Evolution Petroleum Corporation (NYSE MKT: EPM) today declared a quarterly dividend of $0.10 per share of common stock and further elaborated on the impact of the Company earning its reversionary interest in the Delhi Field.
A cash dividend of $0.10 per share of common stock will be paid on December 31, 2014 to common stockholders as of December 15, 2014.
Working Interest in Delhi Field Reverted Back to Evolution
As previously announced the operator notified the Company it had earned its 23.9% reversionary working interest and associated 19.1% revenue interest in the Delhi Field effective November 1, 2014.
Highlights of the working interest reversion:
- Increases Evolution’s total net revenue interest in the field to 26.5%, which includes its existing 7.4% royalty interest and the 19.1% revenue interest from reversion of the Company’s working interest
- Increases expected Company-wide free cash flow to levels exceeding its anticipated capital obligations, preserving the ability to pay dividends and return cash to shareholders
Robert Herlin, Chairman and CEO, said: “With zero debt on our balance sheet, we have relatively low financial risk compared to our peers, and combined with the over three-fold increase in our revenue interest in the Delhi Field, we expect to realize substantially higher revenues, earnings and cash flow beginning this quarter. Consequently, Evolution is well positioned to return cash to shareholders through dividends on both our preferred and common stock while continuing capital expenditures for growth. It is important to note that as the Delhi Field continues to respond to the CO2 flood and investment in the project proceeds, field production is projected to rise for many years and not decline like most oil and gas assets.
“Responsible capital allocation, conservative stewardship of the balance sheet, the reversion of our Delhi Field working interest and the growth prospects from our GARP® technology puts Evolution in the fortunate position of generating more free cash flow than the Company needs for its capital programs. Consequently, we can fund our growth plans out of operating cash flow and still have funds to return cash to shareholders.”
Expected Tax Treatment of Dividends
Based on the November 1, 2014 effective date for the reversion of our working interest in the Delhi Field, our current projections indicate that the majority, if not all, of our cash dividends paid during the fiscal year ended June 30, 2015 will be treated as qualified dividend income and not as a return of capital. This would apply to dividends paid on both preferred and common shares from July 2014 through June 2015. We will make a final determination regarding the tax treatment of dividends for the current fiscal year when we report this information to recipients on Form 1099-DIV. All dividends paid in the previous fiscal year ended June 30, 2014 will be treated as a return of capital.
About Evolution Petroleum
Evolution Petroleum Corporation develops incremental petroleum reserves and shareholder value by applying conventional and specialized technology to known oil and gas resources, onshore in the United States. Principal assets include interests in a CO2-EOR project in Louisiana’s Delhi Field and a patented artificial lift technology designed to extend the life and increase ultimate recoveries of depletion drive oil and gas wells. Additional information, including the Company’s annual report on Form 10-K and its quarterly reports on Form 10-Q, is available on its website atwww.evolutionpetroleum.com. Additional information regarding GARP® is available on thewww.garplift.com website.