Evolution Petroleum Corporation, Inc.

Good day, ladies and gentlemen, and welcome to the Evolution Petroleum Fiscal Year in 2021 Earnings Release Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Ryan Stash. Sir, the floor is yours.

Thank you. Appreciate it. And good afternoon, everyone, and welcome to Evolution Petroleum's earnings call for our fourth quarter and fiscal year-end 2021. Joining us today on the call are Jason Brown, President and Chief Executive Officer, and myself, Ryan Stach, Chief Financial Officer for Evolution Petroleum. After I cover the forward-looking statements, Jason will review key highlights along with operational results. Then I will return to provide a more in-depth financial review And Jason will then add some closing comments before we take your questions. If you wish to listen to a replay of today's call, it will be available shortly by going to the company's website or via recorded replay until December 13th, 2021. Please note that any statements and information provided today are time sensitive and may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to risk and uncertainties that are listed and described in our filings with the SEC. Actual results may differ materially from those expected. Since detailed numbers are readily available to everyone in yesterday's earnings release, this call will primarily focus on evolution strategy as well as key operational and financial results and how these affect evolution moving forward. Please note that this conference call is being recorded. Now, let me turn the call over to Jason.

Thank you, Ryan. Good afternoon, everyone, and thanks for joining us today on Evolution's fourth quarter fiscal 2021 earnings call. This past year has been an extraordinary one for Evolution. With the backdrop of low commodity prices and our primary operator going through bankruptcy, restructuring early in our fiscal year, To a swift recovery of prices and a substantial acquisition in the second half of our fiscal year, I'm pleased with the resilience and the dedication of our team. Although we're very happy to see commodity prices return to even pre-pandemic levels, we do believe the volatility still remains going forward and are cautiously optimistic amid the continued uncertainty of global markets. We were able to take advantage of an opportunity to diversify our commodities in the print and materially increase our exposure to natural gas through the acquisition of a one-life asset in the print shale. We're excited about this accretive acquisition, what it does for our company and shareholders moving forward. As I've stated before, we are interested in and continually evaluate both oil and natural gas deals and are pleased that we were able to add these natural gas reserves to our portfolio. Through the past year's challenges, we've maintained our commitment to returning meaningful value to our shareholders through a consistent dividend program. We've increased our first quarter dividend of fiscal 2022 to 7.5 cents per share of common stock, payable in September of 2021. This decision is in line with what we've previously stated, and it's supported by continuing improvement in commodity prices and the additional cash flows generated by the Barnett Shale acquisition. including the first quarter dividend that will be paid on September 30th to shareholders of record as of September 20th. Evolution will have paid out over $77 million or $2.34 per share back to shareholders as cash dividends since 2013. Maintaining and ultimately growing our common stock dividend along with achieving disciplined growth through accretive acquisitions remain our key priorities moving forward. As we look to fiscal 2022, I'm very excited about the trajectory of evolution. In the fiscal fourth quarter, our production grew to 4,378 net BOE per day, which is an increase of about 156% over the prior quarter, substantially due to the production benefit of the Barnett Shale acquisition that closed in May, even though it only contributed for 55 days of the quarter. We generated $4.7 million in adjusted EBITDA in the fourth quarter, almost doubling the $2.5 million we generated in the third quarter. Our year-end crude reserves increased 129% to 23.4 million BOE as well. Although both Del High and Hamilton Dome had positive reserve revisions net of production, the majority of the increase was due to the acquisition of the non-operated interest in the Barnett Shale. It added 48.6 BCF of natural gas, just under 5 million barrels of natural gas liquids, and a small amount of oil. That's a little over 13 MMBOE of long-life reserves, which is a substantial add of extended support to our dividend program. The SEC pricing used our year-end was $49.72 per barrel and $2.46 per MMBTU of gas. You'll note that's quite a bit below the current commodity pricing. Approved SEC reserves for the year ended 6-30-2021, consisted of approximately 65% of liquids, that's about 36% crude and 29% NGO, and 35% natural gas. At fiscal year-end, approximately 92% of crude reserves were classified as proved developed producing and 8% as proved undeveloped. Turning to our operational highlights at Dell High and Hamilton Dome, we continue to have good activity in both areas and are seeing field work and new projects pick up due to the uptick in commodity prices. Our operating partner at Dell High returned to conformance projects in early 2021. Net production at Dell High in the current quarter was 121,911 BOE, or approximately 1,340 BOE per day, and that's about a 3% increase over the prior quarter. Purchased CO2 volumes were up following a pipeline repair, and the operator completed several performance projects. As we discussed last quarter, it will take a while to recover the reservoir pressure and production loss following the CO2 purchase pipeline failure last year. But we are starting to see a trend in the right direction and are pleased with the attention and capital support that Delhi is getting in 2021. In Hamilton Dome, we saw a quarter-over-quarter increase in production of 4%. the 36,453 barrels, who are right at 400 barrels a day, primarily driven by the reactivation of wells that were shut in during the last quarter. During fiscal 2021, in response to commodity prices, operator at Hamilton's Dome shut in a number of wells. At present, all wells that were shut in, substantially all wells that were shut in due to the volatility of pricing, have been returned to production. We were very impressed by Merit's responsiveness to the pricing challenge that they faced over the last year. Net production at the Barnett Shale for the fourth quarter of fiscal 2021 was 240,000 BOE, which represents approximately 55 days of production as we closed on the acquisition of the first week of May. 4,364 BOE per day based on 55 days of production. I would like to note that Blackbeard Operating, the primary operator in the Barnett Shale, sold their interest to Diversified Energy in July of 2021. We will be able to provide more detail on the expected future capital and operational plans of the Barnett once Diversified has finalized their plans upon completion of the transition period. We feel that this is an exciting time for evolution as we build size and scale through accretive acquisitions while continuing to deliver strong operation and financial results that support our dividend. With that, I'll now turn the call back over to Ryan to run through some of our financial highlights. Then I'll wrap up the call by speaking briefly about our strategy and outlook on the M&A landscape. Ryan?