Evolution Petroleum Corporation Corporate Presentation – March 2017 Corporate Presentation – March 2017
Corporate Presentation – March 2017 Forwar ard Looking king Stat atement 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 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. Cauti autionar onary Note re regar arding ng Oi Oil and 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, 2016 were estimated by DeGolyer & MacNaughton (“D&M”), an independent petroleum engineering firm. 2
Corporate Presentation – March 2017 Texas s / Gulf lf Coas ast t 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 Delhi Field Share Price (3/10/2017) $8.10 Total Equity Value (3/10/2017) $268 MM Common Stock Dividend (Annual Rate) $0.28 per share Houston Headquarters 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 Evolution Petroleum Founded in 2003 Net Working Capital (12/31/2016) $18.6 MM Delhi Field Acquired in 2003; Operated by Denbury Resources, Inc. (DNR) Debt ($10 MM Avail Capacity) None 3
Corporate Presentation – March 2017 Summary Financial Statements December 31, 2016 Amounts in $000’s, except EPS Income In me St Stat atem ement ent – December ember Quarter er Bala lance ce Sheet Cash $ 19,156 Delhi field oil revenues $ 8,530 Other current assets 3,720 Lease operating expenses 2,292 Property and equipment 63,881 DD&A and accretion 1,321 Other assets 330 G&A expenses and other 1,248 Tot otal assets ets $ 87,08 ,087 Income before income taxes $ 3,669 Current liabilities $ 4,271 Income tax provision 1,361 Long-term debt - Net et in income ome $ 2,308 Deferred taxes and ARO 14,229 Earnings s per share e (ful ully y dil ilut uted ed) $ 0.07 Stockholders’ equity 68,587 Tot otal li liabi bilitie ties s and equity ty $ 87,08 ,087 4
Corporate Presentation – March 2017 Rec ecent ent De Devel elopme opments nts 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 New $50MM Credit Agreement April 2016 5
Corporate Presentation – March 2017 Inves estm tment ent Considerat nsiderations ions 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%+) Directors and Employees Aligned with Shareholders through Significant Stock Ownership – Insiders own ~9% Well-Positioned for New Opportunities 6
Corporate Presentation – March 2017 Delhi Field Recycle Facility and NGL Plant Foundation Cash Flow Asset for Evolution Petroleum 7
Corporate Presentation – March 2017 Delh lhi Fie ield ld EOR Pro rojec ect t Developme opment nt Exception ptional al resou ource ce: Other er advant antage ges: s: 418 MMBO of gross original oil in place No LA severance taxes (12.5%) 323 MMBO OOIP in proved flood area until financial payout of the project 195 MMBO production prior to EOR Oil transported by pipeline 13.2 MMBO since CO2 flood began Delhi crude sells at LLS pricing 8
Corporate Presentation – March 2017 Delhi Field d Daily ly Oil Prod roductio uction Gross Net Gro ross ss and Net et BOPD BOPD BOPD 10,000 4,000 9,000 3,500 8,000 3,000 7,000 2,500 6,000 5,000 2,000 4,000 1,500 3,000 Reversion of Working 1,000 Interest – Nov 2014 2,000 500 1,000 - - Gross BOPD Total Net BOPD 9
Corporate Presentation – March 2017 Del elhi i Fi Fiel eld d - Net et Dail ily y Oil il Produ ducti ction on 2,200 21% Production Increase 1,987 2,000 1,800 1,640 1,600 1,400 1,200 1,000 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Average Net Delhi Production by Quarter (BOPD) 10
Corporate Presentation – March 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% (a) Field Payout and Reversion of Working Interest to EPM Occurred Effective November 1, 2014 (Working Interest in the Mengel Sand also 23.9%) 11
Corporate Presentation – March 2017 Delhi Operating Costs per BOE $24.00 140 CO2 Purchases & Transp R&M/Labor/Chemicals $19.83 $20.00 120 Electricity $18.15 Purchased CO2 MMcf/d $16.41 $16.00 100 $13.53 $13.13 $13.14 $12.54 $11.72 $12.00 80 $8.00 60 $4.00 40 $0.00 20 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 12
Corporate Presentation – March 2017 EPM Delhi Reserves – Three Cases Proved Reserves assume 13.8% Incremental CO2 Recovery (Up (MBOE – 6/30/16) from 13.0% in 2015) (a) 2P Combined Proved plus 20,000 18,034 Incremental Probable assumes 18.0% incremental CO2 recovery 15,320 15,000 (b) 3P Combined Proved, Probable and Possible assumes 10,823 20.5% incremental CO2 recovery 10,000 20.5% Undevelop eloped ed Reserves: es: 18.0% 5,000 PUD Reserves for NGL Plant are • 13.8% now Developed and Producing • Future Dev Costs for Test Site 5 are - approx $11.5MM - $8.1 .12 per Bbl Proved 2P (a) 3P (b) Oil - Developed Producing Oil - Undeveloped NGL (Now Producing) 13
Corporate Presentation – March 2017 Oil il Price ice and Dis iscoun unt Ra Rate Sensiti nsitivi vities ties Combine bined Valu lues es as of June e 30, 2016 6 ($MM) $450 Net present value, Thre ree e Impor ortan tant t Variabl iables: s: $400 discounted at: 1) 1) Oil il Price e Expe pectat tations 10% 8% 6% $350 2) 2) Ult ltim imate ate Reserve rve Recovery overy 3) Appr 3) prop opri riate ate Discou iscount t Rate $300 $250 $200 $70 WTI Case $150 $60 WTI Case $50 WTI Case $100 $42.91 Price Case $50 $0 PV-10% PV-8% PV-6% PV-10% PV-8% PV-6% PV-10% PV-8% PV-6% PV-10% PV-8% PV-6% $42.91 (SEC) Price Case $50 WTI Price Case $60 WTI Price Case $70 WTI Price Case Cash Proved Reserves 50% of Probable Balance of Probable Note: e: The amoun unts ts in the chart t above are re not intend tended ed to to repr presen esent t the fair ir mark rket et valu lue e of EPM or its asse sets . 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. 14
Corporate Presentation – March 2017 Litigation igation with h Delhi lhi Operat erator or Settle ettled in June ne 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 15
Corporate Presentation – March 2017 Delhi NGL Plant Photo Taken in October 2016 16
Corporate Presentation – March 2017 Delhi NGL Storage Tanks 2,000 Bbl+ Capacity Each 17
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