Evolution Petroleum Corporation Corporate … Presentation - September 2017 2 Forward Looking...
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Transcript of Evolution Petroleum Corporation Corporate … Presentation - September 2017 2 Forward Looking...
Corporate Presentation - September 2017 Evolution Petroleum Corporation
Corporate Presentation – September 2017
1
Corporate Presentation - September 2017
2
Forward Looking Statements
This presentation contains “forward-looking statements.” Such statements may relate to capital
expenditures, drilling and exploitation activities, production efforts and sales volumes, Proved,
Probable, and Possible reserves, operating and administrative costs, future operating or financial
results, cash flow and anticipated liquidity, business strategy and potential property acquisitions.
These forward-looking statements are generally accompanied by words such as “estimated”,
“projected”, “potential”, “anticipated”, “forecasted” or other words that convey the uncertainty of
future events or outcomes. Although we believe the expectations and forecasts reflected in these and
other forward-looking statements are reasonable, we can give no assurance they will prove to have
been correct. These statements are based on our current plans and assumptions and are subject to
a number of risks and uncertainties as further outlined in our most recent Forms 10-K and 10-Q.
Therefore, the actual results may differ materially from the expectations, estimates or assumptions
expressed in or implied by any forward-looking statement and we undertake no obligation to update
these estimates for events after this presentation.
Cautionary Note regarding Oil and Gas Reserves – SEC rules allow oil and gas companies to
disclose not only Proved reserves, but also Probable and Possible reserves that meet the SEC’s
definitions of such terms. We disclose Proved, Probable and Possible reserves in our filings with the
SEC and this presentation. Estimates of Probable and Possible reserves are by their nature more
speculative than estimates of Proved reserves and are subject to greater uncertainties, and
accordingly the likelihood of recovering those reserves is subject to substantially greater risk. Our
reserves as of June 30, 2017 were estimated by DeGolyer & MacNaughton (“D&M”), an independent
petroleum engineering firm.
Corporate Presentation - September 2017
3
Evolution Petroleum Founded in 2003 by Bob Herlin, Chairman
Delhi Field Acquired in 2003
Texas / Gulf Coast Focus Overview (Quarter Ended June 30, 2017)
New York Stock Exchange EPM
Shares Outstanding 33.1 MM
Share Price (9/22/2017) $6.85
Total Equity Value (9/22/2017) $227 MM
Common Stock Dividend (Annual Rate) $0.30 per share
Dividend Yield (9/22/2017) 4.4%
Delhi Gross Oil Production (Jun 17 Qtr) 7,540 BOPD
Delhi Gross NGL Production (Jun 17 Qtr) 1,019 BOEPD
Delhi Avg Net Production (Jun 17 Qtr) 2,243 BOEPD
Proved Reserves (6/30/2017) 10.1 MMBOE
Net Working Capital (6/30/2017) $23.4 MM
Debt ($10 MM+ Avail Capacity) None
Delhi Field
Houston
Headquarters
Corporate Presentation - September 2017
4
High Quality, Long-lived Asset Base Steady Cash Flow from Very Large Delhi Field Resource
Potential Production Increases from Continuing Development
NGL Plant Online; Planned CO2 Flood Enhancements
Solid Financial Position Debt Free Balance Sheet w/ Substantial Working Capital Position
Provides Stability to Weather Industry Cycles
Well-Positioned to Capitalize on New Growth Opportunities
Attractive Dividend Yield of 4.4% Dividends Paid for 16 Consecutive Quarters
Flexible Share Repurchase Program Available
Investment Considerations
Corporate Presentation - September 2017
5
Balance Sheet
Cash $ 23,028
Other current assets 3,115
Property and equipment 61,831
Other assets 295
Total assets $ 88,269
Current liabilities $ 2,719
Long-term debt -
Deferred taxes and ARO 17,080
Stockholders’ equity 68,470
Total liabilities and equity $ 88,269
Summary Financial Statements
June 30, 2017 Amounts in $000’s, except EPS
Fiscal 2017 Income Statement
Delhi field revenues $ 34,485
Lease operating expenses 10,836
DD&A and accretion 5,779
G&A expenses and other 4,985
Income before income taxes $ 12,885
Income tax provision 4,841
Net income $ 8,044
Earnings per share (fully diluted) $ 0.21
Corporate Presentation - September 2017
6
Delhi Field
Recycle Facility
and NGL Plant
Foundation Cash
Flow Asset for
Evolution Petroleum
Corporate Presentation - September 2017
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Exceptional resource: 418 MMBO of gross original oil in place
323 MMBO OOIP in proved flood area
195 MMBO production prior to EOR
15.0 MMBO since CO2 flood began
Other advantages: No LA oil severance taxes (12.5%)
until financial payout of the project
Oil transported by pipeline
Delhi crude sells at LLS pricing
Delhi Field EOR Project Development
Corporate Presentation - September 2017
8
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Gross BOEPD Total Net BOEPD
Reversion of Working
Interest – Nov 2014
Combined Interests
Delhi Field Daily Production (Tertiary) Gross and Net BOEPD
Gross
BOPD
Net
BOEPD
Royalty Interest Only
Corporate Presentation - September 2017
EPM Interests in the Delhi Field
Costs Revenues
Working Interest (a) 23.9% 19.0%
Royalty Interests None 7.2%
Combined Interests 23.9% 26.2%
9
(a) Field Payout and Reversion of Working Interest to
EPM Occurred Effective November 1, 2014
(Working Interest in the Mengel Sand also 23.9%)
Corporate Presentation - September 2017
10
Delhi Revenue and
Field Operating Margin per BOE
$-
$10
$20
$30
$40
$50
$60
$70
2015 2016 2017
LOE CO2 Costs Field Operating Margin
$61.52
$39.71 $44.88 $42.52
Margin (69% of Rev)
$25.95 Margin
(65% of Rev)
$30.78 Margin
(69% of Rev)
Corporate Presentation - September 2017
11
Proved Reserves assume 14.3%
Incremental CO2 Recovery (Up
from 13.0% in 2015)
(a) 2P Combined Proved plus
Incremental Probable assumes
19.4% incremental CO2 recovery
(b) 3P Combined Proved,
Probable and Possible assumes
22.5% incremental CO2 recovery
-
5,000
10,000
15,000
20,000
Proved 2P (a) 3P (b)
Developed Producing Undeveloped
EPM Delhi Reserves – Three Cases (MBOE – 6/30/17)
10,058
15,326
14.3%
19.4%
22.5%
18,542
Undeveloped Reserves:
• Infill Drilling Program Included in
PUD Reserves - $3.3MM – 8 Wells
• Future Dev Costs for Test Site 5 are
approx $10.9MM - $6.97 per Bbl
Reserve Reports Prepared by DeGolyer and MacNaughton
Corporate Presentation - September 2017
12
Delhi NGL Plant
NGL Component % of Stream Ethane 4.6% Propane 27.4% Butanes (ISO + Normal) 34.0% Pentanes Plus (C5+) 34.0% Total 100.0%
Very Rich NGL Mix:
Currently Producing ~1,200 + Bbls NGL’s per Day
•NGL Plant Online Dec 2016 •Engineered Solution to CO2 Inlet Processing Installed Aug 2017 •Now Operating at 100% Capacity •GE Turbine also at Full Production
Corporate Presentation - September 2017
13
Increase Production & Improve EOR Efficiency through Conformance Projects & NGL Plant Modifications
Infill Drilling program; Expand CO2 Flood to Eastern Part of Delhi Field
(Price Dependent)
Expand CO2 Flood to Mengel Sand and Additional Thinner Intervals
(Price Dependent)
Multiple
Projects
To Build
Long-Term
Value
Corporate Presentation - September 2017
14
Key
Financial
Matters
Corporate Presentation - September 2017
$0
$5
$10
$15
$20
$25
$30
$35
$40
2012 2013 2014 2015 2016 2017
Revenues Net Income
Rev
en
ue
& N
et In
com
e ($
MM
)
15
Six Years of Increasing Revenues and Positive Net Income
Corporate Presentation - September 2017
16
$-
$20
$40
$60
$80
$100
$120
$0.00
$0.01
$0.02
$0.03
$0.04
$0.05
$0.06
$0.07
$0.08
$0.09
$0.10
$0.11
$0.12
Common Stock Dividends WTI Oil Prices (Qtr Avg)
Quarterly
Dividend
Rate per
Share
WTI Avg Oil Prices
(Bloomberg)
EPM Dividend History vs WTI Oil Prices
Sep 17 Dividend $0.075
Cumulative Payout Dec 2013 thru Sep 2017:
$37.0 MM ($1.13 per share)
Corporate Presentation - September 2017
17
Management and Directors (Average BOD Tenure 12 Years / Insiders Own ~9%)
Bob Herlin, Chairman, Founder, Former CEO
Randy Keys, CEO – Adobe, Norcen; EPM 4 Years
David Joe, CFO – Unocal; EPM 12 Years
Independent Directors:
Jed DiPaolo – Halliburton; Growth Capital Partners
Bill Dozier – Amoco; Santa Fe Minerals; Vintage
Gene Stoever – Former KPMG Audit Partner
Kelly Loyd – JVL Advisors
Corporate Presentation - September 2017
18
Opportunities for EPM
We see an Improving Market for Acquisitions
Price and Value Expectations more Reasonable
Excess Capital Available; Competition Still a Factor
Over time, we expect continuing divestitures of mature
conventional cash flow properties by larger entities
We have Financial and Operational Capacity to Execute
$50MM Potential Availability under Credit Facility
We are patiently seeking opportunities which are:
Accretive to Value and Cash Flow; and
Support Increasing Long-term Returns to Shareholders
Corporate Presentation - September 2017
19
Value Proposition Summary
High Quality, Long-lived Asset Base Steady Cash Flow from Very Large Delhi Field Resource
Potential Production Increases from Continuing Development
NGL Plant Online; Planned CO2 Flood Enhancements
Solid Financial Position Debt Free Balance Sheet w/ Substantial Working Capital Position
Provides Stability to Weather Industry Cycles
Well-Positioned to Capitalize on New Growth Opportunities
Attractive Dividend Yield of 4.4% Dividends Paid for 16 Consecutive Quarters
Flexible Share Repurchase Program Available