UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2019~~2020

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-32942

EVOLUTION PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)



Nevada		41-1781991
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1155 Dairy Ashford Road, Suite 425, Houston, Texas 77079

(Address of principal executive offices and zip code)

(713) 935-0122

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock, $0.001 par value	EPM	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: ý No: o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes: ý No: o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o	Accelerated filer	x	Non-accelerated filer	o	Smaller reporting company	ox
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.). Yes: o No: ý

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

~~33,186,665~~32,956,469 shares outstanding of common stock, par value $0.001, as of May ~~6, 2019.~~2, 2020.

EVOLUTION PETROLEUM CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS



Forward-Looking Statements		ii
Part I. Financial Information		1
Item 1.	Financial Statements (Unaudited)	1
	Unaudited Consolidated Condensed Balance Sheets as of March 31, ~~2019~~2020 and June 30, ~~2018~~2019	1
	Unaudited Consolidated Condensed Statements of Operations for the three and nine months ended March 31, ~~2019~~2020 and ~~2018~~2019	2
	Unaudited Consolidated Condensed Statements of Cash Flows for the nine months ended March 31, ~~2019~~2020 and ~~2018~~2019	3
	Unaudited Consolidated Condensed Statements of Changes in Stockholders’ Equity for the three and nine months ended March 31, ~~2019~~2020 and ~~2018~~2019	4
	Notes to Unaudited Consolidated Condensed Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1417
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2226
Item 4.	Controls and Procedures	2227
Part II. Other Information		2328
Item 1.	Legal Proceedings	2328
Item 1A.	Risk Factors	2328
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2328
Item 3.	Defaults Upon Senior Securities	2328
Item 4.	Mine Safety Disclosures	2329
Item 5.	Other Information	2329
Item 6.	Exhibits	2329
Signatures		2430

We use the terms, "EPM," "Company," "we," "us" and "our" to refer to Evolution Petroleum Corporation, and unless the context otherwise requires, its wholly-owned subsidiaries.

Table of Contents

FORWARD-LOOKING STATEMENTS

This Form 10-Q and the information referenced herein contains forward-looking statements within the meaning of the Private Securities Litigations Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “plan,” “expect,” “project,” “estimate,” “assume,” “believe,” “anticipate,” “intend,” “budget,” “forecast,” “predict” and other similar expressions are intended to identify forward-looking statements. These statements appear in a number of places and include statements regarding our plans, beliefs or current expectations, including the plans, beliefs and expectations of our officers and directors. When considering any forward-looking statement, you should keep in mind the risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and natural gas, operating risks and other risk factors as described in Part II, Item 1A, "Risk Factors" and elsewhere in this report and as also may be described from time to time in our future reports we file with the Securities and Exchange Commission. You should read such information in conjunction with our consolidated condensed financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. There also may be other factors that we cannot anticipate or that are not described in this report, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. ~~Consolidated Condensed~~Financial Statements (Unaudited)

Evolution Petroleum Corporation and Subsidiaries

Consolidated Condensed Balance Sheets

(Unaudited)


	March 31, 2019		June 30, 2018		March 31, 2020		June 30, 2019
Assets
Current assets
Cash and cash equivalents	$	29,550,385	$	24,929,844	$	20,693,234	$	31,552,533
Restricted cash	—		2,751,289
Receivables	3,687,016		3,941,916		5,222,213		3,168,116
Prepaid expenses and other current assets	679,871		524,507
Prepaid expenses					303,375		458,278
Total current assets	33,917,272		32,147,556		26,218,822		35,178,927
Oil and natural gas properties, net (full-cost method of accounting)	61,333,933		61,239,746		67,668,686		60,346,466
Other property and equipment, net	20,120		30,407		19,449		26,418
Total property and equipment	61,354,053		61,270,153		67,688,135		60,372,884
Other assets	220,190		244,835
Other assets, net					311,695		210,033
Total assets	$	95,491,515	$	93,662,544	$	94,218,652	$	95,761,844
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	2,123,776	$	3,432,568	$	2,263,940	$	2,084,140
Accrued liabilities and other	571,009		874,886		570,239		537,755
State and federal income taxes payable	99,918		122,760		274,299		130,799
Total current liabilities	2,794,703		4,430,214		3,108,478		2,752,694
Long term liabilities
Senior secured credit facility (Note 13)	—		—
Deferred income taxes	11,189,060		10,555,435		11,591,629		11,322,691
Asset retirement obligations	1,533,083		1,387,416		2,499,180		1,560,601
Operating lease liability					99,014		—
Total liabilities	15,516,846		16,373,065		17,298,301		15,635,986
Commitments and contingencies (Note 14)
Commitments and contingencies
Stockholders’ equity
Common stock; par value $0.001; 100,000,000 shares authorized; 33,186,665 and 33,080,543 shares issued and outstanding as of March 31, 2019 and June 30, 2018, respectively	33,186		33,080
Common stock; par value $0.001; 100,000,000 shares authorized; 32,956,469 and 33,183,730 shares issued and outstanding, respectively					32,956		33,183
Additional paid-in capital	42,297,050		41,757,645		40,932,577		42,488,913
Retained earnings	37,644,433		35,498,754		35,954,818		37,603,762
Total stockholders’ equity	79,974,669		77,289,479		76,920,351		80,125,858
Total liabilities and stockholders’ equity	$	95,491,515	$	93,662,544	$	94,218,652	$	95,761,844

See accompanying notes to consolidated condensed financial statements.

Evolution Petroleum Corporation and Subsidiaries

Consolidated Condensed Statements of Operations

(Unaudited)


	Three Months Ended March 31,						Nine Months Ended March 31,						Three Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues
Crude oil	$	9,032,032		$	9,639,238		$	30,945,359		$	27,654,128		$	7,461,823		$	9,032,032		$	25,281,564		$	30,945,359
Natural gas liquids	468,525			511,917			1,910,395			1,825,214			250,476			468,525			963,054			1,910,395
Natural gas	471			—			471			—			320			471			1,831			471
Total revenues	9,501,028			10,151,155			32,856,225			29,479,342			7,712,619			9,501,028			26,246,449			32,856,225
Operating costs
Production costs	3,793,008			3,262,192			10,703,606			8,791,695			3,895,544			3,793,008			11,220,238			10,703,606
Depreciation, depletion and amortization	1,558,130			1,383,148			4,710,223			4,580,161			1,399,481			1,558,130			4,310,284			4,710,223
General and administrative expenses *	1,196,935			1,842,548			3,760,767			5,078,508			1,465,780			1,196,935			4,240,330			3,760,767
Total operating costs	6,548,073			6,487,888			19,174,596			18,450,364			6,760,805			6,548,073			19,770,852			19,174,596
Income from operations	2,952,955			3,663,267			13,681,629			11,028,978			951,814			2,952,955			6,475,597			13,681,629
Other
Enduro transaction breakup fee	—			—			1,100,000			—			—			—			—			1,100,000
Interest and other income	65,831			21,345			172,260			52,036			41,186			65,831			160,256			172,260
Interest expense	(28,789		)	(30,525		)	(87,479		)	(71,436		)	(29,067		)	(28,789		)	(87,757		)	(87,479		)
Income before income taxes	2,989,997			3,654,087			14,866,410			11,009,578			963,933			2,989,997			6,548,096			14,866,410
Income tax provision (benefit)	591,122			585,733			2,767,169			(4,076,156		)	(2,746,226		)	591,122			(1,719,801		)	2,767,169
Net income available to common stockholders	$	2,398,875		$	3,068,354		$	12,099,241		$	15,085,734		$	3,710,159		$	2,398,875		$	8,267,897		$	12,099,241
Earnings per common share
Basic	$	0.07		$	0.09		$	0.36		$	0.46		$	0.11		$	0.07		$	0.25		$	0.36
Diluted	$	0.07		$	0.09		$	0.36		$	0.45		$	0.11		$	0.07		$	0.25		$	0.36
Weighted average number of common shares
Basic	33,186,665			33,171,514			33,151,786			33,123,185			33,052,162			33,186,665			33,055,861			33,151,786
Diluted	33,196,197			33,191,312			33,163,661			33,155,870			33,052,162			33,196,197			33,058,446			33,163,661

* ~~General and administrative expenses for~~For the three months ended March 31, ~~2019~~2020 and ~~2018 included~~2019, non-cash stock-based compensation expenses ofwere $358,591 and $208,665, ~~and $352,420,~~ respectively. For the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, non-cash stock-based compensation expenses were $926,794 and $678,149, ~~and $1,324,230,~~ respectively.

See accompanying notes to consolidated condensed financial statements.

Evolution Petroleum Corporation and Subsidiaries

Consolidated Condensed Statements of Cash Flows

(Unaudited)


	Nine Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities
Net income attributable to the Company	$	12,099,241		$	15,085,734
Net income							$	8,267,897		$	12,099,241
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	4,721,590			4,622,361			4,310,284			4,710,223
Stock-based compensation	678,149			1,324,230			926,794			678,149
Deferred income tax expense (benefit)	633,625			(5,072,214		)
Settlements of asset retirement obligations							(76,833		)	—
Deferred income tax expense							268,938			633,625
Other							35,966			11,367
Changes in operating assets and liabilities:
Receivables	254,900			(1,223,271		)	(2,054,097		)	254,900
Prepaid expenses and other current assets	(155,364		)	(294,973		)
Accounts payable and accrued liabilities	123,853			73,678
Prepaid expenses							154,903			(155,364		)
Accrued liabilities and other							256,112			123,853
Income taxes payable	(22,842		)	—			143,500			(22,842		)
Net cash provided by operating activities	18,333,152			14,515,545			12,233,464			18,333,152
Cash flows from investing activities
Acquisition of oil and natural gas properties							(9,337,716		)	—
Capital expenditures for oil and natural gas properties	(6,369,363		)	(1,668,820		)	(1,354,849		)	(6,369,363		)
Capital expenditures for other property and equipment	(2,337		)	(6,033		)	—			(2,337		)
Net cash used in investing activities	(6,371,700		)	(1,674,853		)	(10,692,565		)	(6,371,700		)
Cash flows from financing activities
Cash dividends to common stockholders	(9,953,562		)	(8,286,486		)	(9,916,841		)	(9,953,562		)
Common share repurchases, including shares surrendered for tax withholding	(138,638		)	(395,550		)	(2,483,357		)	(138,638		)
Net cash used in financing activities	(10,092,200		)	(8,682,036		)	(12,400,198		)	(10,092,200		)
Net increase in cash, cash equivalents and restricted cash	1,869,252			4,158,656
Net change in cash, cash equivalents and restricted cash							(10,859,299		)	1,869,252
Cash, cash equivalents and restricted cash, beginning of period	27,681,133			23,028,153			31,552,533			27,681,133
Cash, cash equivalents and restricted cash, end of period	$	29,550,385		$	27,186,809
Cash and cash equivalents, end of period							$	20,693,234		$	29,550,385


Supplemental disclosures of cash flow information:	Nine Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2020			2019
Income taxes paid	$	2,362,919		$	1,456,754		$	1,150,000		$	2,362,919
Non-cash transactions:
Change in accounts payable used to acquire oil and natural gas properties	(1,748,122		)	622,185			(42,371		)	(1,748,122		)
Oil and natural gas property costs incurred through recognition of asset retirement obligations	84,999			(778		)
Oil and natural gas property costs incurred through recognition of asset retirement obligations and revision of previous estimates							871,076			84,999

See accompanying notes to consolidated condensed financial statements.

Evolution Petroleum Corporation and Subsidiaries

Consolidated Condensed Statements of Changes in Stockholders' Equity

(Unaudited)


	Common Stock					Additional Paid-in Capital			Retained Earnings			Treasury Stock			Total Stockholders' Equity			Common Stock					Additional Paid-in Capital			Retained Earnings			Treasury Stock			Total Stockholders' Equity
	Shares		Par Value			Additional Paid-in Capital			Retained Earnings			Treasury Stock			Total Stockholders' Equity			Shares		Par Value			Additional Paid-in Capital			Retained Earnings			Treasury Stock			Total Stockholders' Equity
For the Three Months Ended March 31, 2020:
Balance at December 31, 2019																		33,106,988		$	33,107		$	41,306,353		$	35,540,306		$	—		$	76,879,766
Common share repurchases, including shares surrendered for tax withholding																		—		—			—			—			(732,518		)	(732,518		)
Retirements of treasury stock																		(150,519	)	(151		)	(732,367		)	—			732,518			—
Stock-based compensation																		—		—			358,591			—			—			358,591
Net income																		—		—			—			3,710,159			—			3,710,159
Common stock cash dividends, $0.10 per share																		—		—			—			(3,295,647		)	—			(3,295,647		)
Balance at March 31, 2020																		32,956,469		$	32,956		$	40,932,577		$	35,954,818		$	—		$	76,920,351

For the Nine Months Ended March 31, 2020:
Balance at June 30, 2019																		33,183,730		$	33,183		$	42,488,913		$	37,603,762		$	—		$	80,125,858
Issuance of restricted common stock																		271,778		272			(272		)	—			—			—
Forfeitures of restricted stock																		(49,118	)	(49		)	49			—			—			—
Common share repurchases, including shares surrendered for tax withholding																		—		—			—			—			(2,483,357		)	(2,483,357		)
Retirements of treasury stock																		(449,921	)	(450		)	(2,482,907		)	—			2,483,357			—
Stock-based compensation																		—		—			926,794			—			—			926,794
Net income																		—		—			—			8,267,897			—			8,267,897
Common stock cash dividends, $0.10 per share																		—		—			—			(9,916,841		)	—			(9,916,841		)
Balance at March 31, 2020																		32,956,469		$	32,956		$	40,932,577		$	35,954,818		$	—		$	76,920,351

For the Three Months Ended March 31, 2019:
Balance at December 31, 2018	33,186,665		$	33,186		$	42,088,385		$	38,564,224		$	—		$	80,685,795		33,186,665		$	33,186		$	42,088,385		$	38,564,224		$	—		$	80,685,795
Stock-based compensation	—		—			208,665			—			—			208,665			—		—			208,665			—			—			208,665
Net income attributable to the Company	—		—			—			2,398,875			—			2,398,875
Net income																		—		—			—			2,398,875			—			2,398,875
Common stock cash dividends, $0.10 per share	—		—			—			(3,318,666		)	—			(3,318,666		)	—		—			—			(3,318,666		)	—			(3,318,666		)
Balance at March 31, 2019	33,186,665		$	33,186		$	42,297,050		$	37,644,433		$	—		$	79,974,669		33,186,665		$	33,186		$	42,297,050		$	37,644,433		$	—		$	79,974,669

For the Nine Months Ended March 31, 2019:
Balance at June 30, 2018	33,080,543		$	33,080		$	41,757,645		$	35,498,754		$	—		$	77,289,479		33,080,543		$	33,080		$	41,757,645		$	35,498,754		$	—		$	77,289,479
Issuance of restricted common stock	121,611		122			(122		)	—			—			—			121,611		122			(122		)	—			—			—
Common share repurchases, including shares surrendered for tax withholding	(15,489	)	—			—			—			(138,638		)	(138,638		)	—		—			—			—			(138,638		)	(138,638		)
Retirements of treasury stock	—		(16		)	(138,622		)	—			138,638			—			(15,489	)	(16		)	(138,622		)	—			138,638			—
Stock-based compensation	—		—			678,149			—			—			678,149			—		—			678,149			—			—			678,149
Net income attributable to the Company	—		—			—			12,099,241			—			12,099,241
Net income																		—		—			—			12,099,241			—			12,099,241
Common stock cash dividends, $0.10 per share	—		—			—			(9,953,562		)	—			(9,953,562		)	—		—			—			(9,953,562		)	—			(9,953,562		)
Balance at March 31, 2019	33,186,665		$	33,186		$	42,297,050		$	37,644,433		$	—		$	79,974,669		33,186,665		$	33,186		$	42,297,050		$	37,644,433		$	—		$	79,974,669

For the Three Months Ended March 31, 2018:
Balance at December 31, 2017	33,171,514		$	33,171		$	41,538,133		$	34,522,856		$	—		$	76,094,160
Stock-based compensation	—		—			352,420			—			—			352,420
Net income attributable to the Company	—		—			—			3,068,354			—			3,068,354
Common stock cash dividends, $0.10 per share	—		—			—			(3,317,151		)	—			(3,317,151		)
Balance at March 31, 2018	33,171,514		$	33,171		$	41,890,553		$	34,274,059		$	—		$	76,197,783

For the Nine Months Ended March 31, 2018:
Balance at June 30, 2017	33,087,308		$	33,087		$	40,961,957		$	27,474,811		$	—		$	68,469,855
Issuance of restricted common stock	158,785		158			(158		)	—			—			—
Forfeitures of restricted stock	(19,561	)	(20		)	20			—			—			—
Common share repurchases, including shares surrendered for tax withholding	(55,018	)	—			—			—			(395,550		)	(395,550		)
Retirements of treasury stock	—		(54		)	(395,496		)	—			395,550			—
Stock-based compensation	—		—			1,324,230			—			—			1,324,230
Net income attributable to the Company	—		—			—			15,085,734			—			15,085,734
Common stock cash dividends, $0.083 per share	—		—			—			(8,286,486		)	—			(8,286,486		)
Balance at March 31, 2018	33,171,514		$	33,171		$	41,890,553		$	34,274,059		$	—		$	76,197,783

See accompanying notes to consolidated condensed financial statements.

Table of Contents

Evolution Petroleum Corporation ~~And~~and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1 — Organization and Basis of Preparation

Nature of Operations. Evolution Petroleum Corporation ~~(the "Company," "EPM," "Evolution," "we," "our," or "us")~~ 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 ~~acquisition,~~acquisitions, while seeking opportunities to maintain and increase production through selective development, production ~~enhancement~~enhancements and other exploitation efforts on its properties. ~~Our largest active investment is our interest in a CO~~₂ ~~enhanced oil recovery project in Louisiana's Delhi field.~~

Interim Financial Statements. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America (“GAAP”) for interim financial information and the appropriate rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. All adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented have been included. The interim financial information and notes hereto should be read in conjunction with the Company’s ~~2018~~2019 Annual Report on Form 10-K for the fiscal year ended June 30, ~~2018,~~2019, as filed with the SEC. The results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year.

Principles of Consolidation and Reporting. Our consolidated financial statements include the accounts of EPM and its ~~wholly-owned~~wholly owned subsidiaries (the "Company"). All significant intercompany transactions have been eliminated in consolidation. The consolidated financial statements for the previous year may include certain reclassifications to conform to the current presentation. Any such reclassifications have no impact on previously reported net income or stockholders' equity.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include (a) reserve quantities and estimated future cash flows associated with proved reserves, which may significantly impact depletion expense and potential impairments of oil and natural gas properties, (b) asset retirement obligations, (c) stock-based compensation, (d) ~~fair values of derivative assets and liabilities, (e)~~ income taxes and the valuation of deferred tax assets and ~~(f)~~(e) commitments and contingencies. We analyze our estimates based on historical experience and various other assumptions that we believe to be reasonable. While we believe that our estimates and assumptions used in preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.

Note 2 — Summary of Significant Accounting Policies

~~Revenue Recognition~~

~~Effective July 1, 2018,~~The significant accounting policies followed by the Company ~~adopted~~are set forth in Note 2 - Summary of Significant Accounting Policies in the 2019 Form 10-K and are supplemented by the notes to the unaudited consolidated condensed financial statements included in this report. These unaudited consolidated condensed financial statements should be read in conjunction with the 2019 Form 10-K.

Recently Adopted Accounting Pronouncement - Leases

In February 2016, the FASB issued ASU ~~No. 2014-09, Revenue From Contracts With Customers (Topic 606)~~2016-02, Leases ("ASC 842"), which relates to the accounting for leasing transactions. This standard requires an entity to recognize a right-of-use (“~~ASC 606”~~ROU”) ~~using~~asset and lease liability for leases. Classification of leases as either a finance or operating lease determines the ~~full retrospective method~~recognition, measurement and ~~has applied~~presentation of expenses. This accounting standards update also requires certain quantitative and qualitative disclosures about leasing arrangements. Leases acquired to explore for or use minerals, oil or natural gas resources, including the ~~standard~~right to all existing contracts. ASC 606 supersedes previous revenue recognition requirements in ASC 605 - Revenue Recognition (“ASC 605”) and includes a five-step revenue recognition model to depict the transfer of goods or services to customers in an amount that reflects the consideration in exchangeexplore for those ~~goods or services. As a result of adopting ASC 606,~~natural resources and rights to use the ~~Company did~~land in which those natural resources are contained, are not ~~have a cumulative-effect adjustment in retained earnings. The comparative information presented therein for~~within the three and nine months ended March 31, 2018 reflects the reclassification on our consolidated statement of operations of $98,411 and $375,006, respectively, from “Production Costs” to “Revenue - Natural Gas Liquids” in conformance with ASC 606. These changes to revenue and production costs resulted from the conclusion that the Company did not control the product throughout processing before transferring to the customer. Therefore, costs incurred after the transfer of control are treated as reductions of revenue. Additionally, adoption of ASC 606 did not impact net income attributable to common stockholders, current assets, total assets, current liabilities, total liabilities or stockholders’ equity and the Company does not expect that it will do so in future periods.

Our revenues are comprised solely of revenues from customers from the sale of crude oil, NGLs and natural gas. The Company believes that the disaggregation of revenue on its consolidated statements of operations into these three major product types appropriately depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors based on our single geographic location. Crude oil and NGL revenues are recognized at a point in time when production is sold to a purchaser at an index-based, determinable price, delivery has occurred, control has transferred and collectibilityscope of the ~~revenue is probable. The transaction price used to recognize revenue is a function of the contract billing terms which~~standards update.

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Evolution Petroleum Corporation ~~And~~and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

~~reference index price sources used by~~Effective July 1, 2019, the ~~industry. Revenue is invoiced by calendar month based on volumes at contractually based rates with payment typically required within 30 days for crude oil~~Company adopted the new standard using a modified retrospective approach and 60 days for NGLs after the end of the production month. At the end of each month when the performance obligations have been satisfied, the consideration can be reasonably estimated and amounts due from customers are accrued in “Receivables” in our consolidated balance sheets. As of March 31, 2019 and June 30, 2018, receivables from contracts with customers were $3.7 million and $3.9 million, respectively.

~~Other Recently Adopted Accounting Pronouncements~~

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investees) to be measured at fair value with changes in fair value recognized in net income, requires public business entitieselected to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entitiesoptional transition methodology whereby reporting periods prior to ~~disclose the method(s) and significant assumptions used to estimate the fair value that is required~~adoption continue to be ~~disclosed for financial instruments measured~~presented in accordance with legacy accounting guidance, Accounting Standard Codification 840 - Leases. Upon transition, we recognized a ROU asset (or operating lease right-of-use asset) and an operating lease liability with no retained earnings impact. We applied the following practical expedients as provided in the standards update which provide elections to not reassess:

Not to apply the recognition requirements in the lease standard to short-term leases (a lease that at ~~amortized cost. Effective July 1, 2018,~~commencement date has a lease term of 12 months or less and does not contain a purchase option that the Company ~~prospectively adopted ASU 2016-01 without impact~~is reasonably certain to ~~its consolidated financial position~~exercise).

Whether an expired or ~~results~~existing pre-adoption date contracts contained leases.

Lease classification of ~~operations. Because its investment~~any expired or existing leases.

Initial direct costs for any expired or existing leases.

Not to separate lease components from non-lease components in ~~Well Lift Inc. does not have~~ a ~~readily determinable fair value, the Company elected to measure this investment at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions~~contract and accounting for the ~~identical or~~combination as a ~~similar investment~~lease (reflected by asset class).

Adoption of the ~~same issuer, if they were to occur.~~

Effective July 1, 2018, the Company retrospectively adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance addresses eight specific cash flow issues for which current GAAP is either unclear or doesnew standard did not ~~include specific guidance. Adoption had no effect on~~impact our ~~current period and comparative~~unaudited consolidated condensed statements of operations, cash ~~flows.~~flows or stockholders’ equity. At adoption we recorded our operating lease as follows:

Effective July 1, 2018, the Company prospectively adopted ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company will apply the clarified definition of business to future acquistions and divestitures.



Asset (Liability)	Balance June 30, 2019			Adjustment at Adoption July 1, 2019
Operating lease right-of-use asset	$	—		$	161,125
Accrued liabilities and other:
Deferred rent	$	(4,338	)	$	4,338
Operating lease liability	$	—		$	(26,194	)
Operating lease liabilities - long-term	$	—		$	(139,269	)

Recently Issued Accounting Pronouncements

In ~~February~~June 2016, the FASB issued ASU ~~2016-02,~~2016-13, Financial Instruments - Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, and requires the use of a new forward-looking expected loss model that will result in the earlier recognition of allowances for losses. Early adoption is permitted and entities must adopt the amendment using a modified retrospective approach to the first reporting period in which the guidance is effective. For smaller reporting companies, as provided by Accounting Standards Update 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“, ASU 2016-02”), which relates to the accounting for leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than twelve months. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. This standard will be2016-13 is effective for ~~fiscal years beginning after December 15, 2018,~~annual periods, including interim periods within those ~~fiscal years. We are evaluating the impact the~~annual periods, beginning after December 15, 2022. The adoption of ASU ~~2016-02 will~~2016-13 is currently not expected to have a material effect on our consolidated financial ~~statements~~statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes ("Topic 740") - Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and ~~we do not expect~~amends existing guidance to improve consistent application. ASU 2019-12 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the ~~standard to have a material impact.~~impact of ASU 2019-12 on our consolidated financial statements.

Note 3 — ~~Receivables~~Revenue from Contracts with Customers

AsOur revenue is primarily generated from our interests in the Delhi field in Northeast Louisiana and, our interests in the Hamilton Dome field in Wyoming. Additionally, an overriding royalty interest retained in a past divestiture of ~~March 31, 2019 and June 30, 2018, our receivables consisted of the following:~~

March 31,
2019 June 30,
2018
Receivables from oil and NGL sales $ 3,686,969
$ 3,940,998
Other 47
918
Total receivables $ 3,687,016
$ 3,941,916

Texas properties provided de minimis revenue:

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Evolution Petroleum Corporation ~~And~~and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Revenues
Crude oil	$	7,461,823	$	9,032,032	$	25,281,564	$	30,945,359
Natural gas liquids	250,476		468,525		963,054		1,910,395
Natural gas	320		471		1,831		471
Total revenues	$	7,712,619	$	9,501,028	$	26,246,449	$	32,856,225

We are a non-operator and presently do not take production in kind and do not negotiate contracts with customers. We recognize crude oil, natural gas liquids, and natural gas production revenue at the point in time when custody and title (“control”) of the product transfers to the customer. Transfer of control drives the presentation of post-production expenses such as transportation, gathering and processing deductions within the accompanying statements of operations. Fees and other deductions incurred prior to control transfer are recorded within the production costs line item on the accompanying unaudited consolidated condensed statements of operations, while fees and other deductions incurred subsequent to control transfer are embedded in the price and effectively recorded as a reduction of crude oil, natural gas liquids, and natural gas production revenue.

Judgments made in applying the guidance in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, relate primarily to determining the point in time when control of product transfers to the customer. The Company does not believe that significant judgments are required with respect to the determination of the transaction price, including amounts that represent variable consideration, as volume and price carry a low level of estimation uncertainty given the precision of volumetric measurements and the use of index pricing with predictable differentials. Accordingly, the Company does not consider estimates of variable consideration to be constrained.

The Company’s contractual performance obligations arise upon the production of hydrocarbons from wells in which the Company has an ownership interest. The performance obligations are considered satisfied at a point in time upon control transferring to a customer at a specified delivery point. Consideration is allocated to satisfied performance obligations at the end of an accounting period.

Revenue is recorded in the month when contractual performance obligations are satisfied. However, settlement statements from the purchasers of hydrocarbons and the related cash consideration are received one to two months after production has occurred, which is typical in the industry. As a result, the Company must estimate the amount of production delivered to the customer and the consideration that will ultimately be received for the sale of the product. Estimated revenue due to the Company is recorded within the receivables line item on the accompanying unaudited consolidated condensed balance sheets until payment is received. The accounts receivable balances from contracts with customers presented on “Note 5 — Receivables” to the accompanying balance sheets as of March 31, 2020 and June 30, 2019 were $2.0 million and $3.2 million, respectively. To estimate accounts receivable from operator contracts with customers, the Company uses knowledge of its properties, historical performance, contractual arrangements, index pricing, quality and transportation differentials, and other factors as the basis for these estimates. Differences between estimates and actual amounts received for product sales are recorded in the month that payment is received from the purchaser. Revenue recognized during the nine months ended March 31, 2020, related to performance obligations satisfied in prior reporting periods, was immaterial.

Note 4 — ~~Prepaid Expenses~~Enduro Purchase and ~~Other Current Assets~~Sale Agreement and "Stalking Horse" Bid

AsDuring the first quarter of ~~March 31,~~fiscal 2019, the Company recorded a $1.1 million break-up fee upon the closing of a higher bidder's purchase transaction. During May 2018, the Company had entered into a Purchase and Sale Agreement ("PSA"), to acquire, as the "stalking horse" bidder, certain oil and gas assets from an affiliate of Enduro Resource Partners LLC ("Enduro") for a purchase price of $27.5 million, subject to the outcome of Enduro's Chapter 11 process. Contemporaneous with executing the PSA, the Company made a $2.75 million deposit to an acquisition escrow account which, together with interest earned, comprised the restricted cash balance on the Company's June 30, 2018 ~~our prepaid expenses~~consolidated statement of financial position. Earlier in the first quarter of 2019, the Company was repaid its deposit together with related earned interest when a higher bidder first emerged in the bidding process.

The Company's initial and ~~other current assets consisted~~subsequent bids represented offers under Section 363 of the ~~following:~~U.S. Bankruptcy Code in Enduro's Chapter 11 proceeding. Such offers are commonly referred to as “stalking horse” bids and are subject to higher bids, in accordance with the bidding procedures approved by the Bankruptcy Court. In connection with the PSA, the Company had

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Evolution Petroleum Corporation and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

March 31,
2019 June 30,
2018
Prepaid insurance $ 31,572
$ 198,558
Retainers and deposits 6,089
11,089
Prepaid federal and state income taxes 438,453
231,920
Prepaid consulting and other 203,757
82,940
Prepaid expenses and other current assets $ 679,871
$ 524,507

incurred third party due diligence expenses, which have been reflected in the Company's consolidated statement of operations for the year ended June 30, 2018.

Note 5 — Receivables



	March 31, 2020		June 30, 2019
Receivables from oil and gas sales	$	1,978,942	$	3,168,116
Receivables for federal and state income tax refunds	3,243,271		—
Total receivables	$	5,222,213	$	3,168,116

Note 6 — Prepaid Expenses



	March 31, 2020		June 30, 2019
Prepaid insurance	$	32,657	$	206,198
Prepaid subscription and licenses	35,552		55,435
Prepaid federal and state income taxes	159,191		121,679
Prepaid investor relations and other	75,975		74,966
Total prepaid expenses	$	303,375	$	458,278

Note 57 — Property and Equipment

~~As of March 31, 2019 and June 30, 2018, our oil and natural gas properties and other property and equipment consisted of the following:~~


	March 31, 2019			June 30, 2018			March 31, 2020			June 30, 2019
Oil and natural gas properties
Property costs subject to amortization	$	95,099,158		$	90,392,918		$	107,143,423		$	95,622,153
Less: Accumulated depreciation, depletion, and amortization	(33,765,225		)	(29,153,172		)	(39,474,737		)	(35,275,687		)
Unproved properties not subject to amortization	—			—			—			—
Oil and natural gas properties, net	$	61,333,933		$	61,239,746		$	67,668,686		$	60,346,466
Other property and equipment
Furniture, fixtures, office equipment and other, at cost	$	145,560		$	143,223		$	154,732		$	154,731
Less: Accumulated depreciation	(125,440		)	(112,816		)	(135,283		)	(128,313		)
Other property and equipment, net	$	20,120		$	30,407		$	19,449		$	26,418

During the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company incurred capital expenditures of $1.3 million and $4.7 million, respectively.

Hamilton Dome Acquisition

On November 1, 2019, and ~~$2.3 million, respectively,~~effective as of October 1, 2019, our wholly-owned subsidiary, Evolution Petroleum West, Inc., a Delaware corporation, purchased a 23.51% non-operating working interest and a 19.70% revenue interest in the ~~Delhi field.~~Hamilton Dome unitized field located in Hot Springs County, Wyoming, from entities owned or controlled by Merit Energy Company ("Merit") of Dallas, Texas. At closing on November 1, 2019, we paid a cash purchase price of $9.5 million subject to customary purchase price adjustments, which were settled in December 2019 upon our receipt of a $0.2 million cash payment made by Merit. Given the effective date of the transaction, the purchase price adjustment consisted of our interest's share of sales proceeds from October sales net of our share of operating expenses. Commencing November 1, 2019, we began recording our share of Hamilton Dome revenues, related expenses and capital costs. In connection with this acquisition, the Company recorded a $0.9 million non-cash addition of asset retirement obligations of wells and related assets.

The unit included 265 producing and water injection wells and associated facilities producing crude oil from proved developed reserves. There were no proved undeveloped reserves, probable nor possible reserves. We accounted for this acquisition transaction as an asset purchase.

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Evolution Petroleum Corporation and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

Note 8 — Leases

Operating leases are reflected as an operating lease ROU asset included in “Other assets, net”, and as a ROU liability in “Accrued liabilities and other” and “Operating lease liability” on our unaudited consolidated condensed balance sheet. Operating lease ROU assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. In addition to the present value of lease payments, the operating lease ROU asset would also include any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred, if any. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Certain leases have payment terms that vary based on the usage of the underlying assets. Variable lease payments are not included in ROU assets and lease liabilities. For all operating leases, lease and non-lease components are accounted for as a single lease component.

As a non-operator in recent years and having adequate liquidity, the Company has generally not entered into lease transactions. Presently, our only operating lease is for corporate office space in Houston, Texas, effective May 1, 2019 and which expires November 30, 2022. Presently we have one operating lease for office space, no finance leases and no short-term leases.

Certain assumptions and judgments made by the Company when evaluating a contract that meets the definition of a lease under Topic 842 include:

Discount Rate - Our lease does not provide an implicit rate. Accordingly, we are required to use our incremental borrowing rate in determining the present value of lease payments based on the information available at commencement date. Our incremental borrowing rate reflects the estimated rate of interest that we would pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. At adoption, July 1, 2019,we used our prime-rate-based borrowing rate under our senior secured credit facility as our incremental borrowing as the term facility was based on a similar term and is appropriately risk-adjusted.

Lease Term - At inception the Company evaluates the contract containing a lease arrangement to determine the length of the lease term when recognizing a ROU asset and corresponding lease liability. When determining the lease term, an option available to extend or to early terminate the arrangement is evaluated and included when it is reasonably certain an option will be exercised. Because of the Company’s intent to maintain operational flexibility, there is no available option to extend that the Company is reasonably certain it will exercise. We have no expectation to use the early termination option that we are reasonably certain to exercise.

At March 31, 2020, maturities of our operating lease liability are as follows:



Fiscal Year	Operating Lease Liability
Remainder of 2020	$	14,709
2021	59,945
2022	61,843
2023	26,098
Total lease payments	162,595
Less imputed interest	(10,456		)
Total lease liability	$	152,139

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Evolution Petroleum Corporation and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

Supplemental cash flow, balance sheet and other disclosures information related to our operating leases are as follows:



	As of and For the Nine Months Ended March 31, 2020
Cash Flow:
Cash paid for amounts included in the measurement of lease liabilities	$	4,903
ROU asset added in exchange for lease obligation at adoption	161,125

Balance Sheet:
Operating lease ROU asset (included in other assets)	128,368
Accrued liabilities - current	53,125
Operating lease liability - long-term	99,014

Other:
Weighted average remaining lease term in years	2.91
Weighted average discount rate	5.15		%

Note 69 — Other Assets

~~As of March 31, 2019 and June 30, 2018, other assets consisted of the following:~~


	March 31, 2019			June 30, 2018			March 31, 2020			June 30, 2019
Royalty rights	$	108,512		$	108,512		$	108,512		$	108,512
Less: Accumulated amortization of royalty rights	(44,083		)	(33,910		)	(57,647		)	(47,474		)
Investment in Well Lift Inc., at cost	108,750			108,750			108,750			108,750
Deferred loan costs	168,972			168,972			168,972			168,972
Less: Accumulated amortization of deferred loan costs	(138,138		)	(126,771		)	(153,295		)	(141,927		)
Right of use asset under operating lease							161,125			—
Less: Accumulated amortization of right of use asset							(32,757		)	—
Software license	20,662			20,662			20,662			20,662
Less: Accumulated amortization of software license	(4,485		)	(1,380		)	(12,627		)	(7,462		)
Other assets, net	$	220,190		$	244,835		$	311,695		$	210,033

Our royalty rights and investment in Well Lift, Inc. ("WLI") resulted from the separation of our artificial lift technology operations in December 2015. We conveyed our patents and other intellectual property to WLI and retained a 5% royalty on future gross revenues associated with the technology. We own 17.5% of the common stock of WLI and account for our investment in this private company at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, if such were to occur. The Company evaluates the investment for impairment when it identifies any events or changes in circumstances that might have a significant adverse effect on the fair value of the investment.

Note 10—Accrued Liabilities and Other



	March 31, 2020		June 30, 2019
Accrued incentive and other compensation	$	367,619	$	369,719
Asset retirement obligations due within one year	—		50,244
Operating lease liability, current	53,125		—
Accrued franchise taxes	83,940		5,738
Accrued ad valorem taxes	54,000		100,500
Other accrued liabilities	11,555		11,554
Accrued liabilities and other	$	570,239	$	537,755

710

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Evolution Petroleum Corporation ~~And~~and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

~~Note 7~~—~~Accrued Liabilities and Other~~

~~As of March 31, 2019 and June 30, 2018, our other current liabilities consisted of the following:~~

March 31,
2019 June 30,
2018
Accrued incentive and other compensation $ 322,538
$ 415,182
Accrued severance payments —
160,089
Asset retirement obligations due within one year 50,244
35,539
Accrued royalties, including suspended accounts 11,552
11,498
Accrued franchise taxes 136,425
162,805
Accrued ad valorem taxes 50,250
89,773
Accrued liabilities and other $ 571,009
$ 874,886

Note 811 — Asset Retirement Obligations

Our asset retirement obligations represent the estimated present value of the amount we expect to incur to plug, abandon and remediate our producing properties at the end of their productive lives in accordance with applicable laws. The following is a reconciliation of the beginning and ending asset retirement obligations for the nine months ended March 31, ~~2019~~2020 and for the year ended June 30, ~~2018:~~2019:


	March 31, 2019			June 30, 2018			March 31, 2020				June 30, 2019
Asset retirement obligations — beginning of period	$	1,422,955		$	1,288,743		$	1,610,845			$	1,422,955
Liabilities incurred	31,268			44,700			903,580			(a)	31,268
Liabilities settled							(86,593		)	(b)	—
Liabilities sold							—				—
Accretion of discount	75,373			90,290			103,852				101,506
Revision of previous estimates	53,731			(778		)	(32,504		)		55,116
Asset retirement obligations — end of period	$	1,583,327		$	1,422,955		$	2,499,180			$	1,610,845
Less current portion in accrued liabilities	(50,244		)	(35,539		)	—				(50,244		)
Long-term portion of asset retirement obligations	$	1,533,083		$	1,387,416		$	2,499,180			$	1,560,601

(a) Liabilities incurred in fiscal 2020 were due to our acquisition of our Hamilton Dome interest.

(b) We abandoned one well in the Delhi field and four wells in the Hamilton Dome field.

Note 912 — Stockholders’ Equity

Common Stock

As of March 31, ~~2019,~~2020, we had ~~33,186,665~~32,956,469 shares of common stock outstanding.

The Company began paying quarterly cash dividends on common stock in December 2013. We paid dividends of ~~$9,953,562~~$9,916,841 and ~~$8,286,486~~$9,953,562 to our common stockholders during the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The following table reflects the dividends paid within the respective ~~three month~~three-month periods:


	Fiscal Year
	2019		2018
Common Stock Cash Dividends per Share					2020		2019
First quarter ended September 30,	$	0.10	$	0.075	$	0.10	$	0.10
Second quarter ended December 31,	$	0.10	$	0.075	$	0.10	$	0.10
Third quarter ended March 31,	$	0.10	$	0.100	$	0.10	$	0.10

In May 2015, the Board of Directors approved a share repurchase program covering up to $5 million of the Company's common stock. ~~Between June 2015 and December 2015,~~Since inception of the program through March 31, 2020, the Company spent ~~$1,609,008~~$4.0 million to repurchase ~~265,762~~706,858 common shares at an average price of ~~$6.05~~$5.72 per ~~share. There have been no~~share, including 440,666 shares ~~repurchased in~~at an average cost of $5.51 during the ~~open market since December 2015.~~nine months ended March 31, 2020. Under the program's terms, shares are repurchased only on the open market and in accordance with the requirements of the ~~Securities and Exchange Commission.~~SEC. Such shares are initially recorded as treasury stock, then subsequently canceled. The timing and amount of repurchases depends upon several factors, including financial resources and market and business conditions. There is no fixed termination date for this repurchase program, and it may be suspended or discontinued at any time.

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~~Evolution Petroleum Corporation And Subsidiaries~~

~~Notes to Unaudited Consolidated Condensed Financial Statements~~

During the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company also acquired treasury stock from holders of newly vested stock-based awards to fund the recipients' payroll tax withholding obligations. The treasury shares were subsequently canceled. Such shares were valued at fair market value on the date of ~~vesting, as reflected~~vesting. The following table shows all treasury stock purchases in the ~~following table:~~respective periods:

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Evolution Petroleum Corporation and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements


	Nine Months Ended March 31,				Nine Months Ended March 31,
	2019		2018		2020		2019
Number of treasury shares acquired(1)	15,489		55,018		449,921		15,489
Average cost per share	$	8.95	$	7.19	$	5.52	$	8.95
Total cost of treasury shares acquired	$	138,638	$	395,550	$	2,483,357	$	138,638

(1) The fiscal 2020 number of shares is net of 49,118 shares forfeited in the period.

Expected Tax Treatment of Dividends

For the fiscal year ended June 30, ~~2018,~~2019, all common stock dividends were treated for tax purposes as qualified dividend income to recipients. Based on our current projections for the fiscal year ending June 30, ~~2019,~~2020, we expect all common dividends for such period to be treated as qualified dividend income. Such projections are based on our reasonable expectations as of March 31, ~~2019~~2020 and are subject to change based on our final tax calculations at the end of the fiscal year.

Note 1013 — Stock-Based Incentive Plan

At the December 8, 2016 annual meeting, the stockholders approved the adoption of the Evolution Petroleum Corporation 2016 Equity Incentive Plan (the “2016 Plan”), which replaced the Evolution Petroleum Corporation Amended and Restated 2004 Stock Plan (the "2004 Plan") for which there were no shares available for future grants. The 2016 Plan authorizes the issuance of 1,100,000 shares of common stock prior to its expiration on December 8, 2026. Incentives under the 2016 Plan may be granted to employees, directors and consultants of the Company in any one or a combination of the following forms: incentive stock options and non-statutory stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards, performance share awards, performance cash awards, and other forms of incentives valued in whole or in part by reference to, or otherwise based on, our common stock, including its appreciation in value. As of March 31, ~~2019, 852,111~~2020, 390,489 shares remained available for grant under the 2016 Plan.

All outstanding awards granted under the 2004 Plan continue to be subject to the terms and conditions as set forth in the agreements evidencing such awards and the terms of the 2004 Plan. Under these agreements, we have outstanding grants of restricted common stock awards ("Restricted Stock") and contingent restricted common stock awards ("Contingent Restricted Stock") to employees and directors of the Company.

Restricted Stock and Contingent Restricted Stock

The Company has awarded grants of both Restricted Stock and Contingent Restricted Stock as part of its long-term incentive plan. Such grants, which expire after a maximum of four years if unvested, contain service-based, performance-based and market-based vesting provisions. The common shares underlying the Restricted Stock grants are issued on the date of grant. Contingent Restricted Stock grants vest only upon the attainment of higher performance-based or market-based vesting thresholds and are issued only upon vesting. Shares underlying Contingent Restricted Stock awards are reserved from the Plan they were granted under.

In July 2019, the new chief executive officer upon his employment, received 48,872 shares of serviced-based restricted common stock which vest in three equal amounts on June 30, 2020, 2021 and 2022, and was also awarded a total of 200,000 market-based restricted stock units consisting of four equal tranches, each of which may vest only if its respective stock price requirement is met before the award term expires. Each tranche has a separate stated price requirement and respective vesting will occur only if, before July 1, 2023, the ninety-day trailing average Company stock share price equals or exceeds its tranche price requirement.

Later during the nine months ended March 31, 2020, we granted 52,119 service-based and 104,236 market-based Restricted Stock awards to our employees as well as 56,395 service-based awards to the Company's directors.

Service-based awards vest with continuous employment by the Company, generally in annual installments over their terms of three to four years. ~~Certain awards may contain other vesting periods, including quarterly installments and~~Awards to the Company's directors have one-year cliff vesting. Restricted Stock grants which vest based on service are valued at the fair market value on the date of grant and amortized over the service period. ~~During the nine months ended March 31, 2019, we granted 31,777 service-based~~

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Evolution Petroleum Corporation and ~~43,990 market-based Restricted Stock awards~~Subsidiaries

Notes to our employees as well as 35,215 service-based awards to the Company's directors. We did not grant any performance-based awards, nor any Contingent Restricted Stock awards, during this period. The employees' service-based awards vest annually over a three-year period and the directors' service-based awards have a one-year cliff vesting period.Unaudited Consolidated Condensed Financial Statements

Performance-based grants vest upon the attainment of earnings, revenue and other operational goals and require that the recipient remain an employee or director of the Company through the vesting date. The Company recognizes compensation expense for performance-based awards ratably over the expected vesting period based on third-party independent assessment of the grant date fair value and when it is

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~~Evolution Petroleum Corporation And Subsidiaries~~

~~Notes to Unaudited Consolidated Condensed Financial Statements~~

deemed probable, for accounting purposes, that the performance criteria will be achieved. The expected vesting period may be deemed to be shorter than the term of the award. As of March 31, ~~2019,~~2020, there were no performance-based awards outstanding.

~~Market-based~~Many of our past market-based awards could vest if their respective two- or three-year trailing total returns on the Company’s common stock exceed the corresponding total returns of various quartiles of indices consisting of ~~either~~ peer ~~companies or a broad market index of companies in our industry. More~~companies. Additionally, more recent market-based awards vest ifwhen the average of the Company's closing stock ~~prices~~price over a defined ~~quarterly~~ measurement ~~periods together with accumulated paid dividends~~period meets or exceeds a ~~defined value.~~required stock price. The third-party independent assessment of fair values and expected vesting periods of these awards are determined using a Monte Carlo simulation based on the historical volatility of the Company's total return compared to the historical volatilities of the other companies in the index. Compensation expense for market-based awards is recognized over the expected vesting period using the straight-line method, so long as the holder remains an employee or director of the Company. Total compensation expense is based on the fair value of the awards at the date of grant and is independent of vesting or expiration of the awards, except for termination of service.

For market-based awards granted during the nine months ended March 31, 2020 and 2019, the ~~range of~~ assumptions used in the Monte Carlo simulation valuations, expected lives and fair values were as follows:



	~~Nine Months Ended~~ ~~March 31,~~
	~~2019~~
~~Risk-free interest rate~~	~~2.69~~	%
~~Expected life in years~~	~~2.82~~
~~Expected volatility~~	~~41.8~~	%
~~Dividend yield~~	~~4.0~~	%



	Nine Months Ended March 31,
	2020		2019
Weighted average fair value of market-based awards granted	$	3.79	$	8.24
Risk-free interest rate	1.65% to 1.87%		2.69		%
Expected vesting term in years	1.35 to 2.56		2.82
Expected volatility	38.6% to 43.7%		41.8		%
Dividend yield	6% to 7.2%		4.0		%

Unvested Restricted Stock awards at March 31, ~~2019~~2020 consisted of the following:


	Number of Restricted Shares	Weighted Average Grant-Date Fair Value		Number of Restricted Shares	Weighted Average Grant-Date Fair Value
Service-based awards	121,265	$	8.62	171,609	$	5.95
Market-based awards	64,302	7.35		129,710	5.10
Unvested Restricted Stock at March 31, 2019	185,567	$	8.18
Unvested Restricted Stock at March 31, 2020				301,319	$	5.59

The following table sets forth the Restricted Stock transactions for the nine months ended March 31, ~~2019:~~2020:

Number of
Restricted
Shares Weighted
Average
Grant-Date
Fair Value Unamortized Compensation Expense at March 31, 2019 Weighted Average Remaining Amortization Period (Years)
Unvested at July 1, 2018 199,477
$ 6.83

Service-based shares granted 66,992
9.17

Market-based shares granted 43,990
8.24

Vested (124,892 ) 6.57

Unvested Restricted Stock at March 31, 2019 185,567
$ 8.18
$ 1,055,246
1.86

~~Unvested Contingent Restricted Stock awards at March 31, 2019 consisted of the following:~~

Number of
Contingent
Restricted
Shares Weighted
Average
Grant-Date
Fair Value
Market-based awards 10,156
$ 3.42



	Number of Restricted Shares		Weighted Average Grant-Date Fair Value		Unamortized Compensation Expense at March 31, 2020		Weighted Average Remaining Amortization Period (Years)
Unvested at July 1, 2019	176,683		$	8.09
Service-based shares granted	157,386		5.73
Market-based shares granted	104,236		4.34
Vested	(87,868	)	7.29
Forfeited	(49,118	)	9.35
Unvested Restricted Stock at March 31, 2020	301,319		$	5.59	$	1,221,702	1.89

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Evolution Petroleum Corporation ~~And~~and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

~~The following table sets forth~~Unvested Contingent Restricted Stock ~~transactions for the nine months ended March 31, 2019:~~awards table below consists solely of market-based awards:



	Number of Contingent Restricted Shares		Weighted Average Grant-Date Fair Value		Unamortized Compensation Expense at March 31, 2020		Weighted Average Remaining Amortization Period (Years)
Unvested at July 1, 2019	10,156		$	3.42
Market-based awards granted	200,000		3.50
Vested	(10,156	)	3.42
Unvested contingent shares at March 31, 2020	200,000		$	3.50	$	295,235	0.66

Number of
Contingent
Restricted
Shares Weighted
Average
Grant-Date
Fair Value Unamortized Compensation Expense at March 31, 2019 Weighted Average Remaining Amortization Period (Years)
Unvested at July 1, 2018 28,562
$ 6.06

Vested (10,629 ) 5.67

Expired (7,777 ) 10.05

Unvested contingent shares at March 31, 2019 10,156
$ 3.42
$ 3,029
.25

Stock-based compensation expense related to Restricted Stock and Contingent Restricted Stock grants for the three months ended March 31, 2020 and 2019 was $358,591 and ~~2018 was~~ $208,665, ~~and $352,420,~~ respectively. For the corresponding ~~nine month~~nine-month periods, stock-based compensation expense was $926,794 and $678,149, ~~and $1,324,230,~~ respectively.

Note 1114 — Income Taxes

We file a consolidated federal income tax return in the United States and various combined and separate filings in several state and local jurisdictions.

There were neither unrecognized tax benefits nor any accrued interest or penalties associated with unrecognized tax benefits during any periods presented in the financial statements. We believe we have appropriate support for the income tax positions taken and to be taken on our tax returns and that the accruals for tax liabilities are adequate for all open years based on our assessment of various factors including past experience and interpretations of tax law applied to the facts of each matter. The Company’s federal and state income tax returns are open to audit under the statute of limitations for the years ended June 30, 2015 through June 30, 2018 for federal tax purposes and for the years ended June 30, ~~2014~~2016 through June 30, 2018 for state tax purposes. To the extent we utilize net operating losses generated in earlier years, such earlier years may also be subject to audit.

For the nine months ended March 31, ~~2019~~2020, we recognized income tax benefit of $1.7 million and ~~2018, respectively, we recognized~~had an effective tax rate of (26.3)% compared to income tax expense of $2.8 million and an ~~income~~effective tax ~~benefit~~rate of $(4.1) million. This benefit included a one-time $6.0 million tax credit, resulting from adjustment of our deferred income tax liabilities at December 31, 2017 in connection with enactment of the Tax Cut and Jobs Act (the "Tax Act"). For18.6% for the nine months ended March 31, ~~2019~~2019. During the current year we undertook a project to seek potential cash tax savings opportunities identifying available Enhanced Oil Recovery credits (“EOR credits”) related to our interests in the Delhi field. To take advantage of the EOR credits, we amended federal and state tax returns for the years ended June 30, 2017, and 2018, and incorporated the ~~corresponding effective~~associated impacts into our 2019 tax ~~rates were 19% and (37)%.~~returns. Principally as a result of EOR credits, the Company recorded a net tax benefit of $2.8 million during the nine months ended March 31, 2020, together with a $3.2 million receivable for income tax refunds at March 31, 2020. Our effective tax rate will typically differ from the statutory federal rate as a result of state income taxes, primarily in the State of Louisiana, and differences related to percentage depletion in excess of basis, stock-based compensation and other permanent differences. For ~~the nine months ended March 31, 2019 and 2018,~~both periods, our respective statutory federal tax ~~rates were~~rate was 21% and 27.55%, as we used a blended rate during the prior fiscal year in which the Tax Act was enacted. The benefit of this statutory rate reduction was partially offset by a decreased benefit from depletion in excess of basis as much of our depletion carryover had been utilized in fiscal 2018..

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Evolution Petroleum Corporation ~~And~~and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1215 —~~Net Income Per~~ Earnings per Common Share

The following table sets forth the computation of basic and diluted ~~income~~earnings per common share:


	Three Months Ended March 31,				Nine Months Ended March 31,				Three Months Ended March 31,				Nine Months Ended March 31,
	2019		2018		2019		2018		2020		2019		2020		2019
Numerator
Net income available to common shareholders	$	2,398,875	$	3,068,354	$	12,099,241	$	15,085,734
Net earnings per common share									$	3,710,159	$	2,398,875	$	8,267,897	$	12,099,241
Denominator
Weighted average number of common shares — Basic	33,186,665		33,171,514		33,151,786		33,123,185		33,052,162		33,186,665		33,055,861		33,151,786
Effect of dilutive securities:
Contingent restricted stock grants	9,532		19,798		11,875		32,685		—		9,532		2,585		11,875
Weighted average number of common shares and potentially dilutive common shares used in diluted EPS	33,196,197		33,191,312		33,163,661		33,155,870
Weighted average number of common shares and potentially dilutive common shares used in diluted earnings per share									33,052,162		33,196,197		33,058,446		33,163,661

Net income per common share — Basic	$	0.07	$	0.09	$	0.36	$	0.46
Net income per common share — Diluted	$	0.07	$	0.09	$	0.36	$	0.45
Net earnings per common share — Basic									$	0.11	$	0.07	$	0.25	$	0.36
Net earnings per common share — Diluted									$	0.11	$	0.07	$	0.25	$	0.36

~~Outstanding potentially dilutive securities as of March 31, 2019 were as follows:~~

~~Outstanding potentially dilutive securities as of March 31, 2018 were as follows:~~

Outstanding Potentially Dilutive Securities Weighted
Average
Exercise Price At March 31, 2018
Contingent Restricted Stock grants $ —
$ 61,868

Note 1316 — Senior Secured Credit Agreement

On April 11, 2016, the Company entered into a three-year, senior secured reserve-based credit facility ("Facility") in an amount up to $50 million. On May 25, 2018, we entered into the third amendment to our credit agreement governing the revolving credit facility to, among other things, extend the maturity date to April 11, 2021. On December 31, 2018, we entered into the fourth amendment to our credit agreement governing the revolving credit facility to broaden the definition for the Use of Proceeds.

As of March 31, ~~2019,~~2020, the Company's elected commitment and borrowing base were $40 million, we were in compliance with all financial covenants and there were no amounts outstanding under the Facility, which is secured by substantially all of the ~~Company’s~~Delhi field assets.

Under the Facility the borrowing base shall be determined semiannually ~~as of every May 15 and November 15~~ during the term of the Facility. ~~During~~On April 27, 2020, the ~~current quarter, the bank performed~~Company completed its ~~periodic~~ spring redetermination of the Facility resulting in a decrease of the borrowing base ~~and confirmed our elected amount of $40 million.~~to $27 million, which remains undrawn.

Borrowings from the Facility may be used for the acquisition and development of oil and gas properties, investments in cash flow generating assets complimentary to the production of oil and gas, and for letters of credit and other general corporate purposes.

The Facility included a placement fee of 0.50% on the initial borrowing base, amounting to $50,000, and carries a commitment fee of 0.25% per annum on the undrawn portion of the borrowing base. Any borrowings under the Facility will bear interest, at the Company’s option, at either LIBOR plus 2.75% or the Prime Rate, as defined under the Facility, plus 1.00%. The Facility contains financial covenants including a requirement that the Company maintain, as of the last day of each fiscal quarter, (a) a maximum total leverage ratio of not more than 3.00 to 1.00, (b) a debt service coverage ratio of not less than

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~~Evolution Petroleum Corporation And Subsidiaries~~

~~Notes to Unaudited Consolidated Condensed Financial Statements~~

1.10 to 1.00, and (c) a consolidated tangible net worth of not less than $50 million, all as defined under the Facility.

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Evolution Petroleum Corporation and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

In connection with this agreement, the Company incurred $168,972 of debt issuance costs. Such costs were capitalized in ~~Other~~"Other Assets, net" and are being amortized to expense. The unamortized balance in debt issuance costs related to the Facility was ~~$30,834~~$15,677 as of March 31, ~~2019.~~2020.

Note 1417 — Commitments and Contingencies

We are subject to various claims and contingencies in the normal course of business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which we operate. At a minimum, we disclose such matters if we believe it is reasonably possible that a future event or events will confirm a loss through impairment of an asset or the incurrence of a liability. We accrue a loss if we believe it is probable that a future event or events will confirm a loss and we can reasonably estimate such loss and we do not accrue future legal costs related to that loss. Furthermore, we will disclose any matter that is unasserted if we consider it probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable. We expense legal defense costs as they are incurred.

~~Lease Commitment.~~ ~~At March 31, 2019, we had a future minimum lease commitment under an operating lease for office space as follows:~~

Twelve month periods ended March 31,
2020 $ 12,179

Rent expense for the three months ended March 31, 2019 and 2018 was $18,568 and $18,568, respectively. For the nine months ended March 31, 2019 and 2018, rent expense was $56,672 and $57,617, respectively.

Note 1518 — ~~Enduro Purchase and Sale Agreement~~Subsequent Events

The Company has continued to monitor the impact of the global outbreak of a novel strain of the coronavirus identified in late 2019 (“COVID-19”) and the partially related downward pressure on oil prices primarily driven by projected limitations on storage availability, forecasted reductions in global demand from various containment efforts and other geopolitical factors. Historically, the Company has funded its operations through cash from operations and working capital with its primary source of cash being the sale of oil and natural gas liquids production.

On April 6, 2020, we entered into NYMEX WTI oil swaps covering 1,400 barrels per day (or approximately 42,000 barrels per month) for the period of April 2020 through December 2020, at a ~~Purchase and Sale Agreement ("PSA") on May 15, 2018, to acquire, as the "stalking horse" bidder, certain oil and gas assets from an affiliate of Enduro Resource Partners LLC ("Enduro") for a purchase~~fixed swap price of ~~$27.5 million, subject to~~$32.00 per barrel. In the ~~outcome of Enduro's Chapter 11 process. Contemporaneous with executing the PSA,~~future, the Company ~~made~~may add additional swaps or other derivative positions covering a ~~$2.75 million deposit~~variable portion of its anticipated future production during subsequent periods.

The Company will continue to ~~an acquisition escrow account which was reflected~~monitor oil prices in ~~restricted cash together~~the near term and may look to add to its hedge portfolio should the opportunity present itself. Consistent with ~~earned interest~~prior years, the Company does not plan to designate its new position as a hedge for accounting purposes and will record the contract on its balance sheet at fair value.

On May 5, 2020, considering the ~~Company's~~substantial decline in oil prices, combined with the uncertainty of timing of any price recovery as a result of the global pandemic, the Company adjusted the dividend rate to $0.025 per share quarterly, effective in the quarter ending June 30, ~~2018 statement of financial position. On July 20, 2018,~~2020. The reduction in the dividend rate will allow the Company ~~was repaid its deposit together~~to conserve cash for additional financial flexibility while continuing to reward shareholders with ~~related earned interest as~~ a higher bidder emerged in the Chapter 11 bidding process. In August 2018, upon the closing of a higher bidder's purchase transaction, the Company received payment of a $1.1 million breakup fee under the terms of the PSA. This breakup fee was effectively intended to cover the Company’s Enduro transaction costs, time and effort, substantially all of which occurred before June 30, 2018.yield.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

~~Results of Operations - Quarter~~

~~Results of Operations - Year to Date~~

Liquidity and Capital Resources

Results of Operations

Critical Accounting Policies and Estimates

Commonly Used Terms

"Current quarter" refers to the three months ended March 31, 2020, the Company's third quarter of fiscal 2020.

"Prior quarter" refers to the three months ended December 31, 2019, the Company's second quarter of fiscal 2020.

"Year-ago quarter" refers to the three months ended March 31, 2019, the Company's third quarter of fiscal 2019.

Executive Overview

General

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~~In support of that objective, 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~~enhancements and other exploitation efforts on its properties.

Our ~~largest active investment is~~producing assets consist of our ~~interest~~interests in the Delhi Holt-Bryant Unit in the Delhi field in Northeast Louisiana, a CO₂ enhanced oil recovery project, ~~in Louisiana's Delhi field.~~

~~By policy, every employee~~ and ~~director maintains a beneficial ownership position in~~ our ~~common stock. We believe this ownership helps ensure that the~~ interests ~~of our employees and directors are aligned with our stockholders.~~

In May 2018, our then President and Chief Executive Officer elected to retire as of May 31, 2018. Robert Herlin, our Chairman of the Board, founder and previous CEO, was elected by the board to the position of Executive Chairman and Interim CEO. A special Transition Services Committee of the board was created with one member, William Dozier, to provide additional operational oversight to the Company during the transition to a new CEO. The Nominating and Corporate Governance Committee is working with Mr. Herlin to identify candidates and the process is expected to be completed during the quarter ending June 30, 2019.

~~Highlights for our Third Quarter of Fiscal 2019 and Operations Update~~

~~"Current quarter" refers to the three months ended March 31, 2019, the Company's third quarter of fiscal 2019.~~

~~"Prior quarter" refers to the three months ended December 31, 2018, the Company's second quarter of fiscal 2019.~~

~~"Year-ago quarter" refers to the three months ended March 31, 2018, the Company's third quarter of fiscal 2018.~~

~~Highlights for the Quarter~~

~~We paid our twenty-second consecutive quarterly cash dividend on common shares, and declared the next quarterly cash dividend of $0.10 per share payable on June 28, 2019.~~

~~Current quarter net income was $2.4 million, or $0.07 per diluted common share, compared to net income of $3.9 million, or $0.12 per diluted common share,~~ in the ~~prior quarter~~Hamilton Dome field located in Hot Springs County, Wyoming, a secondary recovery field utilizing water injection wells to pressurize the reservoir, and ~~$3.2 million, or $0.09 per diluted common share,~~overriding royalty interests in ~~the year-ago quarter.~~

We reported revenues of $9.5 million for the current quarter, a decrease of 14% from the prior quarter and a 7% decrease from the year-ago quarter, primarily due to a lower realized oil price than in the comparative periods.

~~General and administrative expenses decreased 5% to $1.2 million for the current quarter compared to the prior quarter and decreased 35% from the year-ago quarter.~~

~~Working capital increased 9.6% to $31.1 million compared to year-ago quarter end and we remain debt free.~~

~~Delhi Field - Enhanced Oil Recovery Project~~

two onshore Texas wells.

Our interests in the Delhi field consist of a 23.9% working interest, ~~(with~~with an associated 19.0% ~~net~~ revenue ~~interest)~~interest and separate overriding royalty and mineral interests of 7.2%~~. This yields~~ yielding a total net revenue interest of 26.2%. The field is operated by Denbury Onshore LLC, a subsidiary of Denbury Resources, Inc. ~~(the "operator"~~(NYSE: DNR).

On November 1, 2019, the Company acquired mineral interests in the Hamilton Dome field consisting of a 23.5% working interest, with an associated 19.7% revenue interest (inclusive of a small overriding royalty interest). The field is operated by Merit Energy Company ("Merit")., a private oil and gas company, who owns the vast majority of the remaining working interest in Hamilton Dome field. Our acquired interest in this field aligned with the Company's strategy of adding long lived, low decline reserves expected to be supportive of our dividend over the long-term.

Highlights for our Third Quarter of Fiscal 2020 and Operations Update

Paid 26th consecutive quarterly cash dividend on common shares and declared the next dividend payment of $0.025 per share, payable on June 30, 2020.

Reported net income of $3.7 million, inclusive of a $2.8 million one-time income tax benefit related to Enhanced Oil Recovery credit, marking the 16th consecutive quarter of positive reported net income.

Reported cash flows from operating activities of $4.1 million and $12.2 million for the three and nine months ended March 31, 2020.

Ended the quarter with $20.7 million in cash and an undrawn credit facility. On April 27, 2020, the Company completed its spring redetermination of the credit facility resulting in a decrease of the borrowing base to $27 million, which remains undrawn.

In response to the growing global pandemic caused by a novel strain of the coronavirus identified in late 2019 (“COVID-19”), the Company successfully activated its business continuity plan and transitioned to working from home.

On April 6, 2020, the Company entered into NYMEX WTI oil swaps covering approximately 42,000 barrels per month for the period of April 2020 through December 2020 at a fixed swap price of $32.00 per barrel.

Overview

In early March 2020, crude oil prices declined sharply as a result of multiple significant factors impacting supply and demand in the global oil and natural gas markets, including a global pandemic caused by COVID-19. We expect the price of crude oil to continue to be depressed and remain volatile at least through the near term as evidenced by the current crude oil futures market. We cannot predict the duration or effects of this sudden decrease but must be prepared for crude oil prices to remain depressed for an extended period and for its potential effects on our business, financial condition, results of operations and cash flows.

~~Net production of oil and NGL averaged 2,016 BOEPD during the quarter which is essentially flat compared to the 2,034 BOEPD during the prior quarter.~~ Gross oil production ~~at Delhi~~for the Company averaged approximately ~~6,500~~7,827 BOPD during the quarter, a ~~4.4%~~6.6% increase from the prior quarter primarily driven by the acquisition of our Hamilton Dome field in November of 2019 partially offset by lower oil production in the Delhi Field. In the current quarter, CO₂costs decreased 57%. The pipeline that supplies CO₂ to the Delhi field was shut in on February 22^nd when a pressure loss was detected and CO₂ purchases were temporarily suspended. CO₂ purchases provide approximately 20% of the injected volumes in the field, and the field’s recycle facilities provide the other 80%. The recycle facilities continue to operate as usual. The pipeline is owned and operated by Denbury Resources, and the Company does not have any ownership in the portion of the pipeline under repair, which is upstream of the Delhi field. Denbury Resources has initiated a project to repair the pipeline, but has not yet set an estimated return to service date. Gross NGL production for the quarter was approximately 1,098 BOEPD, a 2.8% decrease from the prior ~~quarter. Gross NGL production for~~ quarter ~~was 1,213 BOEPD, up 23% from the prior quarter. Oil production was impacted quarter over quarter~~primarily due to ~~scheduled plant~~a planned maintenance ~~in January. All of the infill producing wells and all but one injection well were in operation~~project at the ~~end of the quarter. Production is expected to be positively impacted over time as we see response to the new CO~~₂ ~~injector wells~~Delhi Field which lasted 10 days and ~~increases~~was completed in injections, and we expect the operator to continue generating workover and conformance opportunities. The operator has been successful in facility modifications, improving plant efficiency and minimizing unplanned downtime resulting in improved NGL production in the current quarter and further improvements subsequent to quarter end.February.

During the current quarter, we incurred $0.7 million on capital projects consisting of $0.3 million for conformance and capital maintenance, $0.2 million primarily for remaining completion costs of a water injection well and a water source well in preparation for Phase V expansion of the flood, and $0.2 million was expended on the NGL plant enhancing flows of richer streams for processing.

~~In the current quarter, operating revenues were $9.5 million, based on an average realized oil price~~The Company recorded quarterly net income of $59.12 per barrel and an average realized NGL price of $16.37 per BOE, and we generated $3.0 million in income from operations. The decline in NGL realized prices is directly related to lower oil prices primarily in the first two months of the current quarter together with the Delhi field's ongoing fixed, per barrel post production cost allocation to the field’s royalty and mineral interests, which also reduces our revenue from such interests. This earnings effect is mostly offset by lower lease operating expense for our Delhi working interest that shares in recovered post production costs. In the year-ago quarter, operating revenues were $10.2 million and we had income from operations of $3.8 million, based on an average realized oil price of $63.56 per barrel and an average realized NGL price of $34.05 per BOE. Net production volumes in the current quarter were 2,016 barrels of oil equivalent per day (“BOEPD”), down slightly from the 2,034 BOEPD in the prior quarter and up from the year-ago quarter’s 1,884 BOEPD. Net income for the quarter was $2.4$3.7 million, or ~~$0.07~~$0.11 per diluted share, compared to ~~$3.9~~$1.8 million, or ~~$0.12~~$0.05 per diluted share, in the ~~previous quarter and $3.1 million, or $0.09 per diluted share,~~prior quarter. The increase in ~~the year-ago quarter.~~

~~Production costs in the Delhi field were $3.8 million in~~net income during the current quarter ~~up 9.9% from the prior quarter~~includes a $2.8 million income tax benefit related to Enhanced Oil Recovery credits and ~~16% from the year-ago quarter. Purchased CO~~₂ volumes increased 33% compared to the previous quarter and 36% compared to year-ago quarter to 103.3 million cubic feet (MMcf) per day due to completion of injection wells added by the infill drilling program and returning the field to optimal pressure.lower CO₂ purchase costs ~~per mcf were 6% lower than both the previous and year-ago quarters reflecting the lower current quarter realized oil price to which CO~~₂ cost is linked. The current quarter's oil price was 8.2% and 7.0% lower than those of the previous and year-ago quarters, respectively. Other production costs were virtually flat compared to the previous quarter and were 6.5% higher that the year-ago quarter due primarily to higher fuel gas and chemicals expenses,as discussed above partially offset by lower ~~electricity expense.~~average realized oil prices.

These items, and others, are further discussed below.

Additional property and project information is included under Item 1. Business, Item 2. Properties, Notes to the Financial Statements and Exhibit 99.1 of our Form 10-K for the year ended June 30, ~~2018.~~2019.

Impact of the COVID-19 Pandemic and Geopolitical Factors

~~Results~~On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a notional emergency with respect to COVID-19. The disease has continued to spread in the United States and abroad, with the potential for catastrophic impact. National, state and local authorities have recommended social distancing and imposed quarantine and isolation measures on large portions of ~~Operations~~the population, including mandatory business closures. These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign economies of uncertain severity and duration. The effectiveness of economic stabilization efforts, including government payments to affected citizens and industries, is uncertain.

~~Three Months Ended March 31, 2019~~

The nature of the COVID-19 pandemic makes it extremely difficult to predict how the Company’s business and ~~2018~~

~~Revenues~~

~~Compared~~operations will be affected long-term. However, the likely overall economic impact of the pandemic is viewed as highly negative to the year-ago quarter, current quarter revenues decreased due to 13% lower realized commodity prices partially offset by an 7% increase in production volumes. The following table summarizes total production volumes, daily production volumes, average realized pricesgeneral economy, especially the oil and ~~revenue for~~natural gas industry. During the three months ended March 31, ~~2019~~2020, primarily driven by the COVID-19 pandemic and ~~2018:~~

actions taken by OPEC+, the benchmark price of WTI dropped significantly. Although global outputs can be adjusted to support commodity pricing levels, the Company expects the price of crude oil to remain volatile in the near term.

Three Months Ended March 31,
2019 2018 Variance Variance %
Oil and gas production
  Crude oil revenues $ 9,032,032
$ 9,639,238
$ (607,206 ) (6.3 )%
  NGL revenues 468,525
511,917
(43,392 ) (8.5 )%
  Natural gas revenues 471
—
471
n.m.
  Total revenues $ 9,501,028
$ 10,151,155
$ (650,127 ) (6.4 )%

  Crude oil volumes (Bbl) 152,776
151,665
1,111
0.7 %
  NGL volumes (Bbl) 28,626
17,926
10,700
59.7 %
  Natural gas volumes (Mcf) 160
—
160
n.m.
Equivalent volumes (BOE) 181,429
169,591
11,838
7.0 %

  Crude oil (BOPD, net) 1,698
1,685
13
0.8 %
  NGLs (BOEPD, net) 318
199
119
59.8 %
  Natural gas (BOEPD, net) n.m.
—
n.m.
n.m.
Equivalent volumes (BOEPD, net) 2,016
1,884
132
7.0 %

  Crude oil price per Bbl $ 59.12
$ 63.56
$ (4.44 ) (7.0 )%
  NGL price per Bbl 16.37
28.56
(12.19 ) (42.7 )%
  Natural gas price per Mcf 2.94
—
2.94
n.m.
   Equivalent price per BOE $ 52.37
$ 59.86
$ (7.49 ) (12.5 )%

~~n. m. Not meaningful.~~

~~Production Costs~~

~~The $0.5 million increase in production costs was due to a 28% increase in CO~~₂ costs together with a 6.5% increase in other production costs. The $0.1 million increase in other production costs consisted primarily of higher fuel gas and chemicals expenses, partially offset by lower electricity expense.

Three Months Ended March 31,
2019 2018 Variance Variance %
CO₂ costs (a)
$ 1,873,720
$ 1,459,349
$ 414,371
28.4 %
Other production costs 1,919,288
1,802,843
116,445
6.5 %
Total production costs $ 3,793,008
$ 3,262,192
$ 530,816
16.3 %

CO₂ costs per BOE
$ 10.33
$ 8.61
$ 1.72
20.0 %
All other production costs per BOE 10.58
10.63
(0.05 ) (0.5 )%
Production costs per BOE $ 20.91
$ 19.24
$ 1.67
8.7 %

~~(a) Under our contract with the operator, purchased CO~~₂ ~~is priced at 1%~~Currently, all of the ~~realized~~Company’s property interests are not operated by the Company and also involve other third-party working interest owners. As a result, the Company has limited ability to influence or control the operation or future development of such properties. The Company continues to be in constant contact with its third-party operators to ensure spending is being reviewed in light of the continued decrease in oil ~~price~~prices so that it can plan accordingly.

Early in February 2020, the Company began making preparations for a potential impact on its business as a result of the global spread of COVID-19, focusing on the Company’s ability to maintain its operations and system of controls remotely. As the number of cases increased in the ~~field per Mcf, plus sales taxes~~Houston, Texas area, the Company enacted its business continuity plan to allow its employees to securely work from home. Given the small size and nature of ~~approximately 8.5%~~the Company, it was able to transition the operation of its business with minimal disruption and ~~transportation costs~~maintain its system of ~~$0.20 per Mcf.~~internal controls and procedures.

~~The $0.4 million increase in CO~~₂ ~~costs was due to an increase in purchased volumes, partially offset by a lower unit purchase cost reflecting a lower realized oil price.~~

Three Months Ended March 31,
2019 2018 Variance Variance %
CO₂ costs per mcf
$ 0.84
$ 0.90
$ (0.06 ) (6.7 )%
CO₂ volumes (MMcf per day, gross)
103.3
75.7
27.6
36.5 %

~~Depletion, Depreciation and Amortization ("DD&A")~~

For the current quarter DD&A was 12.7% higher than the to the year-ago quarter principally because of a 5.3% increase in the oil and gas properties DD&A rate together with a 7% increase in production volumes.

Three Months Ended March 31,
2019 2018 Variance Variance %
DD&A of proved oil and gas properties $ 1,523,990
$ 1,353,340
$ 170,650
12.6 %
Depreciation of other property and equipment 4,338
4,153
185
4.5 %
Amortization of intangibles 3,391
3,392
(1 ) — %
Accretion of asset retirement obligations 26,411
22,263
4,148
18.6 %
Total DD&A $ 1,558,130
$ 1,383,148
$ 174,982
12.7 %

Oil and gas DD&A rate per BOE $ 8.40
$ 7.98
$ 0.42
5.3 %

~~General and Administrative Expenses~~

Expenses for the current quarter decreased $0.6 million, or 35%, to $1.2 million from the year-ago quarter due to a decrease of $0.4 million for litigation expense, which reflected the settlement of a matter in the year-ago quarter, and lower incentive bonus and stock compensation of $0.2 million.

~~Other Income and Expenses~~

~~Other income and expense (net) increased due to higher interest income and lower interest expense.~~

Three Months Ended March 31,
2019 2018 Variance Variance %
Interest and other income $ 65,831
$ 21,345
$ 44,486
208.4 %
Interest expense (28,789 ) (30,525 ) 1,736
(5.7 )%
Total other income, net $ 37,042
$ (9,180 ) $ 46,222
n.m.

~~Net Income~~

For the three months ended March 31, 2019, income tax expense was virtually unchanged from the year-ago quarter due to a higher effective tax rate, which reflected a lower benefit from depletion in excess of basis, partially offset by lower income before income taxes.

Three Months Ended March 31,
2019 2018 Variance Variance %
Income before income taxes $ 2,989,997
$ 3,654,087
$ (664,090 ) (18 )%
Income tax provision 591,122
585,733
5,389
1 %
Net income available to common stockholders $ 2,398,875
$ 3,068,354
$ (669,479 ) (22 )%
Income tax provision (benefit) as a percentage of income before income taxes 20 % 16 %

~~Results of Operations~~

~~Nine Months Ended March 31, 2019 and 2018~~

~~Revenues~~

Compared to the corresponding year-ago period, current period revenues increased 11% due to 14% higher realized commodity prices partially offset by a 2.4% decrease in production volumes. The following table summarizes total production volumes, daily production volumes, average realized prices and revenues for the nine months ended March 31, 2019 and 2018:

Nine Months Ended March 31,
2019 2018 Variance Variance %
Oil and gas production
  Crude oil revenues $ 30,945,359
$ 27,654,128
$ 3,291,231
11.9 %
  NGL revenues 1,910,395
1,825,214
85,181
4.7 %
  Natural gas revenues 471
—
471
n.m.
  Total revenues $ 32,856,225
$ 29,479,342
$ 3,376,883
11.5 %

  Crude oil volumes (Bbl) 475,043
496,169
(21,126 ) (4.3 )%
  NGL volumes (Bbl) 76,728
69,205
7,523
10.9 %
  Natural gas volumes (Mcf) 160
—
160
n.m.
Equivalent volumes (BOE) 551,798
565,374
(13,576 ) (2.4 )%

  Crude oil (BOPD, net) 1,734
1,811
(77 ) (4.3 )%
  NGLs (BOEPD, net) 280
252
28
11.1 %
  Natural gas (BOEPD, net) n.m.
—
n.m.
n.m.
Equivalent volumes (BOEPD, net) 2,014
2,063
(49 ) (2.4 )%

  Crude oil price per Bbl $ 65.14
$ 55.74
$ 9.40
16.9 %
  NGL price per Bbl 24.90
26.37
(1.47 ) (5.6 )%
  Natural gas price per Mcf 2.94
—
2.94
n.m.
   Equivalent price per BOE $ 59.54
$ 52.14
$ 7.40
14.2 %

~~n. m. Not meaningful.~~

~~Production Costs~~

~~The $1.9 million increase in production costs was due to a 17% increase in other production costs together with a 28% increase in CO~~₂ costs. The $0.9 million increase in other production costs consisted of higher costs of $0.1 million for the NGL plant expense, $0.3 million for fuel gas expense, $0.2 million for labor, $0.2 million for chemicals and $0.1 million for workovers.

Nine Months Ended March 31,
2019 2018 Variance Variance %
CO₂ costs (a)
$ 4,862,502
$ 3,813,192
$ 1,049,310
27.5 %
Other production costs 5,841,104
4,978,503
862,601
17.3 %
Total production costs $ 10,703,606
$ 8,791,695
$ 1,911,911
21.7 %

CO₂ costs per BOE
$ 8.81
$ 6.74
$ 2.07
30.7 %
All other production costs per BOE 10.59
8.81
1.78
20.2 %
Production costs per BOE $ 19.40
$ 15.55
$ 3.85
24.8 %

~~(a) Under our contract with the operator, purchased CO~~₂ ~~is priced at 1% of the realized oil price in the field per Mcf, plus sales taxes of approximately 8.5% and transportation costs of $0.20 per Mcf.~~

~~The $1.0 million increase in CO~~₂~~costs was due to a 16% increase in purchased volumes together with a 11% increase in price per mcf reflecting the higher realized oil price.~~

Nine Months Ended March 31,
2019 2018 Variance Variance %
CO₂ costs per mcf
$ 0.90
$ 0.81
$ 0.09
11.1 %
CO₂ volumes (MMcf per day, gross)
82.9
71.5
11.4
15.9 %

~~Depletion, Depreciation and Amortization ("DD&A")~~

~~DD&A expense was 2.8% higher compared to the same year-ago period due to a 5.3% higher oil and gas DD&A rate which was partially offset by the 2.4% decrease in production volumes.~~

Nine Months Ended March 31,
2019 2018 Variance Variance %
DD&A of proved oil and gas properties $ 4,612,053
$ 4,490,545
$ 121,508
2.7 %
Depreciation of other property and equipment 12,624
12,578
46
0.4 %
Amortization of intangibles 10,173
10,173
—
— %
Accretion of asset retirement obligations 75,373
66,865
8,508
12.7 %
Total DD&A $ 4,710,223
$ 4,580,161
$ 130,062
2.8 %

Oil and gas DD&A rate per BOE $ 8.36
$ 7.94
$ 0.42
5.3 %

~~General and Administrative Expenses~~

Expenses for the nine months ended March 31, 2019 decreased $1.3 million, or 26%, to $3.8 million from the same year-ago period primarily due to lower stock and incentive compensation of $0.7 million, a $0.6 million decrease in litigation expense and $0.1 million of lower due diligence expense, partially offset by $0.2 million of higher board compensation expenses.

~~Other Income and Expenses~~

~~Other income and expense (net) increased due primarily to the Enduro breakup fee received during August 2018.~~

Nine Months Ended March 31,
2019 2018 Variance Variance %
Enduro transaction breakup fee 1,100,000
—
1,100,000
n.m.
Interest and other income 172,260
52,036
120,224
231.0 %
Interest expense (87,479 ) (71,436 ) (16,043 ) 22.5 %
Total other income, net $ 1,184,781
$ (19,400 ) $ 1,204,181
n.m.

~~n. m. Not meaningful.~~

~~Net Income~~

Net income available to common stockholders for the nine months ended March 31, 2019 decreased $3.0 million, or 20%, to $12.1 million compared to the same year-ago period primarily due to a non-recurring prior year deferred tax credit of $6.0 million, partially offset by a $3.9 million, or 35%, increase in income before income taxes. This income tax benefit resulted from the revaluation of our deferred income tax liabilities at December 31, 2017 to reflect the lower federal statutory

~~rate under the Tax Cut and Jobs Act.~~

Nine Months Ended March 31,
2019 2018 Variance Variance %
Income before income taxes 14,866,410
11,009,578
3,856,832
35.0 %
Income tax provision (benefit) 2,767,169
(4,076,156 ) 6,843,325
(167.9 )%
Net income available to common stockholders $ 12,099,241
$ 15,085,734
$ (2,986,493 ) (19.8 )%
Income tax provision as a percentage of income before income taxes 19 % (37 )%

Excluding the effect of the $6.0 million tax benefit from income taxes for the nine months ended March 31, 2018, income tax as a percentage of income before income taxes would have been approximately 18%. For the nine months ended March 31, 2019 and 2018, our respective statutory federal tax rates were 21% and 27.55%, as we used a blended rate during our fiscal 2018 in which the Tax Cut and Jobs Act was enacted. The benefit of the lower statutory rate was partially offset by a decreased benefit from depletion in excess of basis as much of our depletion carryover had been utilized by June 30, 2018.

Liquidity and Capital Resources

WeAt March 31, 2020, the Company had ~~$29.6~~$20.7 million in cash and cash equivalents, ~~(and no restricted cash) at March 31,~~impacted by the $9.3 million purchase of Hamilton Dome in November 2019, ~~and $27.7~~compared to $31.6 million of cash and cash equivalents ~~and restricted cash~~ at June 30, ~~2018.~~2019.

On November 1, 2019, and effective as of October 1, 2019, through a wholly-owned subsidiary, Evolution Petroleum West, Inc., the Company purchased a 23.51% non-operating working interest and a 19.70% revenue interest in the Hamilton Dome field located in Hot Springs County, Wyoming, from entities owned or controlled by Merit Energy Company ("Merit"). The cash consideration to Merit amounts to $9.3 million after net settlement of post-closing adjustments.

In addition, ~~we have~~the Company has a senior secured reserve-based credit facility (the "Facility") with a maximum capacity of $50 million. The Facility had $40 million of undrawn borrowing base availability on March 31, ~~2019. Under the Facility the~~2020. Subsequently and effective on April 27, 2020, primarily due to lower crude oil prices, our borrowing base ~~shall be determined semiannually as of May 15 and November 15.~~was redetermined at $27 million. There have been no borrowings under the Facility, which matures on April 11, 2021, and it is secured by substantially ~~all of~~by the ~~Company’s assets.~~

During the current quarter, the bank performed its periodic spring redetermination of borrowing base and confirmed our elected amount of $40 million. Our next scheduled determination will occur this fall.

During the current fiscal year, we amended the credit agreement to broaden the definition for Use of Proceeds to provide funds, limited to an amount not in excess of 25% of the borrowing base, for investments into cash flow generating assets complimentary to the production of oil and gas.reserves associated with Delhi field.

Any future borrowings bear interest, at the Company's option, at either LIBOR plus 2.75% or the Prime Rate, as defined under the Facility, plus 1.0%. The Facility contains covenants ~~that~~which require the maintenance of (i) a total leverage ratio of not more than 3.0 to 1.0, (ii) a debt service coverage ratio of not less than 1.1 to 1.0 and (iii) a consolidated tangible net worth of not less than $50.0 million, each as defined in the Facility. The Facility also contains other customary affirmative and negative covenants and events of default. As of March 31, ~~2019,~~2020, the Company was in compliance with all covenants contained in the Facility.

During the nine months ended March 31, 2019, we funded our operations, capital expenditures and cash dividends with cash generated from operations resulting in an increase of $1.9 million in cash. As of March 31, 2019, our working capital was $31.1 million, an increase of $3.4 million over working capital of $27.7 million at June 30, 2018.

~~We have~~The Company has historically funded ~~our~~ operations through cash from operations and working capital. ~~Our~~The primary source of cash is the sale of oil and natural gas liquids production. A portion of these cash flows are used to fund ~~our~~ capital expenditures. ~~While we expect to continue to expend capital to further develop the Delhi field, we and the operator have flexibility as to when this capital is spent.~~ The Company expects to manage future development activities in the Delhi field and the limited capital maintenance requirements of the Hamilton Dome field within the boundaries of its operating cash flow and existing working capital.

~~We may choose to pursue~~The Company is pursuing new growth opportunities through acquisitions or other transactions. In addition to ~~our~~ cash on hand, ~~we have~~the Company has access to ~~at least $40 million of~~an undrawn ~~elected~~ borrowing base availability under ~~our~~a senior secured credit facility. ~~In addition we have~~Also, the Company has an effective shelf registration statement with ~~Securities and Exchange Commission~~SEC under which wethe Company may issue up to $500 million of new debt or equity securities. ~~If we choose to pursue~~In the pursuit of new growth opportunities, ~~we would expect~~the Company expects to use ~~our~~ internal resources of cash, working capital and borrowing capacity under ~~our~~the credit facility. It may also be advantageous ~~for us~~ to consider issuing additional equity as part of any potential transaction, but ~~we have~~there are no ~~specific~~ plans to issue additional equity at this time.

~~Our other significant use~~During the nine months ended March 31, 2020, the Company funded operations, capital expenditures and cash dividends with cash generated from operations resulting in a decrease of $10.9 million in cash, ~~is our on-going dividend~~largely impacted by $9.3 million spent on an acquisition of the Hamilton Dome field and $2.5 million for repurchasing shares under the buyback program. As of March 31, 2020, working capital was $23.1 million, a decrease of $9.3 million over working capital of $32.4 million at June 30, 2019.

The Board of Directors instituted a cash dividend on ~~our~~ common stock in December ~~2013 and we have~~2013. The Company has since paid ~~twenty-two~~twenty-six consecutive quarterly dividends. Distribution of a

substantial portion of free cash flow in excess of ~~our~~ operating and capital requirements through cash dividends ~~and potential repurchases of our common stock~~ remains a priority of ~~our~~the Company’s financial strategy, and it is ~~our long term~~the Company's long-term goal to increase ~~our~~ dividends over time, as appropriate. ~~On May 7, 2019,~~However, due to the potential to pursue other opportunities at discounted prices during the current industry downturn, the Board ~~declared the next~~of Directors believed it was prudent to adjust its quarterly ~~common stock~~ dividend ofrate from $0.10 per share ~~which will be paid on~~to $0.025 per share, effective in the quarter ending June ~~28, 2019 to stockholders of record on June 14, 2019.~~30, 2020. The ~~Board reviews~~reduction in the ~~quarterly~~ dividend rate will allow the Company to conserve cash for additional financial flexibility while continuing to reward shareholders with a yield of approximately 3% at current stock price levels. As in ~~light~~the past, the Company intends to return to higher dividend levels after the industry emerges from the current economic climate.

In May 2015, the Board of ~~our financial position~~Directors approved a share repurchase program covering up to $5 million of the Company’s common stock. The Company monitors its stock price and ~~operations, forecasted results, including the outlook for oil and NGL prices, the timing of further expansion of Delhi development and other potential growth opportunities.~~

~~Capital Budget - Delhi Field~~

looks to opportunistically purchase its common stock when market conditions are deemed to be appropriate. During the nine months ended March 31, ~~2019,~~2020, the Company purchased 440,666 shares at an average cost of $5.51 per share bringing its total to $4.0 million to purchase 706,858 common shares at an average price of $5.72 per share.

In early March 2020, oil prices declined rapidly. Despite the significant decline in oil prices, the Company is well positioned to manage the current low-price environment due to the Company’s cash on hand as well as its borrowings available under its undrawn senior secured credit facility. Additionally, the Company has no long-term service contracts or drilling commitments. On April 6, 2020, the Company entered into NYMEX WTI oil swaps covering approximately 42,000 barrels per month for the

period of April 2020 through December 2020, at a fixed swap price of $32.00 per barrel. The Company’s projects having sufficient liquidity to meet all its identified cash requirements for at least the next 12 months.

Capital Expenditures

For the nine months ended March 31, 2020, we incurred ~~$4.7~~$11.5 million on capital projects consisting of ~~capital expenditures~~$9.3 million for the acquisition of Hamilton Dome field, a $0.9 million non-cash asset addition related to Hamilton Dome asset retirement obligations, and incurred $1.3 million at ~~Delhi.~~ the Delhi field, primarily for the NGL plant and completion of the water curtain project.

The ~~current expectation for~~Company does not anticipate any material net capital spending for the remainder of fiscal ~~2019 is approximately $0.5 million,~~2020 as all remaining conformance and ~~approximately $1.5 million for~~capital workover plans have been delayed based on the ~~first half~~recent decrease in oil prices and no property purchases are pending.

Full Cost Pool Ceiling Test

At the quarter ended March 31, 2020, our capitalized costs of oil and gas properties were well below the full cost valuation ceiling and we do not currently expect that a write-down of capitalized oil and gas property costs will be required in the remainder of fiscal ~~2020, primarily for conformance~~2020. However, lower oil prices reduced the excess, or cushion, of our valuation ceiling over our capitalized costs in the current quarter and ~~workover projects~~may adversely impact our ceiling tests in future quarters. We cannot give assurance that a write-down of capitalized oil and ~~maintenance capital for~~gas properties will not be required in the ~~NGL plant. We believe that~~future. Under the ~~operator will continue~~full cost method of accounting, capitalized costs of oil and gas properties, net of accumulated DD&A and related deferred taxes, are limited to the ~~development of the field through Phase V in our fiscal years 2020 and 2021. We anticipate funding for our share of capital expenditure at Delhi to be met from~~estimated future net cash flows from ~~operations.~~

~~Our~~ proved ~~undeveloped~~oil and gas reserves, discounted at ~~June 30, 2018 included 537 MBOE~~10%, plus the lower of ~~reserves~~cost or fair value of unproved properties, as adjusted for related income tax effects (the valuation “ceiling”). If capitalized costs exceed the full cost ceiling, the excess would be charged to expense as a write-down of oil and ~~$1.9 million of future development costs associated~~gas properties in the quarter in which the excess occurred. The quarterly ceiling test calculation requires that we use the average price received for our petroleum products during the twelve-month period ending with the ~~infill drilling program and 1,546 MBOE of reserves and $10.9 million of~~balance sheet date. If commodity prices remain at the current quarter’s lower levels, the average prices used in future ~~development costs associated with Phase V development in the eastern portion of the field. The timing of Phase V development is dependent in part on the results and CO~~₂ requirements of the infill drilling program. The timing of such development is also dependent, in part, on the field operator's available funds and capital spending plans and priorities within its portfolio of properties. At present, we expect to begin this development in our fiscal year 2020.

~~Funding for our anticipated capital expenditures at Delhi for our fiscal 2020 is expected to be met from cash flows from operations and current working capital.~~ceiling test calculations will decline.

Overview of Cash Flow Activities

The table below compares a summary of our consolidated condensed ~~consolidated~~ statements of cash flows for nine months ended March 31, 2020 and 2019 ~~and 2018~~ presented ~~on page three~~in the consolidated condensed financial statements in Item 1, Part I of this report on Form 10-Q.


	Nine Months Ended March 31,									Nine Months Ended March 31,
Increases (Decreases) in Cash:	2019			2018			Difference			2020			2019			Difference
	(In Millions)									(In Millions)
Net cash provided by operating activities	$	18.3		$	14.5		$	3.8		$	12.2		$	18.3		$	(6.1	)
Net cash used in investing activities	(6.3		)	(1.6		)	(4.7		)	(10.7		)	(6.4		)	(4.3		)
Net cash used in financing activities	(10.1		)	(8.7		)	(1.4		)	(12.4		)	(10.0		)	(2.4		)
	$	1.9		$	4.2		$	(2.3	)	$	(10.9	)	$	1.9		$	(12.8	)

Cash provided by operating activities in the current year period ~~increased $3.8~~decreased $6.1 million compared to the same year-ago period due to a ~~$5.2~~$3.8 million ~~increase~~decrease in cash provided by net income together with $0.6 million decrease in cash provided by non-cash expenses, and ~~$1.6~~a $1.7 million ~~increase~~decrease in cash provided from current operating assets and liabilities partially offset by a $3.0 million decrease in cash provided by net income. The year-ago period non-cash items used, rather than provided cash, because of a one-time $6.0 million deferred income tax credit related to enactment of the Tax Cut and Jobs Act.liabilities.

Cash used in investing activities increased ~~$4.7~~$4.3 million due principally to the purchase of the Hamilton Dome working interest in fiscal 2020 partly offset by fiscal 2019 cash outflows primarily for completion of the infill drilling project at the Delhi field.

During the nine months ended March 31, 2020, the Company spent $2.4 million for common stock repurchases of which virtually all were made under its authorized stock buyback program.

Results of Operations

Three Months Ended March 31, 2020 and 2019

Revenues

Compared to the corresponding year-ago period, current period revenues decreased 18.8% primarily due to a 26.0% lower realized commodity prices partially offset by a 9.8% increase in production volumes impacted by our interest in the Hamilton Dome field acquired in November 2019. The Company's average realized oil price was lower principally due to the decline in WTI pricing. The Company's Hamilton Dome production trades at a discount to WTI due to its specific gravity and sulfur content, while its Delhi production typically trades at a premium. Contributing to the decrease was additional trucking and handling charges during January 2020 while the Delhi oil sales pipeline was being repaired. The sales pipeline went back online February 1, 2020 thereby eliminating the trucking and handling charges.

The following table summarizes total production volumes, daily production volumes, average realized prices and revenues for the three months ended March 31, 2020 and 2019:



	Three Months Ended March 31,
	2020		2019		Variance			Variance %
Oil and gas production
Crude oil revenues	$	7,461,823	$	9,032,032	$	(1,570,209	)	(17.4	)%
NGL revenues	250,476		468,525		(218,049		)	(46.5	)%
Natural gas revenues	320		471		(151		)	(32.1	)%
Total revenues	$	7,712,619	$	9,501,028	$	(1,788,409	)	(18.8	)%

Crude oil volumes (Bbl)	172,901		152,776		20,125			13.2	%
NGL volumes (Bbl)	26,206		28,626		(2,420		)	(8.5	)%
Natural gas volumes (Mcf)	223		160		63			39.4	%
Equivalent volumes (BOE)	199,144		181,429		17,715			9.8	%

Crude oil (BOPD, net)	1,879		1,698		181			10.7	%
NGLs (BOEPD, net)	285		318		(33		)	(10.4	)%
Natural gas (BOEPD, net)	—		n.m.		n.m.			n.m.
Equivalent volumes (BOEPD, net)	2,164		2,016		148			7.3	%

Crude oil price per Bbl	$	43.16	$	59.12	$	(15.96	)	(27.0	)%
NGL price per Bbl	9.56		16.37		(6.81		)	(41.6	)%
Natural gas price per Mcf	1.43		2.94		(1.51		)	n.m.
Equivalent price per BOE	$	38.73	$	52.37	$	(13.64	)	(26.0	)%

n. m. Not meaningful.

Production Costs

Production costs are presented in two components: CO₂ costs for the Delhi field and other production costs for both the Delhi and Hamilton Dome fields.



	Three Months Ended March 31,
	2020		2019		Variance			Variance %
CO₂ costs (a)	$	806,527	$	1,873,720	$	(1,067,193	)	(57.0	)%
Other production costs	3,089,017		1,919,288		1,169,729			60.9	%
Total production costs	$	3,895,544	$	3,793,008	$	102,536		2.7	%

CO₂ costs per BOE	$	4.05	$	10.33	$	(6.28	)	(60.8	)%
All other production costs per BOE	15.51		10.58		4.93			46.6	%
Production costs per BOE	$	19.56	$	20.91	$	(1.35	)	(6.5	)%

(a) Under our contract with the Delhi field operator, purchased CO₂ is priced at 1% of the realized oil price in the field per Mcf, plus sales taxes and transportation costs as per contract terms.



	Three Months Ended March 31,
	2020		2019		Variance			Variance %
CO₂ costs per mcf	$	0.69	$	0.84	$	(0.15	)	(17.9	)%
CO₂ volumes (MMcf per day, gross)	53.9		103.3		(49.4		)	(47.8	)%

In the current quarter, CO₂costs decreased 57%. The pipeline that supplies CO₂ to the Delhi field was shut in on February 22, 2020, when a pressure loss was detected, and CO₂ purchases were temporarily suspended. CO₂ purchases provide approximately 20% of the injected volumes in the field, and the field’s recycle facilities provide the other 80%. The recycle facilities continue to operate as usual. The pipeline is owned and operated by Denbury Resources, and the Company does not have any ownership in the portion of the pipeline under repair, which is upstream of the Delhi field. Denbury Resources has initiated a project to repair the pipeline, but has not yet set an estimated return to service date. Compared to the year-ago quarter, "Other production costs" increased 61% primarily due to the acquisition of the Hamilton Dome field in the prior quarter whereas during the year-ago quarter the Company did not have any ownership in the Hamilton Dome field. The Delhi field's "Other production costs" increased slightly by 1.1%.

Compared to the year-ago quarter, Delhi field costs decreased 17% to $17.45 per BOE of Delhi production in current quarter, largely due to lower CO₂costs, partly offset by lower field volumes.

Hamilton Dome field costs per BOE were $27.55 for the current quarter.

Depletion, Depreciation and Amortization ("DD&A")

Total DD&A expense was 10% lower compared to the year-ago quarter primarily due to a 19.2% decline in the DD&A rate partially offset by a 9.8% increase in production volumes in the period. The integration of the Hamilton Dome asset led to a lower overall DD&A per BOE rate.



	Three Months Ended March 31,
	2020		2019		Variance			Variance %
DD&A of proved oil and gas properties	$	1,352,203	$	1,523,990	$	(171,787	)	(11.3	)%
Depreciation of other property and equipment	2,465		4,338		(1,873		)	(43.2	)%
Amortization of intangibles	3,391		3,391		—			—	%
Accretion of asset retirement obligations	41,422		26,411		15,011			56.8	%
Total DD&A	$	1,399,481	$	1,558,130	$	(158,649	)	(10.2	)%

Oil and gas DD&A rate per BOE	$	6.79	$	8.40	$	(1.61	)	(19.2	)%

General and Administrative Expenses

Expenses for the three months ended March 31, 2020 increased 22% to $1.5 million relative to the comparable period in 2019, primarily due to higher ~~capital expenditure disbursements~~noncash stock-based compensation, and increases in professional fees, including but not limited to Audit, Tax, Legal and Consulting services.

Other Income and Expenses

Interest income was lower due to lower average cash balance in the ~~2019 period.~~current quarter compared to the year-ago quarter, offset by slightly higher average interest rates.

~~Cash used by financing activities~~



	Three Months Ended March 31,
	2020			2019			Variance			Variance %
Interest and other income	$	41,186		$	65,831		$	(24,645	)	(37.4	)%
Interest expense	(29,067		)	(28,789		)	(278		)	1.0	%
Total other income, net	$	12,119		$	37,042		$	(24,923	)	(67.3	)%

Net Income

Net income available to common stockholders for the three months ended March 31, 2020 increased ~~$1.4~~$1.3 million, or 55%, to $3.7 million compared to the year-ago quarter. Pre-tax income decreased due to ~~$1.7~~the aforementioned revenue and expense variances. During the current quarter we recorded a $2.8 million income tax benefit related to Enhanced Oil Recovery credits claimed on the federal income tax return for fiscal 2019 and on amended federal income tax returns for fiscal years 2017 and 2018.



	Three Months Ended March 31,
	2020			2019		Variance			Variance %
Income before income taxes	963,933			2,989,997		(2,026,064		)	(67.8	)%
Income tax provision (benefit)	(2,746,226		)	591,122		(3,337,348		)	(564.6	)%
Net income available to common stockholders	$	3,710,159		2,398,875		$	1,311,284		54.7	%
Income tax provision as percentage of income before income taxes	(284.9		)%	19.8	%

Results of ~~increased cash dividends, reflecting an higher quarterly dividend rate of $0.10 per share~~Operations

Nine Months Ended March 31, 2020 and 2019

Revenues

Compared to the corresponding year-ago period, current period revenues decreased 20.1% primarily due to 22.7% decrease in the ~~2019 period compared to $0.075~~Company's realized equivalent price per ~~share during the first half of fiscal 2018 and $0.10 per share paid in March 2018,~~BOE partially offset by ~~$0.3~~an increase in volumes primarily as a result of the Company's acquisition of Hamilton Dome on November 1, 2019. The Company’s average realized oil price was lower primarily due to the decline in West Texas Intermediate ("WTI") pricing. The Company’s Hamilton Dome production typically trades at a discount to WTI due to its specific gravity and sulfur content while its Delhi production typically trades at a premium. Also contributing to the decrease was lower LLS premium for Delhi field production due to temporarily higher transportation costs. From mid November 2019 through January 2020, the net realized price was impacted by temporary trucking and handling charges incurred while the oil sales pipeline underwent repairs. This pipeline went back online February 1, 2020.

The following table summarizes total production volumes, daily production volumes, average realized prices and revenues for the nine months ended March 31, 2020 and 2019:



	Nine Months Ended March 31,
	2020		2019		Variance			Variance %
Oil and gas production
Crude oil revenues	$	25,281,564	$	30,945,359	$	(5,663,795	)	(18.3	)%
NGL revenues	963,054		1,910,395		(947,341		)	(49.6	)%
Natural gas revenues	1,831		471		1,360			n.m.
Total revenues	$	26,246,449	$	32,856,225	$	(6,609,776	)	(20.1	)%

Crude oil volumes (Bbl)	490,125		475,043		15,082			3.2	%
NGL volumes (Bbl)	79,982		76,728		3,254			4.2	%
Natural gas volumes (Mcf)	935		160		775			n.m.
Equivalent volumes (BOE)	570,263		551,798		18,465			3.3	%

Crude oil (BOPD, net)	1,782		1,734		48			2.8	%
NGLs (BOEPD, net)	291		280		11			3.9	%
Natural gas (BOEPD, net)	1		n.m.		1			n.m.
Equivalent volumes (BOEPD, net)	2,074		2,014		60			3.0	%

Crude oil price per Bbl	$	51.58	$	65.14	$	(13.56	)	(20.8	)%
NGL price per Bbl	12.04		24.90		(12.86		)	(51.6	)%
Natural gas price per Mcf	1.96		2.94		(0.98		)	n.m.
Equivalent price per BOE	$	46.03	$	59.54	$	(13.51	)	(22.7	)%

n. m. Not meaningful.

Production Costs

Production costs are presented in two components: CO₂ costs for the Delhi field and other production costs for both the Delhi and Hamilton Dome fields.



	Nine Months Ended March 31,
	2020		2019		Variance			Variance %
CO₂ costs (a)	$	3,501,507	$	4,862,502	$	(1,360,995	)	(28.0	)%
Other production costs	7,718,731		5,841,104		1,877,627			32.1	%
Total production costs	$	11,220,238	$	10,703,606	$	516,632		4.8	%

CO₂ costs per BOE	$	6.14	$	8.81	$	(2.67	)	(30.3	)%
All other production costs per BOE	13.54		10.59		2.95			27.9	%
Production costs per BOE	$	19.68	$	19.40	$	0.28		1.4	%

(a) Under our contract with the Delhi field operator, purchased CO₂ is priced at 1% of the realized oil price in the field per Mcf, plus sales taxes and transportation costs as per contract terms.



	Nine Months Ended March 31,
	2020		2019		Variance			Variance %
CO₂ costs per mcf	$	0.77	$	0.90	$	(0.13	)	(14.4	)%
CO₂ volumes (MMcf per day, gross)	69.1		82.9		(13.8		)	(16.6	)%

Compared to the year-ago period, CO₂ costs declined 28%. The pipeline that supplies CO₂ to the Delhi field was shut in on February 22, 2020 when a pressure loss was detected, and CO₂ purchases were temporarily suspended. CO₂ purchases provide approximately 20% of the injected volumes in the field, and the field’s recycle facilities provide the other 80%. The recycle facilities continue to operate as usual. The pipeline is owned and operated by Denbury Resources, and the Company does not have any ownership in the portion of the pipeline under repair, which is upstream of the Delhi field. Denbury Resources has initiated a project to repair the pipeline, but has not yet set an estimated return to service date.

Compared to the year-ago period, "Other production costs" increased by $1.9 million primarily due to five months of production costs attributable to the Hamilton Dome field acquired on November 1, 2019, whereas during the year-ago period the Company did not have any ownership in the Hamilton Dome field. The Delhi field’s “Other production costs” were $0.2 million lower ~~common share repurchases~~compared to the year-ago period.

On a total cost per BOE basis, Delhi field costs decreased 6.0% to $18.23 per BOE in current period, primarily due to a 20.8% decline in CO₂ cost per BOE, partially offset by a 6% increase in other production costs per BOE.

Hamilton Dome field costs per BOE was $30.22 for its five months included in the current period.

Depletion, Depreciation and Amortization ("DD&A")

Total DD&A expense was 8.5% lower compared to the same year-ago period due to an 9.2% decrease in the oil and gas DD&A amortization as the volume change between the two periods was very slight. The integration of the Hamilton Dome asset contributed to an overall lower composite DD&A rate.



	Nine Months Ended March 31,
	2020		2019		Variance			Variance %
DD&A of proved oil and gas properties	$	4,189,290	$	4,612,053	$	(422,763	)	(9.2	)%
Depreciation of other property and equipment	6,969		12,624		(5,655		)	(44.8	)%
Amortization of intangibles	10,173		10,173		—			—	%
Accretion of asset retirement obligations	103,852		75,373		28,479			37.8	%
Total DD&A	$	4,310,284	$	4,710,223	$	(399,939	)	(8.5	)%

Oil and gas DD&A rate per BOE	$	7.35	$	8.36	$	(1.01	)	(12.1	)%

General and Administrative Expenses

Expenses for the nine months ended March 31, 2020 increased $0.5 million, or 12.8%, to $4.2 million relative to the comparable period in 2019, primarily due to higher noncash stock-based compensation related to ~~stock-based awards vestings.~~the hiring of a new executive officer, and increases in professional fees, including but not limited to Audit, Tax, Legal and Consulting services.

Other Income and Expenses

Other income and expense (net) decreased due primarily to the Enduro breakup fee received during August 2018. Interest income is lower primarily due to lower invested balances.



	Nine Months Ended March 31,
	2020			2019			Variance			Variance %
Enduro transaction breakup fee	—			1,100,000			(1,100,000		)	(100.0	)%
Interest and other income	160,256			172,260			(12,004		)	(7.0	)%
Interest expense	(87,757		)	(87,479		)	(278		)	0.3	%
Total other income, net	$	72,499		$	1,184,781		$	(1,112,282	)	(93.9	)%

Net Income

Net income available to common stockholders for the nine months ended March 31, 2020 decreased $3.8 million, or 32%, to $8.3 million compared to the same year-ago period. Pre-tax income decreased due to the aforementioned revenue and expense variances. Our income tax provision decreased primarily due to lower pre-tax income as our effective income tax rate was relatively unchanged from the year-ago period. In addition, during the current period, we recorded a $2.8 million income tax benefit related to Enhanced Oil Recovery credits claimed on the federal income tax return for fiscal 2019 and on amended federal income tax returns for fiscal years 2017 and 2018.



	Nine Months Ended March 31,
	2020			2019			Variance			Variance %
Income before income taxes	6,548,096			14,866,410			(8,318,314		)	(56.0	)%
Income tax provision (benefit)	(1,719,801		)	2,767,169			(4,486,970		)	(162.2	)%
Net income available to common stockholders	$	8,267,897		$	12,099,241		$	(3,831,344	)	(31.7	)%
Income tax provision as percentage of income before income taxes	(26.3		)%	18.6		%

Critical Accounting Policies and Estimates

See our ~~critical accounting policies~~Critical Accounting Policies and Estimates as disclosed ~~in Note 2– Summary~~within Item 7. Management's Discussion and Analysis of ~~Significant Accounting Policies~~Financial Condition and Results of Operations in the ~~2018~~2019 Form 10-K. For recently adopted and recently issued accounting pronouncements from the Financial Accounting Standards Board, please see Note 2 – Summary of Significant Accounting Policies herein.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

Information about market risks for the three months ended March 31, ~~2019,~~2020, did not change materially from the disclosures in Item 7A of our Annual Report on Form 10-K for the year ended June 30, ~~2018.~~2019.

Commodity Price Risk

Our most significant market risk is the pricing for crude oil and NGL's. We ~~expect~~are exposed to various risks, including energy ~~prices to remain volatile~~commodity price risk, such as price differentials between the NYMEX commodity price and ~~unpredictable. If energy~~the index price at the location where our production is sold. When oil and natural gas liquids prices decline significantly our ~~revenues~~ability to finance our capital budget and ~~cash flow would significantly decline.~~operations may be adversely impacted. In addition, a non-cash write-down of our oil and gas properties could be required under full cost accounting rules if future oil and gas commodity prices ~~sustained~~sustain current price levels or if they continue to decline.

We expect the current weakness in oil and gas prices to persist for some time and have a significant decline. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow and raise additional capital, as, if and when needed. We may use derivative instruments to manage our exposure to commodity price risk from time to time basednegative impact on our ~~assessment~~revenues and cash flows. As a result, on April 6, 2020, we entered into NYMEX WTI oil swaps covering 1,400 barrels per day (or approximately 42,000 barrels per month), a substantial portion of ~~such risk.~~our anticipated production, for the period April 2020 through December 2020, at a fixed swap price of $32.00 per barrel. We are exposed to market risk on this open derivative contract related to potential non-performance by our counterparty. It is our policy to enter into derivative contracts only with

counterparties that are credit worthy institutions. We did not post collateral under the swap as it represents an uncollateralized trade.

Interest Rate Risk

We currently have only a small exposure to changes in interest rates. Changes in interest rates affect the interest earned on our cash and cash equivalents. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and that such information is accumulated and communicated to this Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

As required by ~~Securities and Exchange Commission~~SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of the Company’s management, including our ~~Interim~~ Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-15(e)) as of the end of the quarter covered by this report. In designing and evaluating our disclosure controls and procedures, our management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives. Based on the foregoing, our ~~Interim~~ Chief Executive Officer and Chief Financial Officer concluded that as of March 31, ~~2019~~2020 our disclosure controls and procedures are effective in ensuring that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission~~SEC rules and forms.

Under the supervision and with the participation of the Company’s management, including its ~~Interim~~ Chief Executive Officer and Chief Financial Officer, during the quarter ended March 31, ~~2019,~~2020, we have determined there has been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Our Annual Report on Form 10-K for the year ended June 30, ~~2018~~2019 includes a detailed description of our risk factors. ~~There have been no material changes~~In addition to those, we add the following risk factor below:

Events outside of our control, including a pandemic or broad outbreak of an infectious disease, such as the ongoing global outbreak of a novel strain of the coronavirus identified in late 2019 (“COVID-19”), may materially adversely affect our business.

We face risks related to pandemics, outbreaks or other public health events that are outside of our control and could significantly disrupt our operations and adversely affect out financial condition. In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. This virus continues to spread globally including in the United States. The COVID-19 outbreak has severely impacted financial markets and worldwide economic activity and has contributed to the ~~risk factors previously disclosed~~reduced demand for oil, resulting in a substantial decrease in oil prices and production declines, especially when paired with the recent actions taken by OPEC+ and global storage considerations. The extent to which COVID-19 impacts our ~~Annual Report~~business will depend on ~~Form 10-K for~~future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the ~~year ended June 30, 2018.~~severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

During the quarter ended March 31, ~~2019,~~2020, the Company ~~did not purchase any~~purchased shares of common stock in the open market under ~~the previously announced~~its share repurchase program and noalso received shares of common stock ~~were surrendered by its~~from employees of the Company to pay their share of payroll taxes arising from vestings of restricted stock and contingent restricted stock. The table below summarizes information about the Company's purchases of its equity securities during the quarter ended March 31, 2020.



Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share(1)	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 2020	2,934	$5.05	Not applicable	$1.7 million
February 2020	68,437	$4.99	Not applicable	$1.3 million
March 2020	79,148	$4.76	Not applicable	$1.0 million
Total	150,519

(1)During the current quarter there were no shares of common stock surrendered by employees to pay their payroll tax liabilities arising from vestings of restricted stock and contingent restricted stock.

(2)On May 12, 2015, the Board of Directors approved a share repurchase program covering up to $5 million of the Company's common stock. Under the program's terms, shares may be repurchased only on the open market and in accordance with the requirements of the SEC. The timing and amount of repurchases will depend upon several factors, including financial resources and market and business conditions. There is no fixed termination date for this repurchase program, and the repurchase program may be suspended or discontinued at any time. Such shares are initially recorded as treasury stock, then subsequently canceled.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

A. Exhibits



31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1			Certification of Chief Executive Officer pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EVOLUTION PETROLEUM CORPORATION

(Registrant)



	By:	/s/ ~~DAVID JOE~~Jason E. Brown
		~~David Joe~~Jason E. Brown
		~~Senior Vice~~ President and Chief ~~Financial~~Executive Officer ~~and~~
		~~Treasurer~~
Date: May ~~10, 2019~~7, 2020

2430



	March 31, 2019		June 30, 2018
Receivables from oil and NGL sales	$	3,686,969	$	3,940,998
Other	47		918
Total receivables	$	3,687,016	$	3,941,916



Outstanding Potentially Dilutive Securities	Weighted Average Exercise Price		At March 31, 2018
Contingent Restricted Stock grants	$	—	$	61,868

Outstanding Potentially Dilutive Securities

Weighted
Average
Exercise Price

At March 31, 2020

Contingent Restricted Stock grants