Evolution Petroleum Corporation, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Evolution Petroleum second quarter fiscal year 2022 earnings release conference call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Ryan Stash. Sir, the floor is yours.

Thank you, and good afternoon, everyone, and welcome to Evolution Petroleum's earnings call for our second quarter of fiscal year 2022. I'm Ryan Stash, Chief Financial Officer. Joining me today is Jason Brown, our President and Chief Executive Officer. After I cover the forward-looking statements, Jason will review key highlights along with our operational results. I will then return to provide more in-depth financial review. And finally, Jason will provide some closing comments and details about our two recent acquisitions before we take your questions. 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, and 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 our strategy as well as key operational and financial results and how these affect us moving forward. Please note that this conference call is being recorded. If you wish to listen to a replay of today's call, it will be available by going to the company's website or via recorded replay until May 11, 2022. Now, with that, I'll turn over the call to Jason.

Thank you, Ryan. Good afternoon, everyone, and thanks for joining us today on Evaluation's second quarter fiscal 22 earnings call. As Ryan mentioned, we will discuss our two recent acquisitions in the Williston Basin and Jonah Field after our financial results We posted a presentation on the front page of our website if you would like to download it. In the meantime, I will use this slide deck to discuss our acquisitions in more detail. We've been pretty busy since our last update in November. I'm happy to say that the team's efforts have been fruitful for our shareholders. As always, we appreciate your continued interest in our company and welcome any questions that you might have regarding our business and recent acquisitions. We were pleased with our overall results in the second quarter, which were highlighted by continued free cash flow generation. This supports our long-term strategy of operating within cash flow and paying an ongoing meaningful cash dividend to shareholders. We've also continued our plans of expanding our geographic footprint through executing on targeted transactions that promote our ability to further increase our return of capital to shareholders. In the last three weeks, we have announced two accretive acquisitions we believe will increase the longevity of our dividend payout program through the next decade. I will discuss the collective transformative nature of these transactions during my closing comments. For the second quarter of 2022, we had net income grew 31 percent to $6.8 million, or 20 cents per diluted share. from 5.2 million or 16 cents per diluted share in the previous quarter. We continue to benefit significantly from higher commodity prices as we are unhedged during the quarter, which resulted in adjusted EBITDA of 10.2 million, which was 20% increase from the first quarter. In addition, we were able to grow our cash position to 13.6 million at quarter end, which was 71% higher than our cash balance at September 30th of 2021. During the second quarter, we produced 49.57 net BOE per day, which is down from 58.43 net BOE per day for the first quarter of fiscal 2022. Included in our second quarter production results was a downward adjustment of approximately 400 net BOE per day due to the production mix adjustments by the operator in the Barnett shale to reject ethane and capitalize on the higher natural gas prices in the first and second quarters, thereby improving cash flow generation. Also included in the second quarter production was the receipt of past oil royalties from accumulated over a period of approximately three years associated with an overriding royalty interest owned in two wells located in Giddings Field in Burleson County, Texas. Now let's look at our operating results in more detail. Net production in Gdell High for the first quarter was 108,245 BOE, or 1,177 BOE per day. That's an 8% decrease compared to the prior quarter. Oil production in Delhi continues to be impacted by the nine-month suspension of CO2 purchases during the calendar of 2020 due to repairs of the purchase supply line. The results have been lower reservoir pressure, and Dinbury, who operates the field and owns and operates the CO2 purchase line, has worked diligently to restore pre-2020 levels. I would note that CO2 purchase increased to approximately 100 million cubic feet per day in the second quarter, which has assisted in arresting the decline and restoring some of the reservoir pressure previously lost, also impacting delhi production in fiscal 2022 second quarter. It was planned and unplanned compressor maintenance in November and December that temporarily reduced daily production. At Hamilton Dome, we saw a sequential quarter increase in net production of 2% to 38,000 21 barrels, or 413 barrels of oil per day. It's primarily due to continued restoration of previously shut-in wells and strategic adjustments to water injection locations and volumes. Our operating partner, Merit, remains focused on maintenance projects in Hamilton Dome. Net production from the Barnett assets for the second quarter of fiscal 22 was 285,761 BOE, or 3,106 BOEs per day. which is about 25% lower than the first quarter. As I mentioned earlier, the production of Barnett Shale was impacted by Diversified Energy's decision as the operator to maximize the overall field cash flow by capturing the most favorable commodity price. Diversified adjusted the production mix in both the second and the first quarters of 22, which resulted in an adjustment being booked in the second quarter to true up past results. As a reminder, we purchased our non-operated interest in the Barnett Shale in May of 2021. The acquisition materially increased our exposure to natural gas through the addition of another long-life low-decline asset to our portfolio. In addition, the transaction was particularly well-timed considering the sharp increase that we have seen in natural prices over the past few months. Diversified began operating the Barnett Shale assets as of July of 2021 after purchasing their interest from Blackbeard Operating. Based on our discussions, Diversified is planning to run one work-over rig continuously throughout the calendar of 2022. We look forward to participating with them in a number of high-rate return projects in the coming months and years. During the second quarter, we once again generated operating cash flow in excess of capital expenditures, which supported payment of our 33rd consecutive quarterly cash dividend. Given the continued improvement in our business and economic environment, we are pleased to declare a third quarter dividend of 10 cents per common share that will be paid on March 31st to shareholders of record of March 15th. Our third quarter dividend represents a 33% increase from our second quarter dividend of seven and a half cents per share. This was an important milestone returning our dividend to pre-pandemic levels. But the third quarter dividend evolution will have paid out approximately 80 million or $2.50 over $2.50 per share back to the shareholders as cash dividends since the program began in December of 2013. With that, I'll now turn the call back over to Ryan to discuss some of our financial highlights.