Evolution Petroleum Corporation, Inc. · AMEX:EPM
Evolution Petroleum — Investor Presentation (September 2009)
39 slides from Evolution Petroleum's investor presentation, Sep 10, 2009
Slide 1: Corporate Presentation
Corporate p Presentation September 10, 2009 (NYSE A Amex: EPM) © Evolution Petroleum Corporation 1
Slide 2: Forward-Looking Statements
Evolution Petroleum Corporation This presentation contains “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. Forward- looking statements give our current expectations or fore
Slide 3: Cautionary Note Regarding Oil and Gas Reserve Estimates
Evolution Petroleum Corporation Cautionary Note to U.S. Investors Regarding Oil and Gas Reserve Estimates: The U.S. U S Securities and Exchange Commission permits oil and gas companies, companies in their current filings with the SEC, to disclose only “Proved” reserves that a company has demonstrate
Slide 4: Our Business
Our Business We generate & implement projects that develop oil and natural gas reserves: 9 That are located in the onshore US, 9 Are generally well known, but bypassed historically due to low commodity prices or lack of applied technology, 9 Based on a low risk risk, engineered approach approach, an
Slide 5: O&G Core Assets
O&G Core Assets ((Net Reserves at 7/1/09)) East OK Shale 17,600 net acres Delhi Field Low cost, shallow gas 13 6 MMBO 2P 13.6 CO2-EOR 100% oil Neptune Project Giddings Field 0.5 MMBO 1P+2P+3P 3.0 MMBOE 1P + 79 additional locations 0.9 MMBOE 2P All infill oil locations 30% oil, 35% NGL, 35% gas 14% P
Slide 6: EPM Investment Highlights – Why Own EPM?
EPM Investment Highlights – Why Own EPM? 6
Slide 7: EPM Investment Highlights
EPM Investment Highlights ¾ Consistent growth in revenues ¾ Strong balance sheet with no debt ¾ 1P & 2P reserves 84% oil & 7% NGL; long term upside in low cost gas resource ¾ Sufficient cash resources in hand to fund 2010 capital expenditure program ¾ Low cost & low risk development upside ¾ Opportu
Slide 8: EPM Track Record in Project Development
EPM Track Record in Project Development Engineering driven origination & high value creation Project Invested: Results Delhi EOR $6.8 MM $50 MM cash pretax + 2P Reserves PV-10 = $196 MM 2P PV-10 peak (2015) ~ $290 MM Neptune Oil $0.6 MM 1P – 3P Reserves PV-10 = $8.1 MM & 79 additional locations pend
Slide 9: EPM Reserves by Fiscal Year
EPM Reserves by Fiscal Year 14 12 10 Proved 8 Giddings 2P Delhi 2P 6 Neptune 1P-3P 4 2 0 2004 2005 2006 2007 2008 2009 • Reserves as at fiscal year end of June 30 • Does not include low cost shale gas resource in Oklahoma & additional Neptune locations • 2009 downward revisions due to commodity pric
Slide 10: EPM Revenues Growth by Fiscal Year
EPM Revenues Growth by Fiscal Year • Revenues in thousands • 2007 revenues decreased by farm farm-out out to DNR 10
Slide 11: FY 2010 Capital Plan
FY 2010 Capital Plan Objectives: ¾ Substantially expand proved reserves Neptune (South Texas) oil project O Oklahoma gas shales ¾ Begin to commercialize artificial lift technology ¾ Giddings cash income to cover overhead ¾ Avoid use of high cost, risky capital sources ¾ Maintain liquidity throug
Slide 12: FY2010 Plan for Growth
FY2010 Plan for Growth OK: Continued gas shale testing of up to 200 BCF potential Delhi: DNR funds expansion of our CO2-EOR project Neptune: Giddings: Maintain production Drill first 2 oil wells Joint ventures to drill PUDs Target quadrupling Joint ventures to apply our of current 500 MBO proprietar
Slide 13: EPM Assets: Delhi CO2 – EOR Project
EPM Assets: Delhi CO2 – EOR Project 13
Slide 14: EOR - Delhi Field CO2 Project
EOR - Delhi Field CO2 Project Tinsley Jackson Delhi Dome 7/1/09 Pb Net Reserves 13.6 MMBO $196 MM PV-10 Gross Production to date 190 MMBO O g a o Original oil in p place ace es est. 35 MMBO 357 O (“OOIP”) in swept portion Average depth 3,235’ Size 13 636 acres 13,636 Formations Tuscaloosa & Paluxy R
Slide 15: Delhi Field Development by EPM & DNR
Delhi Field Development by EPM & DNR (Calendar year) 2003: Purchased working interest in Delhi Field for $2.8 million Hiigh ROIC 2004: Increased production from 20 bopd to ~145 boep/d through ~$2.5 million of capex 2006: Sold farm-out to DNR for $50 MM - retained 25% reversionary working interest af
Slide 16: EOR Expands EPM's Reserve Base & Value
EOR Expands EPM’s Reserve Base & Value Denbury’s EOR project could recover up to 19% of original oil in place (OOIP) at Delhi Field (based on DNR’s historic results), compared to the 15% assigned in 2P reserves. Additional 4% recovery could add 33.8 8 MMBO to EPM’s EPM s net reserves. reserves EPM’s
Slide 17: Impact of Delhi Production
Impact of Delhi Production* Annual Net Cash Flows from Delhi per fully diluted share Gross Field Production = 1,000 2,460 5,600 7,880 10,000 BOPD BOPD BOPD BOPD BOPD < Payout Occurs > Pre & Post Payout 7.4% Royalty Interest = $0.05 $0.12 $0.27 $0.38 $0.48 After Payout 25% Reversionary WI = $0.63 $1.
Slide 18: EPM Assets: Neptune, Artificial Lift, Giddings
EPM Assets: Conventional Re-development Neptune Oil Project in South Texas Artificial Lift Technology Giddings Field in Central Texas 18
Slide 19: Neptune – Oil Development Within Mature Field
Neptune – Oil Development Within Mature Field 7/1/09 Net Reserves # Locations MBO PV-10 Net Proved Reserves 4 re-entries re entries 48 $0 5 MM $0.5 Net Probable Reserves 21 247 $0.4 MM Net Possible Reserves (in 2P locations) 247 $7.2 MM 542 $8.1 MM ¾ 100% working interest and 79.7% net revenue inter
Slide 20: Neptune – Oil Development Within Mature Field
Neptune – Oil Development Within Mature Field Project based on historic downspacing in this field and similar EPM experience in comparable field in Louisiana Application of our innovative completion technology may = additional upside ~380 previous wells now P&A’d ~100 new infill locations – 4 PUD, 2
Slide 21: Proprietary Artificial Lift Technology
Proprietary Artificial Lift Technology Conventional artificial lift • Fluid level eventually drops to a level where rod pump or gas lift are no longer effective Original fluid level • This can leave substantial volumes of oil and gas gas. Our technology • Mobilizes remaining fluid to the pump Fluid
Slide 22: Giddings Field, Central Texas
Giddings Field, Central Texas 7/1/09 Net Proved Reserves = 3.0 MMBOE $35.3 MM PV-10 Net Probable Reserves = 0 0.9 9 MMBOE $10 9 MM PV-10 $10.9 Drilling locations Ave Gross Recovery Ave D&C cost/well D&C / BOE 14 proved re-entries 111 MBOE/well $1.3 MM $14.64 7 proved grassroot & 270 MBOE/well $2 3 M
Slide 23: Price Sensitivity of Giddings/Neptune Reserves
Price Sensitivity of Giddings/Neptune Reserves* EPM Giddings & Nepturne (1P + 2P) PV-10 per fully diluted share vs Blended Flat Commodity Price $/Share (30% oil, 35% ngl & 35% natural gas) $2.00 Proved $1.80 Probable $1.60 $1.40 $1.20 Gas price increase begins to add back $1.00 locations $0.80 $0.60
Slide 24: EPM Assets: OK Low Cost Gas Shales Project
EPM Assets: OK Low Cost Gas Shales Project 24
Slide 25: Gas Shales in Eastern Oklahoma
Gas Shales in Eastern Oklahoma Woodford EPM ¾ Up to 100 vertical and horizontal Completions Acreage Woodford completions to date offsetting EPM acreage by three other operators Tulsa ¾ Potential for conventional oil development Main W df d Woodford Oklahoma Trend 25
Slide 26: Shallow = Low Cost
Shallow = Low Cost ¾ Developing up to 200 BCF of shale gas potential at $0.75 - $1.25 per MCF Shallow depth = small rig and low fracturing horsepower = low day rates Multiple shale zones identified and tested to date Expect D&C costs to be ~$180K for vertical Wagoner well (multi-zone frac) at
Slide 27: EPM Summary
EPM Summary 57 EVOLUTION € Petroleum Corporation
Slide 28: EPM Financial Strength
EPM Financial Strength Strong g balance sheet and excellent liquidity q y 9 Substantial working capital 9 No external funding required for conservative capital expenditure program in FY2010 9 We control our assets and required capital expenditures Financial Strategy: a conservative approach to optim
Slide 29: EPM Operational Strength for Growth
EPM Operational Strength for Growth EPM Intangibles Experienced Staff Successful Team Record FY2010 Tight sand/horizontal expertise 6 Year Track Record Technology Value Catalysts Delhi p producing g EPM T Tangible ibl Assets A OK confirmation $7MM WC & no debt Neptune producing 13.6 MMBO Delhi EOR O
Slide 30: Contact (NYSE Alt: EPM)
(NYSE Alt: EPM) Company Contact: IR Contact: St li M Sterling McDonald, D ld VP & CFO Li Elli Lisa Elliott tt / [email protected] lli tt@d (713) 935-0122 Jack Lascar / [email protected] [email protected] DRG&E / 713-529-6600 30
Slide 31: Exhibits
Exhibits Quick Facts Liquidity 2009 E Events t and d 2010 C Catalysts t l t Effect of Different Recoveries on EPM’s Delhi Interests Illustration of Giddings Development Management team Board of Directors 31
Slide 32: Quick Facts about EPM
Quick Facts about EPM ¾ Ticker Symbol EPM ¾ Fiscal Year-End June 30 ¾ Market Cap ~$74 million as of 8/26/2009 ¾ Enterprise Value ~$67 MM • 26.5 MM shares outstanding • 32.4 MM shares fully diluted • ~39% owned byy institutions ¾ Financial Strength $7 MM in WC, no debt ¾ Assets low risk development p
Slide 33: EPM Liquidity
EPM Liquidity 3/31/09 (unaudited) Selected Assets Working Capital $7,503,457 Properties & Equipment, net 28,655,188 Other Assets (primarily long term CD) 356,399 Total Assets $37,980,788 Long Term Liabilities & Equity Long Term Debt $0 Other Liabilities (primarily deferred income tax) 4,471,156 Tota
Slide 34: 2009 Events 2010 Catalysts
2009 Events 2010 Catalysts Accomplishments in FY 2009 9 2 Giddings PUD’s averaged initial gross 450 BOEPD per well 9 Completion of Denbury’s Delta CO2 pipeline to Delhi 9 Positive test results in OK low cost gas shale resource 9 Successful first field test of artificial lift technology in Giddings 9
Slide 35: Effect of Different Recoveries on Delhi Volumes
Effect of Different Recoveries on Delhi Volumes Estimated EPM Net Probable Reserves in Delhi CO2-EOR Project CO2 Recovery R off Swept S t OOIP OOIP: 13% 15% 19% (at $66.62 oil, SEC pricing) Gross bbls produced (MMBO) 46.4 54.0 67.8 EPM royalty interest (7.4%) 3.4 4.0 5.0 Other royalty interests (12.
Slide 36: Giddings Field – Infill Development
Giddings Field – Infill Development Lease boundary - lease boundary mandatory distance between vertical wellbore and lease boundary plug Naturally occuring fractures bearing oil and gas Austin Ch lk Chalk New horizontal wellbore penetrating undrained fractures Existing horizontal wellbore penetratin
Slide 37: 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 27 years of leadership experience in M&A, development, operations and finance in public and private sectors $800 million in transactions completed Originated and
Slide 38: Our Management Team
Our Management Team Daryl Mazzanti, VP-Operations Joined team in mid-2005; 21 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 39: Our Board of Directors
Our Board of Directors Robert Herlin, CEO, Chairman & Co-founder Laird Cagan, Director & Co-founder Managing M i DiDirector t – Cagan C M McAfee Af C Capital it l P Partners t Formerly with Goldman Sachs and Drexel Burnham Lambert E.J. DiPaolo, Director Energy Partner with Growth Capital Partners, L
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