Evolution Petroleum Corporation said it completed its acquisition of non-operated oil and natural gas assets located in New Mexico, Texas, and Louisiana.
The total purchase price for the acquisition is $9.0 million before customary post-closing adjustments, with an effective date of February 1, 2025, the company said in a news release.
Evolution said it funded the acquisition through a combination of cash on hand and borrowings under its existing credit facility.
The acquired assets add around 440 net barrels of oil equivalent of stable, low-decline production, consisting of 60 percent oil and 40 percent natural gas, the company said.
The acquisition “provides enhanced cash flow visibility and strengthens long-term dividend sustainability,” Evolution said, adding that it “offers low-risk development upside with potential for incremental production growth”.
Evolution President and CEO Kelly Loyd said, “Despite recent commodity price and market volatility, our TexMex transaction remains highly accretive to both near-term and long-term cash flows and directly supports our core objective — preserving and enhancing the long-term sustainability of our dividend. Our negotiated deal represents a significant discount to PV10 at the current strip and, due to its low-decline nature, should only get better if oil prices move back up to a more normalized price range. TexMex is yet another execution of our proven strategy and represents exactly the kind of transaction that underpins Evolution’s long-standing commitment to deliver a stable and sustainable dividend”.
In the company’s second fiscal quarter, total revenues decreased 4 percent to $20.3 million compared with $21.0 million in the year-ago quarter. The decline was driven primarily by a 12 percent decrease in average realized commodity prices which offset an increase in production volumes, it said in its most recent earnings release.
Production for the quarter increased 10 percent year-over-year to 6,935 average boepd, with oil increasing 13 percent, natural gas increasing 9 percent, and natural gas liquids (NGLs) increasing 9 percent.
The increase in production volumes was largely due to the company’s SCOOP/STACK acquisitions in February 2024 and subsequent drilling and completion activities, as well as new wells at Chaveroo that came online at the same time, Evolution said.
“Despite operational issues and downtime at Chaveroo and Williston, which resulted in approximately 90 boepd lower production for the quarter, our balanced portfolio delivered strong year-over-year production growth of 10 percent. These issues have been resolved, and rates were restored before the end of January. Lower commodity pricing, particularly for natural gas, was the main contributor to a modest revenue decline and net adjusted loss. However, towards the end of the quarter and beyond, we have seen a strong recovery throughout the natural gas futures curve and substantially improved natural gas price realizations to date, while oil and natural gas liquids pricing has remained relatively stable to slightly improved,” Loyd said in an earlier statement.
Evolution Petroleum describes itself as an independent energy company “focused on maximizing total shareholder returns through the ownership of and investment in onshore oil and natural gas properties” in the USA. The company said it aims to build and maintain a diversified portfolio of long-life oil and natural gas properties through acquisitions, selective development opportunities, production enhancements, and other exploitation efforts.
Source: rigzone, Published: 22 April, 2025
