Q2 2022 Evolution Petroleum Corp Earnings Call

Good afternoon.

Speaker 1: Good afternoon ladies and gentlemen and welcome to the Evolution Petroleum second quarter fiscal year 2022 earnings release conference call. At this time all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

Ladies and gentlemen, and welcome to the evolution Petroleum second quarter fiscal year 2022 earnings release Conference call.

At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments. After the presentation. It is now my pleasure to turn the floor over to your host Bryan stash, Sir the floor is yours.

Speaker 1: It is now my pleasure to turn the floor over to your host, Ryan Stasch. Sir, the floor is yours. Thank you. And good afternoon, everyone. And welcome to Evolution Petroleum's earnings call for our second quarter of fiscal year 2022.

Thank you.

And good afternoon, everyone and welcome to evolution Petroleum's earnings call for our second quarter of fiscal year 2022.

Speaker 2: I'm Ryan Stasch, Chief Financial Officer. Joining me today is Jason Brown, a President and Chief Executive Officer for the United States of America.

<unk> Chief Financial Officer, joining me today is Jason Brown, President and Chief Executive Officer. After I cover the forward looking statements. Jason will review key highlights along with our operational results. I will then return to provide more in depth financial review and finally, Jason will provide some closing comments and details about our two recent acquisitions before we take.

Speaker 2: After I cover the forward-looking statements, Jason will review key highlights along with our operational results. I will then return to provide more in-depth financial review. And finally, Jason will provide some closing comments and details about our two recent acquisitions before we take

Your questions. Please note that any statements and information provided today are time sensitive and may not be accurate at a later date. Our discussion today will contain forward looking statements of management's beliefs and assumptions based on currently available information. These forward looking statements are subject to risks and uncertainties that are listed and described in our filings with the SEC and actual results.

Speaker 2: Please note that any statements and information provided today are time sensitive and may not be accurate in a later date. Our discussion today will contain forward looking statements of management's beliefs and assumptions based on currently available information. These forward looking statements are subject to risk and uncertainties that are listed and described in our filings with the FCC. And actual results may differ materially from those expected.

May differ materially from those expected.

Speaker 2: Since detailed numbers are readily available to everyone in yesterday's earnings release, this call will primarily focus on our strategy as well as key operational and financial results and how these affect us moving forward.

Since detailed numbers are readily available to everyone. In Yesterdays earnings release. This call will primarily focus on our strategy as well as key operational and financial results and how these affect us moving forward.

Please note that this conference call is being recorded if you wish to listen to a replay of today's call will be available by going to the company's website or via recorded replay until may 11, 2022, and with that I'll turn over the call to Jason.

Speaker 2: Please note that this conference call is being recorded. If you wish to listen to a replay of today's call, it will be available by going to the company's website or via recorded replay until May 11, 2022. Now, with that, I'll turn over the call to Jason.

Thank you Ryan.

Speaker 3: Good afternoon everyone and thanks for joining us today on Evolution's second quarter fiscal 22 earnings call.

Good afternoon, everyone and thanks for joining us today on evolution second quarter fiscal 'twenty two earnings call.

Speaker 3: As Ryan mentioned, we will discuss our two recent acquisitions in the Wilson Basin and Jonah Field after our financial results. We posted a presentation on the front page of our website if you would like to download it. In the meantime, I will use this slide deck to discuss our acquisitions in more detail.

As Brian mentioned, we will discuss our two recent acquisitions.

In the Williston basin and Jonah fields.

After our financial results.

We posted a presentation on our front page of our website, if you would like to download it in the meantime.

We'll use this slide deck to discuss our acquisitions in more detail.

We've been pretty busy since our last update in November I'm happy to say that the team's efforts have been fruitful for our shareholders.

Speaker 3: We've been pretty busy since our last update in November . I'm happy to say that the team's efforts have been fruitful for our shareholders.

Speaker 3: As always, we appreciate your continued interest in our company and welcome any questions that you might have regarding our business and recent acquisitions.

As always we appreciate your continued interest in our company and welcome any questions that you might have regarding our business and recent acquisitions.

We were pleased with our overall results in the second quarter, which were highlighted by continued free cash flow generation.

Speaker 3: We were pleased with our overall results in the second quarter, which were highlighted by continued free cash flow generation. This supports our long-term strategy of operating within cash flow and paying an ongoing meaningful cash dividend to shareholders.

Supports our long term strategy of operating within cash flow and paying an ongoing meaningful cash dividends to shareholders.

Speaker 3: We've also continued our plans of expanding our geographic footprint through executing on targeted transactions that promote our ability to further increase our return of capital to shareholders.

We've also continued our plans of expanding our geographic footprint.

Executing on targeted transactions that promote our ability to further increase our return of capital to shareholders.

Speaker 3: In the last three weeks, we have announced two accretive acquisitions.

Last three weeks, we've announced two accretive acquisitions.

Speaker 3: We believe in increasing the longevity of our dividend payout program through the next decade.

We've increased the longevity of our dividend payout program through.

Through the next decade.

I will discuss the collective transformative nature of these transactions.

Speaker 3: I will discuss the collective transformative nature of these transactions for during my..................

For my closing comments.

For the second quarter of 2022, we had net income grew 31% to $6 8 million or <unk> 20 per diluted share from $5 2 million or <unk> 16 per diluted share in the previous quarter.

Speaker 3: For the second quarter of 2022, we had net income grew 31% to $6.8 million or $0.20 per diluted share from $5.2 million or $0.16 per diluted share in the previous quarter.

We continue to benefit significantly from higher commodity prices as we are unhedged during the quarter.

Speaker 3: We continue to benefit significantly from higher commodity prices as we are unhedged during the quarter.

Which resulted in adjusted EBITDA of $10 2 million, which was 20% increase from the first quarter and Additionally, we were able to grow our cash position to $13 6 million at quarter end, which was 71% higher than our cash.

Speaker 3: which resulted in an adjusted EBITDA of $10.2 million, which was 20% increase from the first quarter. In addition, we were able to grow our cash position to $13.6 million at quarter end, which was 71% higher than our cash balance at September 30th of 2021. During the second quarter, we produced 49.

Cash balance at September 30 of 2021.

During the second quarter, we produced.

$49 57, net Boe per day.

This was down from $58 43, net Boe per day for the first quarter.

Speaker 3: down from 5843 net BOE per day for the first quarter of fiscal 2022. Included in our second quarter production results was a downward adjustment of approximately 400 net BOE per day due to the production mix adjustments by the operator in the Barnett Shale to reject ethane and capitalize on the higher natural gas prices in the first and second quarters thereby improving cash flow generation.

2022, and <unk> included in our second quarter production results with a downward adjustment of approximately 400 net Boe per day due to the production mix adjustments by the operator in the Barnett shale.

To reject ethane and capitalize on the higher natural gas prices in the first and second quarters, thereby improving cash flow generation.

Also included in the second quarter production was the receipt of path.

Speaker 3: Also included in the 7th quarter production was the receipt of past oil royalties from accumulated over a period of approximately 3 years associated with an overriding royalty interest owned in two wells located in Giddingsfield in Burleson County, Texas.

Royalties from accumulated over a period of approximately three years associated with an overriding royalty interest owned and two wells located in Giddings field in Burleson County, Texas.

Speaker 3: Now let's look at our operating results in more detail. Net production in Dell High for the first quarter was 108,245 BOE.

Now, let's look at our operating results in more detail net production at Delhi for the first quarter was 108245 Boe.

Or.

Speaker 3: or 11.77 BOE per day, that's an 8% decrease compared to the prior quarter. Oil production in Delhi continues to be impacted by the nine-month suspension of CO2 purchases during the calendar of 2020 due to repairs of the purchase supply line.

$11 77 Boe per day, that's an 8% decrease compared to the prior quarter oil production in Delhi continues to be impacted by the nine months suspension of Sidoti purchases during.

During the calendar 2020.

Due to repairs to the purchase supply line.

The result has been lower reservoir pressure.

And then Barry who operate in the field.

Speaker 3: and Denbury who operates the field and owns and operates the CO2 purchase line and has worked diligently to restore pre-2020 levels.

Operator.

Owns and operates the CFC purchase line and has worked diligently to restore pre 2020 levels.

Speaker 3: I would note the CO2 purchase increased to approximately 100 million cubic feet per day in the 2nd quarter, which is assisted in resting the decline and restoring some of the reservoir pressure previously lost. Also impacting bell high production fiscal 22 2nd quarter.

I would note that COPD purchase increased to approximately 100 million cubic feet per day in the second quarter.

Which has assisted in arresting the decline in restoring some of the reservoir pressure previously lost also impacting DAU high production in fiscal 2022 second quarter.

Speaker 3: planned and unplanned compressor maintenance in November and December temporarily reduced daily production.

It was planned and unplanned compressor maintenance in November and December the temporarily reduced daily production.

And Hamilton Dome, we saw sequential quarter increase in net production of 2% to 30021 barrels or 413 barrels of oil per day.

Speaker 3: At Hamilton Dome, we saw a sequential quarter increase in net production of 2% to 30,021 barrels, or 413 barrels of oil per day.

Speaker 3: primarily due to continued restoration of previously shut-in wells and strategic adjustments to water injection locations and volumes. Our operating partner Merritt remains focused on maintenance projects.

Primarily due to continued restoration of previously shut in wells and strategic adjustments to water injection locations and volumes are operating partner Merit remains focused on maintenance projects.

At Hamilton Dome.

Net production from the Barnett assets for the second quarter of fiscal 'twenty two with.

Speaker 3: Net production from the Barnet assets for the second quarter of fiscal 22. 285,761 BOE or 3,106 BOEs per day.

285761, Boe or <unk>.

<unk> thousand 106 Boe per day.

Which was about 25% lower than the first quarter as I mentioned earlier the production of the Barnett shale was impacted by diversified energies decision as the operator to maximize the overall field cash flow by capturing the most favorable commodity price.

Speaker 3: is about 25% lower than the first quarter. As I mentioned earlier, the production of Barnett's shale was impacted by Diversified Energy's decision as the operator to maximize the overall field cash flow by capturing the most favorable commodity price.

Speaker 3: diversified adjusted the production mix in both the second and the first quarters of 22, which resulted in an adjustment being booked in the second quarter to true out past results.

<unk> adjusted the production mix in both the second hand in the first quarter of 'twenty, two which resulted in an adjustment being booked in the second quarter to true up Patrick Scholes.

As a reminder, we purchased our non operated interest in the Barnett shale in May of 2021 <unk>.

Speaker 3: As a reminder, we purchased our non operated interest in the Barnett Shale in May of 2021. The acquisition materially increased our exposure to natural gas through the addition of another long life low decline asset to our portfolio.

The acquisition materially increased our exposure to natural gas through the addition of another long life low decline asset to our portfolio.

Speaker 3: In addition, the transaction was particularly well timed considering the sharp increase that we have seen in natural prices.

In addition, the transaction was particularly well time, considering the sharp increase.

We are seeing a natural prices over the past few months.

Speaker 3: Diversified begin operating the Barnett Shell assets as of July of 2021 after purchasing their interest from Blackbeard operating.

Diversify began operating in the Barnett shale assets as of July of 2021 after purchasing their interest from Blackberry operating.

Speaker 3: Based on our discussions, diversified his planning to run 1 workover rig continuously throughout the calendar of 2022. We look forward to participating with them and a number of high rate return projects.

Based on our discussions diversified is planning to run one workover rig continuous throughout the calendar of 2022, we look forward to participating with them in a number of high rate of return projects.

In the coming months and years.

Speaker 3: During the second quarter, we once again generated operating cash flow in excess of capital expenditures.

During the second quarter, we once again generated operating cash flow in excess of capital expenditures.

Which supported payment of our 30 <unk> consecutive consecutive quarterly cash dividend.

Speaker 3: which supported payment of our 33rd consecutive quarterly cash dividend.

Given the continued improvement of our business and economic environment. We are pleased to declare a third quarter dividend per common share that will be paid on March 31 to shareholders of record of March 15.

Speaker 3: Given the continued improvement in our business and economic environment, we are pleased to declare a third quarter dividend of 10 cents per common share that will be paid on March 31 to shareholders of record of March 15.

Our third quarter dividend represents a 33% increase from our second quarter dividend of $7 five per share.

Speaker 3: Our third quarter dividend represents a 33% increase from our second quarter dividend of seven and a half cents per share. This was an important milestone returning our dividend to pre-pandemic levels.

This was an important milestone returning our dividend to pre pandemic levels.

With the third quarter dividend evolution will have paid out approximately $80 million or $2 50, or $2 50 per share back to the shareholders.

Speaker 3: The third quarter dividend evolution will have paid out approximately $80 million or $2.50 per share back to the shareholders as cash dividends since the program began in December of 2013.

As cash dividends since the program began in December of 2013.

Speaker 3: With that, I'll now turn the call back over to Ryan to discuss some of our financial highlights. Thanks Jason................

With that I'll now turn the call back over to Ryan to discuss some of our financial highlights. Thanks, Jason.

I'll now share some additional details regarding our financial results for the second quarter of fiscal 'twenty. Two please refer to our press release from yesterday afternoon for additional information and details with some of the key highlights include.

Speaker 2: I'll now share some additional details regarding our financial results for the second quarter of fiscal 22. Please refer to our press release from yesterday afternoon for additional information and details, but some of the key highlights include

Speaker 2: The Jussie Deva dye increased 20% to 10.2 million from 8.5 million in the first quarter of fiscal 2020.

Adjusted EBITDA increased 20% to $10 2 million from $8 5 million in the first quarter of fiscal 'twenty two second quarter. Adjusted EBITDA was $22 30, $22 32 on a per Boe basis, which is 41% higher than the first quarter.

Speaker 2: 2nd quarter adjusted EBITDA was $22.32 on a per BOE basis, which is 41% higher than the 1st quarter. Now, excluding the impact of the adjustment related to the operator production make changes in the barnet shale that Jason discussed.

Excluding the impact of the adjustment related to the operator's production mix changes in the Barnett shale that Jason discussed the <unk>.

Speaker 2: The second quarter adjusted EBITDA would have been $28.88 per view.

Second quarter, adjusted EBITDA would have been $28 88 per Boe.

Speaker 2: We once again funded all operations, development capex, and dividends out of operating cash flow, and we maintained our strong balance sheet with $13.6 million of cash on hand, less $4 million of debt, resulting in net cash of $9.6 million as of December 31st.

We once again funded all operations development, Capex and dividends out of operating cash flow and we maintained our strong balance sheet with $13 6 million of cash on hand, less $4 million of debt, resulting in net cash of $9 6 million as of December 31.

Speaker 2: As Jason mentioned, we paid a dividend of seven and a half cents per share for the second quarter, marking the payment of our thirty third consecutive quarterly dividend.

As Jason mentioned, we paid a dividend of $7.05 per share for the second quarter, marking the payment of our 30 <unk> consecutive quarterly dividend.

Speaker 2: Also, as you mentioned supported by our solid operational and cash flow, we increased we declared increased distribution to 10 cents per share for shareholders of record on March 15, 2022 to be paid on March 31st, 2020.

Also as you mentioned supported by our solid operational and cash flow like we increase we declared an increased distribution to <unk> <unk> per share for shareholders of record on March 15th 2022 to be paid on March 31 2022.

Working capital was $22 million at the end of our second quarter of fiscal 'twenty. Two this was $6 $4 million higher than our working capital.

Speaker 2: Working capital was 22M at the end of our 2nd quarter of fiscal 22. This was 6.4M higher than our working capital at September 30th of 2021 with 5.6M of the increase due to our improved cash.

At September 30 of 2021 with $5 6 million of the increase due to our improved cash position.

Our liquidity at December 31 was $49 6 million, which included $13 6 million of cash and $36 million of availability of the credit facility.

Speaker 2: Liquidity at December 31st was 49.6 million, which included 13.6 million of cash and 36 million of availability.

As a reminder.

Speaker 2: As a reminder, on November 9th, we amended our credit facility to reflect last year's acquisition of our Barnett Shell assets. The result was the redetermination of our borrowing base to 50 million, which was a 20 million increase from our previous borrowing base of 30 million. And we elected a 40 million commitment amount resulting in the availability of the 30 million.

On November nine we amended our credit facility to reflect last year's acquisition of Barnett shale assets. The result was the redetermination of our borrowing base to $50 million, which was a $20 million increase from our previous borrowing base of $30 million and we elected a $40 million commitment amount, resulting in the availability of disclosed at $36 million.

Speaker 2: As Jason will discuss in more detail in his closing comments on January 14th, we close on a transaction to acquire non operated assets in the Wilson basin in North Dakota for a total purchase price of 25.9M net of preliminary purchase price adjustment.

As Jason will discuss in more detail in his closing comments on January 14th we closed on the transaction to acquire non operated assets in the Williston Basin in North Dakota for a total purchase price of $25 9 million net of preliminary purchase price adjustments funding.

Funding for this acquisition was provided by cash on hand, and a $16 million draw on our credit facility. As a result, we currently have $20 million drawn on the credit facility, which includes the previously mentioned 4 million balance as we ended the.

Speaker 2: Funding for this acquisition was provided by cash on hand and a $16 million draw on our credit facility. As a result, we currently have $20 million drawn on the credit facility, which includes the previously mentioned $4 million balance as we ended on December 31st.

As we ended on December 31.

Speaker 2: Yesterday we announced that we entered in a definitive agreement to acquire non-operated natural gas assets in the Jonah Field in Wyoming. The purchase price of this acquisition was $29.4 million subject to customary purchase price adjustments including conditions.

Yesterday, we announced that we entered into definitive agreement to acquire non operated natural gas assets in the Jonah field in Wyoming. The purchase price of this acquisition was $29 4 million subject to customary purchase price adjustments and closing conditions. We expect to fund this transaction with cash on hand, and borrowings from our credit facility.

Speaker 2: We expect to fund this transaction with cash on hand and borrowings from our credit facility.

Pro forma for the closing of these two acquisitions, we expect that our net debt will be below our stated maximum leverage target of one times pro forma and one times pro forma adjusted annual EBITDA.

Speaker 2: Proforma for the closing of these two acquisitions, we expect that our net debt will be below our stated maximum leverage target of one times Proforma and one times Proforma adjusted annual EBITDA.

Speaker 2: Now, as we discussed on our last N

As we discussed on our last earnings call in November the amended credit facility added a covenant, where we must hedged a certain percentage of future production based on utilization presented percentages outlined in the credit facility agreement on February 7th we entered into the ninth amendment to our credit agreement that modified the definition of utilization percentage related to this require hedging covenant.

Speaker 2: On February 7th, we entered into the 9th Amendment to our credit agreement that modified the definition of utilization percentage related to this required hedging covenant, such that for the purposes of determining the amount of production to hedge, the utilization of our credit facility will be based on a calculated collateral value to the extent it exceeds the barring base than in a

Such that for the purposes of determining the amount of production to hedge utilization of our credit facility will be based on a calculated collateral value to the extent it exceed the borrowing base then in effect.

Speaker 2: Now, we currently estimate that this collateral value is approximately $125 million, which would result in a current utilization of 16%. However, as we have stated in the past, we would look to enter into hedges to protect the balance sheet if we took on debt for an acquisition.

We currently estimate that this collateral value is approximately $125 million, which would result in a current utilization of 16%. However, as we have stated in the past we would look to enter into hedges to protect the balance sheet. If we took on debt for an acquisition as a result of the debt related to the Wilson acquisition as part of the ninth Amendment to the credit facility we have.

Speaker 2: As a result of the debt related to the Wilson acquisition as part of the 9th amendment to the credit facility, we have agreed to enter into hedges covering 25% over expected oil and gas production for a period of 12 months.

To enter into hedges covering 25% of our expected oil and gas production for a period of 12 months.

We still anticipate using primarily costless collars in order to retain upside to commodity prices and we do continue to maintain our strategy of retaining exposure to commodity prices, which has benefited us recently.

Speaker 2: We still anticipate using primarily costless collars in order to retain upside to commodity prices. And we do continue to maintain our strategy of retaining exposure to commodity prices, which has benefited us.

However, as we utilize that for potential acquisitions, we may look to hedge a portion of our incremental production to lock in cash flows maintain compliance with our credit facility ensure a quick pay down of any that we may incur and protect our dividend.

Speaker 2: However, as we utilize debt for potential acquisitions, we may look to hedge a portion of our incremental production to lock in cash flows, maintain compliance with our credit facility, ensure a quick pay down of any debt we may incur in Protector to

Looking at our second quarter fiscal 2022 financials in more detail. We grew total revenue to $22 3 million, which was an 18% increase from the prior quarter oil revenue increased to $10 6 million due to 12% higher sales volumes, primarily as a result of the additional royalty income and production received from our Giddings field interest and also 6%.

Speaker 2: Looking at our second quarter fiscal 2022 financials in more detail. We grew total revenue to 22.3 million, which was an 18% increase from the prior quarter. Oil revenue increased to 10.6 million due to 12% higher sales volumes, primarily as a result of the additional royalty income and production received from our Giddings Field interest. And also a 6% increase in realized price.

Increase in realized pricing.

Speaker 2: NGL revenue decreased to $2.6 million primarily due to the production mix adjustments made by the operator in the Barnett Shell that Jason previously just...

<unk> revenue decreased to $2 $6 million, primarily due to the production mix adjustments made by the operator in the Barnett shale that adjacent previously discussed.

Speaker 2: These were designed to capitalize on the most favorable commodity prices and maximize overall cash.

These are designed to capitalize on the most favorable commodity prices and maximize overall cash flow. This has this helped drive natural gas revenue to $9 2 million for the second quarter.

Speaker 2: This helped drive natural gas revenue to 9.2 million for the second.

LOE increased to $10 7 million in the second quarter contributing to the increase was $1 million and higher <unk> cost at Delhi compared to the prior quarter, primarily due to the suspension of <unk> purchases from July $15 21 to August 2021 in order to perform preventive maintenance on the <unk> purchase pipeline. In addition oil.

Speaker 2: LOE increased to $10.7 million in the second quarter. Contributing to the increase was $1 million in higher CO2 costs at Delphi compared to the prior quarter, primarily due to the suspension of CO2 purchases from July 15, 2021 to August 20, 2021 in order to perform preventative maintenance on the CO2 purchase pipeline. In addition, oil prices increased from the prior quarter, leading to an increase in CO2 costs per MCF, as the CO2 purchase price is based on and tied to the price of oil.

Prices increased from the prior quarter, leading to an increase in <unk> cost per Mcf as the <unk> purchase price is based on and tied to the price of oil.

Speaker 2: The $1.1 million increase in other LOE was primarily a result of increased production in ad val taxes, ad valorem taxes, due to higher commodity prices.

The $1 1 million increase in other low was primarily a result of increased production and AD Val taxes AD valorem taxes due to higher commodity prices.

<unk> to estimates in the Barnett shale electrical cost at Hamilton dome, following injection, well activation and costs associated with the repairs at the NGL plant and Delhi.

Speaker 2: Changes to estimates in the Barnett Shell, electrical costs at Hamilton Dome following injection well activation and costs associated with repairs at the plant in Delphi.

Total <unk> for the second quarter was $23 <unk> per Boe compared with $16 five per Boe in the prior quarter. However, excluding the impact of the Barnett shale adjustments <unk> would have been $21 20 per Boe.

Speaker 2: Total LOE for the second quarter was $23.40 per BOE compared with $16.05 per BOE in the prior quarter. However, excluding the impacts of the Barnett Shell adjustments, LOE would have been $21.22 per BOE.

General and administrative expenses were $1 8 million for the second quarter compared to one nine for the prior quarter.

Speaker 2: General and administrative expenses were $1.8 million for the second quarter compared to $1.9 million for the prior quarter. This decrease was primarily due to lower salaries and benefits costs, which were partially offset by an approximate $100,000 increase in non-cash stock-based compensation.

This decrease was primarily due to lower salaries and benefits costs, which were partially offset by an approximate $100000 increase in noncash stock based compensation.

Speaker 2: Net income for the second quarter grew to $6.8 million, or $0.20 per share, from $5.2 million, or $0.16 per share in the previous quarter. However, when adjusting for the previously mentioned Barnett Shale changes in estimates, net income would have been $7.3 million, or $0.22 per share.

Net income for the second quarter grew to $6 8 million or <unk> 20 per share from $5 2 million or <unk> 16 per share in the previous quarter. However, when adjusting for the previously mentioned Barnett shale changes in estimates net income would have been $7 3 million or <unk> 22 per share.

For the three months ended December 31, 2021, we invested 300000, Capex, which were primarily associated with Delhi field capital maintenance activities and we currently expect that operators at Delhi, and Hamilton Dome will continue conformance workover projects and likely incur additional maintenance capital expenditures as oil prices remained strong.

Speaker 2: For the 3 months ended December 31st, 2021, we invested 300,000 in CapEx, which were primarily associated with Del High Field capital maintenance activities. And we currently expect that operators at Del High and Hamilton Dome will continue conformance workover projects and likely incur additional maintenance capital expenditures as oil prices remain strong.

As Jason discussed at the Barnett shale, we expect to see diversified continue to do Workover Workover rig work during calendar year 2022 based on discussions with the operators at Delhi Hamilton dominant Barnett. We currently expect total capex for the remainder of fiscal year 'twenty, two a $500 to $1 5 million.

Speaker 2: As Jason discussed at the Barnett show, we expect to see diversify continue to do work over work over rig work during calendar year 2022. Now, based on discussions with the operators that Del high Hamilton, dumb and Barnett. We currently expect total capex for the remainder of fiscal year, 22 of 500,000 to 1.5M. Additionally. For discussions with the operator of a recently acquired Wilson base and assets, we expect additional capital expenditures of 500,000 to a 1M during the remainder of our fiscal 2020.

<unk> for discussions with the operator of our recently acquired Williston Basin assets, we expect additional capital expenditures of 500000 to $1 million during the remainder of our fiscal 2022.

Speaker 2: So with that, I will now turn the call back over to Jason for his closing remarks and a discussion of our recent acquisitions.

So with that I will now turn the call back over to Jason for his closing remarks, and a discussion of our recent acquisitions.

Thanks, Brian .

As we've discussed consistently in the past maintaining and ultimately growing our common stock dividend remains our top priority.

Speaker 3: As we've discussed consistently in the past, maintaining and ultimately growing our common stock dividend remains our top priority, and as such, we continue to look for creative acquisition opportunities.

As such we continue to look for accretive acquisition opportunities.

That meet our requirements of long life established production with disciplined growth opportunities.

Speaker 3: that meet our requirements of long life established production with discipline growth opportunities, both of which support the value creation for our shareholders. Over the last three weeks we've been able to...

Both of which support the value creation for our shareholders.

Over the last three weeks, we've announced two significant transactions to.

Speaker 3: to acquire additional non-operated oil and gas assets located in two prolific producing basins.

To acquire additional non operated oil and gas assets located into <unk>.

Prolific producing basins in the United States.

This includes last month's announcement announcement that we closed on the acquisition of oil weighted assets in the Williston basin of North Dakota.

Speaker 3: This concludes last month's announcement, an announcement that we closed on the acquisition of oil weighted assets in the Wilson Basin of North Dakota.

Speaker 3: In this week's announcement that we've entered into a definitive agreement requiring natural gas assets in the Jonah Field located in the Siblet County of Wyoming.

And this week's announcement that we've entered into a definitive agreement to acquire natural gas assets in the Jonah field located in Cibola County of Wyoming.

If you are able to view the presentation on our website, we encourage you to reference it while it makes the remarks.

Speaker 3: If you are able to view the presentation on our website, we encourage you to reference it while it makes some remarks.

If youre unable to review the presentation at this time, we invite you to review it later and reach out with any questions that you might have.

Speaker 3: If you're unable to review the presentation at this time, we invite you to review it later and reach out with any questions that you might have................

In short since late calendar of 2019, we've seen great success in our efforts to increase immediate and long term cash generation.

Speaker 3: In short, since late calendar of 2019, we've seen great success in our efforts to increase immediate and long-term cash generation for the benefit of our shareholders through strategic expansion of our geographic footprint of assets and production mix.

For the benefit of our shareholders through strategic expansion.

The geographic footprint of assets and production mix.

Directly as a result of the hard work of our dedicated employee team.

Speaker 3: Directly as a result of the hard work of our dedicated employee team, I'm happy to report that over the last two years, we've increased both net daily production and PDP reserves by approximately 400%.

Happy to report that over the last two years, we've increased both net daily production and PDP reserves.

Normally 400%.

Equally important we have accomplish this without the growth this growth and the value creation without materially.

Speaker 3: Equally important, we've accomplished this without the growth, this growth in the value creation, without materially diluting shareholders or any owner's debt or materially increase to GNA.

Diluting shareholders or any onerous debt.

Or.

Material increase to G&A.

Speaker 3: So let's look at the slide deck now, going through a few slides of the acquisition. Slide two shows some.

So let's look at the slide deck now going through a few slides of the acquisition on.

Slide two shows some.

Disclaimers there that these are forward looking statements it's.

Speaker 3: disclaimers there that these are forward looking statements. It's important to note that.

Important to note that.

Speaker 3: On slide three, this will look pretty familiar to you because it's part of our IR deck. It's important to us.

On slide three this will look pretty familiar to you because it's part of our IR deck.

It's important to us.

That we do what we say we're going to do what we've been communicated we're going to do and be consistent.

Speaker 3: that we do what we say we're going to do, what we've been communicating that we're going to do.

Speaker 3: We look at these assets and they're both long lived and dominated by PDP value. That's what we feel like we bought them on.

We look at these assets.

They are both long life.

Long lived and dominated by PDP value.

What we felt like we bought them on.

Wilson has upside.

Speaker 3: Wilson has upside and so does Jonah, but the main point of what we focused on was the PDP-heavy. They're accretive immediately to cash flow. They support the dividend and kick off cash flow immediately. There's low ongoing capital requirements or investments.

But and so it was John it, but but the main point of what we focused on was the was the PDP heavy they are accretive immediately to cash flow they support the dividend and kick off cash flow immediately there's low oncoming ongoing capital requirements or investment there.

Speaker 3: They're located in well-established basins with a stable regulatory environment.

They are located in well established basins with stable regulatory environments and takeaway capacity and their high margin now one thing that does look different I will say this.

Speaker 3: and take away capacity and their high margin. Now one thing that does look different, I will say this.

Speaker 3: I've said many times that we probably wouldn't be pursuing gas.

<unk> said, many times that we probably wouldn't be pursuing gas.

Speaker 3: It wasn't pretty close to the coast down here in Texas.

Pretty close to the coast down here in Texas, either on the <unk> pipeline coming down to Houston ship channel or in the Carthage pipeline on East, Texas coming down to Sabine pass thinking that Thats, where the prime markets are but this is really good lesson was a good lesson for our team.

Speaker 3: either on the KD pipeline coming down to Houston Ship Channel or on the Carthage pipeline on East Texas coming down to Sabine Pass thinking that that's where the prime mark

Speaker 3: But this is a really good lesson. It was a good lesson for our team that our opinions aren't good enough, including mine. And we've got to be driven by the data. And I was happy to tell my team that I was wrong here. We found a portion of coming out of Opal going west.

Our opinions.

Aren't good enough, including mine and we've got to be driven by the data and I was happy to tell my team and I was wrong here, we found a portion of coming out of <unk> going west where theyre getting pretty good prices and we like that we think there is premium access to markets up there.

Speaker 3: where they're getting pretty good prices and we like that. We think there's premium access to markets up there.

<unk>.

And so we're happy to.

Speaker 3: be willing to change if the data suggests that, so I think that's an important culture that we're building.

Youre willing to change if the data suggests that so I think thats important culture that we're building slide four.

I think this kind of shows what we've been working on it shows that we're starting to see results of our efforts.

Speaker 3: I think this kind of shows what we've been working on. It shows that we're starting to see results of our efforts.

Speaker 3: Moving, diversifying a little bit away from Delhi, it's going to be a great asset that contributes to our dividends for multiple decades, and we all love Delhi, but we've also added on and added some diversity. And I think that's going to be important for the health and the strength and the security of our business and our dividends.

Moving diversifying a little bit away from Delhi, it's going to be a great asset that contributes to our dividends for multiple decades, and we all love Delhi, but we've also added on and added some diversity.

And I think thats going to be important for the health and the strength and the security of our business and our dividend.

Speaker 3: So it's important to note on this that this is a 6 to 1 ratio in terms of BOE. So the oil, the gas assets show a little better on production and BOE wise. The oil assets that we purchased are still very valuable. It's important to note on the foundation that the 596 in production, we like that and we feel like we got a good buy on that, but we also have a tremendous amount of upside that really has us excited about that.

So it's important to note on this this is a six to one ratio in terms of BOE. So the oil.

Yes.

<unk> show, a little better on production.

The oil assets that we purchased are.

Still very valuable.

It's important to note on the foundation that the <unk>.

<unk> hundred 96 in production, we like that and we feel like we've got a good buy on that but we also have a tremendous amount of upside that really as excited about that.

Speaker 3: Slide five, I think, shows what we're trying to do here. If we kind of start at the upper left, production. It shows us to be fairly gassy right now, but we've got a nice commodity mix. We've got exposure to all three commodities. But if you move.

Slide five.

I think shows what we're trying to do here.

If we kind of started the upper left production it shows us to be fairly gassy right now, but we've got a nice commodity mix will get exposure to all three commodities.

But if you move from production to reserves because we've got now some upside in locations that are more oily, we start to look really balanced and a 40% oil 38% gas, 21% Ngls. That's the kind of company that we want to put together, we feel like Theres resilience, there and commodity mix.

Speaker 3: Because we've got now some upside locations that are more oily, we start to look really balanced in the 40% oil, 38% gas, 21% NGO. That's the kind of company that we want to put together. We feel like there's resilience there in commodity mix, diversity.

Diversity.

And risk cats, continuing over to the upper right looking at rest CAD.

Speaker 3: In ResCats, continuing over to the upper right, looking at ResCats, previously we've been kind of high 90% of PDP. We're now starting to get into some PUD, which is some opportunity in ResCats differentiation. And that leads to the lower right....

Previously, we've been kind of a high 90% of PDP, we're now starting to get into some part which has some opportunity and risk cat differentiation.

And that leads to the lower right.

Speaker 3: where you've got showing some geographic diversity, which gives us some strengths, different parts of the country experiencing freezes or hurricanes or different things. We're not all tied to one place or our concentration for our cash flows aren't in one place. So,

<unk> got showing some geographic diversity, which gives us some strength different parts of the country experiencing freezes or hurricanes or different things, where not all tied to one place or our concentration for our cash flows.

In one place so.

With that you get a little bit of operator diversity, we learned within Berry, who is doing very well right now, but a couple of years ago. They went through some financial situations, where they couldnt spins the amount of money that we would have liked them to on our asset and this gives us a little bit of diversity and security away from a concentration on a single operator.

Speaker 3: With that, you get a little bit of operator diversity. We learned with Denberry, who's doing very well right now, that a couple years ago they went through some financial situations where they couldn't spend the amount of money that we would have liked them to on our asset. And this gives us a little bit of diversity and security away from a concentration on a single operator.

<unk>.

Speaker 3: So, let's take just a little bit deeper dive on slide six into what we feel like is a tremendous amount of value kind of nestled in this Williston basin acquisition. Now, we're not interested in becoming a big driller. We're not going to run up a bunch of capex spending. This for us was about optionality and again, we feel like we bought this on a PDP type valuation and got a good purchase, but we really like having these options.

So, let's take just a little bit deeper dive on slide six into what we feel like is a tremendous amount of value kind of nestled in the Williston Basin acquisition now.

Now, we're not interested in becoming a big drill or we're not going to run up a bunch of capex spending. This for US was about Optionality and again, we feel like we bought this on a PDP <unk> valuation and got a good purchase, but we really like having these options.

And the options are these wells that are held by production that are out there now there's 400 locations.

Speaker 3: And the options are these wells that are held by production that are out there. Now, I think there's 400 locations. We will dovetail this into our reserves at the end of the year, our fiscal year in the summer in our reserves process. So our company engineered reserves right now. We think probably there's about 150 of these locations that would pass the qualifications of being an SEC PUD approved reserves. That means they're kind of one space off of a drill producing a well.

We will dovetail this into our reserves at the end of the year our fiscal year.

In the summer and our reserves process, but so our company engineered reserves right now we think probably theres about 150 of these locations.

Past the qualifications of being an SEC pud proved reserves that means theyre kind of one space off of drilled a producing well.

Speaker 3: But we don't really need that. But I think there's 40 something locations built. And so the ones that we're calling PUD right now that we're thinking about internally are 50 locations. Because to be a PUD, you've got to be able to drill it. They've got a five-year rule by the SEC.

But we don't really need that I think there is 40 something locations built and so we kind of the ones that we're calling pud right now that we are thinking about internally.

50 locations because.

To be a part of that you've got to be able to drill it they've got a five year rule by the SEC.

Putting out a small program like there of.

Speaker 3: putting out a small program like there of a couple five-well pads a year, ten wells a year over a five-year period, that's 50 wells. So anything above that we kind of call probable or possible. So even though if you look at the reservoir calculation on, with the reserves calculation on the upper left-hand side, that's a donut.

Couple five well pads, a year 10 wells a year over five year period, Thats 50 wells, so anything above that we kind of called probable or possible. So even though if you look at the reservoir calculation.

With the reserves calculation in the upper left hand side of that.

<unk> four.

Speaker 3: 4% of PDP, 15% represents that 50, and there's quite a bit more there. So that collectively is about nine million barrels. We think the potential out here is around 50 million barrels. So there's a lot of upside here and we, we're not doing that to go and.

4% of PDP, 15% represents 50, and there's quite a bit more there. So that collectively is about 9 million barrels. We think the potential out here is around 50 million barrels. So there's a lot of upside here and we.

But we're not doing that to go.

And try to become a drilling company like I said, we're doing this.

The types of assets that we buy our PDP heavy long life flat.

Speaker 3: The types of assets that we buy are PDP-heavy, long-life, flat. Sometimes those are fairly expensive. In the acquisition process, you'd like to have an alternative when the bid-ask gets a little too far apart to be able to put some capital to work, or in a situation where operators might be underperforming. So we just feel like this provides some strength and security for our shareholders.

Those are fairly expensive in the acquisition process you'd like to have an alternative when the bid ask it's a little too far apart to be able to put some capital work or in a situation where operators might be underperforming. So we just feel like this provides some strength and security for our shareholders.

Speaker 3: You know, in 2027, 2030, these wells out there are going to go away. This is optionality and inventory for us many years down the road. Slide 7 shows the footprint. I think there's a couple key takeaways here. One is the relationship with foundation.

In 2027 to 2030 these wells out there aren't going to go away. This is optionality and inventory for us many years down the road slide seven shows the footprint I think theres a couple of key takeaways here. One is the relationship with foundation, where non op and we like being non op, but we like this relationship with them. They are good at.

Speaker 3: We're not off and we like being not off, but we like this relationship with them. They're good operators. They've been operating up there in North Dakota. And so it's a chance for us to be a little bit closer, have more influence, have more collaboration working with them on developing this.

<unk> been operating up there in North Dakota, and so it's a chance for us to be a little bit closer have more influence have more collaboration.

Working with them on developing this now we do have the ability if they're focused on other areas and we want to drill a well we do have the ability to go out there and drilling.

Speaker 3: Now we do have the ability, if they're focused on other areas and we want to drill a well, we do have the ability to go out there and drill one.

Speaker 3: They'll drill it for us, or we can contract people to drill it, but we can...

As youll drilled for us where we can.

Tract people to drill it but we can.

Proposed wells and that gives us a decent.

Speaker 3: And that gives us a decent optionality, like I said. Another thing to note over on the map, most of the acreage has been delineated. So we're looking at more infill wells rather than step-out wells, which is the nature of evolution. That's what it feels like.

Decent optionality like I said another thing to note over on the map.

Most of the acreage has been delineated. So we're looking at more infill wells rather than step out wells, which is which is the nature of evolution.

It feels like our company.

Speaker 3: This is an 84% lease net revenue interest, so it's a pretty high net. And again, the PDP was pretty attractive with an R over P of over 10 years.

This is an 84% leased net revenue interest so that's a pretty high net and again, the Pvp was pretty attractive with an R. Over P of over 10 years.

I think I'll skip slide eight just a few more expansive comments of what I've just made a couple of comments about the Jonah field on slide nine.

Speaker 3: I think I'll skip slide eight, as it's just a few more expansive comments of what I just made. A couple comments about the Jonah field on slide nine.

Speaker 3: One, you can see in the upper right-hand corner, it's about 100 miles from our Hamilton Dome. We know this area, and we're happy with Wyoming and the environment up there to operate in.

One you can see in the upper right hand corner, it's about 100 miles from our Hamilton Dome. We know this area and we are happy with Wyoming.

Environment up there to operate in.

Speaker 3: But this deal is just classic evolution. This is right in the middle of our fairways. PDP, long line, stable regulatory, good markets, and a good operator in Jonah operating. So we expect to close this on April . And this is all 100% held by production. We don't anticipate any drilling here. Might be some minor workovers and stuff. But again, a decent R over P of 8.1.

This deal is just classic evolution. This is right in the middle of our fairway as PDP long line stable regulatory good markets and a good operator and Jonah operating so we expect to close this on April .

This is all 100%.

By production, we don't anticipate any drilling here might be some minor workovers and stuff, but again, a decent RVP of $8 one.

Speaker 3: The thing we really like about this was on slide 10, and this is where I kind of admitted to it.

The thing we really like about this was on slide 10, and this is where I kind of admitted to.

That my opinion was wrong, although it was rooted in some logic because on gas you've really got to watch midstream and marketing it can be.

Speaker 3: That my opinion was wrong, although it was rooted in some logic, because on gas, you've really got to watch midstream and marketing. It can be a killer in terms of cost.

Killer in terms of cost.

But if you look at this map on slide 10, Youll see that Oh POW here has some ability to go west and <unk> been receiving north of Henry hub premium to Henry hub. So just as a point of reference our Barnett is about 35 36 under Henry hub and they have been getting over Henry hub up there. So.

Speaker 3: But if you look at this map on slide 10, you'll see that the OPAL here has some ability to go West. And they've been receiving north of Henry hub, a premium to Henry hub. So, just as a point of reference. Our Barnett is about 35 cents 36 cents under Henry hub. And they've been getting over Henry hub up there. So, we're really excited about that.

We're really excited about that.

Speaker 3: going to future. So I really think that the Jonah Field is going to be a great, it feels like evolution is going to be a great thing.

Going to future so.

I really think that the Jonah field is going to be a great.

Like evolution that can be a great field.

<unk> for us so finally on slide 11.

Speaker 3: So finally on slide 11, I'd just like to point out a couple things. One, we had a 5% yield at $0.30. We released this before we had raised the dividend. So right now I think the stock's trading a little over $6, so it's kind of moving up to $0.40 a year, $0.10 a quarter, somewhere around 6%.

I'd like to point out a couple of things one we had a 5% yield at 30.

We released this before we have raised the dividend so right now I think the stock's trading a little over $6. So that's kind of.

Moving up to <unk> 40, a year 10, since the quarter somewhere around 6%.

<unk>.

I think if you look at the bottom there you've seen quite a bit of activity.

Speaker 3: I think if you look at the bottom there, you've seen quite a bit of activity. We've moved into a revolver a little bit, as Ryan said. I don't think you'll see a...

We've moved into a revolver a little bit as Ryan said, I don't think Youll see us.

Speaker 3: continue that, I think you're going to see us digest a little bit, integrate these assets, and start paying down the debt. We feel like these two assets were strategic, we felt like they built a lot of security for our dividend, and it was a big milestone. We feel like we've turned a corner on a couple of hard years for the industry, and now we're looking forward back to ten cents a quarter, and we're excited about the future.

Continue that I think you're going to see us digest, a little bit <unk>.

Great These assets.

And start paying down the debt we feel like these two assets where strategically we feel like they built a lot of security for our dividend and it was a big it was a big milestone we feel like we've turned the corner on a couple of hard years for the industry and now we're.

We're looking forward back to 10 since quarter end.

No.

We're excited about the future.

Yeah.

Couple of final comments before we turn it over to question.

Speaker 3: Couple final comments before we turn it over to question.

<unk>.

Speaker 3: So I want to thank all of our employees for their hard work over the past few years as we transformed evolution in a much stronger company with a significant footprint in diversified assets, multiple prolific producing key base.

So I want to thank all of our employees for their hard work over the past few years as we transformed evolution in a much stronger company with a significant footprint and diversified assets multiple prolific producing key basins.

Speaker 3: It's important I, along with the full support of the board, want to support or want to thank our shareholders for the continued support of our strategic long-term efforts. With that, I think we're ready to take some questions. So operator, if you'll...

It's important I along with the full support of the board when support or want to thank our shareholders for their continued support of our strategic long term efforts with that I think we're ready to take some questions.

So operator, if you'll open up the lines.

Speaker 1: Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing a question, please pick up your handset, if you're listening on speakerphone, to provide optimum sound quality.

Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that while posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Speaker 1: Once again, if you have any questions or comments, please press star 1 on your phone. Please hold while we poll for questions.

Once again, if you have any questions or comments. Please press star one on your phone.

Please hold while we poll for questions.

Your first question is coming from John Bair from ascend wealth Advisors. Your line is live.

Speaker 1: Your first question is coming from John Bear from Ascend Wealth Advisors. Your line is live. Good afternoon Jason and Ryan.

And good afternoon, Jason and Brian .

Hey, John John .

Thanks, again on behalf of myself and our clients for raising that dividend.

Speaker 4: Thanks again on behalf of myself and clients for raising that dividend.

Speaker 4: bit off quite a bit here. So I've got a few questions.

They don't have quite a bit here, so I've got a few questions.

What is the current rate on the credit facility the interest rate.

Speaker 4: What is the current rate on the credit facility, the interest rate?

Yes, so we're at.

Speaker 2: We're at 3 percent, so it's LIBOR plus 275 with the 25 basis point floor, so 3 percent even for the interest rate, which is pretty good in this market.

We're at 3% so its LIBOR plus 275 with the 25 basis point floor, so 3% even for the interest rate, which is pretty good.

Okay and.

Looking at the.

Speaker 4: looking at them uh... map on this uh... any looking to expand that credit facility now with uh... with the most recent acquisition announcement because doing the

The math on this.

Looking to expand that credit facility now with the with the most recent acquisition announcement because.

Doing the back of the envelope it looks like with those.

Large acquisition that you've got.

Speaker 4: large acquisition that you've got uh... adding that on

Adding add on.

Wood.

Speaker 4: take up that additional streaming network.

Take up that additional $20 million am I am I missing something here.

Speaker 2: Well, so yeah, a couple of points. One is we actually had approval from the first for up to 50 million. You know, that's kind of their, their maximum level. And so that's likely what we'll go back to, quite frankly, beyond 50 million, you know, it's an active debate kind of talking about the board level, you know, we don't

Well so a.

Couple of points. One is we actually had approval from mid first for up to $50 million.

That's kind of their Max hold level. So that's likely what will go back to quite frankly.

And $50 million, it's an active debate kind of talking about the board level. We don't we don't really feel like we need a lot of additional liquidity and we think as much cash flow. As these assets are going to be generating were going to be able to pay it down very quickly.

Speaker 2: You know, we don't really feel like we need a lot of additional liquidity and we think as much cash flow as these assets are going to be generating. We're going to be able to pay it down very quickly. So we're certainly thinking about it. I think going up to 50 million, which is comfortable from mint first and clearly comfortable for what our assets can support, we feel like it would give us plenty of liquidity given how much cash, free cash flow we expect to have.

We're certainly thinking about it but I think going up to $50 million, which is comfortable for mid first and clearly comfortable for what our assets can support we feel like it would give us plenty of liquidity given how much cash free cash flow, we expect to have.

Okay.

Speaker 4: And then looking at the two, the Jonah and the Williston acquisitions, it appears in my alone home in perpetuate Jason Jordan.

And then looking at the two the Jonah and the Williston acquisitions. It it appears and Jason I think kind of underscored this but it appears that there's probably going to be more activity going forward.

Speaker 4: but it appears that there's probably going to be more activity going forward uh... him in the wilson asset as opposed to jonah at this

In the Williston asset as opposed to Jonah at this point.

Thats a fair statement, yes, I definitely think Thats fair John is going to be limited to.

Speaker 3: Is that a fair statement? Yeah, no, I definitely think that's fair. Jonah's going to be limited to...

Speaker 3: some workovers and things like that, more operational optimization.

Some workovers and things like that more operational optimization.

Speaker 3: But I don't anticipate any drilling up there, it's fairly developed.

But I don't anticipate any drilling up there it's fairly developed.

Speaker 3: They're different assets that way.

They are different assets that way.

One another.

Yes.

Speaker 4: And also, I just wanted, I was looking at the slide deck on your slide six.

Also I just wanted I was looking at the slide deck on your slide six.

Speaker 4: uh... under the probable possible the third bullet point

Under the probable possible.

Third bullet point.

Speaker 4: Says, as proved undeveloped wells are drilled and put on production, these locations would be reclassified to proved undeveloped. Is that a typo?

Says as proved undeveloped wells are drilled and put on production. These locations would it be reclassified to proved undeveloped.

Typo.

Missing something on that.

Speaker 3: No, it's just the nature of what's classified as PUDs. Like I said, about 150. I mean, if you're bringing them online, wouldn't they be producing well?

No. It's just the nature of.

With classified as Puds.

Like I said about 150 million at 100 came online when they would be producing wells.

So it would be prudent.

Speaker 3: to be proved developed? So, well, OK. So let's say that there's a PDP well currently producing well, and then offset to that currently producing well. A location or two away they will classify as PUD currently.

Well.

Okay. So, let's say that Theres, a PDP well currently producing well and then offset to that currently producing well.

A location or two away they will classify as pud currently.

Speaker 3: But the locations that are three or four locations away or are not classified as proved, they're classified as probable.

But the locations that are three or four locations away were not classified as proved they are classified as probable but as you drill a couple of these wells than those other ones that are probable right now will become proved because they're closer to produce producing wells if that makes sense. So right now.

Speaker 3: But as you drill a couple of these wells, then those other ones that are probable right now will become proved because they're closer to producing wells, if that makes sense. So right now, 150 of the...

150 of the 400.

Speaker 3: are within one or two locations of producing wells, which means they would be classified.

Or within one or two locations of producing wells, which means they would be classified as <unk>.

Speaker 3: as a as a pud right now, but as you continue to drill more of those other remaining 250 wells or whatever will will become proved as you does that make sense?

As a pud right now, but as you continue to drill more of those other remaining 250 wells or whatever it will become proved as does that make sense John .

Speaker 4: uh... i think so uh... a

I think so.

Alright.

I guess, if you're if their wells that are online and producing then I guess.

Speaker 4: I guess if there are wells that are online and producing, then I guess.

Speaker 3: Those would definitely be PDPs. I'm saying that a lot of these probables are possible if as things get drilled closer to them they'll go from probable to putt.

Now those will definitely be PDP.

That makes a lot of these probable or possible.

If things get drilled closer to them they'll go from probable to Puds.

Speaker 2: I think if you read the bullet, John , it's just instead of the word these, just think about that should be probable and possible is what it's referring to, right? So probable and possible locations would be these columns. So is there a typo there? Am I...

Okay.

Thank you read the book John .

Instead of the word these just think about that should that should be probable impossible is what it's referring to rights of probable and possible locations would be next so so is there a typo there.

Yes.

No.

Speaker 3: Well, it's referring to the whole category of probable and possible locations. Okay. Okay. All right. We can talk about that offline. Last quick question.

It's referring to the whole the whole category of probable impossible. Okay. Okay. Okay.

Not that offline last quick question.

And that is.

Speaker 4: and that is CO2.

C O two.

Are you are they is the operator, Denver, you're continuing to ramp up <unk>.

Speaker 4: Are you, is the operator, Denver, are they continuing to ramp up CO2 injection and so forth or is that kind of stabilized at this point and kind of how long do you think it might be or is there any guidance or thoughts on?

<unk>.

Injection and so forth or is that kind of stabilized at this point and kind of how long do you think it might be or is there any guidance or thoughts on.

How long it might take to get that production back up.

Speaker 4: how long it might take to get that production back up to the levels it was at before the CO2.

To the to the levels it was that before the C O two.

Yeah.

Injecting cotwo.

Well.

Speaker 4: Well, no, they capture back that extra 10,000.

Capture back that extra 10000.

I think that in.

Speaker 3: I think that in December they were able to ramp up to 100 million. I think they're about 105 right now. I think they want to hold it there for quite a while. Denbury and our discussions with Denbury and then also B&M, our reserve auditors, they're kind of seeing that as sort of a 24 month, 18 to 24 month.

December they were able to ramp up to a $100 million I think there are about 105 right now.

I think they want to hold it there for for quite a while.

Didn't berry under discussions with <unk> and then also Dnm our reserve auditors.

They are kind of seeing that is sort of a 24 months 18 to 24 months.

Ford starting to rise up to previous projections I don't know that we will get back to.

Speaker 3: Ford's starting to rise up to previous projections. I don't know that we will get back to

Before it went down it was 56 100 barrels a day, we're right around 4000 right now.

Speaker 3: See, before it went down, it was 5,600 barrels a day. We're right around 4,000 right now.

Speaker 3: So I'm not sure that we don't expect it to get back to 5,600 in 24 months. We do expect to see the decline arrested and we've already started seeing that. And then we start we would hope to see kind of an increase. You got to realize we're also pulling out oil every day. So we're we're fighting the national decline on top of that. So even arresting the current decline is making progress towards where it would have been. But but John , I think the best.

I'm not sure.

We don't expect it to get back to 50 624 months.

We do expect to see the decline arrested and we've already started seeing that and then we start we would hope to see kind of an increase you got to realize we're also pulling out oil every day. So we're fighting the natural decline on top of that so even arresting the current decline is making progress towards where it would've been.

But John I think the best.

Speaker 3: The best way for me to answer that is probably not going to get back to 5600 barrels a day. That's 8.8 for just the oil, by the way. And...

The best way for me to answer that is probably not going to get back 5600 barrels a day.

<unk> for the just the oil by the way.

Referencing.

And.

And we would expect it to take at least 18 to 24 months before.

Speaker 3: And we would expect it to take at least 18 to 24 months before it gets back to where we thought it would have been at that point.

It gets back to where we thought it would have been at that point.

Okay.

Speaker 4: Good. I'll get off now and let somebody else on. Thanks. Thanks, sir. Thanks for the question. I'll follow up with you. Yep. Thanks. Yep. Sure.

Good.

I'll get off now and let somebody else Sean. Thanks. Thanks, Sir Thanks for the question a follow up with you yes sure.

Thank you. Your next question is coming from Lee <unk> from <unk> Partners. Your line is live.

Speaker 1: Thank you. Your next question is coming from Lay Curry from Curry Partners. Your line is live.

Good morning, Jason and the guys there enjoyed good morning Lee.

Speaker 4: Good morning, Jason and the guys there. Enjoyed reading the results.

<unk>.

Tell me a little bit about <unk>.

Speaker 5: Tell me a little bit about, explain a little bit more on the optionality in the Williston, which is an attractive aspect of it to me. What has been the operator? What has been foundation?

Explain a little bit more on the <unk>.

<unk> in the Williston, which is an attractive aspect of it to me.

What has been.

The operator has been foundations.

Speaker 5: you know, level of exploration, de-risking here. What do you expect of them in the future?

<unk> of exploration de risking here.

What do you expect to see them in the future.

Yeah.

How how do you have complete choice on going along or not going along with every well they drill until a little bit more about what's going on there.

Speaker 5: How do you have complete choice on going along or not going along with every well they drill? Tell a little bit more about what's going on there. Very good question.

Very very good questions.

Speaker 3: Lee, I appreciate that because we're excited about what the inventory and the reserves does in terms of just security for the company, but didn't want to like...

I appreciate that because.

We're excited about what the inventory and the reserves does in terms of just the security for the company, but didn't want to like.

Imply like I said earlier that we're going to become some big driller Outrunning capex.

Speaker 3: imply like I said earlier that we're going to become some big driller and outrunning CapEx. This is more about security. In terms of optionality we have

This is more about security in terms of Optionality, we have.

Either one of us can propose wells foundation or us.

Speaker 3: Either one of us can propose wells, foundation or us. If we're in a position where we don't want to drill it, then they can take over our interest and drill our capacity. If they're in a position where they don't want to drill it, we can take up to 100% of a well. If we do that, then the interest owners that don't participate in any particular well don't lose out on any other wells, and they will be out of that particular well or for a 300% penalty.

If we're in a position where we don't want to drill. It then they can take over our interest and drill our capacity if theyre in a position where they don't want to drill it.

We can take.

Up to a 100% of a well if.

If we do that.

The interest owners that don't participate in any particular well.

Don't lose out on any other wells.

And they will be out of that particular wellbore for a 300% penalty.

Speaker 3: And right now on the type curve that comes in about 19 to 20 years. So effectively it means they're out of that well. So we feel like we got a bunch of welds out there that we can go drill if we want to regardless of their

And right now in the type curve that comes in about 19% to 20 years so effectively.

Means they are out of that well. So we feel like we've got a bunch of wells out there that we can go drill if we want to regardless of their.

Desire.

Speaker 3: desire 100% if we'd like to, but at the same time, we can't get drilled under the ground. We can just say no and we don't lose any other opportunities other than that wellbore. So it's really a wonderful situation and most of them, 85% of it being held by production. Again, I'm thinking in 2028 or 2030, I'm gonna have things to do regardless.

3rd%, if we'd like to but at the same time we.

Can't get drilled into the ground, we can just say no and we don't lose any other opportunities other than that wellbore. So it's really a wonderful situation most of them, 85% of it being held by production again Im thinking in 2028 or 2030, I'm going to have things to do.

<unk>.

But.

Speaker 3: But the optionality for us really is...

The optionality for us really is.

Like I said twofold.

Speaker 3: I studied negotiations at Notre Dame and the first rule was the BATNA, your best alternative to the negotiated agreement. A lot of these PDP packages, the bid asks is just so rough sometimes.

Yes.

Steadied negotiated that Notre Dame and the first rule was the baton you're best alternative to the negotiated agreement a lot of these PDP packages. The bid ask is just so rough sometimes that.

Speaker 3: that we don't want to overpay for things. You can really do some damage to your balance sheet. And a lot of companies have done that. And Evolution's had a great reputation for being fiscally disciplined. This allows us an alternative to that negotiation to go out and put some money to work if we need to, which is great.

We don't want to overpay for things you can really do some damage to your balance sheet and a lot of companies have done that and evolution has had a great reputation for being fiscally disciplined.

It allows us to an alternative to that negotiation to go out and put some money to work.

If we need to which is great.

I Love this I love that element of Optionality as you described it there.

Speaker 5: I love this. I love that element of optionality as you described it there. It sort of allows you, if I'm understanding this correctly, it allows you...

Sort of allows you if I'm understanding this correctly it allows you to.

Speaker 5: to utilize the optionality and do some drilling on what could be a fabulous bunch of probable impossibles there, only if and when you want to, and without pissing off Foundation because you're not going along to every well they've produced. Is that a correct analysis? No, that's right, that's right. But they are the right kind of partner for us. They have LPs.

To utilize the ops optionality and do some drilling in what could be a fabulous bunch of.

Probable and possible is there.

Only if and when you want to.

And without and without Pissing, All foundation, because youre not going along to every well they produce is that a correct analysis.

That's right that's right I mean, but they are the right kind of partner for us they have Lps and they do their operations out of cash flow and they give distributions very much like us.

Speaker 3: and they do their operations out of cash flow and they give distributions. Very much like us, we do things out of cash flow and we give a dividend. So, we're the right kind of partner. You don't want a partner that's just going to outspend cash flow and get it around. So, anyway, but yeah, I think you're seeing all that right. We're super excited about it.

Things Adam.

Out of cash flow and we give a dividend so with the right kind of part you don't want a partner that is just going to outspend cash flow around so anyway, but yeah, I think youre seeing all that right. We are super excited about it.

Speaker 3: How large of a market cap or revenue, how big of a company is Foundation, say, compared to you all? They're private. I think they're in fund seven, it's about 100 million. They've been around for 15, 20 years, so they're working on fund eight. So they've got assets in a number of different places and they've consistently bought and sold and yeah. Okay. On Jones, so just answered at Whiskey, reps as-point...

How large of a market cap of revenue how big of a company is foundation say compared to you all.

Private I think they are in fund seven it's about $100 million they've been around for 15 years 20 years. So they are working on Sunday. So they have got assets in a number of different places.

Consistently.

Bought and sold.

Okay Joe.

Donna.

<unk>.

Did you buy out our partner is that what zoro is did you buy out into our existing partner.

Speaker 5: Did you buy out a partner? Is that what XRO is? Did you buy out an existing partner?

Speaker 3: That's right. That's right. Jonah. Jonah Energy operates and they own the majority of it. Xaro was a private equity backed company. They've been successful in South Texas in a number of ways. I think that they wanted to get into that field.

That's right that's right John .

Jonah energy operates and they own the majority of it.

ROE was a private equity backed company they have been successful in south Texas in a number of ways I think that they wanted to get into that field and maybe buy a bigger piece and become an operator and Jonah was pretty dominating up there.

Speaker 3: maybe buy a bigger piece and become an operator and Jonah was pretty dominating up there.

Speaker 3: They wanted to sell out. I think that they're unwinding the company completely. It's a really good position for them, but we feel like we cut a bird's nest on the ground there. And again, they were just not our partner. This is even better, because it was them selling and not Jonah selling.

They wanted to sell out I think that they're unwinding the company completely it's a really good position for them, but we feel like we kind of personnel on the ground there.

This is even.

Better because it was them selling and not Jo mill selling yeah, that's right that's right.

Speaker 3: Yeah, that's right. That's right. Oh, John is a pretty good operator. We've been impressed with all that we've seen from them.

Pretty good operator, we've been impressed with all that we've seen from them.

I'm surprised I just was ignorant Oh I didn't realize that there were places in the middle of the United States.

Speaker 5: I'm surprised, or I just was ignorant of, I didn't realize that there were places in the middle of the United States.

Speaker 5: that you were getting premium prices for gas versus the Gulf Coast.

That you were getting premium prices for gas versus Gulf coast.

Speaker 5: What's been the history of those price premiums? Did it just develop lately or what? Give me a little history on that. Well, I think there's a little bit of a crunch of a lack of infrastructure development headed towards California in the West. Right. There's not a lot of new... There's no new pipelines going out there. And it's the same thing that's happening up in Appalachia.

What's been the history of those price premiums I mean did you just develop lately or what would give me a little history on that well I think theres, a little bit of a crunch and the lack of infrastructure development headed towards California in the west.

Not a lot of new no new pipelines going out there and it's the same thing that is happening up in Appalachia and.

Speaker 3: Pennsylvania. So there's a big pipeline coming down out of the Permian going west, but it's completely full and you can't really get any capacity. Coming down from the north through Washington from Canada, that's pretty much bottlenecked and full as well. So you've got Opal here that's just sitting there with some capacity.

Sylvia so.

There's a big pipeline coming down out of the Permian going west, but it's completely full and you can't really get into capacity coming down from the north through Washington.

From Canada, that's pretty much a bottleneck in full as well so you've got <unk> here, that's just sitting there with some capacity and Zara actually and we will as well take our gas in kind and they've got five or six buyers that are sort of bidding on it so.

Speaker 3: And Exara actually, and we will as well take our gas in kind, and they've got.

Speaker 3: five or six buyers that are sort of bidding on it. So we put in there that they've been averaging around.

We put in there that <unk> been averaging around.

Speaker 3: four cents above Henry Hub, but it's actually averaged quite a bit higher than that. So we anticipate that's going to be strong for a little while. We're pretty excited about that.

Forced into above Henry hub.

Average quite a bit quite a bit higher than that so we anticipate that's going to be strong for a little while we're pretty excited about that.

Alright, well I just want to say.

Speaker 5: All right, well, I just want to say I want to congratulate you on being patient, and it looks like it's finally paid off for you, and I would say a job well done, Jason, and keep up the good work. Thank you, Lee. I sure appreciate that.

I want to congratulate you on being patient and it looks like it's finally paid off for you and I would say yes.

Job well done Jason and keep up the good work.

Thank you Lee I sure appreciate that thanks for your interest.

Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time, please hold while it poll for questions.

Speaker 1: Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star one on your phone at this time. Please hold while I pull for questions.

Your next question is coming from John Bair from ascend wealth Advisors. Your line is live.

Speaker 1: Your next question is coming from John Baer from Ascend Wealth Advisors. Your line is live.

Like the movie back anyway.

Speaker 4: Like the movie, I'm back. Anyway, kind of curious on a question on the Giddings royalties. What was the three-year lag on that? Was those properties tied up in something in the royalties escrow?

Kind of curious on the question on the Giddings.

Royalties what was what was the lag to three year lag on that was that was this property is tied up in something that.

And the royalties escrowed or.

Just just kind of curious on that.

Speaker 2: No, I mean, it's a great question. It was so these are assets that I believe were, I think originally owned prior to Chesapeake. Chesapeake was the operator and they're notoriously slow sometimes on these types of payments. And I think they took these over from wild horse. I think is where they originated from.

I mean, it's a great question.

So these are assets that I believe we are I think originally owned.

Probably prior to Chesapeake Chesapeake was the operator and their notoriously slow sometimes on these types of royalty payments and I think they took these over from Wild horse I think is where they originated from and there are two wells that were drilled back in 2018 that.

Speaker 2: And there are two wells that were drilled back in 2018 that sat in there, revving the suspense for a couple of years. And Chesapeake finally got around to clearing out suspense. You know, obviously we weren't aware at the time that they were on the land. It was land that we had sold years back and kept an override on.

Sat in their revenue suspense for a couple of years at Chesapeake finally got around to clear enough suspense and obviously one of them were at the time that they're on the way. It was lanes that we had sold years back and kept an override on and so.

Speaker 2: You know, we were now receiving consistent checks for them. Certainly not the amount that we got in that 1 time check for the 3 years, but it was just. Situation where their 2 wells drilled that, you know, they hadn't really done their land records well enough to know who all the.

We're now receiving consistent checks for them certainly not the amount that we got in that onetime check for the three years, but it was just a situation where there are two wells drilled that they hadn't really done their land records well enough to know who all the royalty owners were.

Yes.

Speaker 4: And are those, you say those are still, those two wells are still in production then, so you've got something coming in from that on the... Yeah, so there's some cash still coming from those. It's not huge, but... $10,000, $15,000 a month. We've got $10,000, $15,000 a month coming in from them.

And are those you say those are still those two wells are still in production. So that's yet to come in from that on the yes.

Yes, there are.

Some cash flow coming from that is just not it's not a huge plant and 15th 19000, a month coming in from them.

Yes.

Speaker 4: All right, and then a little clarification on the Wilson, too, I think in the comments you were saying that estimates are.

Alright, and then a clarification on the Wilson to I think in the comments you were saying that the estimates are.

Speaker 4: uh... capex of about a half a million to a million over through the through fiscal year twenty-two so the next basically through the end of June is that right

Capex of about a half a million to $1 million or through the through fiscal year 'twenty. Two so the next basically through the end of June is that right.

Yes, John there was a.

Speaker 3: Yeah, down there was a little bit of low-hanging fruit, a few workovers they've identified and some pine pipes. There's a little bit of conventional Red River production up there and Niskiu production, so these are vertical re-completes of four or five workovers in May I think that they're going to do. But any kind of real drilling in the Bakken or the Pronghorn is probably going to come in 2023.

Little bit of low hanging fruit few workovers, they've identified some behind pipes theres little bit of.

Conventional.

Red River production up there in new SKU production. So these are vertical re completes.

Five workovers in May I think that theyre going to do okay, but any any kind of real drilling in the Bakken.

Pronghorn is probably going to come in 2023.

Speaker 4: And I would imagine that that's something that you're in kind of having evaluated all this and closed on it, soon to close that.

And I would imagine that that's something that you are in kind of having evaluated all this and closed on it seemed to close that.

Kind of.

Speaker 4: Can we expect that CapEx might expand from what you heard?

We expect that Capex might expand from what you.

You are anticipating.

Or what you've put out in the press release and so forth.

Speaker 4: or what you put out in the press release and so forth. I guess some of that would probably depend upon.

I guess some of that would probably depend upon.

Price is staying up at kind of these levels, but as Mike.

Speaker 4: Price is staying up kind of these levels, but is

Am I thinking on the right direction here that maybe might be a little more active in.

Speaker 4: thinking in the right direction here that maybe you might be a little more active in.

Getting some wells down.

Well, we're going to put a lot of work in high grading locations and doing a lot of rock mechanic and Geo work over the next six months, but.

Speaker 3: Well, we're going to put a lot of work in high-grading locations and doing a lot of rock mechanic and geo work over the next six months.

I would say this right.

Right now, it's it's an interesting situation, where we're such a backward dated curve.

Speaker 3: Right now it's an interesting situation with such a backwardated curve. I think at some point the back end of the curve as I guess the general markets feel a little more comfortable being on solid footing.

I think it is.

At some point the back end of the curve is I guess, the general markets feel a little more comfortable being on solid footing that.

Speaker 3: that things aren't gonna go back down into a pandemic or generally demand's gonna be fairly consistent and growing, but back into that curve, I think we're anticipating is going to come up making everything a lot more expensive. So it really comes down to when we get the high graded locations of things that we would wanna go do.

Things aren't going to go back down into a pandemic or.

<unk> demand is going to be fairly consistent or growing the back end of that curve. I think we're anticipating is going to come up making everything a lot more expensive. So it really comes down to when we get the high graded locations are things that we would want to do.

Like Brian said, we're making a lot of cash flow, we got it and then decide what to do it right and our job is to reinvest the capital and not just have a bunch of savings in the bank, earning 5% interest reinvestment activities now is that an additional acquisition. If we find one that fits our profile its properly priced we'll put the money.

Speaker 3: Like Ryan said, we're making a lot of cash flow. We've got to then decide what to do with it. Ryan and I's job is.

Speaker 3: to reinvest the capital and not just have a bunch of savings in the bank, earning half percent interest, but reinvest in activities. Now, is that an additional acquisition? Well...

Speaker 3: If we find one that fits our profile, that's properly priced, we'll put the money there instead of going drilling. If the back end of the curve comes up and things become too expensive to buy...

There instead of going drilling if the back end of the curve comes up and things become too expensive to buy.

Then, we'll we'll drill.

Speaker 3: then we'll drill, because if they're too expensive to buy, that means prices are high. Anyway, so it really is that optionality. I think that it wouldn't be necessarily a function of just CapEx going up, but more of a choice of the reinvestment. Do we make more acquisitions or do we put money into some wells? So, but yeah, I think we would anticipate.

Expensive to buy that means prices are high in anyway. So.

It really is that optionality.

I think that it wouldn't be necessarily a function of just capex going up but more of a choice of the reinvestment do we make more acquisitions and where we put money in.

And to some wells, so, but yes, I think we would anticipate we'd like to locations, where I think we would have a lot of variability.

Speaker 4: We like the locations and we think we would anticipate. A lot of variability. Yes. In the previous caller, you said a lot of optionality.

Yes.

These color and as he said a lot of Optionality.

Exciting.

Speaker 4: Okay, thanks very much. I'll follow up. Thanks, John . Appreciate it, John . Okay, thank you.

Okay. Thanks, very much I'll follow up thanks, John I appreciate it John .

<unk>.

Yeah.

Thank you and once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time, please hold while we poll for questions.

Speaker 1: Thank you. And once again, ladies and gentlemen, if you have any questions or comments, please press star one on your phone at this time. Please hold while I poll for questions.

Speaker 1: Thank you. There are no further questions in the queue. I will now hand the conference back to our host for closing remarks. Please go ahead.

Thank you there are no further questions in the queue I will now hand, the conference back to our host for closing remarks. Please go ahead.

Well, we appreciate your time today and look forward to providing further updates on our business.

Speaker 3: We appreciate your time today and look forward to providing further updates on our business during our third quarter fiscal 2022 earnings call. That's going to be in early May. Please feel free to contact us with any other questions or comments. Thank you.

Our third quarter fiscal 2022 earnings call that's going to be in early May Bill piece, Please feel free to contact us with any other questions or comments.

Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker 1: Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Okay.