal year 2024 include capital projects associated with the properties acquired in the SCOOP/STACK acquisitions and other capital and maintenance projects at the other asset areas. Evolution believes its near-term capital spending requirements will be funded from cash flows from operations, current working capital, and borrowings, as needed, under the revolving credit facility without exceeding the targeted debt level of one times pro forma annual adjusted EBITDA.

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Conference Call

As previously announced, Evolution Petroleum will host a conference call on May 8, 2024, at 10:00 a.m. Central Time to review its third quarter fiscal 2024 financial and operating results. To join by phone, please dial (844) 481-2813 (Toll-free) or (412) 317-0677 (International) and ask to join the Evolution Petroleum Corporation call. To join online via webcast, click the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=gRhkzT9R.

A webcast replay will be available through May 8, 2025, via the webcast link above and on Evolution's website at www.ir.evolutionpetroleum.com.

About Evolution Petroleum

Evolution Petroleum Corporation is an independent energy company focused on maximizing total shareholder returns through the ownership of and investment in onshore oil and natural gas properties in the U.S. The Company aims to build and maintain a diversified portfolio of long-life oil and natural gas properties through acquisitions, selective development opportunities, production enhancements, and other exploitation efforts. Properties include non-operated interests in the following areas: the SCOOP/STACK plays of the Anadarko Basin located in central Oklahoma; the Chaveroo oilfield located in Chaves and Roosevelt Counties, New Mexico; the Jonah Field in Sublette County, Wyoming; the Williston Basin in North Dakota; the Barnett Shale located in North Texas; the Hamilton Dome Field located in Hot Springs County, Wyoming; the Delhi Holt-Bryant Unit in the Delhi Field in Northeast Louisiana; as well as small overriding royalty interests in four onshore Texas wells. Visit www.evolutionpetroleum.com for more information.

Cautionary Statement

All forward-looking statements contained in this press release regarding the Company's current expectations, potential results, and future plans and objectives involve a wide range of risks and uncertainties. Statements herein using words such as "believe," "expect," "plans," "outlook," "anticipate,” "should," "will," and words of similar meaning are forward-looking statements. Although the Company's expectations are based on business, engineering, geological, financial, and operating assumptions that it believes to be reasonable, many factors could cause actual results to differ materially from its expectations and can give no assurance that its goals will be achieved. These factors and others are detailed under the heading "Risk Factors" and elsewhere in our periodic documents filed with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

Investor Relations

(713) 935-0122

info@evolutionpetroleum.com

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Evolution Petroleum Corporation

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Evolution Petroleum Corporation

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Evolution Petroleum Corporation

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Evolution Petroleum Corporation

Non-GAAP Reconciliation – Adjusted EBITDA (Unaudited)

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Adjusted EBITDA and Net income (loss) and earnings per share excluding selected items are non-GAAP financial measures that are used as supplemental financial measures by our management and by external users of our financial statements, such as investors, commercial banks, and others, to assess our operating performance as compared to that of other companies in our industry, without regard to financing methods, capital structure, or historical costs basis. We use these measures to assess our ability to incur and service debt and fund capital expenditures. Our Adjusted EBITDA and Net income (loss) and earnings per share, excluding selected items, should not be considered alternatives to net income (loss), operating income (loss), cash flows provided by (used in) operating activities, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA and Net income (loss) and earnings per share excluding selected items may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA and Net income (loss) and earnings per share excluding selected items in the same manner.

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We define Adjusted EBITDA as net income (loss) plus interest expense, income tax expense (benefit), depreciation, depletion, and accretion (DD&A), stock-based compensation, ceiling test impairment, and other impairments, unrealized loss (gain) on change in fair value of derivatives, and other non-recurring or non-cash expense (income) items.

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Evolution Petroleum Corporation

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Evolution Petroleum Corporation

Supplemental Information on Oil and Natural Gas Operations (Unaudited)

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