evolution petroleum corporation corporate presentation ......corporate presentation –may 2017 3...

Corporate Presentation – May 2017Evolution Petroleum CorporationCorporate Presentation – May 2017

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Corporate Presentation – May 2017

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Forward Looking StatementsThis presentation contains “forward-looking statements.” Such statements may relate to capitalexpenditures, drilling and exploitation activities, production efforts and sales volumes, Proved,Probable, and Possible reserves, operating and administrative costs, future operating or financialresults, 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 offuture events or outcomes. Although we believe the expectations and forecasts reflected in these andother forward-looking statements are reasonable, we can give no assurance they will prove to havebeen correct. These statements are based on our current plans and assumptions and are subject toa 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 assumptionsexpressed in or implied by any forward-looking statement and we undertake no obligation to updatethese estimates for events after this presentation.

Cautionary Note regarding Oil and Gas Reserves – SEC rules allow oil and gas companies todisclose not only Proved reserves, but also Probable and Possible reserves that meet the SEC’sdefinitions of such terms. We disclose Proved, Probable and Possible reserves in our filings with theSEC and this presentation. Estimates of Probable and Possible reserves are by their nature morespeculative than estimates of Proved reserves and are subject to greater uncertainties, andaccordingly the likelihood of recovering those reserves is subject to substantially greater risk. Ourreserves as of June 30, 2016 were estimated by DeGolyer & MacNaughton (“D&M”), an independentpetroleum engineering firm.


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§ Evolution Petroleum Founded in 2003

§ Delhi Field Acquired in 2003; Operated by Denbury Resources, Inc. (DNR)

Texas / Gulf Coast Focus Overview (Quarter Ended March 31, 2017)

New York Stock Exchange EPM

Shares Outstanding (3/31/2017) 33.1 MM

Fully Diluted Shares (3/31/2017) 33.2 MM

Share Price (5/10/2017) $7.35

Total Equity Value (5/10/2017) $244 MM

Common Stock Dividend (Annual Rate) $0.28 per share

Delhi Gross Oil Production (3/31/2017) 7,786 BOPD

Delhi Gross NGL Production (3/31/2017) 830 BOEPD

Avg. Net Production (3/31/2017) 2,260 BOEPD

Proved Reserves – (6/30/2016) 10.8 MMBOE

Net Working Capital (3/31/2017) $21.5 MM

Debt ($10 MM Avail Capacity) None

Delhi Field

HoustonHeadquarters


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Balance Sheet

Cash $ 20,220

Other current assets 4,117

Property and equipment 62,817

Other assets 313

Total assets $ 87,467

Current liabilities $ 2,859

Long-term debt -

Deferred taxes and ARO 15,626

Stockholders’ equity 68,982

Total liabilities and equity $ 87,467

Income Statement

Delhi field oil revenues $ 9,525

Lease operating expenses 2,811

DD&A and accretion 1,537

G&A expenses and other 1,284

Income before income taxes $ 3,893

Income tax provision 1,518

Gain on unrealized derivatives & Other 44

Net income $ 2,419

Earnings per share (fully diluted) $ 0.07

Summary Financial StatementsMarch 31, 2017

Amounts in $000’s, except EPS


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Investment Considerations

§ 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 (~3.8%)§ Directors and Employees Aligned with Shareholders

through Significant Stock Ownership – Insiders own ~9%§ Well-Positioned for New Opportunities


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Delhi FieldRecycle Facility and NGL Plant

Foundation Cash Flow Asset for

Evolution Petroleum


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Delhi Field EOR Project Development

Exceptional resource:§ 418 MMBO of gross original oil in place § 323 MMBO OOIP in proved flood area§ 195 MMBO production prior to EOR § 13.9 MMBO since CO2 flood began

Other advantages:§ No oil severance taxes (12.5%)

until financial payout of the project§ Oil transported by pipeline§ Delhi crude sells at LLS pricing


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Gross BOPD Total Net BOPD

Reversion of Working Interest – Nov 2014

Delhi Field Daily Oil ProductionGross and Net BOPDGross

BOPDNet

BOPD


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Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17

Delhi Field - Net Daily Oil Production

Average Net Delhi Production by Quarter (BOPD)

1,640

2,04225% Production Increase since reversion


EPM Interests in the Delhi FieldCosts 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 Operating Costs per BOE

$18.15

$16.41

$13.53 $13.13$11.72

$13.14 $12.54$13.82

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NGL OpexCO2 Purchases & TranspElectricityR&M/Labor/ChemicalsPurchased 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

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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 Reserves:• PUD Reserves for NGL Plant are

now Developed and Producing

• Future Dev Costs for Test Site 5 are approx $11.5MM - $8.12 per Bbl


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Note: The amounts in the chart above are not intended to represent the fair market value of EPM or its 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.

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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 Price and Discount Rate SensitivitiesCombined Values as of June 30, 2016 ($MM)

Cash Proved Reserves 50% of Probable Balance of Probable

Three Important Variables:1) Oil Price Expectations2) Ultimate Reserve Recovery3) Appropriate Discount 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%


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Litigation with Delhi Operator Settled in June 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


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Delhi NGL PlantPhoto Taken in October 2016


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Delhi NGL Storage Tanks2,000 Bbl+ Capacity Each


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Inside General Electric LM-2500 TurbineApprox 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 ProjectsTo Build

Long-TermValue


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KeyFinancial Matters


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Delhi Capital Spending by Quarter

NGL Plant Conformance and Other Forecast

Forecast

Cum Capex – Mar 2017NGL Plant - $26.3 MM

Conformance - $5.3 MM(Post Mar 2015)


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Credit AgreementStrengthens Financial Flexibility

$50MM Reserve-Based Credit Agreement with MidFirst Bank – Financially Strong Private 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


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Defensive Hedging Strategy

§ Goals for Hedging Program:Protect Dividends and Capex ObligationsRetain Long-term Commodity Price Upside

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

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

§ Company is Cautious on Short-term Oil Prices§ Current Collars:

41% of March-May Est Prod with $50 WTI Floor and $58 Ceiling


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Common Stock Dividends WTI Oil Prices (Qtr Avg)

Quarterly DividendRate per

Share

WTIAvgOilPrices

(Bloomberg)

EPM Dividend History vs WTI Oil Prices

$0.07

CumulativePayoutDec2013thruMar2017:$32.2MM($0.985pershare)


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Opportunities for EPM

§ We see an Improving Market for AcquisitionsPrice and Value Expectations more 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 to Value and Cash Flow; andSupport Increasing Long-term Returns to Shareholders


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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 Proposition Summary

evolution petroleum corporation corporate presentation ......corporate presentation –may 2017 3...

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