Evolution Petroleum Corporation, Inc.

Good morning, everyone, and welcome to the Evolution Petroleum Fiscal Third Quarter 2025 Earnings Conference Call. All participants are in listen-only mode. Please also note today's event is being recorded. At this time, I'd like to turn the call over to Brandi Hudson, the company's Investor Relations Manager. Sam, please go ahead.

Thank you. Welcome to Evolution Petroleum's fiscal third quarter 2025 earnings call. I'm joined today by Kelly Lloyd, President and Chief Executive Officer, Mark Bunch, Chief Operating Officer, and Ryan Stash, Senior Vice President, Chief Financial Officer, and Treasurer. We released our fiscal third quarter 2025 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release in the Investors section of our website. Please note that any statements and information provided in today's call speak only as of today's date, May 14, 2025, and any time-sensitive information 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 the risks, assumptions, and uncertainties as described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statement. During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release. Kelly will begin today's call with opening comments and review of the company's ongoing plans and strategy. Mark will provide an update on operations during the quarter, and Ryan will provide a brief overview of our fiscal third quarter financial highlights. After our prepared remarks, the management team will be available to answer any questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the investor section of our website. With that, I will turn the call over to Kelly.

Thank you, Brandi, and good morning, everybody. Our fiscal third quarter results demonstrated Evolution's commitment to disciplined capital allocation and strategic execution. We stayed grounded in our core strengths, allocating capital prudently to high quality, low decline assets, maintaining our longstanding dividend, and generating positive cash flow. Our diversified portfolio, robust hedging strategy, and measured approach to development is enabling us to weather market volatility while continuing to deliver long-term value. Subsequent to quarter end, we closed the Tex-Mex acquisition and brought online four new wells in our second Chavarru development block. Together, these additions are currently contributing more than 850 net barrels of oil equivalent per day and are expected to meaningfully benefit our fiscal fourth quarter production and cash flow, especially when coupled with the recent strength in natural gas pricing. We also expect to see production ads from ongoing activities in our Scoop stack area. The Tex-Mex acquisition, which closed in April, adds approximately 440 barrels of oil equivalent per day of stable, low-decline production with a balanced commodity mix of 60% oil and 40% natural gas. The $9 million transaction was completed at a very attractive valuation of approximately 3.4 times forward adjusted EBITDA, based on current strip pricing, underscoring its strong near and long-term accretion, even amid recent oil price volatility. The portfolio consists of producing wells across New Mexico, Texas, and Louisiana, and aligns with our long-term strategy to own cash-generative, low-risk assets. Consistent with our disciplined approach, We structured this transaction to preserve the strength of our balance sheet. The $9 million purchase was funded through a combination of cash on hand and a modest $2 million draw on our credit facility. We are now working closely with the operator to evaluate low-cost reactivation opportunities that could provide additional long-term upside. This marks our seventh highly accretive acquisition in six years. and we continue to see an encouraging M&A market, even more so now amid oil price volatility. In the last six years, we've invested $136 million to grow production by more than three and a half times, all while returning capital to shareholders with our quarterly dividend. With a well-established track record, we remain confident in our ability to source, evaluate, and integrate high-quality non-operated assets an incredible value. Taking a look at the broader energy market, as we all know, oil prices softened during April, falling nearly $12 a barrel in one week to sub 60. However, natural gas prices have strengthened of late, providing a partial offset to the softness in crude prices. Our diversified commodity exposure helped mitigate the impact of weaker oil revenue. Our third quarter natural gas revenue rose 33% year over year to $7.8 million, and NGL revenue was up 14% to $3 million, partially offsetting a 19% decline in oil revenue. This volatile market environment underscores the value and resiliency of our diversified portfolio. We remain well hedged on oil, with approximately 40% of oil volumes hedged at prices above $70 through the fiscal year end, providing a strong safety net that supports both our CapEx program and dividends. Operationally, our operators executed well despite some temporary disruptions during the quarter. Total production declined 7.5% year-over-year to 6,667 barrels of oil equivalent per day, primarily due to planned maintenance at Delhi and weather-related downtime in Barnett. Overall, we are maintaining our focus on operational execution and continue to make meaningful progress across our various development programs. As I mentioned earlier, we drilled and completed four new gross wells in the second Chavarru development block, which were brought online shortly after the quarter ended. While it's still too early to fully assess how the wells will perform, we're encouraged by the efficient execution, drilling and completing the four wells for less than budget, and the highly positive initial results. Mark will have more updates to share across our portfolio shortly. In terms of capital allocation, dividend sustainability remains a top priority for us. On May 12th, our board declared a cash dividend of 12 cents per share of common stock, marking our 47th consecutive quarter of issuing a dividend and our 12th consecutive quarter at 12 cents per share. It's important to underscore that this dividend was not declared as a one-time event. Despite the ongoing volatility in commodity prices, the Board's decision reflects our confidence in Evolution's ability to sustain dividends at this level over the long term. Our ability to generate strong operating cash flow driven by our diversified portfolio of assets enables us to meet our capital requirements, repay debt, and continue to return capital to shareholders. To date, Evolution has returned approximately $131 million or $3.93 per share to shareholders in common stock dividends. Looking ahead, our strategy remains focused on preserving financial flexibility, sustaining our dividend, and pursuing opportunistic growth. The fruits of our disciplined acquisition and development strategy during fiscal Q3 will be made obvious in our fiscal fourth quarter, when we will see the effects of our Tex-Mex acquisition and our four new Chabot-Uru wells begin to contribute to our quarterly results. While we are committed to long-term development, we recognize that there are optimal times to develop new wells and optimal times to acquire new assets. In light of the recent market volatility, we, in coordination with our operating partner at Chavarru, have made the decision to delay the start of our third development block to later into our fiscal year 26. We believe it's prudent to now focus our development activities toward gas-weighted opportunities, particularly in the scoop stack. This disciplined strategy enables us to preserve near-term cash flow while positioning us to resume development when oil prices are more favorable. By maintaining a measured development approach in a low-price environment, we are effectively preserving long-term resource value for our shareholders. In the interim, we're actively pursuing opportunities in what we view as a highly attractive market to acquire oil-weighted, low-decline producing assets or natural gas properties with favorable hedging potential. All said, our decision-making will remain grounded in disciplined capital allocation, financial flexibility, and a commitment to delivering long-term value for our shareholders. With that, I'll turn the call over to our COO, Mark Bunch, to review our operations in more detail.