Evolution Petroleum: Another Acquisition

2025-03-20 12:41:07 ET

Summary

• Evolution Petroleum has historically focused on acquiring non-operated interests.
• The company recently reported $39.5 million in long-term debt.
• Management recently announced an acquisition for approximately $9 million.
• Management has a good record of acquiring assets that payback quickly.
• The dividend has to be considered variable because it has been cut before.

Evolution Petroleum ( EPM ) has long been an acquirer of non-operated interests. This has definitely kept the overhead low. Only recently has the company made acquisitions that drill for a new production that is either conventional or unconventional. In the past, this was mainly a secondary recovery operator. As a result, production costs are on the higher side. But the low debt was always an offsetting advantage. Now, management seems to be on an acquisition binge that may or may not offset some of these high costs. So, the debt levels will have to be watched as the future unfolds....

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