Yet Another Acquisition in the Books
The opening weeks of June make for a great example of how geopolitical events can impact the price of crude oil.
In early June, Israel attacked Iranian nuclear and military sites, with Iran retaliating with its own missile strikes. The U.S. entered the fray on June 21 when it bombed three Iranian nuclear sites.
Brent Crude prices jumped from $65.00 per barrel in early June to more than $81.00 per barrel on June 23. Over the same time frame, West Texas Intermediate (WTI) prices climbed from around $63.00 per barrel to approximately $78.00 per barrel.
Since then, a tenuous ceasefire has seen Brent Crude fall to around $66.50 per barrel, with WTI crude slipping to around $64.00 per barrel. Should the ceasefire fail to hold, we can expect crude oil prices to surge again.
While geopolitical uncertainties remain in the Middle East, here in the U.S., our domestic oil and gas exploration and production (E&P) industry remains as reliable and stable as ever. And that’s good news for E&P companies like Evolution Petroleum Corp (NYSE:EPM).
With market capitalization of $163.6 million, Evolution Petroleum is on the small side. But it’s working at getting a lot larger. The Houston-Texas-based company is engaged in the development, production, and ownership of onshore oil and natural gas properties in the U.S. (Source: “Investor Presentation, March 2025,” Evolution Petroleum Corp, last accessed June 25, 2025.)
Evolution Petroleum’s actually been growing its assets though a number of strategic acquisitions over the last number of years:
- Hamilton Dome in Wyoming: ~1,400 net acres; acquisition closed in November 2019
- Barnett Shale in Texas: ~21,000 net acres; closed May 2021
- Williston Basin in North Dakota: ~43,300 net acres; closed January 2022
- Jonah Field in Wyoming: ~950 net acres; closed April 2022
- Scoop/Stack: ~4,200 net acre acquisition, closed in February 2024
- Chaveroo Oilfield in New Mexico: ~8,000 net acres; closed January 2024
- TexMex in New Mexico, Texas, and Louisiana: ~11,200 net acres, closed in April 2025
Thanks to these accretive acquisitions, the company’s daily barrels have increased approximately 3x since 2019. Because of the long-life low decline in assets, it has 15+ years of reserve life.
Q3 Revenues Climb 11%, Adjusted EBITDA Up 30%
For the third quarter of fiscal 2025, ended March 31, 2025, Evolution Petroleum announced that revenues increased 11% on a sequential basis to $22.56 million. The increase was largely fueled by the strength of natural gas revenue, which increased 34% during the quarter. (Source: “Evolution Petroleum Reports Fiscal Third Quarter 2025 Results and Declares Quarterly Cash Dividend for Fiscal Fourth Quarter,” Evolution Petroleum Corp, May 13, 2025.)
On the production side, the average barrels of oil equivalent per day generated slipped four percent to 6,667.
The company’s third-quarter net loss increased slightly to $2.1 million, from $1.8 million in the second quarter of 2025. Adjusted net income came in at $806,000, versus a second-quarter adjusted net loss of $841,000.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rallied 30% to $7.42 million.
Subsequent to the end of the third quarter, Evolution Petroleum brought four gross new wells online at the Chaveroo Field under budget, with early production rates exceeding expectations. It also closed the $9.0-million TexMex acquisition of non-operated oil and natural gas assets located in New Mexico, Texas, and Louisiana. As of May 13, production from the four new gross Chaveroo wells and TexMex is contributing more than 850 net barrels of oil equivalent per day (BOEPD) to production.
Commenting on the results, Kelly Loyd, president and chief executive officer, said, “Our third quarter results reflect the benefits of our balanced, long-life portfolio of producing assets that are capable of both flourishing in attractive price environments and withstanding cyclical lows.”
Evolution Petroleum Corp’s 47th Consecutive Quarterly Dividend
Returning capital to shareholders is an important pillar of Evolution’s business plan. Whereas many oil and gas companies suspended their quarterly dividends during the 2020 health crisis, for Evolution Petroleum, it was business as usual.
In fact, Evolution Petroleum has not missed a quarterly dividend payment since it began paying a dividend in December 2013. Over that 10+ year period, the company has returned $126.6 million in dividends to shareholders. (Source: “Dividends & Splits,” Evolution Petroleum Corp, last accessed June 25, 2025.)
Most recently, in May, Evolution announced it was maintaining its quarterly dividend at $0.12 per share for the 12th consecutive quarter. This also represents the 47th consecutive quarterly cash dividend. It works out to an annual dividend payout of $0.48, for a forward annual dividend yield of 10.06%.
Commenting on its dividend plan, Loyd said, “Maintaining our dividend is a top priority, and we believe our resilient portfolio and strong financial position will enable us to continue with our dividend program well into the future.”
EPM Stock Has 75% Upside
EPM stock was trading at a 52-week low until the company announced solid third-quarter results. The stock climbed significantly higher over the first three weeks of June due to the conflict in the Middle East between Israel and Iran.
With a truce on the table, EPM has given up some ground, but it is still trading up 12% over the last month. On the other hand, it’s still down 5.56% year to date and 3.0% on an annual basis.
EPM might be in the red in 2025, but Wall Street believes it will climb to multi-year highs. Analysts are providing a 12-month share price target range of $6.15 to $8.25 per share. At current levels, this points to potential gains of 30% to 75%.
Chart courtesy of StockCharts.com
The Lowdown on Evolution Petroleum Corp
As you can see, Evolution Petroleum is an E&P company with a growing portfolio of properties in some of the most prolific onshore fields in the U.S.
It has a strong balance sheet and an active acquisition strategy and it’s home to one of the most lower-risk investment vehicles in the energy industry. It’s also home to a reliable ultra-high-yield dividend. Management has said that maintaining its dividend is a top priority.