Evolution Petroleum Corporation, Inc. · AMEX:EPM
Evolution Petroleum — Investor Presentation (February 2013)
31 slides from Evolution Petroleum's investor presentation, February 2013
Slide 1: Corporate Presentation February 2013
FEBRUARY 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 Cash Flows into Building Growth 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 common equity investment into $409 MM Proved PV10
Transformed $8.3 MM common equity investment into $409 MM Proved PV10 $700 + $174 MM Probable PV10 + Working Capital* $72 MM $596 MM $600 $103 MM $500 $409 MM $400 $MM $300 $200 $100 $18 MM $0 Initial Investment 12/31/12 W/C Proved Delhi Probable Delhi Probable Ms Lime Total 2P Reserves & Other -$10
Slide 6: Proved and Probable Reserves and Revenue
Proved and Probable Revenue (Fiscal years ended June 30) MMBoe Reserves* $M 25 $20,000 $18,000 20 $16,000 $14,000 15 $12,000 $10,000 10 $8,000 $6,000 5 $4,000 $2,000 0 $0 PD PUD Probable * 6/30/2012 reserves exclude noncore assets sold in Q2-13 or scheduled for monetization 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 (0.81 net) & 1 SWDW drilled to date 112 gross drilling locations (24 net to EPM) 6.4 MMBOE Probable (57% oil, 43% rich gas) GARPR Patented artificial lift technology for horizontal and vertical wells. Delhi F
Slide 8: Reserves and SEC Pretax PV10
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 * Exclu
Slide 9: Foundation Asset: CO2 Enhanced Oil Recovery
Foundation Asset CO2 Enhanced Oil Recovery
Slide 10: Delhi: "Cash Annuity" to Fund Growth
“Cash Annuity” to Fund Growth Jackson Dome Gross historic production 192 MMBO prior to EOR Delhi Current production 6,872 gross BOPD (quarter ended 12/31/12) 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 deve
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 Interest • Royalty interest = 29% of EPM’s Delhi reserves volumes • Delhi crude sells as LLS (current premium to WTI) • Payout project
Slide 12: 2013E Activity ~$40MM gross
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 calendard 2013, reducing operator’s net production by 1,000-1,500 BOPD. Capex focuse
Slide 13: Delhi Production: Actual and D&M Forecast of Proved + Probable
Delhi Production: Actual and D&M Forecast of Proved + Probable 1,000,000 Actual Gross D&M 6/30/12 Gross Actual EPM Net D&M 6/30/12 EPM Net BOPM Field Gross 100,000 EPM Net Reversion 10,000 1,000 Jul-10 Jul-15 Dec-10 Jan-13 Jun-13 Jan-18 Jun-18 Oct-11 Nov-13 Dec-15 Nov-18 Aug-12 Apr-14 Sep-14 Oct-16
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 Remaining NPV10
($000) Cumulative Pretax NCF Rem'g NPV10 $1,000,000 $900,000 $800,000 Peak 2P 2/7/13 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 $12 $10 $8 $6 EPM @ $10.57 LLS @ ~$117 $4 2/7/2013 $2 $- $60 $70 $80 $90 $100 $110 $120 $130 * From independent report of 6/30/2012 including proved and p
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 Actual Probable 100 Proved 10 7/1/2012 Forecasted production over first 16 years of 36+ year life Notes: From independent report of 6/30/2012 including proved and probable reser
Slide 18: Growth & Oily Projects: Growing Per-Share Value
GROWTH & OILY PROJECTS Growing Per-Share Value KKEVOLUTION Petroleum Corporation
Slide 19: Mississippian Lime: Fits selection criteria, Kay County, Oklahoma
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 O Spyglass, 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 486 MBOE EPM JV 311 MBOE 600 EUR: ~311 MBOE (57% oil) 500 $3.2 MM drilling and completion 400 cost (our 1st two at ~$3.2MM) BOEPD 300 200 Own SWD facilities to minimize LOE 100 Rich gas is minor contributor
Slide 23: Innovation for Increasing Recovery
Innovation for Increasing Recovery
Slide 24: Industry at risk of losing reserves as horizontal wells mature
Industry at risk of losing vast quantities of reserves and production as mature horizontal wells encounter liquid loading and depletion issues These problems exist in many areas – Giddings, Barnett, Bakken, Haynesville, Permian… Our technology re-establishes economic production of the “Tail” r
Slide 25: GARP: Before vs After 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 BO
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 (non-GARP®) • Noncore due to high gas co
Slide 28: Conservative, Strong and Aligned
Conservative, Strong and Aligned
Slide 29: Strong, Debt-Free Balance Sheet with Liquidity
Strong, Debt-Free Balance Sheet with Liquidity to Fund 2013 Capital Plan and Beyond Debt to Common Market Cap Liquidity – Sources & Uses (2/7/13) $MM 200% $25 4 FQFQCFFO + FQ3-4 CFFO 180% 172% 160% Credit 160% $20 Line 140% 120% $15 101% 100% 80% 74% $10 12/31/12 64% Working 60% Capital 42% 46% + ex
Slide 30: Total Value Per Fully Diluted Share
$20 $17.85 Total Per Fully Diluted Share $16 $7.08 Gap $12 $10.57 $8 $4 $0 Investment W/C Proved Probable Probable Total Share Price PV10 PV10 PV10 Value (2/7/13) Delhi Delhi Ms Lime *Note: Per-share values are based on 33.4 MM diluted shares and no debt. PV10 from 6/30/12 reserves report, excluding
Slide 31: Result = Total alignment with accretive growth per share strategy
Cash flow “Annuity” & debt free = continued growth w/o shareholder dilution ~$7/diluted share gap between intrinsic and market value (excluding GARP®) Premium oil focused reserves (88% of 2P is oil, mostly LLS priced) Incremental reserves potential in Delhi EOR project (potential growth cata
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