Evolution Petroleum Corporation Corporate Presentation April 2017 - - PowerPoint PPT Presentation

Corporate Presentation – April 2017 Evolution Petroleum Corporation Corporate Presentation – April 2017

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Corporate Presentation – April 2017

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Forward L Looking S 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

• 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.

Ca Cautionary No Note re regarding Oi Oil an and Ga Gas Re 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, 2016 were estimated by DeGolyer & MacNaughton (“D&M”), an independent petroleum engineering firm.

Corporate Presentation – April 2017

3 § Evolution Petroleum Founded in 2003 § Delhi Field Acquired in 2003; Operated by

Denbury Resources, Inc. (DNR)

Texas / / G Gulf C Coast F Focus Overview (Quarter Ended December 31, 2016) New York Stock Exchange EPM Shares Outstanding (12/31/2016) 33.1 MM Fully Diluted Shares (12/31/2016) 33.2 MM Share Price (3/31/2017) $8.00 Total Equity Value (3/31/2017) $265 MM Common Stock Dividend (Annual Rate) $0.28 per share EPM Avg Net Production (12/31/2016) 1,987 BOPD Delhi Gross Production (12/31/2016) 7,580 BOPD Proved Reserves – (6/30/2016) 10.8 MMBOE Net Working Capital (12/31/2016) $18.6 MM Debt ($10 MM Avail Capacity) None

Delhi Field Houston Headquarters

Corporate Presentation – April 2017

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Ba Balance Sh Sheet et

Cash $ 19,156 Other current assets 3,720 Property and equipment 63,881 Other assets 330 To Total asse ssets $ 8 87,087 Current liabilities $ 4,271 Long-term debt

• Deferred taxes and ARO

14,229 Stockholders’ equity 68,587 To Total liabilities a and e equity $ 87 87,087 87

In Income St Statement – December Q Quarter

Delhi field oil revenues $ 8,530 Lease operating expenses 2,292 DD&A and accretion 1,321 G&A expenses and other 1,248 Income before income taxes $ 3,669 Income tax provision 1,361 Net i income $ 2 2,308 Earnings p per s share ( (fully d diluted) $ 0 0.07

Summary Financial Statements December 31, 2016

Amounts in $000’s, except EPS

Corporate Presentation – April 2017

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Recent D Developments

Dividend Increased 40% to $0.28 per Year NGL Plant Complete and Online $27.5MM Litigation Settlement Proceeds

§ Greatly Improves Financial Strength § Removes Uncertainty and Continuing Legal Costs

Redemption of all Preferred Stock

Corporate Presentation – April 2017

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Investment C Considerations

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High Quality Asset Base w/ Near-Term Growth Catalysts

§

Extremely Long-Lived Production (25 Year Life; Much Longer with Higher Oil Prices)

§

Debt-Free Balance Sheet with Solid Working Capital Position

§

Positive Net Income reported in the last Five Fiscal Years

§

Attractive Dividend Yield (~3.5%)

§

Directors and Employees Aligned with Shareholders through Significant Stock Ownership – Insiders own ~9%

§

Well-Positioned for New Opportunities

Corporate Presentation – April 2017

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

Corporate Presentation – April 2017

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Delhi F Field E EOR P Project D Development Exceptional r resource:

§ 418 MMBO of gross original oil in place § 323 MMBO OOIP in proved flood area § 195 MMBO production prior to EOR § 13.2 MMBO since CO2 flood began

Other a advantages:

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

Corporate Presentation – April 2017

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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

Gross BOPD Total Net BOPD Reversion of Working Interest – Nov 2014

Delhi F Field D Daily O y Oil P Production

Gross a and N Net B BOPD PD

Gross BOPD Net BOPD

Corporate Presentation – April 2017

10 1,000 1,200 1,400 1,600 1,800 2,000 2,200 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

De Delhi lhi F Field ld - Net Da Daily O ly Oil P l Production

Average Net Delhi Production by Quarter (BOPD)

1,640 1,987

21% Production Increase

Corporate Presentation – April 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%

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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%)

Corporate Presentation – April 2017

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Delhi Operating Costs per BOE

$19.83 $18.15 $16.41 $13.53 $13.13 $11.72 $13.14 $12.54 20 40 60 80 100 120 140 $0.00 $4.00 $8.00 $12.00 $16.00 $20.00 $24.00 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 CO2 Purchases & Transp R&M/Labor/Chemicals Electricity Purchased CO2 MMcf/d

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§ Proved Reserves assume 13.8% Incremental CO2 Recovery (Up from 13.0% in 2015) § (a) 2P Combined Proved plus Incremental Probable assumes 18.0% incremental CO2 recovery § (b) 3P Combined Proved, Probable and Possible assumes 20.5% incremental CO2 recovery

• 5,000

10,000 15,000 20,000

Proved 2P (a) 3P (b)

Oil - Developed Producing Oil - Undeveloped NGL (Now Producing)

EPM Delhi Reserves – Three Cases

(MBOE – 6/30/16)

10,823

15,320

13.8% 18.0% 20.5%

18,034 Undeveloped R Reserves:

• PUD Reserves for NGL Plant are

now Developed and Producing

• Future Dev Costs for Test Site 5 are

approx $11.5MM - $8.12 p per B Bbl

Corporate Presentation – April 2017

14 Note: T The a amounts i in t the c chart a above a are n not i intended t to r represent t the f fair m market v value o

• f E

EPM o

• r i

its a assets.

They do not conform to GAAP and are presented solely to illustrate the effects of varying assumptions about oil prices, ultimate reserve recoveries and discount rates on the discounted future net revenues of the Company. There is no comparable GAAP measure for comparison of these amounts, which are presented on a pre-tax basis.

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

PV-10% PV-8% PV-6% PV-10% PV-8% PV-6% PV-10% PV-8% PV-6% PV-10% PV-8% PV-6%

Oil P Price a and D Discount R Rate S Sensitivities Comb mbined V Values a as o

• f J

June 3 30, 2 2016 ( ($MM)

Cash Proved Reserves 50% of Probable Balance of Probable Three I Important V Variables: 1) 1) Oil P Price E Expectations 2) 2) Ultimate R Reserve R Recovery 3) 3) Appropriate D Discount R Rate

$42.91 Price Case $50 WTI Case $60 WTI Case $70 WTI Case $50 WTI Price Case $60 WTI Price Case $70 WTI Price Case $42.91 (SEC) Price Case

Net present value, discounted at: 10% 8% 6%

Corporate Presentation – April 2017

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Litigation w with D Del elhi O Oper erator S Settled ed i in J June 2 e 2016

In a comprehensive resolution of all issues, Evolution received:

§ Cash Payment of $27.5MM § 23.9% Working Interest in Mengel Sand in Delhi Field Expected to ultimately expand the Delhi project § Quantified attractive long-term cost for purchased CO2 Purchased CO2 is the largest part of Delhi LOE § Agreement for technical cooperation – Relationship improved

In turn, Evolution resolved a long-standing dispute by transferring a small 0.2% (.002) net revenue interest to the Operator

Corporate Presentation – April 2017

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Delhi NGL Plant Photo Taken in October 2016

Corporate Presentation – April 2017

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Delhi NGL Storage Tanks 2,000 Bbl+ Capacity Each

Corporate Presentation – April 2017

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Inside General Electric LM-2500 Turbine Approx 25 Megawatt Max Capacity

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Start-up NGL Plant, Increase Production & Improve EOR Efficiency 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 B Build Lo Long-Te Term Va Value

Corporate Presentation – April 2017

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Key Financial Matters

Corporate Presentation – April 2017

21 $0 $2,500 $5,000 $7,500 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17e Jun-17e Sep-17e Dec-17e

Delhi hi C Capital S Spending b g by Q y Quarter

NGL Plant Conformance and Other Forecast

Forecast

Cum Capex – Dec 2016

NGL Plant - $26.0MM Conformance - $5.3MM

(Post Mar 2015)

Corporate Presentation – April 2017

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New C Cre redit A Agre reement Stre rengthens Financial F Flexibility

$50MM R Reserve-Based C Credit A Agreement w with MidFirst B Bank – Financially S y Strong P Private B Bank

§ Initially Elected Borrowing Base of $10MM § Attractive Rate Structure: Mid-3% Range All-in § 25 Basis Points on Undrawn Borrowing Base § Standard 3X EBITDA and Other Covenants § Significant Improvement Over Prior Facility § Provides Additional Capacity for Future Growth

Corporate Presentation – April 2017

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De Defens nsiv ive Hedging S Stra rategy

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Goals for Hedging Program:

Protect D Dividends a and C Capex O Obligations Retain L Long-term C Commodity P Price U Upside

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Policy allows Hedging of Maximum 70% of Estimated Production not to exceed one year forward

Started Program in 2H 2015 – Realized gains of $3.4MM Added $5 per barrel to FY 2016 net realized oil price ($40)

§

Company is Cautious on Short-term Oil Prices

§

Current Collars:

41% o

• f M

March-May E Est P Prod w with $ $50 W WTI F Floor a and $ $58 C Ceiling

Corporate Presentation – April 2017

24 $- $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 D Dividend H History v y vs W WTI O Oil P Prices

$0. $0.07

Cumulative Payout Dec 2013 thru Mar 2017:

$32.2 MM ($0.985 per share)

Corporate Presentation – April 2017

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Opportunities f for E EPM

§ We see an Improving Market for Acquisitions

Pr Price a and V Value E Expectations m more R Reasonable

§ Over time, we expect to see a continuing rationalization of

mature conventional cash flow properties by large entities

§ We are patiently seeking opportunities which are:

Accretive t to V Value a and C Cash F Flow; a and Support I Increasing L Long-term R Returns t to S Shareholders

Corporate Presentation – April 2017

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§ Accretive Growth

§ Delhi Field Production Increasing from CO2 Flood Enhancements § Low-Cost Reserves Additions and Upgrades § Start up of the NGL Plant at Delhi Field

§ Underlying Value

§ Long-Lived Cash Flow from Very Large Delhi Field Resource

§ Solid Balance Sheet

§ Ability to Weather the Cycle & Fund Growth Capital Expenditures § Well-Positioned to Capitalize on New Growth Opportunities

§ Returning Cash to Shareholders

§ Attractive Common Dividend - Potential For Future Increases § Flexible Share Repurchase Program Available

Value P Proposition S Summary