- Fiscal Fourth Quarter Revenues Increased 363% Over Prior Year - Fiscal Fourth Quarter Net Income was $0.01 per Diluted Share
HOUSTON, Sept. 23 /PRNewswire-FirstCall/ -- Evolution Petroleum
Corporation (Amex: EPM) today reported financial and operating results for the
fiscal fourth quarter and year ended June 30, 2008 ("Q4-08" and "FY-08",
respectively).
Oil and gas revenues for Q4-08 increased 363%, to approximately ("~") $2.4
million from $508,459 for Q4-07. The increase in quarterly revenues was due
to a 230% increase in sales volumes and a 40% increase in blended oil and gas
prices. Oil and gas revenues for FY-08 increased 128% to ~$4.3 million, from
~$1.9 million for the fiscal year ended June 30, 2007 ("FY-07"). The increase
in fiscal year revenues was due to a 79% increase in sales volumes and a 27%
increase in blended oil and gas prices. The substantial increases in sales
volumes for Q4-08 and FY-08 were a result of drilling operations in the
Giddings Field in central Texas during the second half of FY-08. Revenues and
production increased during the periods despite the March 2008 sale of the
Company's Tullos properties in Louisiana, which contributed essentially all of
the Company's production in FY-07 and the first half of FY-08.
Net cash used in operations for FY-08 was ~$863,036 compared to ~$14.5
million for FY-07. Cash used included significant increases in working
capital during both periods, in addition to ~$12 million being used to relieve
deferred taxes in FY-07 related to a portion of the FY-06 capital gain from
the Delhi Farmout.
Net income in Q4-08 was $377,249, or $0.01 per diluted share on
approximately 26.9 million weighted average shares outstanding. This compares
to a net loss of $473,932, or $(0.02) per share for Q4-07 on ~26.8 million
weighted average shares outstanding. These results include non-cash stock-
based compensation of $480,043 for Q4-08 and $376,007 for Q4-07. Net loss in
FY-08 was ~$1.6 million, or ($0.06) per share compared to a net loss of ~$1.8
million, or ($0.07) per share for FY-07. The fiscal year results include
non-cash stock-based compensation of $1.8 million for FY-08 and $1.6 million
for FY-07.
Robert Herlin, President and Chief Executive Officer, commented, "We are
very pleased to have generated our first quarterly net profit without the
benefit of a capital gain, which is due to the results of our drilling program
in our Giddings Field operations. As planned, the Giddings Field is helping
us build a more balanced portfolio through near term development drilling of
high return proved and probable reserves to complement our long-term growth
investment in the Delhi Field CO2 project. Although Giddings Field wells have
high decline rates and produce a majority of the reserves in the first few
years, we believe that the return on our invested capital and net cash
generated will prove to be very attractive. We have identified substantial
reserves in our inventory of 27 proved undeveloped locations and continue to
work to add some additional locations. As we previously announced, we plan
to drill approximately 10 wells in Giddings Field during fiscal year 2009,
beginning shortly. Our overall production rate from current producing wells
should decline naturally going forward, until we begin generating production
from the 2009 drilling program.
"As previously announced, our 2009 capital budget includes initial
drilling in our Woodford Shale projects in Oklahoma and initial drilling in a
new project in Texas, both expected to occur late in the fiscal year," added
Herlin. "The 2009 capital budget also provides for up to $3 million in new
leasing in the Giddings Field, our Oklahoma gas shale projects and our new
Texas project. We have now acquired leases on more than 17,600 net acres in
Oklahoma and are very encouraged by the drilling results of operators also
developing the shallow and mid-depth Woodford Shale near our leases."
Sales Volumes and Prices:
Sales volumes for Q4-08 were 18,237 barrels of oil and natural gas liquids
("Bbl") and 53.1 million cubic feet of natural gas ("MMCF"), or 27,095 barrels
of oil equivalent ("BOE"). This is an increase of 230% over sales volumes of
8,210 Bbl of oil ("BO") and no gas in Q4-07, and an increase of 183% over the
9,569 BOE sold in fiscal Q3-08. The average price of oil rose to $130.69 per
BO in Q4-08, an increase of 69% from $61.93 per BO in Q4-07. The average
price of natural gas was $10.24 per Mcf and of natural gas liquids was $64.62
per Bbl in Q4-08, with no natural gas or NGL's produced in Q4-07. On a BOE
basis, the blended effective price was $86.97 in Q4-08, an increase of 40%
from Q4-07.
Sales volumes in FY-08 were 40,105 Bbl and 69.1 MMCF, or 51,614 BOE, an
increase of 79% over total sales volumes in FY-07 of 28,800 BO and no natural
gas. The average price per Bbl of oil increased 53% to $99.03 in FY-08 from
$64.82 per BO in FY-07. The average price of natural gas was $9.67 per Mcf
and of natural gas liquids was $63.02 per Bbl in FY-08, with no natural gas or
NGLs produced in FY-07. On a BOE basis, the blended effective price was $82.46
in FY-08, an increase of 27% from FY-07.
Costs and Expenses
Lease operating expenses per BOE for Q4-08 declined 70% over Q4-07 to
$12.11, due to a much lower unit lifting costs in the Giddings Field as
compared to the recently divested Tullos Field. Lease operating expenses per
BOE for FY-08 declined 47% to $26.08, compared to FY-07.
Depreciation, Depletion & Amortization Expense ("DD&A") increased to
$530,569 or $19.25 per BOE for Q4-08, from $126,357 or $14.66 per BO in Q4-07.
DD&A for FY-08 increased $612,064 to $903,214, or $16.44 per BOE, from
$291,150 or $9.68 per BO for FY-07. The increase is primarily due to a higher
depletion rate ($16 vs. $10) per BOE on significantly higher sales volumes in
the current period. The increase in the depletion rate is due to the higher
development cost of PUDs in the Giddings Field that we added in replacement of
our lower cost PDP's from our properties in the Tullos Field Area, which we
sold in March 2008.
General and administrative ("G&A") expenses were ~$1.4 million for Q4-08,
as compared to ~$1.6 million for Q4-07. Lower G&A in Q4-08 was due primarily
to capitalization of a portion of staff compensation expenses directly
associated with the drilling program. G&A expenses in FY-08 were ~$5.5
million compared to ~$4.5 million in FY-07, due to increased staff costs
necessary to carry out the drilling program in the Giddings Field and
estimated bonus accruals.
Other Income and Expense
Q4-08 interest income decreased to $82,613, as compared to interest income
of $399,343 for Q4-07. The decrease was due to lower interest rates on
reduced short-term investment balances during Q4-08. Interest income for
FY-08 decreased ~$1.1 million to $854,448, compared to ~$1.9 million for
FY-07. The fiscal year decrease was due to lower available cash balances
averaging $19.5 million during FY-08, as compared to cash balances averaging
$36.2 million during FY-07, combined with a lower interest rate environment in
FY-08. The lower cash balance is mostly the result of cash used to pay income
taxes arising from the Delhi Farmout and for drilling and leasing capital
expenditures.
About Evolution Petroleum
Evolution Petroleum Corporation (http://www.evolutionpetroleum.com)
acquires known, onshore oil and gas resources and applies conventional and
specialized technology to accelerate production and develop incremental
reserves and value. The Company focuses on initiatives in Enhanced Oil
Recovery, Bypassed Resources and Unconventional Gas Development.
Principal assets as of July 1, 2008 include 4 MMBOE of proved and 3.1
MMBOE of probable reserves in the Giddings Field of central Texas, more than
13 MMBO of probable reserves associated with 7.4% in overriding royalty
interests and a 25% after payout reversionary working interest (20% revenue
interest) in the 13,636 acre Delhi Field Holt Bryant Unit currently being
redeveloped with CO2-EOR technology in northeast Louisiana, and working
interests in leases covering approximately 18,000 net acres in two Woodford
gas shale projects in Oklahoma. The Company is also actively engaged in
developing new projects within its initiatives.
Cautionary Statement
All statements contained in this press release regarding potential results
and future plans and objectives of the Company are forward-looking statements
that involve various risks and uncertainties. There can be no assurance that
such statements will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements. The
Company undertakes no obligation to update or review any forward-looking
statement, whether as a result of new information, future events, or
otherwise. Important factors that could cause actual results to differ
materially from our expectations include, but are not limited to, those
factors that are disclosed under the heading "Risk Factors" and elsewhere in
our documents filed from time to time with the United States Securities and
Exchange Commission and other regulatory authorities. Statements regarding
our ability to complete transactions, successfully apply technology
applications in the re-development of oil and gas fields, realize future
production volumes, realize success in our drilling and development activity,
prices, future revenues and income and cash flows and other statements that
are not historical facts contain predictions, estimates and other forward-
looking statements. Although the Company believes that its expectations are
based on reasonable assumptions, it can give no assurance that its goals will
be achieved and these statements will prove to be accurate. Important factors
could cause actual results to differ materially from those included in the
forward-looking statements.
Company Contact:
Sterling McDonald, VP & CFO
(713) 935-0122
smcdonald@evolutionpetroleum.com
Lisa Elliott / lelliott@drg-e.com
Jack Lascar / jlascar@drg-e.com
DRG&E / 713-529-6600
- Tables to Follow -
Evolution Petroleum Corporation and Subsidiaries
Consolidated Statements of Operations
Three Months Ended Year Ended
June 30, June 30,
2008 2007 2008 2007
Revenues
Crude oil $1,253,478 $508,459 $2,918,127 $1,866,892
Natural gas
liquids 558,736- 670,434-
Natural gas 544,290- 667,567-
Price risk
management
activities--- (14)
Total revenues 2,356,504 508,4594,256,1281,866,878
Operating Costs
Lease operating
expense 284,099 313,6801,255,7871,352,907
Production taxes 44,021 18,166 90,252 62,426
Depreciation,
depletion and
amortization530,569 126,357 903,214 291,150
Accretion of asset
retirement obligation 3,5404,545 20,196 17,319
General and
administrative* 1,434,8141,557,8395,497,2374,491,600
Total operating
costs 2,297,0432,020,5877,766,6866,215,402
Income (loss) from
operations 59,461 (1,512,128) (3,510,558) (4,348,524)
Other income (expense)
Interest income 81,613 399,343 854,4481,920,913
Other expense (318) - (318) (21,453)
Net income (loss)
before income
tax benefit 140,756 (1,112,785) (2,656,428) (2,449,064)
Income tax benefit(236,493)(638,853) (1,085,454)(638,853)
Net income (loss) $377,249$(473,932) $(1,570,974) $(1,810,211)
Earnings (loss) per
common share
Basic and Diluted $0.01 $(0.02) $(0.06) $(0.07)
Weighted average
number of common
shares
Basic and
Diluted 26,870,214 26,770,261 26,786,270 26,706,713
* General and administrative expenses for the three month periods ended
June 30, 2008 and 2007 included non cash stock-based compensation expense of
$480,043 and $376,007, respectively. General and administrative expenses for
the year ended June 30, 2008 and 2007 included non cash stock-based
compensation expense of $1,791,486 and $1,613,493, respectively.
Evolution Petroleum Corporation and Subsidiaries
Consolidated Balance Sheets
June 30, June 30,
2008 2007
Assets
Current Assets
Cash and cash equivalents $11,272,280$27,746,942
Receivables
Oil and natural gas sales 2,066,300190,210
Income tax 478,599421,325
Other 86,966 22,375
Income taxes recoverable 3,625,987 -
Prepaid expenses and other current assets 270,938540,666
Total current assets 17,801,070 28,921,518
Property and equipment, net of
depreciation, depletion, and amortization
Oil and natural gas properties -
full cost method of accounting 22,047,233 5,459,553
Other property and equipment 161,027154,872
Total property and equipment 22,208,260 5,614,425
Other assets, net356,518370,049
Total assets $40,365,848$34,905,992
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$2,892,459 $1,064,918
Accrued expenses 805,262524,809
Royalties payable 473,327 6,831
Total current liabilities 4,171,048 1,596,558
Long term liabilities
Deferred income tax liability2,901,929338,001
Deferred rent 74,081 47,289
Asset retirement obligations 215,056140,998
Total liabilities 7,362,114 2,122,846
Commitments and contingencies
Stockholders' equity
Common Stock; par value $0.001;
100,000,000 shares authorized;
26,870,439 and 26,776,234 issued and
outstanding as of June 30, 2008 and
June 30, 2007, respectively. 26,870 26,776
Additional paid-in capital 14,188,841 12,397,373
Retained earnings 18,788,023 20,358,997
Total stockholders' equity33,003,734 32,783,146
Total liabilities and stockholders'
equity $40,365,848$34,905,992
SOURCE Evolution Petroleum Corporation
