Evolution Petroleum Corporation, Inc. · AMEX:EPM
Evolution Petroleum — Investor Presentation (January 2013)
31 slides from Evolution Petroleum's investor presentation, January 2013
Slide 1: January 2013 Corporate Presentation
JANUARY 2013 CORPORATE PRESENTATION KKEVOLUTION Petroleum Corporation
Slide 2: 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. Such statements may relate to capital expenditures
Slide 3: Four Factors for Repeating Success and Building Value per Share
Four Factors for Repeating Success and Building Value per Share Every Day Innovative Engineering Redeploying Internal Cashflows Building Value per Share Staff Fully Aligned with Shareholders Known Oil Fields 3
Slide 4: Management Team — Value Creators
MANAGEMENT TEAM — VALUE CREATORS Name/Title Background Achievements Robert Herlin Co-founded EPM in 2003, based on 30 years leadership experience in M&A, CEO & Chairman $8.3 MM in total common equity development, operations and finance in public capital raised during 2003-06. and private sectors. B.
Slide 5: Transformed $8.3 MM Investment into $409 MM Proved PV10 + $174 MM Probable PV10
Transformed $8.3 MM Investment into $409 MM Proved PV10 + $174 MM Probable PV10 + WC* $700 $72 MM $596 MM $600 $103 MM $500 $409 MM $400 $MM $300 $200 $100 $12 MM $0 Initial Investment 6/30/12 W/C Proved Delhi Probable Delhi Probable Ms Lime Total 2P Reserves & Other -$100 * Notes: PV10 values based
Slide 6: Proved and Probable Reserves and Revenue
Proved and Probable Revenue (Fiscal years ended June 30) MMBoe Reserves $M 30 $20,000 $18,000 25 $16,000 $14,000 20 $12,000 15 $10,000 $8,000 10 $6,000 5 $4,000 $2,000 0 $0 PD PUD Probable 6
Slide 7: Ms Lime – Drilling Began May 2012
Ms Lime – Drilling Began May 2012 45% in JV spanning 38 sections (~5,400 net acres) 2 wells & 1 SWDW drilled to date 112 gross drilling locations (24 net to EPM) 6.4 MMBOE Probable (57% oil, 43% rich gas) GARPTM Patented artificial lift technology for horizontal and vertical wells Delhi Field - Prod
Slide 8: SEC Pretax PV10 and Proved/Probable Reserves
11.1 MMBOE SEC Pretax PV10 * Proved Reserves as of 6/30/2012 * 0.1% $MM Proved Probable $450 $411 $400 $375 99.9% $350 $300 Oil NGL & Gas $266 $250 12.2 MMBOE Probable Reserves as of 6/30/2012 * $200 $172 $150 23% $100 $77 $64 77% $50 $0 2010 2011 2012 Oil Liquids Rich Natural Gas as of June 30 * Ex
Slide 9: Our Foundation Asset: CO2 Enhanced Oil Recovery
Our Foundation Asset CO2 Enhanced Oil Recovery
Slide 10: "Cash Annuity" to Fund Growth
“Cash Annuity” to Fund Growth Jackson Dome Gross cum production 192 MMBO Delhi Current production 5,057 gross BOPD (qtr ended 9/30) 6/30/2012 Reserves 7.5 MMBO Proved Developed (PV10: $326MM) 11.0 MMBO Proved (PV10: $409MM) 5.8 MMBO Probable (PV10: $103MM) 61% of 2P is developed 29% of 2P from royal
Slide 11: Royalty Interest and Reversionary Working Interest
• EPM owns 7.4% of gross revenues • No Cap Ex or Op Ex…ever 7.4% • Exempt from state severance tax until project payout of all Royalty actual costs plus capital cost (FY2017) Interest • Royalty interest = 29% of EPM’s Delhi reserves volumes • Delhi crude priced at LA Light Sweet (premium to WTI) • $
Slide 12: Operator completed planned ~$64 MM of work during calendar 2012
Operator completed a planned ~$64 MM of work during calendar 2012 2012 plan included three patterns and additional facilities Operator expects Calendar 2013 capex of $40MM gross, with reversion to EPM in ~late 2013, reducing operator’s net production by 1,000-1,500 BOPD 2012 Activity 2009 Acti
Slide 13: Delhi Production History & Forecast
DELHI PRODUCTION HISTORY & FORECAST 7 Delhi Production - Actual and D&M Forecast 1,000,000 +- E Actual ==---D&M 6/30/12 |) === EPM Net Actual ===-EPM Net - D&M 6/30/12 s Gross a en pemn senescent \ewre es Apes 9 etal oer 100,000 ow —_ ee EPM Net vil f- =v == La a = IV 7 : ¥ ] 1 yi T Wi i Vv a! pn ‘
Slide 14: Reversionary WI Royalty
Reversionary WI Royalty ($000) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cal Year Note: Based on report from independent reserve engineers, DeGolyer & MacNaughton, and includes proved and probable reserves as of 6/30/2012
Slide 15: Cumulative Pretax NCF and Remaining NPV10
($000) Cumulative Pretax NCF Rem'g NPV10 $1,000,000 $900,000 $800,000 Peak 2P 1/14/13 PV10 $700,000 stock price $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cal Year Notes: Residual PV10 is the PV10 of remaining cash flows from given
Slide 16: LLS Oil Price Impact on Delhi 2P PV10 per Fully Diluted Share
Louisiana Light Sweet (LLS) Oil Price Impact on Delhi 2P PV10 per Fully Diluted Share $ / Fully-Diluted Share $18 $16 PV-10* vs LLS Oil Price $14 EPM @ $8.90 $12 LLS @ ~$111.40 1/14/13 $10 $8 $6 $4 $2 $- $60 $70 $80 $90 $100 $110 $120 $130 * From independent report of 6/30/2012 including proved and
Slide 17: Total 2P PV10 Heavily Driven by Proved Reserves Production
Total 2P PV10 Heavily Driven by Proved Reserves Production MBO/month 1,000 Delhi Gross Production Forecast as of 6/30/2012 Probable 100 Proved 10 Forecasted production over first 16 years of 36+ year life 7/1/2012 Notes: From independent report of 6/30/2012 including proved and probable reserves at
Slide 18: Growth & Oily Projects: Growing Per-Share Value
GROWTH & OILY PROJECTS Growing Per-Share Value KKEVOLUTION Petroleum Corporation
Slide 19: Mississippian Lime: Kay County, Oklahoma selection criteria
Fits selection criteria: Oil-prone, horizontal drilling, onshore U.S., IRR(e) > 30%, known oil field, accessible, running room, repeatable Kay County, Oklahoma – oily region of play JV holds ~12,000 net acres in 38 sections (24,320 acres) EPM owns 45% share of JV 112 gross, 24 net probable
Slide 20: Joint venture acreage in oil-prone area east of Nemaha ridge
Joint venture acreage in oil-prone area, east of the Nemaha ridge. Multi-year visible growth potential for reinvesting early Delhi free cash flow. SD, PQ Spyglass, Vitruvian, Orion, Century D Devon, Calyx, Pablo, CHK, E EPM PQ, Range, Chaparral, V Ram, SDR, Eagle, SDR Spyglass, O H Century, N K
Slide 21: Mississippian Lime defined by old vertical wells
Mississippian Lime is well Vitruvian defined by old vertical wells Bowling 2-32H o Numerous vertical logs show thick, IP 527 Bopd continuous pay 566 Boepd o Interpretation of well data and logs Spyglass shows geologic continuity with offset Bird Creek 1A-15H wells EPM IP 210 Bopd Vertical averag
Slide 22: Estimated Mississippian Lime Type Curves by Operator
Estimated Mississippian Lime Type Curves by Operator Assumptions: Range 485 MBOE SDR 450 MBOE EPM JV 268 MBOE 350 EUR: 268 MBOE (75% oil) 300 250 $3.2 MM drilling and completion 200 BOEPD cost (our 1st two at ~$3.1MM) 150 100 Includes SWD facilities 50 Rich gas is minor contributor 0 0 40 80
Slide 23: Innovation for Increasing Recovery
Innovation for Increasing Recovery
Slide 24: GARP technology addresses liquid loading in mature horizontal wells
Industry at risk of losing vast quantities of reserves and production as mature horizontal wells encounter liquid loading Our technology re-establishes economic production of the “Tail” reserves at risk due to the liquid loading, as it: Supplements & enhances existing rod pump Mobilizes rema
Slide 25: GARP vs Conventional Rod Pump
BEFORE: Conventional Rod Pump AFTER: GARP® Either fluid level eventually drops May add substantial new reserves to a level where rod pump or gas lift at low cost are no longer effective, or Benefit = up to 25% incremental Fluid production in gas well builds recovery and eventually shuts off
Slide 26: Selected Lands #2 with GARP Daily Rate versus Time
Selected Lands #2 w/GARP® BOPD Daily Rate versus Time Pre-GARP BOPD 100 Downtime for repairs of inherited equipment BOPD Installed GARP® 10 1 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 Selected Lands #2 Daily Rate versus Cumulative Production 1,000 Restored production ra
Slide 27: Lopez Field and Giddings noncore assets
LOPEZ FIELD – SOUTH TEXAS • Steady 100% oil production of ~20+ BOPD from 1st two producers • 37 drilling locations on existing leases – 100% working interest • Lengthy expansion project development timeline = noncore asset • Candidate for monetization GIDDINGS (nonGARPR) • Noncore due to high gas co
Slide 28: Conservative, Strong and Aligned
Conservative, Strong and Aligned
Slide 29: Debt to Market Cap and Liquidity – Sources & Uses
Debt to Market Cap Liquidity – Sources & Uses (as of 9/17/12) $MM 120% $20 4 FQFQCFFO 105% + FQ2-4 CFFO $18 100% 97% Credit $16 Line $14 80% 67% 69% $12 + expansions 60% $10 43% 44% $8 9/30/12 40% 38% Working $6 Capital 20% $4 $2 0% 0% $- EPM MH CWEI CXPO AXAS PQ WRES DNR Resources Rem'g FY13 Capex
Slide 30: Total Value Per Fully Diluted Share
$20 $17.85 Total Per Fully Diluted Share $16 $8.95 Gap $12 $8.90 $8 12% discount to Delhi Proved Developed $4 PV10 alone! $0 Investment W/C Proved Probable Probable Total Share Price PV10 PV10 PV10 Value (11/27/12) Delhi Delhi Ms Lime *Note: Per-share values are based on 33.4 MM diluted shares and n
Slide 31: Result = Total alignment with accretive growth per share strategy
Cash flow “Annuity” & debt free = continued growth w/o shareholder dilution ~$300+ million gap between intrinsic and market value (excluding GARP®) Premium oil focused reserves (88% of 2P is oil, mostly LLS priced) New exposure to oily Mississippian Lime Play GARP® upside (harvesting the “
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