On February 7, 2018 Evolution Petroleum (ticker: EPM) announced that its board of directors declared a quarterly cash dividend to common shareholders of $0.10 per share, an increase of 33% over the previous rate of $0.075 per share. The quarterly dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018.
Evolution Petroleum also reported financial and operating highlights for its fiscal second quarter ended December 31, 2017, with comparisons to the fiscal first quarter ended September 30, 2017 (the “prior quarter”) and the quarter ended December 31, 2016 (the “year-ago quarter”).
Highlights for fiscal second quarter
In the company’s fiscal second quarter, the company reported revenues of $11.1 million, which is an increase of 30% over both the prior and year-ago quarter. From the $11.1 million in revenue, the company reported a net income of $9.9 million for the quarter, or $0.30 per common share which is an increase of $0.23 per common share from the prior and year-ago quarter. The net income for the quarter includes a one-time $6.0 million non-cash tax benefit related to passage of the Tax Cuts and Jobs Act of 2017.
Additional highlights from the fiscal second quarter include Evolution paying its seventeenth consecutive quarterly cash dividend on common shares, in the amount of $0.075 per share, and announced an increase in the dividend rate to $0.10 per share for the quarter ending March 31, 2018. Also, Evolution Petroleum ended the quarter with $27.6 million of working capital, an increase of $3.2 million from the prior quarter, after paying $2.5 million in common stock dividends.
Production update
In the fiscal second quarter the company achieved gross oil production at Delhi of 7,370 barrels per day during the quarter, a 7% increase from the prior quarter. Gross NGL production for the quarter was 1,079 barrels per day, up 3% from the prior quarter. As previously disclosed, Evolution completed a strategic capital upgrade to the inlet of the recycle plant in August. Results from the NGL plant after completion of this project have been very positive, with the plant operating at or near maximum capacity and efficiency.
New wells to be drilled
Evolution will begin a twelve-well infill drilling program in the Delhi field during the quarter ending March 31, 2018. This program, which has an expected net cost to the company of $4.7 million, will target productive oil zones in the developed area of the field which are not being swept effectively by the current CO2 flood.
At the same time, we will drill the last three wells of a six-well water injection program on the eastern edge of the planned Phase Five expansion of the Delhi field. Evolution’s forecast for the remaining net costs of this project is $2.3 million. The Company expects all of these projects to be completed during the quarter ending September 30, 2018.
Liquidity and Outlook for 2018
Evolution ended the quarter with $27.6 million in working capital, an increase of $3.2 million from the prior quarter, after paying $2.5 million in common stock dividends during the quarter. Evolution Petroleum’s cash balance on December 31, 2017 was $25.7 million with no debt outstanding. The company recently increased its borrowing base under its credit facility to $40.0 million to better position themselves for potential acquisition of primarily producing properties. The company believes its financial resources are more than sufficient to fund continuing development of the Delhi field, beginning with the infill drilling program starting in early 2018.
EnerCom Dallas conference presenter
Evolution Petroleum will be presenting at the EnerCom Dallas investment conference, Feb. 21-22 at the Tower Club in downtown Dallas. Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now.
