Evolution Petroleum Corporation is an oil and gas company focused on delivering a sustainable dividend yield to its shareholders through the ownership, management and development of producing oil and gas properties. The Company's long-term goal is to build a diversified portfolio of oil and gas assets primarily through acquisition, while seeking opportunities to maintain and increase production through selective development, production enhancement and other exploitation efforts on its properties. Our largest active investment is our interest in a CO2 Our operations began in September 2003. In May 2004, our predecessor, Natural Gas Systems, Inc., merged into a wholly-owned subsidiary of Reality Interactive Inc., an inactive public company, which was renamed Natural Gas Systems Inc. ("NGS"). In connection with the listing of NGS shares on the American Stock Exchange (currently the NYSE American) in July 2006, NGS was renamed Evolution Petroleum Corporation. Our principal executive offices are located at 1155 Dairy Ashford Road, Suite 425, Houston, Texas 77079, and our telephone number is (713) 935-0122. We maintain a website at www.evolutionpetroleum.com, but information contained on our website does not constitute part of this document. Our common stock is traded on the NYSE American under the ticker symbol "EPM".
A substantial or extended decline in oil prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
Our revenues are concentrated in one asset and related declines in production or other events beyond our control could have a material adverse effect on our results of operations and financial results.
Operating results from oil and natural gas production may decline; we may be unable to acquire and develop the additional oil and natural gas reserves that are required in order to sustain our business operations.
We have limited control over the activities on properties we do not operate.
The types of resources we focus on have substantial operational risks.
Crude oil and natural gas development, re-completion of wells from one reservoir to another reservoir, restoring wells to production and drilling and completing new wells are speculative activities and involve numerous risks and substantial uncertain costs.
The loss of a large single purchaser of our oil and natural gas could reduce the competition of our production.
Our crude oil and natural gas reserves are only estimates and may prove to be inaccurate.
Regulatory and accounting requirements may require substantial reductions in reporting proven reserves.
Our derivative activities could result in financial losses or could reduce our income.
We may have difficulty managing future growth and the related demands on our resources and may have difficulty in achieving future growth.
Our operations may require significant amounts of capital and additional financing may be necessary in order for us to continue our exploitation activities, including meeting potential future drilling obligations.
We may be subject to risks in connection with acquisitions because of uncertainties in evaluating recoverable reserves, well performance and potential liabilities, as well as uncertainties in forecasting oil and gas prices and future development, production and marketing costs, and the integration of significant acquisitions may be difficult.
Government regulation and liability for oil and gas operations and environmental matters may adversely affect our business and results of operations.
Our insurance may not protect us against all of the operating risks to which our business is exposed.
The loss of key personnel could adversely affect us.
Oil field service and materials' prices may increase, and the availability of such services and materials may be inadequate to meet our needs.
We cannot market the crude oil and natural gas that we produce without the assistance of third parties.
We face strong competition from larger oil and gas companies.
We have been, and in the future may become, involved in legal proceedings related to our Delhi interest or other properties or operations and, as a result, may incur substantial costs in connection with those proceedings.
Ownership of our oil, gas and mineral production depends on good title to our property.
Poor general economic, business, or industry conditions may have a material adverse effect on our results of operations, liquidity, and financial condition.
Our stock price has been and may continue to be volatile.
Our executive officers, directors and affiliates may be able to control the election of our directors and all other matters submitted to our stockholders for approval.
The market for our common stock is limited and may not provide adequate liquidity.
If securities or industry analysts do not publish research reports about our business, or if they downgrade our stock, the price of our common stock could decline.
The issuance of additional common stock and preferred stock could dilute existing stockholders.
Continued payment of dividends on our common stock could be impacted.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Evolution Petroleum Corporation is an oil and gas company focused on delivering a sustainable dividend yield to its stockholders through the ownership, management and development of oil and gas properties. The Company's long-term goal is to build a diversified portfolio of oil and gas assets primarily through acquisitions, while seeking opportunities to maintain and increase production through selective development, production enhancement and other exploitation efforts on its properties.
Our producing assets consist of our interests in the Delhi Holt-Bryant Unit in the Delhi field in Northeast Louisiana, a CO2 enhanced oil recovery project, and a de minimis overriding royalty interest retained in a past divestiture.