Evolution Petroleum Corporation Corporate Presentation June 2019 - PowerPoint PPT Presentation

Evolution Petroleum Corporation Corporate Presentation – June 2019 Corporate Presentation – June 2019 1

Corporate Presentation – June 2019 Forward L d Looking St 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 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 regard rding Oi Oil and Gas Res eser erves es – 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, 2018 were estimated by DeGolyer and MacNaughton (“D&M”), an independent petroleum engineering firm. 2

Corporate Presentation – June 2019 KEY TAKEAWAYS Free Cash Flow Quarterly Cash Dividend Stock Buy Back Program Under-levered Balance Sheet Reported Net Income 3

Corporate Presentation – June 2019 Texas / Gulf Coast Focus Overview New York Stock Exchange EPM Shares Outstanding 33.18 MM Share Price (6/3/2019) $6.09 Delhi Field Total Equity Value (6/3/2019) $202 MM Common Stock Dividend (Annualized Rate) $0.40 per share Dividend Yield (6/3/2019) 6.5% EPM Houston Headquarters (Nine months ended 3/31/19) Delhi Gross Liquids Production (86% Oil) ~7,700 BOEPD EPM Net Liquids Production ~2,014 BOEPD Proved Reserves (6/30/2018) 9.4 MMBOE (78% dev)  Evolution Petroleum co-founded in 2003 by Probable Reserves (6/30/2018) 4.5 MMBOE (80% dev) Robert Herlin, Executive Chairman Possible Reserves (6/30/2018) 4.6 MMBOE (88% dev)  Delhi Field acquired in 2003 Cash on hand (3/31/19) $30 MM ($0.91/Shr)  Delhi Field CO 2 project initiated in 2006 with first production in 2010 with expansion Debt ($40 MM+ Avail Capacity) $0.0 ongoing into 2020 and beyond 4

Corporate Presentation – June 2019 INVESTMENT CONSIDERATIONS High Quality, Long-lived Asset Base  Steady cash flow from large, Delhi field resource; 20+ years remaining life Potential production additions from continuing development  Phase V scheduled for fiscal 2020 - 2021  Upside unquantified potential by extending CO 2 flood to other reservoirs utilizing existing recycle and NGL plants Solid Financial Position   $30 million cash as of 3/31/19, $0 debt and untapped $40 million revolver  Current free cash flow well in excess of dividend plus balance sheet cash can fuel acquisitions without undue leverage  Demonstrated conservative management philosophy provides stability to weather future industry downturns and maintain a cash dividend to shareholders  Positioned to capitalize on new opportunities to grow Attractive Dividend Yield of 6.5% as of 6/3/2019  5

Corporate Presentation – June 2019 CORE OBJECTIVES  Directly benefit our shareholders by distributing ~ 40-60% of cash flow through cash dividends Tax Reform makes C-Corps like EPM more tax-efficient  Conservatively invest balance of cash flow into similar, long-life assets that fit our model and capabilities  Diversify asset base Geologic, product and market diversity  Maintain solid financial position Extend our consistent record of earnings and dividend distributions without high leverage  Increase scale to enhance public market liquidity and leverage overhead 6

Corporate Presentation – June 2019 EPM Dividend History vs WTI Oil Prices Cumulative Payout Dec 2013 thru Mar 2019 $0.14 $140 $56 MM (or $1.71/share) $0.12 $120 June 2019 Dividend Declared at $0.10 $0.10 $100 $0.08 $80 Quarterly WTI Avg Dividend Oil Prices Rate per (Bloomberg) $0.06 $60 Share $0.04 $40 $0.02 $20 $0.00 $- Common Stock Dividends WTI Oil Prices (Qtr Avg) 7

Corporate Presentation – June 2019 Seven Consecutive Years of Net Income (& Counting) $45 Revenues Net Income $40 $35 $30 $Million (a) $25 (b) $20 $15 $10 $5 $0 2012 2013 2014 2015 2016 2017 2018 2019 9 Mos YTD (a) Includes Litigation Settlement (b) Includes Tax Reform 8

Corporate Presentation – June 2019 Where is our operational cash flow going? Uses of CFFO 1 , $000 Uses of CFFO 1 , $000 $25,000 $25,000 • Qualified Ordinary Dividends to Shareholders $20,000 $20,000 $15,000 • Invested back into Delhi Field $15,000 to maintain production level $10,000 $10,000 into next decade $5,000 $5,000 • Retained cash to redeploy $- into acquisition of similar $- FY17 FY18 6 Mos FY19 long life, mostly developed FY17 FY18 9 Mos FY19 Paid to S/H Retained for Future Inv Invested in Delhi and producing assets or Paid to S/H Retained for Future Inv Invested in Delhi future dividends 2 1. Cash Flow From Operations, as of 3/31/19 • 100% for the benefit of 2. Cash balance as of 3/31/19 is $30 million with no debt shareholders 9

Corporate Presentation – June 2019 Summary Financial Statements March 31, 2019 Amounts in $000’s, except EPS Income Statement ( Nine months fiscal YTD ) Balance Sheet Cash $ 29,550 Delhi field revenues $ 32,856 Other current assets 4,368 Lease operating expenses 10,704 Property and equipment, net 61,354 DD&A and accretion 4,710 Other assets 220 G&A expenses 3,761 Total assets $ 95,492 Income before income taxes $ 13,681 Current liabilities $ 2,795 Other (income) (1,185) Long-term debt 0 Income tax provision 2,767 Deferred taxes and ARO 12,722 Net income $ 12,099 Stockholders’ equity 79,975 Earnings per share (fully diluted) $ 0.36 Total liabilities and equity $ 95,492 10

Corporate Presentation – June 2019 Delhi Recycle Facility & NGL Plant Delhi Field EOR CO 2 Flood ~7,700 BOE per day • ~86% premium Louisiana Light Sweet (LLS) • oil, connected by pipeline to market 3 trains of processing of recycle gas • Rich mix of heavier NGLs, or 60% C5 + C4 • 11

Corporate Presentation – June 2019 Delhi Field EOR Project Delhi Unit 12+ miles long Unquantified 2010 2009 2012-13 Future Town Expansion of Delhi Phase V Unquantified Phase future expansion IV in downdip Phase I thinner reservoirs Phase & eastern phase – II dependent on oil Phase III price 2020/21 2018 2015-17 PUD PUD Infill Infill Drilling in 2011 Pgm Phases I & II Exceptional Resource: Other Advantages:  418 MMBO of gross original oil in place (“OOIP”)  No LA oil severance taxes (12.5%) at current oil  325 MMBO gross OOIP in current proved flood area price  195 MMBO gross production prior to EOR  Oil transported by pipeline from field – no current  ~19 MMBO gross produced from CO 2 flood since capacity constraints inception  Delhi crude price based on LLS pricing (current  Over 9 MMBOE of net unproven reserves that are 80+% premium to WTI) developed & based on increased oil recovery  Investigating options for uplift in NGL pricing  Unquantified upside through expansion as noted above through onsite processing  At fixed $58 oil price, proved reserves extend field life  Due to long life, small change in discount rate over 20 years, and unproved reserves extend life by results in large impact on present value of reserves additional 20 years. while reducing impact of short term price swings  Over 13,600 gross acres in units held by production 12

Corporate Presentation – June 2019 Delhi Field Daily Production (Tertiary) Gross and Net BOE per Day Infill Dr ill Drillin illing Phase se V V Conformance Pr Con Proj ojects & & NGL L First pr produ oduction 2018 018 ~Fis iscal l Pla lant from om CO CO 2 flood od 2020 020 Prog Pr ogram 10,000 BOEPD WI & Royalty Interests 1,000 Reversion of Working Interest in Nov 2014 Royalty Interests Only 100 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Jun-12 Sep-12 Dec-12 Jun-13 Sep-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Mar-12 Mar-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Gross BOEPD Total Net BOEPD 13