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1. Company Snapshot

1.a. Company Description

Evolution Petroleum Corporation, an oil and natural gas company, engages in the development, production, ownership, and management of oil and gas properties in the United States.The company holds interests in a CO2 enhanced oil recovery project in Louisiana's Delhi field.Its Delhi Holt-Bryant Unit covers an area of 13,636 acres located in Northeast Louisiana.


The company also holds interests in the Hamilton Dome field covering 5,908 acres located in Wyoming; and Barnett Shale field covering an area of 123,777 acres located in North Texas.Evolution Petroleum Corporation was founded in 2003 and is based in Houston, Texas.

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1.b. Last Insights on EPM

Evolution Petroleum Corporation's recent performance was negatively impacted by break-even quarterly earnings per share, compared to the Zacks Consensus Estimate of $0.02. The company's increased long-term debt of $53 million, recent acquisitions, and non-recurring costs have pressured earnings. Higher operating costs and weak oil prices elevate risk. Recent downgrades by analysts, citing these concerns, have contributed to the negative performance. (Source: Zacks Rank #5 (Strong Sell) List)

1.c. Company Highlights

2. Evolution Petroleum's Q1 FY2026: Steady Execution Amidst Challenging Prices

Evolution Petroleum reported total revenue of $21.3 million for the first quarter of fiscal 2026, a modest decline from the prior year period due to lower realized oil and NGL prices, partially offset by a 43% increase in natural gas pricing. The company's adjusted EBITDA was $7.3 million, and EPS came in at $0.02425, beating estimates of $0.02. Cash provided by operating activities increased to $7.8 million, and capital expenditures were $1.9 million.

Publication Date: Nov -26

📋 Highlights
  • Revenue Decline and Price Dynamics: Total revenue fell to $21.3 million (-YoY), driven by lower oil/NGL prices but offset by 43% higher natural gas pricing.
  • Minerals Acquisition Expansion: Closed first mineral/royalty acquisition in SCOOP/STACK, unlocking ~650 gross locations with minimal capital and opex.
  • Dividend Continuity: Paid 49th consecutive quarterly dividend of $0.12/share, returning $4.1 million to shareholders in Q1.
  • Operational and Financial Performance: Adjusted EBITDA at $7.3 million, cash flow from operations rose to $7.8 million, with $11.9 million in liquidity.
  • Natural Gas Demand Outlook: Revenue up 38% YoY, driven by Henry Hub averaging $3.03/quarter, with 20–30 Bcf/day growth expected over 10 years.

Operational Highlights

The company's assets performed in line with expectations, with the SCOOP/STACK seeing 3 wells turned to sales and 2 additional wells remaining in progress. At Chaveroo, operations remained stable, with optimization efforts ongoing. The Williston Basin saw horizontal drilling activity moving towards Evolution's approximately 40,000 net acres. The recent minerals acquisition in the SCOOP/STACK is expected to contribute to future growth, with over 650 gross locations and minimal operating expenses.

Financial Position and Shareholder Returns

Evolution maintained a strong financial foundation with ample liquidity and low leverage, supported by the credit facility expansion completed at the end of fiscal 2025. The company declared its 49th consecutive quarterly cash dividend of $0.12 per share for the fiscal second quarter, returning $4.1 million to shareholders. The dividend yield stands at 12.63%, making it an attractive feature for income-focused investors. With a P/E Ratio of 552.39 and a P/S Ratio of 1.55, the market appears to be pricing in modest growth expectations.

Macro Outlook and Guidance

The company notes that crude oil is in a tug of war between OPEC+ and the U.S., with global supply and demand close to being in balance. Evolution believes that at $60 per barrel, CapEx budgets are beginning to be reduced, which will lead to prices needing to move higher to spur enough drilling to meet demand. For fiscal '26, the company expects production to be flat versus fiscal '25, with CapEx guidance of $4 million to $6 million. Analysts estimate next year's revenue growth at -2.3%, indicating a relatively stable outlook.

Valuation and Prospects

With an EV/EBITDA ratio of 6.71 and a ROE of 0.32%, Evolution's valuation appears reasonable considering its current earnings profile. The company's focus on minerals and royalties acquisitions, along with its existing portfolio, positions it for potential long-term growth. As Evolution continues to execute on its strategy, its attractive dividend yield and relatively stable outlook make it a stock worth monitoring.

3. NewsRoom

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Evolution Petroleum: A Breakeven Quarter And $50 Million Of Debt (Downgrade)

Nov -13

Source: seekingalpha.com

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Evolution Petroleum Corporation (EPM) Q1 2026 Earnings Call Transcript

Nov -12

Source: seekingalpha.com

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Compared to Estimates, Evolution Petroleum (EPM) Q1 Earnings: A Look at Key Metrics

Nov -12

Source: zacks.com

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Evolution Petroleum (EPM) Reports Break-Even Earnings for Q1

Nov -11

Source: zacks.com

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Stay Ahead of the Game With Evolution Petroleum (EPM) Q1 Earnings: Wall Street's Insights on Key Metrics

Nov -06

Source: zacks.com

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New Strong Sell Stocks for Nov. 5

Nov -05

Source: zacks.com

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Evolution Petroleum Schedules Fiscal First Quarter 2026 Earnings Release and Conference Call

Oct -28

Source: globenewswire.com

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New Strong Sell Stocks for Oct. 28th

Oct -28

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.43%)

6. Segments

Natural Gas

Expected Growth: 4.83%

Evolution Petroleum Corporation's 4.83% growth in Natural Gas is driven by increasing demand for clean energy, strategic acquisitions, and improved operational efficiencies. Additionally, the company's focus on developing its existing assets, such as the Delhi Field, and its hedging strategy to mitigate price volatility, have contributed to its growth momentum.

Crude Oil

Expected Growth: 3.83%

Evolution Petroleum Corporation's 3.83% growth in Crude Oil is driven by increasing demand from refineries, improved operational efficiency, and strategic hedging. Additionally, the company's focus on enhancing oil recovery through advanced technologies and optimizing production from existing wells also contributes to this growth.

Natural Gas Liquids

Expected Growth: 4.83%

Evolution Petroleum Corporation's 4.83% growth in Natural Gas Liquids is driven by increasing demand for petrochemical feedstocks, growing LNG exports, and rising crude oil prices. Additionally, the company's strategic acquisitions and operational efficiencies have contributed to the growth. Furthermore, the increasing use of NGLs as a cleaner-burning energy source and the growth of the global energy market also support the segment's expansion.

7. Detailed Products

Crude Oil

Evolution Petroleum Corporation is engaged in the acquisition, exploitation, and development of crude oil properties

Natural Gas

The company is also involved in the production and sale of natural gas, a clean-burning fuel used for electricity generation, heating, and cooking

Natural Gas Liquids (NGLs)

Evolution Petroleum Corporation also produces NGLs, which are used as a feedstock for the production of plastics, fertilizers, and other petrochemicals

Carbon Dioxide (CO2) for Enhanced Oil Recovery (EOR)

The company provides CO2 for EOR, a process that increases the amount of oil that can be extracted from existing fields

8. Evolution Petroleum Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Evolution Petroleum Corporation operates in the oil and gas industry, which has few substitutes. However, the increasing focus on renewable energy sources and electric vehicles may pose a threat to the company's operations in the long run.

Bargaining Power Of Customers

Evolution Petroleum Corporation's customers are primarily oil and gas companies, which have limited bargaining power due to the company's specialized services and expertise.

Bargaining Power Of Suppliers

Evolution Petroleum Corporation relies on a few key suppliers for its operations, which gives them some bargaining power. However, the company's diversified supply chain and long-term contracts mitigate this risk.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements and regulatory hurdles, which makes it difficult for new entrants to compete with Evolution Petroleum Corporation.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. Evolution Petroleum Corporation faces intense rivalry from its peers, which may impact its market share and pricing power.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.20%
Debt Cost 8.65%
Equity Weight 99.80%
Equity Cost 8.65%
WACC 8.65%
Leverage 0.20%

11. Quality Control: Evolution Petroleum Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Vitesse Energy

A-Score: 6.1/10

Value: 6.1

Growth: 7.1

Quality: 5.9

Yield: 10.0

Momentum: 3.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
PHX Minerals

A-Score: 6.1/10

Value: 4.3

Growth: 2.0

Quality: 6.6

Yield: 7.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

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Evolution Petroleum

A-Score: 5.4/10

Value: 4.8

Growth: 4.8

Quality: 4.5

Yield: 10.0

Momentum: 2.5

Volatility: 6.0

1-Year Total Return ->

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SilverBow Resources

A-Score: 4.9/10

Value: 8.8

Growth: 7.2

Quality: 6.5

Yield: 0.0

Momentum: 5.0

Volatility: 2.0

1-Year Total Return ->

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HighPeak Energy

A-Score: 4.8/10

Value: 7.7

Growth: 9.4

Quality: 5.5

Yield: 3.0

Momentum: 0.0

Volatility: 3.0

1-Year Total Return ->

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Epsilon Energy

A-Score: 4.7/10

Value: 5.7

Growth: 2.7

Quality: 6.4

Yield: 7.0

Momentum: 1.0

Volatility: 5.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.21$

Current Price

4.21$

Potential

-0.00%

Expected Cash-Flows