UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 28, 2006
Date of Earliest Event Reported: September 27, 2006
EVOLUTION PETROLEUM CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Nevada
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(State or Other Jurisdiction of Incorporation)
0-27862 80-0028196
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(Commission File Number) (I.R.S. Employer Identification No.)
820 Gessner, Suite 1340, Houston, Texas 77024
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(Address of Principal Executive Offices) (Zip Code)
(713) 935-0122
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425).
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12).
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)).
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)).
Item 2.02. Results of Operations and Financial Condition
On September 27, 2006, Evolution Petroleum Corporation, a Nevada corporation,
issued a press release announcing its financial results for the fiscal year
ended June 30, 2006. A copy of the press release is attached hereto as Exhibit
99.1 and is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
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99.1 Press release issued by Evolution Petroleum Corporation on
September 27, 2006.
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.
Date: September 27, 2006 EVOLUTION PETROLEUM CORPORATION
By: /s/ Robert Herlin
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Robert Herlin, Chief Executive Officer
EVOLUTION PETROLEUM CORP. NEWS
820 Gessner, Suite 1340, Houston, TX 77024 RELEASE
FOR IMMEDIATE RELEASE
Company Contact:
Sterling McDonald, CFO
Phone: (713) 935-0122
Email: smcdonald@evolutionpetroleum.com
Investor Relations Contact:
Kathleen Heaney
Integrated Corporate Relations
(203) 803-3585
Evolution Reports Fiscal 2006 Results Highlighted by 75%
Increase in Operating Revenues and $50 Million Received for Delhi
Farmout
Houston, TX, September 27, 2006. Evolution Petroleum Corporation (AMEX: EPM),
formerly Natural Gas Systems, announced today that operating revenues for the
fiscal year ended June 30, 2006 increased 75% over fiscal year 2005 to $2.9
million. Increased oil volumes and higher realized oil prices led to a 91%
increase in oil revenues, and decreased natural gas volumes on higher realized
prices led to an 18% increase in natural gas revenues. Net income for the year
was $24.6 million, compared with a net loss of $2.2 million in fiscal 2005. A
$45.3 million pre-tax gain on the sale of assets was the major factor in the
increased net income reported for fiscal 2006. The Company reported earnings per
share of $0.98 basic and $0.96 diluted for fiscal 2006, as compared to a loss
per share of $0.09 in fiscal 2005.
Fiscal 2006 Operating Highlights
o Sales Volumes:
o Oil (Mbbls) - 46.9
o Gas (MMcf) - 45.4
o 5 development wells drilled
o Average Realized Prices (including price risk activities):
o Oil - $51.92
o Gas - $9.35
o Proved Reserves - 465 MBOE
Costs and Expenses
Lease operating expenses of $1.7 million ($31.66/boe sold) were 97% higher than
fiscal 2005 and reflect a full year of operating expenses in the Tullos Field, a
general increase in oilfield service costs and unexpectedly high workover costs
on older, recently recompleted wells in the Delhi Field. General and
administrative (G&A) costs were $2.8 million for fiscal 2006 as compared to $2.2
million in fiscal 2005. Increased G&A expenses reflect the overall growth of the
business as well as higher costs associated with being a public company. For
fiscal 2006, the company reported an operating loss of $2.2 million compared to
an operating loss of $1.8 million in fiscal 2005.
Robert Herlin, President and Chief Executive Officer of Evolution Petroleum,
commented, "Fiscal 2006 was a transformational year for Evolution Petroleum. The
sale of our Delhi Farmout was completed late in the fiscal year, potentially
adding 11 million to 16 million barrels of unproven resources to our interest
through the CO2-EOR project planned for Delhi. This transaction also
significantly strengthened our balance sheet, providing us with the necessary
funds to further grow our three business initiatives in re-developing older
fields, enhanced oil recovery and tight gas projects."
Conference Call Info.
Management will host a conference call to discuss these results today at 4:30
p.m. Eastern Time (3:30 p.m. Central Time). To participate in the conference
call, dial 877-704-5384. International callers, please dial: 913-312-1279. No
Passcode required.
The conference call will be webcast and can be accessed from the Company's
website at www.evolutionpetroleum.com as well as from
http://viavid.net/dce.aspx?sid=000035E3. For those who are unable to listen to
the webcast live, an indexed recording of the call will be posted on the
Company's website following the call's completion.
A telephone replay will also be available for one week beginning at 7:30 p.m.
(Eastern) on September 26, 2006, and can be accessed by dialing 1-888-203-1112
or 1-719-457-0820 (international callers) and entering pin number 1040577.
About Evolution Petroleum
Evolution Petroleum Corporation (http://www.evolutionpetroleum.com) acquires
mature oil and gas resources and applies conventional and specialized technology
to accelerate production and develop incremental reserves and value. The Company
currently owns 7.4% in overriding royalty interests and a 25% reversionary
working interest in the 13,636 acre Delhi Field Holt Bryant Unit, a 25% working
interest in certain other depths in the Delhi Field and 100% working interests
in smaller fields, all located onshore in Louisiana. Having already produced 190
million barrels of oil through primary and secondary recovery methods, the Delhi
Holt Bryant Unit is scheduled for redevelopment using CO2 enhanced oil recovery
technology. The Company is actively engaged in other development projects.
Safe Harbor Statement
All statements contained in this press release regarding potential results and
future plans and objectives of the Company are forward-looking statements that
involve various risks and uncertainties. There can be no assurance that such
statements will prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements. The Company
undertakes no obligation to update or review any forward-looking statement,
whether as a result of new information, future events, or otherwise. Important
factors that could cause actual results to differ materially from our
expectations include, but are not limited to, those factors that are disclosed
under the heading "Risk Factors" and elsewhere in our documents filed from time
to time with the United States Securities and Exchange Commission and other
regulatory authorities. Statements regarding our ability to complete
transactions, successfully apply technology applications in the re-development
of oil and gas fields, realize future production volumes, realize success in our
drilling and development activity, prices, future revenues and income and cash
flows and other statements that are not historical facts contain predictions,
estimates and other forward- looking statements. Although the Company believes
that its expectations are based on reasonable assumptions, it can give no
assurance that its goals will be achieved and these statements will prove to be
accurate. Important factors could cause actual results to differ materially from
those included in the forward-looking statements.
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EVOLUTION PETROLEUM
Consolidated Income Statement
Years Ended June 30,
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2006 2005
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Revenues:
Oil sales $ 2,450,676 $ 1,335,288
Gas sales 424,190 358,433
Price risk management activities (13,452) (58,534)
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Total revenues 2,861,414 1,635,187
Operating Costs:
Production expenses 1,725,760 874,876
Production taxes 86,562 68,386
Depreciation, depletion and amortization 407,467 260,124
General and administrative (includes non-cash
stock based compensation expense of $546,567
and $707,117 for the years ended June 30, 2006 and 2005) 2,826,085 2,220,780
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Total operating costs 5,045,874 3,424,166
Loss from operations (2,184,460) (1,788,979)
Other income and (expense):
Interest income 165,313 11,709
Interest expense (2,600,180) (387,301)
Gain on sale of assets 45,325,468 0
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Total other income and (expense) 42,890,601 (375,592)
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Income / (loss) before income taxes 40,706,141 (2,164,571)
Income tax expense:
Current 2,978,650 0
Deferred 13,101,350 0
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Total income tax expense 16,080,000 0
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Net income (loss) $ 24,626,141 $ (2,164,571)
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Earnings/ (Loss) per common share
Basic $ 0.98 $ (0.09)
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Diluted $ 0.96 $ (0.09)
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Weighted average number of common share
Basic 25,031,125 23,533,922
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Diluted
25,555,992 23,533,922
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Evolution Petroleum Corporation and Subsidiaries
Consolidated Balance Sheets
June 30,
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2006 2005
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Assets
Current Assets:
Cash $ 9,893,547 $ 2,548,688
Accounts receivable, trade 132,371 300,761
Inventories 76,917 222,470
Prepaid expenses 157,629 84,304
Retainers and deposits 60,895 56,335
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Total current assets 10,321,359 3,212,558
Cash in qualified intermediary account for "like-kind" exchanges 34,662,368 0
Oil & Gas properties - full cost 3,878,551 5,276,303
Oil & Gas properties - not amortized 52,098 61,887
Less: accumulated depletion (371,624) (313,391)
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Net oil & gas properties 3,559,025 5,024,799
Furniture, fixtures and equipment, at cost 16,561 12,113
Less: accumulated depreciation (7,998) (3,401)
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8,563 8,712
Restricted deposits 326,835 863,089
Other assets 79,808 356,066
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Total assets $ 48,957,958 $ 9,465,224
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 310,272 $ 240,389
Accrued liabilities 473,782 276,470
Notes payable, current 0 6,754
Income taxes payable 2,978,650 0
Royalties payable 47,054 89,713
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Total current liabilities 3,809,758 613,326
Long term liabilities:
Notes Payable, net of discount 0 2,906,548
Deferred income taxes payable 13,101,350 0
Asset retirement obligations 123,679 433,250
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Total liabilities 17,034,787 3,953,124
Common Stock, totaling 351,333 shares subject to demand registration rights 790,500 0
Stockholders' equity:
Common Stock, par value $0.001 per share; 100,000,000 shares authorized,
26,300,664 and 24,774,606, issued and outstanding as of June 30, 2006
and June 30, 2005, respectively, net of 351,333 shares of common stock
subject to
demand registration rights 26,300 24,774
Additional paid-in capital 10,274,555 9,611,767
Deferred stock based compensation (265,167) (595,283)
Accumulated income / (deficit) 21,096,983 (3,529,158)
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Total stockholders' equity 31,132,671 5,512,100
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Total liabilities and stockholders' equity $ 48,957,958 $ 9,465,224
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