EPM - Evolution Petroleum: Transition From Secondary Recovery Continues

2024-06-18 23:10:51 ET

Summary

• The recent acquisitions have led to considerable growth opportunities in the conventional and unconventional business.
• Evolution Petroleum is transitioning from high-cost secondary recovery to conventional and unconventional business through small interest purchases.
• Recent $40 million purchase in Anadarko, Oklahoma marks a significant shift in the company's focus.
• Management aims to pay down debt quickly to mitigate risk.
• The price paid for non-operated interests is generally low because of a lack of market liquidity for these interests.

Evolution Petroleum ( EPM ) had the Delhi asset for a long time as its either main or only producing asset. Relatively high-cost secondary recovery was therefore the business of the company since its startup. But recently the company has been venturing into both the conventional and unconventional business through the purchase of small interests. This marks a transition into a riskier but lower cost business. If the transition is successful, this could be a very different company in a few years from the secondary recovery business that market in the early years of the company....

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