Evolution Petroleum Posts Q4 Revenue Rise on Higher Oil Prices

Evolution Petroleum Corporation reported a fourth-quarter recovery in financial performance, with total revenue rising 20% sequentially to $24.2 million. The increase was driven by a 3% sequential rise in production to 6,901 barrels of oil equivalent per day and higher realized prices for crude oil and natural gas liquids. These gains offset continued weakness in natural gas realizations, allowing the company to more than double its adjusted EBITDA to $6.5 million from $3.1 million in the prior quarter.

Net income for the fiscal quarter ended June 30 was $4.6 million, or $0.13 per diluted share, reversing a net loss of $8.9 million in the third quarter. CEO Kelly Loyd attributed the improvement to the resolution of temporary operational issues and lower operating costs per barrel. While realized oil prices rose 49% year over year to $90.74 per barrel, hedge settlements partially offset these benefits, though the company retained upside exposure on unhedged volumes.

Adjusted EBITDA doubles on operational efficiency

The jump in adjusted EBITDA to $6.5 million reflects improved lease operating expense management. Lease operating expenses totaled $12.8 million in the quarter, compared to $11.4 million in the year-ago period. When adjusted for a $1.9 million joint-venture audit credit recorded in the prior year, the expense per barrel of oil equivalent was $20.35, a slight increase from $20.25 a year earlier. Sequentially, however, the cost per unit improved by approximately 5% from $21.49, indicating better operational efficiency.

CFO Ryan Stash noted that the current EBITDA remains below the $8.6 million reported a year earlier, primarily due to the absence of the one-time audit credit. Despite this, the company recorded a $5.8 million unrealized gain on derivative contracts, contrasting with a $7.6 million unrealized loss in the previous quarter. This shift in derivative positions contributed to the narrowing of the adjusted net loss to $0.6 million from $2.9 million sequentially.

Permian acquisition expands mineral portfolio

Evolution Petroleum expanded its asset base by completing a roughly $16 million acquisition in the Permian Midland Basin. This transaction added 3,420 net royalty acres and more than 200 barrels of oil equivalent per day to the company’s production mix. The move diversifies the portfolio beyond existing SCOOP/STACK, Haynesville, and Bossier assets, providing additional royalty streams to support cash flow.

Liquidity and dividend policy remain stable

Following the Permian acquisition, the company maintained post-transaction liquidity of approximately $19 million. The borrowing base was temporarily increased to $73 million, providing sufficient financial flexibility for ongoing operations. Evolution declared its 52nd consecutive quarterly dividend of $0.12 per share, signaling confidence in its ability to sustain shareholder returns despite the recent capital deployment.

For fiscal 2027, Evolution expects capital spending of $4 million to $6 million, excluding potential development costs for the Chaveroo field. This modest capex outlook aligns with the company’s strategy of maintaining liquidity and consistent dividend payments while managing operational costs. The forward guidance suggests a focus on cash conservation and selective growth rather than aggressive expansion in the near term.