Evolution Closes Mineral & Royalty Acquisition, Adding Long-Term Production and Cash Flow

Rhea-AI Summary

Evolution Petroleum (NYSE American: EPM) has completed a significant $17 million acquisition of mineral and royalty interests in Oklahoma's SCOOP/STACK area. The transaction, effective May 1, 2025, encompasses approximately 5,500 net royalty acres primarily in Grady and Canadian counties.

The acquisition includes 420 gross producing wells with current production of 420 BOE/d (54% natural gas, 15% oil, 31% natural gas liquids) and over 650 drilling locations across 140,000 gross acres. The portfolio features high-quality operators including Camino Natural Resources, Canvas Energy, Coterra Energy, Mach Resources, and Validus Energy.

The deal was funded through cash on hand and existing credit facility borrowings, with expected cash flow receipts from the effective date within 90 days.

Positive

• Immediately accretive to cash flow per share, supporting dividend strategy
• Zero lifting costs or future capital expenditures required due to royalty structure
• 10+ years of projected drilling inventory with 650+ locations
• High-margin, long-life assets with minimal operating costs
• Established operators managing the assets

Negative

• Increased leverage due to credit facility borrowing for acquisition funding
• Significant exposure to commodity price fluctuations with mixed production profile

Insights

Energy Investment Analyst

EPM's $17M royalty acquisition adds 420 BOE/d production with zero operating costs, immediately boosting cash flow and dividend potential.

Evolution Petroleum's strategic $17 million acquisition of mineral and royalty interests in Oklahoma's SCOOP/STACK represents a shrewd capital allocation decision with compelling economics. Unlike traditional working interest acquisitions, these royalty assets generate revenue without the burden of operating expenses or capital requirements—essentially pure margin cash flow.

The acquisition includes 5,500 net royalty acres with 420 producing wells generating approximately 420 BOE/d, creating an immediate production boost with an attractive commodity mix (54% natural gas, 15% oil, 31% NGLs). The effective date of May 1 means EPM will soon receive roughly three months of retroactive cash flow, accelerating investment recovery.

Most compelling is the development upside—over 650 undrilled locations across multiple stacked pay zones that require zero capital from EPM. The company benefits from having high-quality operators like Coterra and Validus Energy deploying capital to develop these locations, with EPM simply collecting royalty checks as production comes online.

The structure of the transaction directly supports EPM's dividend-focused business model by generating immediate cash flow accretion while establishing a decade-plus inventory of no-cost development. This acquisition represents a textbook example of how smaller E&Ps can create shareholder value through targeted, margin-rich investments rather than capital-intensive drilling programs, positioning EPM for sustained dividend growth.

HOUSTON, Aug. 06, 2025 (GLOBE NEWSWIRE) -- Evolution Petroleum Corporation (NYSE American: EPM) ("Evolution" or the "Company") today announced the closing of an acquisition of mineral and royalty interests in the SCOOP/STACK area of Oklahoma from a non-affiliated private seller in a cash transaction valued at approximately $17 million, subject to customary post-closing adjustments. The acquisition, effective May 1, 2025 (the “Effective Date”), was funded through a combination of cash on hand and borrowings under the Company's existing credit facility. The Company expects to receive the vast majority of the cash flow earned between the Effective Date and the closing date, August 4, 2025, within the next 90 days through receipt of a final closing statement.

Acquisition Highlights:

• Mineral and Royalty interests provide ownership in high margin, long-life assets without any lifting costs typically associated with working interest ownership or associated future capital expenditures to support current and future free cash flow.
• Immediately accretive to cash flow per share, enhancing Evolution’s dividend strategy.
• Approximately 5,500 net royalty acres focused primarily in Grady and Canadian counties in Oklahoma.
• Total of approximately 420 gross producing (PDP) wells and more than 650 drilling locations over roughly 140,000 gross acres, providing 10+ years of projected drilling inventory.
• Drilling locations include 4 permitted locations, 59 locations where regulatory activity has been performed recently, and approximately 600 other undrilled locations, many located within some of the highest return areas of the SCOOP/STACK across multiple proven producing stacked pay intervals.
• Net production at the Effective Date estimated at approximately 420 BOE/d (54% natural gas, 15% oil and 31% natural gas liquids).
• High-quality, well-capitalized operators including Camino Natural Resources, Canvas Energy, Coterra Energy, Mach Resources, and Validus Energy.
  

Kelly Loyd, President and Chief Executive Officer, commented: "Building on our established presence and deep knowledge of the SCOOP/STACK, this complementary acquisition of mineral and royalty interests represents an exciting addition to our established portfolio of long-life, low-decline assets. We value this transaction utilizing similar metrics as we would for a non-op working interest acquisition, particularly when accompanied by substantial development upside that we expect will maintain or grow cash flow and significantly enhance our ability to pay dividends to our shareholders for years to come."

"We’re particularly enthusiastic about the anticipated robust, perpetual cash flows from the approximate 400 producing wells, along with over 650 undrilled locations that come with zero future capital obligations which presents meaningful upside. This structure uniquely positions Evolution to benefit from exceptional margins due to the minimal operating cost and the current and future drilling at no incremental cost to generate sustained returns. We anticipate this deal will set a strong foundation for future diversified growth and demonstrates our continued commitment to disciplined, value-accretive expansion."

About Evolution Petroleum

Evolution Petroleum Corporation is an independent energy company focused on maximizing total shareholder returns through the ownership of and investment in onshore oil and natural gas properties in the U.S. The Company aims to build and maintain a diversified portfolio of long-life oil and natural gas properties through acquisitions, selective development opportunities, production enhancements, and other exploitation efforts. Visit www.evolutionpetroleum.com for more information.

Cautionary Statement

All forward-looking statements contained in this press release regarding the Company's current and future expectations, potential results, and plans and objectives involve a wide range of risks and uncertainties. Statements herein using words such as "believe," "expect," "may," "plans," "outlook," "should," "will," and words of similar meaning are forward-looking statements. Although the Company's expectations are based on business, engineering, geological, financial, and operating assumptions that it believes to be reasonable, many factors could cause actual results to differ materially from its expectations. The Company gives no assurance that its goals will be achieved. These factors and others are detailed under the heading "Risk Factors" and elsewhere in our periodic reports filed with the Securities and Exchange Commission ("SEC"). The Company undertakes no obligation to update any forward-looking statement.

Contact

Investor Relations
(713) 935-0122
ir@evolutionpetroleum.com

FAQ

What is the value of Evolution Petroleum's (EPM) recent SCOOP/STACK acquisition?

Evolution Petroleum acquired mineral and royalty interests in the SCOOP/STACK area for approximately $17 million, with the transaction closing on August 4, 2025.

How many producing wells and drilling locations did EPM acquire in the SCOOP/STACK deal?

The acquisition includes 420 gross producing wells and more than 650 drilling locations across approximately 140,000 gross acres.

What is the current production from EPM's new SCOOP/STACK assets?

The acquired assets produce approximately 420 BOE/d, consisting of 54% natural gas, 15% oil, and 31% natural gas liquids.

How did Evolution Petroleum fund the SCOOP/STACK acquisition?

The acquisition was funded through a combination of cash on hand and borrowings under the company's existing credit facility.

What are the key benefits of EPM's mineral and royalty interests acquisition?

The acquisition provides high-margin, long-life assets without lifting costs, is immediately accretive to cash flow per share, and includes 10+ years of drilling inventory with no future capital expenditure requirements.