Evolution Petroleum Corporation, Inc. · AMEX:EPM
Evolution Petroleum — Investor Presentation (March 2011)
30 slides from Evolution Petroleum's investor presentation, March 2011
Slide 1: Corporate Presentation March 2011
Corporate Presentation March 2011 (NYSE Amex: EPM) © Evolution Petroleum Corporation 1
Slide 2: Forward Looking Statements and Cautionary Note
Forward Looking Statements and Cautionary Note The data contained in this presentation that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. Suc
Slide 3: Quick Facts about EPM
Quick Facts about EPM Ticker Symbol EPM (NYSE AMEX) Fiscal Year-End June 30 Market Cap* ~$208 million as of 2/25/2011 ($7.58/shr) Enterprise Value ~$205 MM “ (based on 12/31/10 FS) Shares 27.5 MM shares outstanding 33.1 MM shares fully diluted ($1.83 avg. exercise) ~42 % owned by instituti
Slide 4: Our Business
Our Business EPM generates and implements domestic, onshore oil & gas development projects utilizing our expertise and modern technology. Our business model is focused on building share value by: Generating development ideas Capturing project value without overpaying Initiating development to
Slide 5: Oil & Gas Core Assets
Oil & Gas Core Assets (Net Reserves at 6/30/2010) East OK Woodford Shale – testing Delhi Field-producing ~15,000 net acres targeting shallow Woodford CO2 EOR - 100% oil 9.4 MMBO Proved 5.7 MMBO Probable Giddings Field – producing Horizontal wells – naturally fractured Austin Chalk, Georgetown, Buda
Slide 6: EPM Metrics
EPM Metrics Substantial oil and gas reserves 12.4 MMBOE Proved Each fully diluted common share owns 60% of 1 BOE of net reserves 7.2 MMBOE Probable Oily – Proved reserves are 83% black oil and 8% NGL Valuation Metrics at fiscal year-end (6/30/2010): (@SEC NYMEX pricing of $76.21/BO, $4.10/MMBT
Slide 7: Why own EPM?
Why own EPM? Proved reserves PV10 at current oil price >> current market valuation Growing value in Delhi CO2 EOR project: Currently producing with expected steadily increasing cash flows PV10 grows 40+% over next 5 years without significant EPM capex + EPM expects ~$140+ MM of pretax cash
Slide 8: Why own EPM?
Why own EPM? Upside potential in other projects underway: 15 remaining development drilling locations (13 PUD) in Giddings, of which up to 2 may be included in current joint venture Exposure to new Eagle Ford / Woodbine play Proprietary artificial lift technology Low cost unconventional ga
Slide 9: Successful Team Track Record
Successful Team Track Record Using $8.3 MM of paid-in equity, We generated, as of 6/30/10 we invested Delhi EOR $6.8 MM $50 MM cash pretax + Proved PV10 = $224 million 2P PV10 = $276 million Giddings $26.7 MM $9.7 MM cash from field + Proved PV10* = $41 million 2P PV10* = $53 million Artificial Lift
Slide 10: EPM Reserves Growth (MMBOE)
EPM Reserves Growth (MMBOE) • Reserves as at fiscal year end of June 30 • Does not include other resource or technology potential • 2009 downward revisions primarily due to commodity prices 10
Slide 11: EPM Assets: Delhi CO2 – EOR Project
EPM Assets: Delhi CO2 – EOR Project Milestones Achieved – Phase I CO2 injection began Nov 2009 Early first oil production response in March 2010 from Phase I Gross production > 1,000 bopd from Phase I Phase II CO2 injection began Dec 2010 78 mile Delta Pipeline to transport CO2 to Delhi Field
Slide 12: EOR - Delhi Field CO2 Project
EOR - Delhi Field CO2 Project Delhi Tinsley Reserves*: Proved 9.4 MMBO $224 MM PV10 Probable 5.7 MMBO $ 51 MM PV10 2P 15.1 MMBO $276 MM PV10 (* At 6/30/10 SEC NYMEX price $76.21/BO) Jackson Dome Gross Historical Production 192 MMBO Projected EOR Recovery 13% Proved (% of OOIP) 4% Probable Average de
Slide 13: EPM's Delhi Assets
EPM’s Delhi Assets We purchased Delhi Field in 2003 for $2.8 MM, expended $2.5 MM in field, later purchased royalty interests for $1.5 MM, then farmed out our working interest for $50 MM cash + commitment to install EOR project at operator’s sole cost with their proved CO2 reserves + reversionary in
Slide 14: Delhi PV10 @ $76/Bbl Increases With Time
Delhi PV10 @ $76/Bbl Increases With Time Residual 2P PV10 and Cumulative Cash Flows per Fully Diluted Share Residual PV10 Cumulative Pretax Cash Generated $25 $20 $15 $10 $5 $- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cash Flows from DeGolyer & MacNaughton 7/1/10 SEC Reserves Report @
Slide 15: Delhi Sensitivity Analysis
Delhi Sensitivity Analysis Delhi PV/Share Impact by Delhi PV/Share Impact by Oil Price Levels of Recovery and Inflation PV10 Esc* vs Gross Oil Recovery PV10* vs Initial Oil Price $/ FD Share $ / FD Share $14 $16 2P PV10 Esc @ 3% $13 $14 2P PV10 Flat $12 $12 $10 $11 $8 $6 EPM stock & $10 $4 Delhi oil
Slide 16: Additional Delhi Analysis
Additional Delhi Analysis EPM's Projected Annual Pretax Cashflows from Delhi (2P Reserves @ $76 oil + 3% inflation) Royalty Interest Reversionary WI $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 @ 2/28/11 LLS $30,000,000 Oil price $20,000,000 $10,000,000 $0 2010 2011 2012 2
Slide 17: Giddings Field, Central Texas
Giddings Field, Central Texas Attractive Drilling Economics Drilling locations Ave. Gross Recovery Ave. cost/well Cost per net BOE 10 proved re-entries 146 MBOE/well $1.5 MM $12.40 3 proved grassroot & 305 MBOE/well $2.7 MM $11.00 2 probable grassroot Naturally fractured Austin Chalk, Georgetown &
Slide 18: Gas Shales in Eastern Oklahoma
Gas Shales in Eastern Oklahoma EPM owns ~15,000 net acres in Woodford EPM Haskell and Wagoner Counties, OK Completions Acreage Haskell – Woodford between 4,000’ & 6,000’ in depth Wagoner – Woodford between 1,200’ Tulsa & 1,800’ in depth EPM vertical re- entry Main 6,422’ TVD Woodford Hz Woodford Tes
Slide 19: Our OK Gas Shales: Shallow Low Cost
Our OK Gas Shales: Shallow Low Cost EPM is targeting a development cost of $1 per MCFe or less Shallow depth = small rig and light acid fracs = low day rates Haskell Woodford at 4,000-6,000’ depth – vertical wells targeting 500-1000 mmcf at $500K cost; vertical wells in Wagoner targeting 200+
Slide 20: Proprietary Artificial Lift Technology
Proprietary Artificial Lift Technology Conventional artificial lift • Either fluid level eventually drops to a level where rod pump or gas lift are no longer effective, or • Low level of fluid production in gas well builds and eventually shuts off gas production Original fluid level • This can leave
Slide 21: Operating Plan for FY 2011
Operating Plan for FY 2011 A $4 million base case capital expenditure program to: Drill up to 5 horizontal wells in Giddings joint venture (3 completed to date) Re-enter and frac Woodford Shale in two mid-depth vertical wells in Haskell (1 to date) and continue Wagoner production testing Comme
Slide 22: Catalysts for growth in FY2011
Catalysts for growth in FY2011 Continued production growth at Delhi at premium LLS oil price Drilling success in Giddings Positive tests in Woodford Shale New joint venture(s) to apply artificial lift technology Additional development joint venture(s) – Giddings & OK Maintain conservativ
Slide 23: Exhibits
Exhibits Definitions EPM Annual Revenues Management team Board of Directors 23
Slide 24: Definitions
Definitions EOR Enhanced oil recovery WAG Water alternating gas – type of CO2 EOR BOE Barrel of oil equivalent CF Cubic feet of natural gas at standard conditions M Thousands MM Millions NGL Natural gas liquids PUD Proved undeveloped 2P Proved + Probable Unrisked Reserves PV10 Future unescalated pre
Slide 25: EPM Revenues
EPM Revenues • Revenues in thousands • 2007 revenues decreased by farm-out to DNR • June 30 fiscal year-end 25
Slide 26: EPM Liquidity
EPM Liquidity 12/31/2010 Assets Current Assets $ 7,437,525 Properties & Equipment, net 32,707,583 Other Assets 45,308 Total Assets $40,190,416 Long Term Liabilities & Equity Long Term Debt $ 0 Current Liabilities 4,241,714 Other Liabilities (primarily deferred income 4,064,388 tax) Total Liabilities
Slide 27: Our Management Team
Our Management Team Robert Herlin, CEO & Chairman • Co-founded EPM in 2003 and built company using $8.3 million of equity capital • 28 years of leadership experience in M&A, development, operations and finance in public and private sectors • $800 million in transactions completed • Originated and le
Slide 28: Our Management Team
Our Management Team Daryl Mazzanti, VP-Operations • Joined team in mid-2005; 22 years of experience in oil & gas industry • Former Manager of US Business Development for Anadarko • Former Production Manager, Austin Chalk for Anadarko/UPRC responsible for 1200 wells, staff of 65 and 25,000 BOEPD of p
Slide 29: Our Board of Directors
Our Board of Directors Robert Herlin, CEO, Chairman & Co-founder Laird Cagan, Director & Co-founder Managing Director – Cagan McAfee Capital Partners Formerly with Goldman Sachs and Drexel Burnham Lambert E.J. DiPaolo, Director Energy Partner with Growth Capital Partners, L.P. Former Halliburton Gro
Slide 30: (NYSE AMEX: EPM)
(NYSE AMEX: EPM) Company Contact: IR Contact: Sterling McDonald, VP & CFO Lisa Elliott / lelliott@drg-e.com (713) 935-0122 Jack Lascar / jlascar@drg-e.com smcdonald@evolutionpetroleum.com DRG&E / 713-529-6600 30
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