Evolution Petroleum Scoops Up Anadarko Assets for $43.5MM

Houston-based Evolution Petroleum Corporation is acquiring non-operated oil and natural gas assets in the SCOOP and STACK plays in central Oklahoma from Red Sky Resources III, LLC, Red Sky Resources IV, LLC, and Coriolis Energy Partners I, LLC.

The combined purchase price of the acquisitions is $43.5 million in cash, subject to customary closing adjustments, with an effective date of November 1, 2023. The acquisitions are expected to close in mid-February, Evolution said in a news release Tuesday.

The assets have production of approximately 1,550 barrels of oil equivalent per day (boepd) and a commodity mix of 42 percent oil, 15 percent natural gas liquids, and 43 percent natural gas as of the effective date, the company said, adding that the assets include approximately 230 producing wells in the SCOOP and STACK plays of the Anadarko Basin.

Evolution said there is “significant upside” associated with approximately 3,700 net acres in the plays with more than 300 gross undeveloped locations. The assets are managed by best-in-class operators, including Continental, Ovintiv, EOG, Marathon, and Gulfport, Evolution added.

“We are pleased to announce these Acquisitions, which together equal the largest transaction in Evolution’s history”, Evolution President and CEO Kelly Loyd said. “This is a significant achievement for our company and demonstrates our ability to successfully procure high-quality assets in a core basin with best-in-class operating parties. The strategic addition of these non-operated assets to our increasingly diversified portfolio is a testament to our prudence in growing our business for the long-term benefit of our shareholders”.

“The asset’s high-quality, proved developed producing base (PDP) and long-dated inventory have the potential to generate significant free cash flow, contribute to higher per-share profits, and extend and potentially enhance our dividend capacity. Evolution has a proven track record of executing its strategy of buying long-life production based on current commodity pricing during the downswings with the potential for significant upside associated with an upswing in the commodity price cycle”, Lloyd continued.

“These acquisitions continue our strategy to diversify our asset base within targeted areas and give us exposure to another world-class producing basin with ample takeaway and processing infrastructure and well-established end sales markets”, Lloyd added. “They also greatly diversify our portfolio classification by adding not just PDP wells but also low working interest exposure to more than 300 gross, high-quality undeveloped locations. We are excited about the potential of these acquisitions and the opportunities they present for our continued growth and success”.

Evolution expects to fund the transactions from cash on hand and borrowings from the company’s senior credit facility with MidFirst Bank. As of December 31, 2023, and prior to the transaction, the company had approximately $8 million in cash on hand and had no outstanding borrowings under the credit facility, according to the release.

Evolution is an independent energy company focused on maximizing total shareholder returns through the ownership of and investment in onshore oil and natural gas properties in the USA. The company aims to build and maintain a diversified portfolio of long-life oil and natural gas properties through acquisitions, selective development opportunities, production enhancements, and other exploitation efforts.

Its properties include non-operated interests in the following areas: the Chaveroo Oilfield located in Chaves and Roosevelt Counties, New Mexico; the Jonah Field in Sublette County, Wyoming; the Williston Basin in North Dakota; the Barnett Shale located in North Texas; the Hamilton Dome Field located in Hot Springs County, Wyoming; the Delhi Holt-Bryant Unit in the Delhi Field in Northeast Louisiana; as well as small overriding royalty interests in four onshore Texas wells.

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