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Corporate Presentation February 2018 1 Corporate Presentation - - PowerPoint PPT Presentation

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Evolution Petroleum Corporation Corporate Presentation February 2018 Corporate Presentation February 2018 1 Corporate Presentation February 2018 Forwar ard Looking king Stat atements ements This presentation contains forward

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Corporate Presentation – February 2018 Evolution Petroleum Corporation Corporate Presentation – February 2018

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Corporate Presentation – February 2018

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Forwar ard Looking king Stat atements ements

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

  • ther 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.

Cau auti tiona

  • nary Note re

regar ardi ding ng Oi Oil an and Gas as 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, 2017 were estimated by DeGolyer and MacNaughton (“D&M”), an independent petroleum engineering firm.

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Corporate Presentation – February 2018

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▪ Evolution Petroleum Founded in

2003 by Bob Herlin, Chairman

▪ Delhi Field Acquired in 2003 Texas s / Gulf lf Coas ast t Focus Overview (Quarter ended December 31, 2017) New York Stock Exchange EPM Shares Outstanding 33.1 MM Share Price (2/13/2018) $8.00 Total Equity Value (2/13/2018) $265 MM Common Stock Dividend (Annual Rate) $0.40 per share Dividend Yield (2/13/2018) 5.0% Delhi Gross Oil Production (87% Oil) 7,370 BOPD Delhi Gross NGL Production 1,079 BOEPD EPM Avg Net Production (26.2% NRI) 2,215 BOEPD Proved Reserves (6/30/2017) 10.1 MMBOE Net Working Capital $27.6 MM Debt ($40 MM+ Avail Capacity) None

Delhi Field Houston Headquarters

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▪ Distribute 40-50% of Cash Flow as Dividends

▪ Tax Reform makes C-Corp’s much more Tax-Efficient

▪ Reserve 40-50% of Cash Flow for Value-

Driven Reinvestment in Portfolio

▪ Diversify Asset Base with Acquisitions

▪

Seeking Geologic and Product Mix Diversity

▪ Maintain Solid Financial Position

▪

Increase Scale for Public Market

Core Principles and Objectives

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Corporate Presentation – February 2018

5 $- $20 $40 $60 $80 $100 $120 $140 $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14

Common Stock Dividends WTI Oil Prices (Qtr Avg)

Quarterly Dividend Rate per Share WTI Avg Oil Prices (Bloomberg)

EPM M Divide dend nd Hi History y vs WTI Oil Pric rices

Mar-18 Dividend $0.10

Cumulative Payout Dec 2013 thru Dec 2017: $39.5 MM ($1.205 per share)

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▪ High Quality, Long-lived Asset Base

▪ Steady Cash Flow from Very Large Delhi Field Resource ▪ Potential Production Increases from Continuing Development ▪ 12 well Infill Drilling Program Planned to Start March 2018

▪ 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 5.0%

▪ Flexible Share Repurchase Program Available

In Investment stment Con

  • nside

sideratio rations ns

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Corporate Presentation – February 2018

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Bala lance ce Sheet

Cash $ 25,744 Other current assets 4,902 Property and equipment 60,126 Other assets 260 Tot

  • tal assets

ets $ 91,03 ,032 Current liabilities $ 3,061 Long-term debt

  • Deferred taxes and ARO

11,877 Stockholders’ equity 76,094 Tot

  • tal li

liabi bilitie ties s and equity ty $ 91 91,03 ,032

In Income me St Stateme ement nt (Six

x Month ths s Fis iscal YTD) Delhi field revenues $ 19,605 Lease operating expenses 5,806 DD&A and accretion 3,197 G&A expenses and other 3,247 Income before income taxes $ 7,355 Income tax (benefit) (4,662) Net et in income

  • me

$ 12,017 Earnings s per share e (ful ully y dil ilut uted ed) $ 0.36

Summary Financial Statements December 31, 2017

Amounts in $000’s, except EPS

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Corporate Presentation – February 2018

$0 $5 $10 $15 $20 $25 $30 $35 $40 2012 2013 2014 2015 2016 2017 2018 Revenues Net Income

Revenues & Net Income ($MM)

Fiscal YTD 2 Quarters 8

Six + Years of Increasing Revenues and Positive Net Income

(a) (b) (a) Includes Litigation Settlement (b) Includes Tax Reform

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Delhi Field Recycle Facility and NGL Plant Foundation Cash Flow Asset for Evolution Petroleum

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Exception ptional al resou

  • urce

ce:

▪ 418 MMBO of gross original oil in place ▪ 323 MMBO OOIP in proved flood area ▪ 195 MMBO production prior to EOR ▪ 16.0 MMBO since CO2 flood began

Other er advant antage ges: s:

▪ No LA oil severance taxes (12.5%) until financial payout of the project ▪ Oil transported by pipeline ▪ Delhi crude sells at LLS pricing

Delh lhi Fie ield ld EOR Pro rojec ect t Developme

  • pment

nt

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  • 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

Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17

Gross BOEPD Total Net BOEPD Reversion of Working Interest Nov 2014 Combined Interests

Delhi Fi Field d Daily ly Prod roductio uction n (Terti tiar ary)

Gro ross ss and Net et BOE per Day

Gross BOEPD Net BOEPD Royalty Interests Only

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Corporate Presentation – February 2018 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%

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(a) Field Payout and Reversion of Working Interest to EPM Occurred Effective November 1, 2014 (Working Interest in the Mengel Sand also 23.9%)

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Delhi Revenue and Field Operating Margin per BOE (YE June 30)

$- $10 $20 $30 $40 $50 $60 $70

Y YE Ju Jun 2 n 2015 015 Y YE Ju Jun 2 n 2016 016 Y YE Ju Jun 2 n 2017 017 FY FYTD TD Dec Dec 20 2017 17

LO LOE CO CO2 Costs 2 Costs Fie Field ld Operat Operating Margi Margin

Rev / BOE $61.52 $39.71 $44.88

(69% of Rev)

$49.53

(65% of Rev) (69% of Rev) (70% of Rev)

Field Operating Margins of $42.52 (2015) , $25.95 (2016), $30.78 (2017) and $34.86 (YTD Dec 2017), respectively

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Corporate Presentation – February 2018

14 $5,359 $2,292 $2,397 $901 $5,500 $1,500 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 FY 2015 FY 2016 FY 2017 1H 2018 2H 2018e 1H 2019e

Delhi Capital Spending by Year ($000’s)

Well Integrity Field Enhancement Facilities/Other New Drilling

Forecast

Cum Capex – Dec 2017

NGL Plant - $26.6MM * Other Spending - $10.9MM

(Post Reversion Nov 2014)

Forecast

* Above Chart Excludes NGL Plant – $26.6 MM Field Enhancement ~ $4MM

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Proved Reserves assume 14 14.3% Incremental CO2 Recovery (Up from 13.0% 0% in 2015) Undevelop eloped ed Reserves: es: Infill Drilling Program $4.7MM – 12 Wells (8 Wells in Jun 2017 PUD) Future Dev Costs for Test Site 5 are approx $10.9MM - $6.97 7 per Bbl

  • 2,000

4,000 6,000 8,000 10,000 12,000

Pro roved d Reserves s – June e 2017

PDP-NGL PDP-Oil PUD-BOE PDP-BOE

Revision Gains Oil Only + 11%

Reserve Reports Prepared by DeGolyer and MacNaughton

MBbls Total Proved Reserves 10,058 MBOE

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Delhi NGL Plant

NGL Component % of Stream Ethane 2.9% Propane 26.0% Butanes (ISO + Normal) 33.1% Pentanes Plus (C5+) 38.0% Total 100.0%

Very Rich NGL Mix (ITD): Currently Producing ~1,150 Bbls NGL’s per day

  • NGL Plant Online Dec 2016
  • Engineered Solution to CO2 Inlet

Processing Installed Aug 2017

  • Operating at Effective Capacity
  • GE Turbine also at Capacity
  • NGL Avg Net Price ~52% WTI
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Increase Production & Improve EOR Efficiency through Conformance Projects & NGL Plant Modifications Infill Drilling program; Expand CO2 Flood to Eastern Part of Field (Test Site 5) Expand CO2 Flood to Test Site 6, Mengel Sands and Additional Intervals

(Price Dependent)

Mu Mult ltip iple le Pro rojects ects To Bu Buil ild Long ng-Term erm Val alue

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Ma Mana nage gement ment an

and Dir

Direc ector

  • rs

(Aver erag age e BOD Tenure e 12 Y Years s / Insid ider ers s Own wn ~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 Kelly Loyd – JVL Advisors Marran Ogilvie – Ferro Corp, LSB Industries, & Others Gene Stoever – Former KPMG Audit Partner

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Op Oppor portuni tunities ties for r EP EPM

▪ We see an Improving Market for Acquisitions

Price e and Value Expectatio tations ns more Rea Reaso sonab nable le Ex Excess ss Capital ital Available; ailable; Compe petitio tition n Sti Still l a F Factor

▪ Over time, we expect continuing divestitures of mature

conventional cash flow properties by larger entities

▪ We have Financial and Operational Capacity to Execute $40MM+ Potential under Credit Facility plus $26MM Cash

▪ We are patiently seeking opportunities which are:

Ac Accretiv etive e to Value and Cash sh Flow; w; and Support Increasing asing Long-ter erm m Ret Retur urns ns to Shareholde

  • lders
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▪ High Quality, Long-lived Asset Base

▪ Steady Cash Flow from Very Large Delhi Field Resource ▪ Potential Production Increases from Continuing Development ▪ 12 well Infill Drilling Program Planned to Start March 2018 ▪ Planned CO2 Flood Expansion to Phase 5

▪ 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 5.0%

▪ Flexible Share Repurchase Program Available

Val alue ue Prop ropositio

  • sition

n Summar ummary