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EP

EVOLUTION PETROLEUM CORP (EPM)·Q3 2025 Earnings Summary

Executive Summary

  • Fiscal Q3 2025 revenue rose 11% QoQ to $22.6M, driven by a 34% QoQ surge in natural gas revenue; GAAP net loss was $(2.2)M (−$0.07 EPS), while adjusted diluted EPS was $0.02 .
  • Versus Wall Street: revenue modestly beat consensus ($22.561M vs $21.845M); normalized EPS matched ($0.02 vs $0.02); EBITDA came in below consensus ($6.6M vs $7.23M) — implying a mixed print with stronger top-line but softer profitability (S&P Global) [Q3 2025 estimates table below].
  • Operationally: average BOEPD fell 4% QoQ to 6,667 on Delhi maintenance and winter weather at Barnett; subsequent to quarter end, TexMex closed and 4 Chaveroo wells came online, contributing >850 net BOEPD, a likely near-term production catalyst .
  • Capital and dividends: Board declared its 47th consecutive $0.12 dividend; credit facility commitments expected to expand to $65M, extending maturity to April 2028, supporting ongoing M&A and hedging flexibility .

What Went Well and What Went Wrong

  • What Went Well

    • “Maintaining our quarterly dividend at $0.12 per share… underscoring our commitment to sustainable shareholder returns” and confidence in asset base despite volatility .
    • Natural gas price strength lifted realized prices (+7% YoY) and QoQ revenue; Adjusted EBITDA rose 30% QoQ to $7.4M on commodity mix tailwinds .
    • Post-quarter adds: closed $9M TexMex (~440 BOEPD) and brought 4 Chaveroo wells online under budget; combined >850 net BOEPD production addition expected to benefit next quarter .

  • What Went Wrong

    • Production down 7.5% YoY to 6,667 BOEPD on Delhi facility maintenance, NGL plant downtime, Barnett winter storms, and natural declines; liquids revenue mix fell to 65% (vs 75% YoY) .
    • LOE rose to $13.4M (+16% per BOE YoY to $22.32/BOE), primarily from resumed CO2 purchases at Delhi (Oct 2024), constraining margins .
    • EBITDA below Street consensus and GAAP EPS loss (−$0.07) amid unrealized hedging losses and higher operating costs, pressuring profitability (S&P Global; company GAAP) [Q3 2025 estimates table].

Financial Results

Core P&L vs Prior Periods

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD)$23.025M $20.275M $22.561M
GAAP Diluted EPS ($)$0.01 $(0.06) $(0.07)
Adjusted Diluted EPS ($)$0.03 $(0.03) $0.02
Operating Income ($USD)$2.084M $(0.605)M $1.586M
Adjusted EBITDA ($USD)$8.476M $5.688M $7.421M
Avg BOEPD (units)7,209 6,935 6,667
LOE ($USD)$12.624M $12.793M $13.388M
LOE per BOE ($)$19.24 $20.05 $22.32

Margins (S&P Global)

MetricQ3 2024Q2 2025Q3 2025
EBITDA Margin %34.68%*23.81%*29.25%*
EBIT Margin %9.05%*−2.98%*7.03%*
Net Income Margin %1.26%*−9.00%*−9.66%*

Values marked with * retrieved from S&P Global.

Commodity Revenue Mix

Revenue ($USD)Q3 2024Q2 2025Q3 2025
Crude Oil$14.538M $11.763M $11.769M
Natural Gas$5.860M $5.793M $7.790M
NGLs$2.627M $2.719M $3.002M
Total$23.025M $20.275M $22.561M

KPIs

KPIQ3 2024Q2 2025Q3 2025
Avg BOEPD7,209 6,935 6,667
Avg Realized Price ($/BOE)$35.10 $31.78 $37.60
LOE per BOE ($)$19.24 $20.05 $22.32
Adjusted EBITDA ($USD)$8.476M $5.688M $7.421M

Results vs Wall Street (Q3 2025)

MetricConsensusActualVariance
Revenue ($USD)$21.845M$22.561M+$0.716M (Beat)
Primary EPS ($)$0.02$0.02In line
EBITDA ($USD)$7.225M$6.600M−$0.625M (Miss)

Estimates from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareFY25 Q4$0.12 (FY25 Q3) $0.12 declared for FY25 Q4 Maintained
Credit Facility CommitmentsFacility$50.0M (MidFirst) Expected $65.0M; extend maturity to Apr 2028 Raised/Extended
Capex (FY25)FY2025$12–$14.5M range reiterated Range maintained Maintained
Delhi LOE per BOEForward~$25/BOE when CO2 line down (prior ref) “Mid-20s $/BOE” expected with water injection strategy Lower operating cost pathway
Chaveroo Development Block 3StartEarly FY2026 prelim plan Delayed to later FY2026 Deferred

No formal revenue/EPS guidance was provided; management emphasized dividend sustainability and opportunistic M&A/hedging .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
M&A pipeline/valuationHighly encouraging pipeline; focus on cash-accretive PDP; willing to do serial deals if accretive Bid-ask alignment improving; both oil and gas opportunities; TexMex at ~3.4x NTM Adj. EBITDA Improving activity/valuation clarity
Hedging strategy/flexibilityOngoing additions to protect cash flow Greater flexibility to hedge more gas volumes per lender terms More gas hedging latitude
Natural gas macro/pricesExpect stronger futures curve; demand improving Gas strength lifted Q3 realized prices; management bullish on near-term impact Positive tailwind
Delhi EOR operations/LOECO2 purchases resumed Oct 2024; LOE per BOE elevated Shift to water injection replacing purchased CO2; ~$0.4–$0.5M per month savings; mid-20s $/BOE LOE Cost reduction
Chaveroo wellsQ2 pumps interference resolved; drilling 4 wells in Block 2 4 wells online under budget; ~50% above type curve early; Block 3 start deferred Near-term outperformance; timing prudence
Credit facility/liquidity$39.5M drawn; $22.2M liquidity (Q2) Commitments expanding to $65M; maturity extended Strengthening liquidity
CapexFY25 range $12–$14.5M; back-half weighted Range maintained; modest Q4 completions Stable plan

Management Commentary

  • Dividend/portfolio resilience: “Maintaining our quarterly dividend at $0.12 per share… even in a volatile commodity price environment.”
  • Near-term production adds: “TexMex and the four new gross Chaveroo wells are currently contributing more than 850 net BOEPD… expected to meaningfully benefit our next fiscal quarter.”
  • Capital allocation discipline: “Focus on acquiring oil-weighted, low-decline producing properties… or natural gas properties which can be hedged favorably… while strategically deferring… oil-weighted locations.”
  • Strategy and priorities: “Maintain and look to grow our long-standing dividend, preserve financial flexibility and grow free cash flow.”

Q&A Highlights

  • M&A environment: Bid-ask spreads more rational; low-decline oil assets attractive at strip; gas assets can be hedged favorably; SCOOP/STACK seeing activity .
  • Chaveroo performance/costs: Wells under budget; early production ~50% above expectations; techniques similar; reservoir differences aided efficiency .
  • Delhi LOE savings: Switch to water injection could save ~$0.4–$0.5M per month; LOE per BOE expected “mid-20s,” with minimal performance impact .
  • Production adds detail: TexMex ~440 BOEPD; combined TexMex + new Chaveroo wells currently above the 850 BOEPD “safe” number .
  • Capex outlook: FY26 capex TBD; FY25 range maintained; Q4 spend mostly completions and some SCOOP/STACK .
  • Credit facility: Adding Prism Bank to expand commitments while keeping favorable terms; rationale is added flexibility .

Estimates Context

  • Q3 2025 results vs consensus: revenue beat (+$0.716M), normalized EPS in line ($0.02/$0.02), EBITDA miss (−$0.625M), suggesting stronger realized pricing/volumes but elevated LOE/hedging losses constrained margins (S&P Global).
  • Estimate implications:
    • Revenue: upward bias to near-term estimates given >850 BOEPD post-quarter adds and higher realized gas prices .
    • EBITDA/margins: likely mixed revisions — Delhi cost savings and production adds are positives, but CO2-related LOE in Q3 and hedging impacts weighed; the water injection shift should reduce LOE from Q4 onward .
    • EPS: normalized EPS tracking in line; upside depends on sustained gas strength and operational uptime .

Key Takeaways for Investors

  • Near-term production catalyst: >850 net BOEPD from TexMex and four new Chaveroo wells should lift Q4 volumes and cash flow; monitor realized gas pricing and early well performance continuity .
  • Margin recovery path: Delhi’s shift to water injection targets mid-20s $/BOE LOE, offering a structural cost tailwind into FY26; watch LOE per BOE trend in Q4/Q1 .
  • Capital returns intact: Dividend maintained at $0.12; stronger liquidity ($65M commitments, maturity 2028) supports steady returns and opportunistic M&A .
  • Mix matters: Gas strength aided Q3 pricing; continued gas hedging flexibility can stabilize cash flows amid oil price volatility .
  • Estimates: Expect modest revenue/EPS upward adjustments on volumes/pricing; EBITDA revisions may be more cautious until LOE improvements flow through (S&P Global).
  • Strategy execution: Disciplined, non-op, low-decline PDP acquisitions plus measured development pacing (deferring oil-weighted) reduces cycle risk and supports dividend durability .
  • Trading setup: Near-term narrative skew is positive on production and cost actions; watch Q4 print for confirmation of LOE reductions and sustained >850 BOEPD contribution as catalysts .

Sources

  • Q3 2025 8-K and press release: financials, operations, dividends, liquidity .
  • Q3 2025 earnings call transcript: strategy, operations, LOE outlook, Q&A .
  • Other relevant PRs: TexMex acquisition closed April 14, 2025 .
  • Prior quarters for trend: Q2 2025 8-K and transcript ; Q1 2025 8-K .

Values marked with * retrieved from S&P Global. Estimates from S&P Global.