0001558370-22-017173 | 10-Q | XBRL Viewer

Fiscal Year

First quarter ended September 30,

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Derivatives - Crude Oil Derivative Positions (Details)	3 Months Ended
Derivatives - Crude Oil Derivative Positions (Details)	Sep. 30, 2022 MMBTU $ / MMBTU $ / bbl bbl
October 2022
Derivative [Line Items]
Volume in MMBTU \| MMBTU	117,523
Weighted Average Floor Price	3.75
Weighted Average Ceiling Price	5.05
October 2022
Derivative [Line Items]
Volume in MMBTU \| MMBTU	78,928
Weighted Average Floor Price	5.25
Weighted Average Ceiling Price	6.67
November 2022 - February 2023
Derivative [Line Items]
Volume in MMBTU \| MMBTU	443,750
Weighted Average Floor Price	3.75
Weighted Average Ceiling Price	7.30
November 2022 - March 2023
Derivative [Line Items]
Volume in MMBTU \| MMBTU	374,072
Weighted Average Floor Price	5.25
Weighted Average Ceiling Price	7.50
October 2022 To February 2023
Derivative [Line Items]
Volumes in Barrels \| bbl	76,425
Weighted Average Floor Price \| $ / bbl	70.00
Weighted Average Ceiling Price \| $ / bbl	87.50

Fair Value Measurement - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Contract Asset	$ 49	$ 170
Derivative Contract Liability	924	2,164
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Contract Asset	49	170
Derivative Contract Liability	$ 924	$ 2,164

Stockholders' Equity - Treasury Shares (Details) - USD ($)	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Stockholders' Equity
Number of treasury shares acquired (in shares)	3,805	353
Average cost per share (in USD per share)	$ 6.94	$ 4.53
Total cost of treasury shares acquired	$ 26,407	$ 1,599

Derivatives - Gain and Loss on Derivatives (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2022 USD ($)
Derivatives
Realized gain (loss) on derivative contracts	$ (1,722)
Unrealized gain (loss) on derivative contracts	1,119
Total net gain (loss) on derivative contracts	$ (603)

Stockholders' Equity - Narrative (Details) - USD ($)		3 Months Ended		105 Months Ended
Stockholders' Equity - Narrative (Details) - USD ($)	Sep. 08, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Jun. 30, 2022
Class of Stock [Line Items]
Common stock, outstanding shares (in shares)		33,546,236		33,546,236	33,470,710
Common stock dividends paid		$ 4,026,000	$ 2,522,000	$ 90,300,000
Cash dividends to common stockholders		4,000,000.0	2,500,000
Total cost of treasury shares acquired		$ 26,407	$ 1,599
Purchases of treasury stock (in shares)		3,805	353
Treasury stock acquired, average cost (in USD per share)		$ 6.94	$ 4.53
2022 Share Repurchase Program
Class of Stock [Line Items]
Amount authorized to be repurchased	$ 25,000,000
Stock repurchase program expiration date	Dec. 31, 2024
Purchases of treasury stock (in shares)		0

Stockholders' Equity (Tables)

3 Months Ended

Sep. 30, 2022

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Dividends declared and paid

Schedule of share repurchases


	Three Months Ended
	September 30,
	2022		2021
Number of treasury shares acquired		3,805		353
Average cost per share	$	6.94	$	4.53
Total cost of treasury shares acquired	$	26,407	$	1,599

Schedule of Market-based Award Valuation Assumptions


	Three Months Ended
	September 30,
	2022			2021
Weighted average fair value of performance-based awards granted	$	6.78		$	3.31
Risk-free interest rate		3.91	%		0.53	%
Expected term in years		3			3
Expected volatility		69.6	%		64.7	%
Dividend yield		6.1	%		6.3	%

Schedule of Restricted Stock transactions


		Weighted
	Number of	Average
	Restricted	Grant-Date
Award Type	Shares	Fair Value
Time-vested awards	259,351	$	5.49
Performance-based awards	144,503		4.55
Unvested at September 30, 2022	403,854	$	5.15

Restricted Stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Restricted Stock transactions


						Weighted
		Weighted		Unamortized		Average
	Number of	Average		Compensation		Remaining
	Restricted	Grant-Date		Expense		Amortization
	Shares	Fair Value		(In thousands)		Period (Years)
Unvested at June 30, 2022	341,211		4.54	$	1,092	2.1
Time-vested shares granted	34,950		7.38
Performance-based shares granted	44,381		7.61
Vested	(16,688)		3.89
Forfeited	—		—
Unvested at September 30, 2022	403,854	$	5.15	$	1,485	2.1

Contingent restricted stock grants

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Restricted Stock transactions


						Weighted
				Unamortized		Average
	Number of	Weighted Average		Compensation		Remaining
	Restricted	Grant-Date		Expense		Amortization
	Stock Units	Fair Value		(In thousands)		Period (Years)
Unvested at June 30, 2022	50,062		2.21	$	68	1.7
Performance-based awards granted	22,193		5.13
Vested	—		—
Forfeited	—		—
Expired	—		—
Unvested at September 30, 2022	72,255	$	3.11	$	169	2.3

Income Taxes (Details) - USD ($)	3 Months Ended
Income Taxes (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021
Income Taxes
Unrecognized tax benefits	$ 0	$ 0
Accrued interest and penalties	0	0
Income tax expense (benefit)	$ 3,064,000	$ 1,520,000
Income tax rate percentage	22.20%	22.60%
Statutory federal tax rate	21.00%	21.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2022	Jun. 30, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, issued shares (in shares)	33,546,236	33,470,710
Common stock, outstanding shares (in shares)	33,546,236	33,470,710

Subsequent Events

3 Months Ended

Sep. 30, 2022

Subsequent Events

Subsequent Events

Note 15. Subsequent Events

Senior Secured Credit Facility

Appointment of Chief Executive Officer

On October 27, 2022, the Company announced that the Board of Directors selected Kelly W. Loyd as President and Chief Executive Officer (“CEO”). Mr. Loyd had been serving as Interim CEO since June 2022 and has served as a

member of the Board of Directors since 2008. Upon commencing employment, Mr. Loyd will no longer receive compensation for his services as a member of the Board of Directors.

Dividend Declaration

On November 7, 2022, the Company declared a quarterly cash dividend of $0.120 per share of common stock to shareholders of record on December 15, 2022 and payable on December 30, 2022.

Property and Equipment (Details) $ in Thousands	3 Months Ended
Property and Equipment (Details) $ in Thousands	Sep. 30, 2022 USD ($) $ / MMBTU $ / bbl	Sep. 30, 2021 USD ($) $ / MMBTU $ / bbl
Property and Equipment
Depletion	$ 3,300	$ 1,400
Capital expenditures	1,000	300
Impairment of proved property	$ 0	$ 0
Natural Gas and Natural Gas Liquids
Property and Equipment
Oil and gas prices first day average of twelve months of Henry Hub price for ceiling test \| $ / MMBTU	6.17	2.97
Net price per barrel (in dollars per barrel) \| $ / bbl	47.49	23.04
Crude oil
Property and Equipment
Oil and gas prices first day average of twelve months of West Texas Intermediate spot market price for ceiling test \| $ / bbl	92.16	57.64

Summary of Significant Events and Accounting Policies - Nature of Operations (Details)	Sep. 30, 2022 item
Summary of Significant Events and Accounting Policies
Number of wells with overriding royalty interest	4

Additional Financial Statement Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
Schedule of Equity Method Investments [Line Items]
Receivables related to customary purchase adjustments	$ 658	$ 2,263
Jonah Field Acquisition
Schedule of Equity Method Investments [Line Items]
Receivables related to customary purchase adjustments		1,600
Customary purchase adjustments received	$ 1,600
Williston Basin Acquisition
Schedule of Equity Method Investments [Line Items]
Receivables related to customary purchase adjustments		$ 700

Commitments and Contingencies

3 Months Ended

Sep. 30, 2022

Commitments and Contingencies.

Commitments and Contingencies

Note 10. Commitments and Contingencies

The Company is subject to various claims and contingencies in the normal course of business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates. The Company discloses such matters if it believes there is a reasonable possibility that a future event or events will confirm a material loss through impairment of an asset or the incurrence of a material liability. The Company accrues a material loss if it believes it probable that a future event or events will confirm a loss and the loss is reasonably estimable. Furthermore, the Company will disclose any matter that is unasserted if it considers it probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable and material in amount. The Company expenses legal defense costs as they are incurred.

Summary of Significant Events and Accounting Policies

3 Months Ended

Sep. 30, 2022

Summary of Significant Events and Accounting Policies

Summary of Significant Events and Accounting Policies

Note 1. Financial Statement Presentation

Nature of Operations. Evolution Petroleum Corporation is an independent energy company focused on maximizing returns to shareholders through the ownership of and investment in onshore oil and natural gas properties in the United States. The Company’s long-term goal is to maximize total shareholder return from a diversified portfolio of long-life oil and natural gas properties built through acquisitions and through selective development, production enhancement, and other exploitation efforts on its oil and natural gas properties.

The Company’s producing properties consist of non-operated interests in the following areas: the Jonah Field in Sublette County, Wyoming, a natural gas and natural gas liquids producing field; the Williston Basin in North Dakota, a producing oil and natural gas property; the Barnett Shale located in North Texas, a natural gas and natural gas liquids producing property; the Hamilton Dome Field located in Hot Springs County, Wyoming, a secondary oil recovery field utilizing water injection wells to pressurize the reservoir; the Delhi Holt-Bryant Unit in the Delhi Field in Northeast Louisiana, a CO₂ enhanced oil recovery (“EOR”) project; as well as small overriding royalty interests in four onshore Texas wells.

Interim Financial Statements. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles 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 2022 Annual Report on Form 10-K for the fiscal year ended June 30, 2022, as filed with the SEC on September 14, 2022. The results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year. The Company has evaluated events and transactions through the date of issuance of these unaudited condensed consolidated financial statements.

Principles of Consolidation and Reporting. The unaudited condensed consolidated financial statements include the accounts of Evolution Petroleum Corporation and its wholly-owned subsidiaries (the “Company”). All significant intercompany transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements for the previous year may include certain reclassifications to conform to the current presentation. To conform with the current year presentation, “Other receivables” disclosed in Footnote 13, “Additional Financial Statement Information” is included with “Prepaids expenses and other current assets” instead of “Receivables from crude oil, natural gas, and natural gas liquids sales” at June 30, 2022 on the unaudited condensed consolidated balance sheets. This reclassification has no impact on previously reported net income or stockholders’ equity.

Risk and Uncertainties. The Company’s oil and natural gas interests are operated by third-party operators and involve other third-party working interest owners. As a result, the Company has limited ability to influence the operation or future development of such properties. However, the Company is proactive with its third-party operators to review spending and present alternative plans.

Use of Estimates. The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities, if any, at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the respective 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 contract assets and liabilities, (e) income taxes and the valuation of deferred income tax assets, (f) commitments and contingencies, and (g) accruals of crude oil, natural gas, and natural gas liquids (“NGL”) revenues and expenses. The Company analyzes estimates and judgements based on historical experience and various other assumptions and information that are believed to be reasonable. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as additional information is obtained, as new events occur, and as the Company’s environment changes.

Actual results may differ from the estimates and assumptions used in the preparation of the Company’s unaudited condensed consolidated financial statements.

Correction of Immaterial Error

During the year ended June 30, 2022, the Company identified an issue related to its historical process of calculating the Company’s earnings (loss) per common share (“EPS”). The Company grants restricted stock awards which entitle the recipient to all of the rights of a shareholder of the Company including non-forfeitable rights to receive all dividends or other distributions paid with respect to such shares. Unvested restricted stock is forfeitable until earned and therefore not considered outstanding for basic EPS. Because restricted stock awards have the non-forfeitable right to share in dividends and earnings with common shareholders prior to vesting, the Company must apply the two-class method of allocating distributed and undistributed earnings to unvested restricted stock and outstanding common shares. Historically, it was identified by management that the Company had not been applying the two-class method of calculating basic and diluted EPS in accordance with Accounting Standards Codification (“ASC”) 260, Earnings Per Share (“ASC 260”). Rather, the Company was considering all restricted stock grants as outstanding at the time of issuance in the calculation of EPS.

At March 31, 2022, the Company determined that its unvested restricted stock awards were participating securities which contain non-forfeitable rights to dividends. As a result, the Company was required to adjust “Net income (loss) attributable to common stockholders” on the unaudited condensed consolidated statements of operations to allocate dividends paid to unvested shares as well as undistributed earnings. In addition, the Company determined that its basic and diluted weighted average shares outstanding were not adjusted correctly to reflect these participating securities.

The Company concluded the adjustments were immaterial to its 2022 interim financial statements in accordance with the guidance in SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements. The correction resulted in a decrease of $0.01 per basic and diluted share for the three months ended September 30, 2021. See Note 12, “Earnings (Loss) per Common Share” for more details.

The Company noted the following adjustments to its EPS presentation for the three months ended September 30, 2021 (in thousands, except per share amounts):


	Three Months Ended
	September 30, 2021
As reported:
Net income (loss) for earnings per share calculation	$	5,218

Weighted average number of common shares outstanding — Basic		33,534
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,534

Net earnings (loss) per common share — Basic	$	0.16
Net earnings (loss) per common share — Diluted	$	0.16

Revised:
Net income (loss) for earnings per share calculation	$	5,115

Weighted average number of common shares outstanding — Basic		32,863
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,126

Net earnings (loss) per common share — Basic	$	0.16
Net earnings (loss) per common share — Diluted	$	0.15

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 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 ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022. The Company is currently evaluating the impact of ASU 2016-13 but does not expect that it will have a material effect on the Company’s financial position, results of operations, cash flows or disclosures.

Other accounting pronouncements that have recently been issued by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations, cash flows or disclosures.

Asset Retirement Obligations

3 Months Ended

Sep. 30, 2022

Asset Retirement Obligations

Asset Retirement Obligations

Note 9. Asset Retirement Obligations

The Company’s ARO represents the estimated present value of the amount expected to be incurred to plug, abandon, and remediate its oil and natural gas properties at the end of their productive lives in accordance with applicable laws and regulations. The Company records the ARO liability on the unaudited condensed consolidated balance sheets and capitalizes the cost in “Oil and natural gas properties, net” during the period in which the obligation is incurred. The Company records the accretion of its ARO liabilities in “Depletion, depreciation and accretion” expense in the unaudited condensed consolidated statements of operations.

The following is a reconciliation of the activity related to the Company’s ARO liability (inclusive of the current portion) (in thousands):


	September 30, 2022
Asset retirement obligations — beginning of period	$	13,921
Accretion of discount		276
Asset retirement obligations — end of period		14,197
Less: current asset retirement obligations		(22)
Long-term portion of asset retirement obligations	$	14,175

Fair Value Measurement (Tables)

3 Months Ended

Sep. 30, 2022

Fair Value Measurement

Schedule of Derivative Assets at Fair Value


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Derivative contract assets	$	—	$	49	$	—	$	49

Liabilities
Derivative contract liabilities	$	—	$	924	$	—	$	924


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Derivative contract assets	$	—	$	170	$	—	$	170

Liabilities
Derivative contract liabilities	$	—	$	2,164	$	—	$	2,164

Derivative contracts listed above as Level 2 include costless put/call collars that are carried at fair value. The Company records the net change in fair value of these positions in “Net gain (loss) on derivative contracts” in the Company’s unaudited condensed consolidated statements of operations. The Company is able to value the assets and liabilities based on observable market data for similar instruments, which resulted in the Company reporting its derivatives as Level 2. This observable data includes the forward curves for commodity prices based on quoted market prices and implied volatility factors related to changes in the forward curves. See Note 7, “Derivatives,” for additional discussion of derivatives.

Schedule of Derivative Liabilities at Fair Value


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Derivative contract assets	$	—	$	49	$	—	$	49

Liabilities
Derivative contract liabilities	$	—	$	924	$	—	$	924


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Derivative contract assets	$	—	$	170	$	—	$	170

Liabilities
Derivative contract liabilities	$	—	$	2,164	$	—	$	2,164

Additional Financial Statement Information (Tables)

3 Months Ended

Sep. 30, 2022

Additional Financial Statement Information

Additional Financial Statement Information

Certain amounts on the unaudited condensed consolidated balance sheets are comprised of the following (in thousands):


	September 30, 2022		June 30, 2022

Prepaid expenses and other current assets:
Receivable for settlement proceeds from acquisitions⁽¹⁾	$	658	$	2,263
Other receivables		35		37
Prepaid insurance		632		743
Prepaid federal and state income taxes		8		8
Prepaid subscription and licenses		78		38
Carryback of EOR tax credit		347		347
Prepaid other		477		439
Total prepaid expenses and other current assets	$	2,235	$	3,875

Other assets, net:
Deposit	$	1,150	$	1,150
Right of use asset under operating lease		9		21
Total other assets, net	$	1,159	$	1,171

Accrued liabilities and other:
Accrued payables	$	7,564	$	8,070
Accrued incentive and other compensation		210		626
Accrued royalties payable		1,586		1,517
Accrued severance		325		332
Accrued franchise taxes		58		58
Accrued ad valorem taxes		180		120
Accrued settlements on derivative contracts		700		919
Operating lease liability		5		26
Asset retirement obligations due within one year		22		22
Accrued - other		46		203
Total accrued liabilities and other	$	10,696	$	11,893

(1)

Receivables as of June 30, 2022 related to customary purchase adjustments of $1.6 million and $0.7 million related to the Jonah Field Acquisition and Williston Basin Acquisition, respectively. As of September 30, 2022, the receivable of $1.6 million related to the Jonah Field Acquisition was received. See Note 3, “Acquisitions” for a further discussion.

Stockholders' Equity - Dividends (Details) - $ / shares	3 Months Ended
Stockholders' Equity - Dividends (Details) - $ / shares	Sep. 30, 2022	Sep. 30, 2021
Stockholders' Equity
Cash dividends paid (in USD per share)	$ 0.120	$ 0.075

Stockholders' Equity - Fair Value Assumptions (Details) - Restricted Stock And Contingent Restricted Stock, Market-Based - $ / shares	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value of market-based awards granted (in USD per share)	$ 6.78	$ 3.31
Risk-free interest rate	3.91%	0.53%
Expected life in years	3 years	3 years
Expected volatility	69.60%	64.70%
Dividend yield	6.10%	6.30%

Stockholders' Equity - Schedule of Restricted Stock and Contingent restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022
Number of Restricted Shares
Granted (in shares)	100,000	200,000
Unvested, end of period (in shares)	403,854
Weighted Average Grant-Date Fair Value
Unvested, end of period (in USD per share)	$ 5.15
Restricted Stock
Number of Restricted Shares
Unvested, beginning of period (in shares)	341,211
Vested (in shares)	(16,688)
Unvested, end of period (in shares)	403,854		341,211
Weighted Average Grant-Date Fair Value
Unvested, beginning of period (in USD per share)	$ 4.54
Vested (in USD per share)	3.89
Unvested, end of period (in USD per share)	$ 5.15		$ 4.54
Unamortized compensation expense	$ 1,485		$ 1,092
Weighted Average Remaining Amortization Period (Years)	2 years 1 month 6 days		2 years 1 month 6 days
Restricted Stock, Performance Based
Number of Restricted Shares
Granted (in shares)	44,381	100,000
Unvested, end of period (in shares)	144,503
Weighted Average Grant-Date Fair Value
Granted (in USD per share)	$ 7.61
Unvested, end of period (in USD per share)	$ 4.55
Restricted Stock Time Vested
Number of Restricted Shares
Granted (in shares)	34,950	100,000
Unvested, end of period (in shares)	259,351
Weighted Average Grant-Date Fair Value
Granted (in USD per share)	$ 7.38
Unvested, end of period (in USD per share)	$ 5.49
Contingent Restricted Stock Grants
Number of Restricted Shares
Unvested, beginning of period (in shares)	50,062
Unvested, end of period (in shares)	72,255		50,062
Weighted Average Grant-Date Fair Value
Unvested, beginning of period (in USD per share)	$ 2.21
Unvested, end of period (in USD per share)	$ 3.11		$ 2.21
Unamortized compensation expense	$ 169		$ 68
Weighted Average Remaining Amortization Period (Years)	2 years 3 months 18 days		1 year 8 months 12 days
Performance Based Contingent Shares
Number of Restricted Shares
Granted (in shares)	22,193
Weighted Average Grant-Date Fair Value
Granted (in USD per share)	$ 5.13

Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Fiscal Year
Remaining in 2023	$ 5
Total operating lease payments	5
Total operating lease liabilities	5
Less: current operating lease liabilities	$ 5	$ 26

Revenue Recognition (Details)	3 Months Ended
Revenue Recognition (Details)	Sep. 30, 2022
Minimum
Revenue Recognition
Period of receives payment from the sale of oil and natural gas production	1 month
Number of production received by field operators	1 month
Maximum
Revenue Recognition
Period of receives payment from the sale of oil and natural gas production	2 months
Number of production received by field operators	2 months

Derivatives - Derivative Contracts (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Derivatives
Derivative assets, Gross amounts presented in the Consolidated Balance Sheet	$ 49	$ 170
Derivative asset, Amounts not offset in the Consolidated Balance Sheet	(7)	(170)
Derivative asset, net amount	42
Derivative liability, Gross amounts presented in the Consolidated Balance Sheet	924	2,164
Derivative liability, Amounts not offset in the Consolidated Balance Sheet	(7)	(170)
Derivative liability, Net amount	$ 917	$ 1,994

Derivatives - Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Derivative [Line Items]
Derivative Contract Asset	$ 49	$ 170
Derivative Contract Liability	924	2,164
Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative Contract Asset	49	170
Derivative Contract Liability	924	2,164
Current Assets \| Commodity Contract \| Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative Contract Asset	49	170
Other Assets \| Commodity Contract \| Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative Contract Asset	0	0
Current Liabilities \| Commodity Contract \| Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative Contract Liability	924	2,164
Long term liabilities \| Commodity Contract \| Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative Contract Liability	$ 0	$ 0

Property and Equipment (Tables)

3 Months Ended

Sep. 30, 2022

Property and Equipment

Schedule of property and equipment

Property and equipment as of September 30, 2022 and June 30, 2022 consisted of the following (in thousands):


	September 30, 2022		June 30, 2022
Oil and natural gas properties
Property costs subject to amortization	$	189,647	$	188,634
Less: Accumulated depletion, depreciation, and accretion		(81,448)		(78,126)
Oil and natural gas properties, net	$	108,199	$	110,508

Earnings (Loss) per Common Share (Tables)

3 Months Ended

Sep. 30, 2022

Earnings (Loss) per Common Share

Schedule of computation of basic and diluted income (loss) per share

The following table sets forth the computation of basic and diluted earnings (loss) per common share, reflecting the application of the two-class method (in thousands, except per share amounts):


	Three Months Ended
	September 30,
	2022		2021
Numerator
Net income (loss)	$	10,707	$	5,218
Undistributed earnings allocated to unvested restricted stock		(111)		(103)
Net income (loss) for earnings per share calculation	$	10,596	$	5,115

Denominator
Weighted average number of common shares outstanding — Basic		33,134		32,863
Effect of dilutive securities:
Unvested restricted stock awards		184		263
Unvested contingent restricted stock units		1		—
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,319		33,126

Net earnings (loss) per common share — Basic	$	0.32	$	0.16
Net earnings (loss) per common share — Diluted	$	0.32	$	0.15

Leases

3 Months Ended

Sep. 30, 2022

Leases

Leases

Note 14. Leases

Operating leases are reflected as an operating lease right of use (“ROU”) asset included in “Other assets, net”, and as a ROU liability in “Accrued liabilities and other” and “Operating lease liability” on the Company’s unaudited condensed consolidated balance sheets. 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 and are presented as “General and administrative expenses” in the unaudited condensed consolidated statements of operations. 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 and having adequate liquidity, the Company has generally not entered into lease transactions. The Company’s only operating lease is for corporate office space in Houston, Texas, effective May 1, 2019 and which expires November 30, 2022. The Company has no leases that meet the criteria for classification as a finance lease or a short-term lease.

The Company makes certain assumptions and judgments when evaluating a contract that meets the definition of a lease under ASC 842, Leases. As the Company’s operating lease did not provide an implicit rate, an incremental borrowing rate was calculated using the prime-rate-based borrowing rate under the Company’s Senior Secured Credit Facility, as discussed below, as the term facility was based on a similar lease term and is appropriately risk-adjusted. The lease term was determined by considering any option available to extend or to early terminate the lease which the Company believed was reasonably certain to be exercised.

The table below summarized the Company’s leases for the three months ended September 30, 2022 and 2021 (in thousands, except years and discount rate):


	Three Months Ended September 30,
	2022			2021
Statements of Operations:
Operating lease costs	$	13		$	13

Statements of Cash Flow:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases⁽¹⁾	$	21		$	15

Other:
Weighted average remaining lease term in years		0.17			1.17
Weighted average discount rate		5.15	%		5.15	%

The following table presents the Company’s ROU assets and lease liabilities (in thousands):


	September 30, 2022		June 30, 2022
Balance Sheets:
Operating lease ROU asset (included in other assets)	$	9	$	21
Accrued liabilities and other - current⁽¹⁾		5		26

(1)	A portion of the cash paid for operating leases during the three months ended September 30, 2022 includes a prepayment for the subsequent quarter.

As of September 30, 2022, the future minimum lease payments associated with the Company’s non-cancellable operating lease for office space are as follows (in thousands):


Fiscal Year	September 30, 2022
Remaining in 2023	$	5
Total operating lease payments		5
Less: discount to present value		—
Total operating lease liabilities		5
Less: current operating lease liabilities		5
Non current operating lease liabilities	$	—

Income Taxes

3 Months Ended

Sep. 30, 2022

Income Taxes

Income Taxes

Note 6. Income Taxes

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

There were no unrecognized tax benefits, nor any accrued interest or penalties associated with unrecognized tax benefits during the periods presented in the unaudited condensed consolidated financial statements. The Company believes that it has appropriate support for the income tax positions taken and to be taken on the Company’s tax returns and that the accruals for tax liabilities are adequate for all open years based on its assessment of many 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 fiscal years ended June 30, 2019 through June 30, 2021 for federal tax purposes and for the fiscal years ended June 30, 2018 through June 30, 2021 for state tax purposes. To the extent the Company utilizes net operating losses (“NOLs”) generated in earlier years, such earlier years may also be subject to audit.

For the three months ended September 30, 2022 the Company recognized income tax expense of $3.1 million and had an effective tax rate of 22.2% compared to an income tax expense of $1.5 million and an effective tax rate of 22.6% for the three months ended September 30, 2021.

The Company’s effective tax rate will typically differ from the statutory federal rate as a result of state income taxes, primarily in the states of Louisiana, North Dakota, and Texas, due to percentage depletion in excess of basis, and other permanent differences. For both periods, the respective statutory federal tax rate was 21%.

Deferred income taxes primarily represent the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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Summary of Significant Events and Accounting Policies - Correction of Immaterial Error (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Changes in earning per share basic		$ 0.01
Changes in earning per share diluted		$ 0.01
Net income (loss) for earnings per share calculation	$ 10,596	$ 5,115
Weighted average number of common shares outstanding - Basic (in shares)	33,134	32,863
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share (in shares)	33,319	33,126
Net earnings (loss) per common share - Basic (in dollars per share)	$ 0.32	$ 0.16
Net earnings (loss) per common share - Diluted (in dollars per share)	$ 0.32	$ 0.15
Previously Reported [Member]
Net income (loss) for earnings per share calculation		$ 5,218
Weighted average number of common shares outstanding - Basic (in shares)		33,534
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share (in shares)		33,534
Net earnings (loss) per common share - Basic (in dollars per share)		$ 0.16
Net earnings (loss) per common share - Diluted (in dollars per share)		$ 0.16

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

Revenue Recognition (Tables)

3 Months Ended

Sep. 30, 2022

Revenue Recognition

Schedule of disaggregates the Company's revenues by major product


	Three Months Ended
	September 30,
	2022		2021
Revenues
Crude oil	$	15,163	$	8,859
Natural gas		19,848		5,458
Natural gas liquids		4,786		4,562
Total revenues	$	39,797	$	18,879

Derivatives (Tables)

3 Months Ended

Sep. 30, 2022

Derivatives

Schedule of Derivative Instruments

The following table summarizes the location and fair value amounts of all derivative contracts in the unaudited condensed consolidated balance sheets as of September 30, 2022 and June 30, 2022 (in thousands):


Derivatives not designated
as hedging contracts	Balance sheet	Derivative Contract Assets				Balance sheet	Derivative Contract Liabilities
under ASC 815	location	September 30, 2022		June 30, 2022		location	September 30, 2022		June 30, 2022
Commodity contracts	Current assets - derivative contract assets	$	49	$	170	Current liabilities - derivative contract liabilities	$	924	$	2,164
Commodity contracts	Other assets - derivative contract assets		—		—	Long term liabilities - derivative contract liabilities		—		—
Total derivatives not designated as hedging contracts under ASC 815		$	49	$	170		$	924	$	2,164


Derivatives not designated	Location of gain (loss)	Three Months Ended
as hedging contracts	recognized in income on	September 30,
under ASC 815	derivative contracts	2022		2021
Commodity contracts:
Realized gain (loss) on derivative contracts	Other income and expenses - net gain (loss) on derivative contracts	$	(1,722)	$	—
Unrealized gain (loss) on derivative contracts	Other income and expenses - net gain (loss) on derivative contracts		1,119		—
Total net gain (loss) on derivative contracts		$	(603)	$	—

Derivative Instruments, Gain (Loss)

As of September 30, 2022, the Company had the following open crude oil and natural gas derivative contracts:

Weighted Average

Volumes in

Floor Price per

Ceiling Price per

Period

Instrument

Commodity

MMBTU/BBL

October 2022

Collar

Natural Gas

117,523

3.75

5.05

October 2022

Collar

Natural Gas

78,928

5.25

6.67

November 2022 - February 2023

Collar

Natural Gas

443,750

3.75

7.30

November 2022 - March 2023

Collar

Natural Gas

374,072

5.25

7.50

October 2022 - February 2023

Collar

Crude Oil

76,425

70.00

87.50

Offsetting Assets

The following table shows the potential effects of master netting arrangements on the fair value of the Company’s derivative contracts as of September 30, 2022 and June 30, 2022 (in thousands):


	Derivative Contracts Assets				Derivative Contracts Liabilities
Offsetting of Derivative Assets and Liabilities	September 30, 2022		June 30, 2022		September 30, 2022		June 30, 2022
Gross amounts presented in the Consolidated Balance Sheet	$	49	$	170	$	924	$	2,164
Amounts not offset in the Consolidated Balance Sheet		(7)		(170)		(7)		(170)
Net amount	$	42	$	—	$	917	$	1,994

Offsetting Liabilities


	Derivative Contracts Assets				Derivative Contracts Liabilities
Offsetting of Derivative Assets and Liabilities	September 30, 2022		June 30, 2022		September 30, 2022		June 30, 2022
Gross amounts presented in the Consolidated Balance Sheet	$	49	$	170	$	924	$	2,164
Amounts not offset in the Consolidated Balance Sheet		(7)		(170)		(7)		(170)
Net amount	$	42	$	—	$	917	$	1,994

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

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-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=125515794&loc=d3e41641-113959

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=125515794&loc=SL5624171-113959

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=125515794&loc=SL5579240-113959

+ Details

Additional Financial Statement Information - Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Prepaid expenses and other current assets:
Receivable for settlement proceeds from acquisitions	$ 658	$ 2,263
Other receivables	35	37
Prepaid insurance	632	743
Prepaid federal and state income taxes	8	8
Prepaid subscription and licenses	78	38
Carryback of EOR tax credit	347	347
Prepaid other	477	439
Total prepaid expenses and other current assets	2,235	3,875
Other assets, net:
Deposit	1,150	1,150
Right of use asset under operating lease	9	21
Other assets, net	1,159	1,171
Accrued liabilities and other:
Accrued payables	7,564	8,070
Accrued incentive and other compensation	210	626
Accrued royalties payable	1,586	1,517
Accrued severance	325	332
Accrued franchise taxes	58	58
Accrued ad valorem taxes	180	120
Accrued settlements on derivative contracts	700	919
Operating lease liability	5	26
Asset retirement obligations due within one year	22	22
Accrued - other	46	203
Total Accrued liabilities and other	$ 10,696	$ 11,893

Earnings (Loss) per Common Share - Schedule of Outstanding Potentially Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares (in shares)	8,000	26,000

Summary of Significant Events and Accounting Policies (Tables)

3 Months Ended

Sep. 30, 2022

Summary of Significant Events and Accounting Policies

Schedule of earnings (loss) per common share

The Company noted the following adjustments to its EPS presentation for the three months ended September 30, 2021 (in thousands, except per share amounts):


	Three Months Ended
	September 30, 2021
As reported:
Net income (loss) for earnings per share calculation	$	5,218

Weighted average number of common shares outstanding — Basic		33,534
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,534

Net earnings (loss) per common share — Basic	$	0.16
Net earnings (loss) per common share — Diluted	$	0.16

Revised:
Net income (loss) for earnings per share calculation	$	5,115

Weighted average number of common shares outstanding — Basic		32,863
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,126

Net earnings (loss) per common share — Basic	$	0.16
Net earnings (loss) per common share — Diluted	$	0.15

Additional Financial Statement Information

3 Months Ended

Sep. 30, 2022

Additional Financial Statement Information

Additional Financial Statement Information

Note 13. Additional Financial Statement Information

Certain amounts on the unaudited condensed consolidated balance sheets are comprised of the following (in thousands):


	September 30, 2022		June 30, 2022

Prepaid expenses and other current assets:
Receivable for settlement proceeds from acquisitions⁽¹⁾	$	658	$	2,263
Other receivables		35		37
Prepaid insurance		632		743
Prepaid federal and state income taxes		8		8
Prepaid subscription and licenses		78		38
Carryback of EOR tax credit		347		347
Prepaid other		477		439
Total prepaid expenses and other current assets	$	2,235	$	3,875

Other assets, net:
Deposit	$	1,150	$	1,150
Right of use asset under operating lease		9		21
Total other assets, net	$	1,159	$	1,171

Accrued liabilities and other:
Accrued payables	$	7,564	$	8,070
Accrued incentive and other compensation		210		626
Accrued royalties payable		1,586		1,517
Accrued severance		325		332
Accrued franchise taxes		58		58
Accrued ad valorem taxes		180		120
Accrued settlements on derivative contracts		700		919
Operating lease liability		5		26
Asset retirement obligations due within one year		22		22
Accrued - other		46		203
Total accrued liabilities and other	$	10,696	$	11,893

(1)

Stockholders' Equity - Stock-Based Incentive Plan Narrative (Details) - USD ($) $ in Millions		3 Months Ended
	Dec. 09, 2020	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022	Dec. 08, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		100,000	200,000
Stock-based compensation expense		$ 0.2	$ 0.2
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)		1 year
Restricted Stock and Contingent Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		20,000.00
Restricted Stock, Market Based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)		3 years
Restricted Stock, Performance Based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		44,381	100,000
Restricted Stock Time Vested
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		34,950	100,000
Performance Based Contingent Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		22,193
2016 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for granting (in shares)					1,100,000
Number of additional shares authorized (in shares)	2,500,000
Shares available for grant (shares)		1,700,000		1,800,000
Minimum \| Restricted Stock Time Vested
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)		3 years
Maximum \| Restricted Stock, Performance Based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period (in years)		4 years
Maximum \| Restricted Stock Time Vested
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)		4 years
Maximum \| 2016 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares authorized (in shares)	3,600,000
Employee \| Restricted Stock, Performance Based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		40,000.00
Employee \| Restricted Stock Time Vested
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		30,000.00

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Current assets
Cash and cash equivalents	$ 10,714	$ 8,280
Receivables from crude oil, natural gas, and natural gas liquids sales	18,846	24,043
Derivative contract assets	49	170
Prepaid expenses and other current assets	2,235	3,875
Total current assets	31,844	36,368
Property and equipment, net of depletion, depreciation, amortization, and impairment
Oil and natural gas properties, net-full-cost method of accounting, of which none were excluded from amortization	108,199	110,508
Other assets, net	1,159	1,171
Total assets	141,202	148,047
Current liabilities
Accounts payable	10,044	15,133
Accrued liabilities and other	10,696	11,893
Derivative contract liabilities	924	2,164
State and federal taxes payable	3,673	1,095
Total current liabilities	25,337	30,285
Long term liabilities
Senior secured credit facility	12,250	21,250
Deferred income taxes	7,063	7,099
Asset retirement obligations	14,175	13,899
Total liabilities	58,825	72,533
Commitments and contingencies (Note 10)
Stockholders' equity
Common stock; par value $0.001; 100,000,000 shares authorized: issued and outstanding 33,546,236 and 33,470,710 shares as of September 30, 2022 and June 30, 2022, respectively	33	33
Additional paid-in capital	42,811	42,629
Retained earnings	39,533	32,852
Total stockholders' equity	82,377	75,514
Total liabilities and stockholders' equity	$ 141,202	$ 148,047

Fair Value Measurement

3 Months Ended

Sep. 30, 2022

Fair Value Measurement

Fair Value Measurement

Note 8. Fair Value Measurement

Accounting guidelines for measuring fair value establish a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.

The three levels are defined as follows:

Level 1—Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.

Level 2—Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3—Unobservable inputs for which there are little or no market data and which the Company makes its own assumptions about how market participants would price the assets and liabilities.

Fair Value of Derivative Instruments. The Company’s determination of fair value incorporates not only the credit standing of the counterparties involved in transactions with the Company resulting in receivables on the Company’s unaudited condensed consolidated balance sheets, but also the impact of the Company’s nonperformance risk on its own liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable (Level 1) market corroborated (Level 2), or generally unobservable (Level 3). The Company classifies fair value balances based on observability of those inputs.


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Derivative contract assets	$	—	$	49	$	—	$	49

Liabilities
Derivative contract liabilities	$	—	$	924	$	—	$	924


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Derivative contract assets	$	—	$	170	$	—	$	170

Liabilities
Derivative contract liabilities	$	—	$	2,164	$	—	$	2,164

The Company’s derivative contracts are with large utilities with investment grade credit ratings which are believed to have minimal credit risk. As such, the Company is exposed to credit risk to the extent of nonperformance by the counterparties in the derivative contracts; however, the Company does not anticipate such nonperformance.

Other Fair Value Measurements. The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of ASC 825, Financial Instruments. The estimated fair value amounts have been determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash and cash equivalents, accounts receivable, and accounts payable approximates their carrying value due to their short-term nature. The estimated fair value of the Company’s Senior Secured Credit Facility approximates carrying value because the interest rates approximate current market rates.

The Company follows the provisions of ASC 820, for nonfinancial assets and liabilities measured at fair value on a non-recurring basis. These provisions apply to the Company’s initial measurement and any subsequent revision of asset retirement obligations (“ARO”) for which fair value is calculated using discounted future cash flows derived from historical costs and management’s expectations of future cost environments. Significant Level 3 inputs used in the calculation of ARO include the costs of plugging and abandoning wells, surface restoration, and reserve lives. Subsequent to initial recognition, revisions to estimated asset retirement obligations are made when changes occur for input values. See Note 9, “Asset Retirement Obligations,” for a reconciliation of the beginning and ending balances of the liability for the Company’s ARO.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Leases - Supplemental Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022
Leases
Operating lease costs	$ 13	$ 13
Operating cash flows from operating leases	21	$ 15
Operating lease ROU asset (included in other assets)	9		$ 21
Accrued liabilities and other - current	$ 5		$ 26
Weighted average remaining lease term in years	2 months 1 day	1 year 2 months 1 day
Weighted average discount rate	5.15%	5.15%
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other assets, net		Other assets, net
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued liabilities and other		Accrued liabilities and other

Summary of Significant Events and Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2022

Summary of Significant Events and Accounting Policies

Principles of Consolidation and Reporting

Risk and Uncertainties

Use of Estimates

Actual results may differ from the estimates and assumptions used in the preparation of the Company’s unaudited condensed consolidated financial statements.

Correction of Immaterial Error

The Company noted the following adjustments to its EPS presentation for the three months ended September 30, 2021 (in thousands, except per share amounts):


	Three Months Ended
	September 30, 2021
As reported:
Net income (loss) for earnings per share calculation	$	5,218

Weighted average number of common shares outstanding — Basic		33,534
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,534

Net earnings (loss) per common share — Basic	$	0.16
Net earnings (loss) per common share — Diluted	$	0.16

Revised:
Net income (loss) for earnings per share calculation	$	5,115

Weighted average number of common shares outstanding — Basic		32,863
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,126

Net earnings (loss) per common share — Basic	$	0.16
Net earnings (loss) per common share — Diluted	$	0.15

Recently Adopted and Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Leases (Details)	3 Months Ended
Leases (Details)	Sep. 30, 2022 item
Leases
Lessee, finance lease or short term lease, number of contracts	0

Earnings (Loss) per Common Share - Schedule of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Numerator
Net income (loss)	$ 10,707	$ 5,218
Undistributed earnings allocated to unvested restricted stock	(111)	(103)
Net income (loss) for earnings per share calculation	$ 10,596	$ 5,115
Denominator
Weighted average number of common shares outstanding - Basic (in shares)	33,134	32,863
Effect of dilutive securities:
Unvested restricted stock (in shares)	184	263
Contingent restricted stock grants (in shares)	1
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share (in shares)	33,319	33,126
Net earnings (loss) per common share - Basic (in dollars per share)	$ 0.32	$ 0.16
Net earnings (loss) per common share - Diluted (in dollars per share)	$ 0.32	$ 0.15

Asset Retirement Obligations (Tables)

3 Months Ended

Sep. 30, 2022

Asset Retirement Obligations

Schedule of Reconciliations of the Beginning and Ending Asset Retirement Obligation Balances

The following is a reconciliation of the activity related to the Company’s ARO liability (inclusive of the current portion) (in thousands):


	September 30, 2022
Asset retirement obligations — beginning of period	$	13,921
Accretion of discount		276
Asset retirement obligations — end of period		14,197
Less: current asset retirement obligations		(22)
Long-term portion of asset retirement obligations	$	14,175

Acquisitions (Details) - USD ($) $ in Millions	Apr. 01, 2022	Jan. 14, 2022
Jonah Field In Wyoming From Exaro Energy III, LLC
Acquisitions
Asset acquisition of transaction cost	$ 0.2
Asset acquisition, consideration transferred related to deposits transferred	1.6
Liabilities acquired	3.0
Jonah Field In Wyoming From Exaro Energy III, LLC \| Oil and natural gas properties
Acquisitions
Asset acquisition, consideration transferred	26.4
Jonah Field In Wyoming From Exaro Energy III, LLC \| Other assets, net
Acquisitions
Asset acquisition for deposits	1.2
Williston Basin Acquisition
Acquisitions
Asset acquisition, consideration transferred		$ 25.2
Asset acquisition of transaction cost		0.3
Liabilities acquired		2.4
Senior Secured Reserve-Based Credit Facility \| Jonah Field In Wyoming From Exaro Energy III, LLC
Acquisitions
Borrowings under credit facility	$ 17.0
Senior Secured Reserve-Based Credit Facility \| Williston Basin Acquisition
Acquisitions
Borrowings under credit facility		$ 16.0

Cover Page - shares	3 Months Ended
Cover Page - shares	Sep. 30, 2022	Nov. 04, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Current Fiscal Year End Date	--06-30
Document Transition Report	false
Entity File Number	001-32942
Entity Registrant Name	EVOLUTION PETROLEUM CORP
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	41-1781991
Entity Address, Address Line One	1155 Dairy Ashford Road
Entity Address, Address Line Two	Suite 425
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77079
City Area Code	713
Local Phone Number	935-0122
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	EPM
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		33,716,461
Entity Central Index Key	0001006655
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Revenues
Total revenues	$ 39,797	$ 18,879
Operating costs
Lease operating costs	19,116	8,625
Depletion, depreciation, and accretion	3,598	1,528
General and administrative expenses	2,472	1,940
Total operating costs	25,186	12,093
Income (loss) from operations	14,611	6,786
Other income and expenses
Net gain (loss) on derivative contracts	(603)
Interest and other income	6	3
Interest expense	(243)	(51)
Income (loss) before income taxes	13,771	6,738
Income tax (expense) benefit	(3,064)	(1,520)
Net income (loss)	$ 10,707	$ 5,218
Earnings (loss) per common share:
Basic (in dollars per share)	$ 0.32	$ 0.16
Diluted (in dollars per share)	$ 0.32	$ 0.15
Weighted average number of common shares outstanding
Basic (in shares)	33,134	32,863
Diluted (in shares)	33,319	33,126
Crude oil
Revenues
Total revenues	$ 15,163	$ 8,859
Natural gas liquids
Revenues
Total revenues	4,786	4,562
Natural gas
Revenues
Total revenues	$ 19,848	$ 5,458

Property and Equipment - Other (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022
Oil and natural gas properties
Property costs subject to amortization	$ 189,647	$ 188,634
Less: Accumulated depletion, depreciation, and accretion	(81,448)	(78,126)
Oil and natural gas properties, net	$ 108,199	$ 110,508

Property and Equipment

3 Months Ended

Sep. 30, 2022

Property and Equipment

Property and Equipment

Note 4. Property and Equipment

Property and equipment as of September 30, 2022 and June 30, 2022 consisted of the following (in thousands):


	September 30, 2022		June 30, 2022
Oil and natural gas properties
Property costs subject to amortization	$	189,647	$	188,634
Less: Accumulated depletion, depreciation, and accretion		(81,448)		(78,126)
Oil and natural gas properties, net	$	108,199	$	110,508

As of September 30, 2022, all oil and natural gas property costs were subject to amortization. Depletion on oil and natural gas properties was $3.3 million and $1.4 million for the three months ended September 30, 2022 and 2021, respectively.

During the three months ended September 30, 2022 and 2021, the Company incurred development capital expenditures of $1.0 million and $0.3 million, respectively.

The Company uses the full cost method of accounting for its investments in oil and natural gas properties. All costs of acquisition, exploration, and development of oil and natural gas reserves are capitalized as the cost of oil and natural gas and properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs result in an impairment charge.

At September 30, 2022, the ceiling test value of the Company’s reserves was calculated based on the first-day-of-the-month average for the 12-months ended September 30, 2022 of the West Texas Intermediate (“WTI”) crude oil spot price of $92.16 per barrel and Henry Hub natural gas spot price of $6.17 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $47.49, which was based on historical differentials to WTI as NGLs do not have any single comparable reference index price. Using these prices, the Company’s net book value of oil and natural gas properties as of September 30, 2022 did not exceed the current ceiling. There was no impairment on oil and natural gas properties for the three months ended September 30, 2022.

At September 30, 2021, the ceiling test value of the Company’s reserves was calculated based on the first-day-of the month average for the 12-months ended September 30, 2021 of the WTI crude oil spot price of $57.64 per barrel and Henry Hub natural gas spot price of $2.97 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $23.04, which was based on historical prices received as NGLs do not have any single comparable reference index price. Using these prices, the Company’s net book value of oil and natural gas properties at September 30, 2021 did not exceed the current ceiling. There was no impairment on oil and natural gas properties for the three months ended September 30, 2021.

Acquisitions

3 Months Ended

Sep. 30, 2022

Acquisitions

Acquisitions

Note 3. Acquisitions

On April 1, 2022, the Company closed the acquisition of non-operated interests in the Jonah Field in Sublette County, Wyoming from Exaro Energy III, LLC (the “Jonah Field Acquisition”). After taking into account customary closing adjustments and an effective date of February 1, 2022, total cash consideration for the Jonah Field Acquisition was $26.4 million. The Company accounted for this transaction as an asset acquisition and allocated all of the purchase price (including $0.2 million of transaction costs) to proved oil and natural gas properties. Approximately, $1.6 million of the consideration transferred related to deposits transferred to the Company at closing, the largest related to a $1.2 million deposit with Enterprise for a gas gathering contract which was recorded to “Other assets, net” on the unaudited condensed consolidated balance sheets. In addition, the Company recognized $3.0 million in non-cash asset retirement obligations. The transaction was funded with cash on hand and $17.0 million in borrowings under the Company’s Senior Secured Credit Facility.

On January 14, 2022, the Company completed the acquisition of non-operated working interests in the Williston Basin in North Dakota from Foundation Energy Fund VII-A, LP and Foundation Energy Management, LLC (the “Williston Basin Acquisition”). After taking into account customary closing adjustments and an effective date of June 1, 2021, cash consideration was $25.2 million which included $0.3 million of capitalized transaction costs related to the acquisition. The Company accounted for the transaction as an asset acquisition and allocated all of the purchase price (including capitalized transaction costs) to proved oil and natural gas properties. The Company also recognized $2.4 million in non-cash asset retirement obligations. The transaction was funded with cash on hand and $16.0 million in borrowings under the Company’s Senior Secured Credit Facility.

In accordance with the FASB’s authoritative guidance on asset acquisitions, the Company allocated the cost of the acquisition to the assets acquired and liabilities assumed based on a relative fair value basis of the assets acquired and liabilities assumed, with no recognition of goodwill or bargain purchase gain recorded. Incremental legal and professional fees related directly to the acquisitions were capitalized as part of the acquisition cost. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements also utilize market assumptions of market participants.

Asset Retirement Obligations - Summary of Asset Retirement Obligations (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
Reconciliation of the beginning and ending asset retirement obligation
Asset retirement obligations - beginning of period	$ 13,921
Accretion of discount	276
Asset retirement obligations - end of period	14,197	$ 13,921
Less: current asset retirement obligations	(22)	(22)
Long-term portion of asset retirement obligations	$ 14,175	$ 13,899

Earnings (Loss) per Common Share

3 Months Ended

Sep. 30, 2022

Earnings (Loss) per Common Share

Earnings (Loss) per Common Share

Note 12. Earnings (Loss) per Common Share

The following table sets forth the computation of basic and diluted earnings (loss) per common share, reflecting the application of the two-class method (in thousands, except per share amounts):


	Three Months Ended
	September 30,
	2022		2021
Numerator
Net income (loss)	$	10,707	$	5,218
Undistributed earnings allocated to unvested restricted stock		(111)		(103)
Net income (loss) for earnings per share calculation	$	10,596	$	5,115

Denominator
Weighted average number of common shares outstanding — Basic		33,134		32,863
Effect of dilutive securities:
Unvested restricted stock awards		184		263
Unvested contingent restricted stock units		1		—
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		33,319		33,126

Net earnings (loss) per common share — Basic	$	0.32	$	0.16
Net earnings (loss) per common share — Diluted	$	0.32	$	0.15

Unvested restricted stock awards (both time-vested and performance-based), totaling approximately 8,000 for the three months ended September 30, 2022, were not included in the computation of diluted earnings per common share because the effect would have been anti-dilutive.

Unvested restricted stock awards (time-vested), totaling approximately 26,000 for the three months ended September 30, 2021 were not included in the computation of diluted earnings per common share because the effect would have been anti-dilutive.

In addition, unvested performance-based restricted stock awards and unvested contingent restricted stock units that would not meet the performance criteria as of the period end are excluded from the computation of diluted earnings per common share.

Senior Secured Credit Facility (Details) $ in Millions		3 Months Ended
Senior Secured Credit Facility (Details) $ in Millions	Apr. 11, 2016 USD ($)	Sep. 30, 2022 USD ($) agreement	Oct. 01, 2022 USD ($)	Feb. 07, 2022	Nov. 09, 2021 USD ($)	Sep. 30, 2021	Aug. 05, 2021 USD ($)	Jun. 30, 2021 USD ($)	Jan. 05, 2021
Debt Instrument [Line Items]
Minimum current ratio	1.00
Percentage of production hedged				25.00%
LIBOR \| Minimum
Debt Instrument [Line Items]
Debt instrument, variable interest rate	0.25%
Line of Credit \| Senior Secured Reserve-Based Credit Facility
Debt Instrument [Line Items]
Debt instrument, variable interest rate		4.89%				3.00%
Line of Credit \| Senior Secured Reserve-Based Credit Facility \| Revolving credit facility
Debt Instrument [Line Items]
Term of debt instrument	3 years
Maximum borrowing capacity	$ 50.0
Available borrowing capacity		$ 37.8
Initial borrowing base					$ 50.0
Credit facility maturity date		Apr. 09, 2024
Credit facility, number of rights to interim unscheduled redeterminations \| agreement		1
Minimum current ratio									1.00
Minimum consolidated tangible net worth	$ 40.0						$ 40.0	$ 50.0
Long-term line of credit		$ 12.3
Commitment fee percentage	0.25%
Maximum total leverage ratio (not more than)	3.00
Current borrowing base		$ 50.0
Debt instrument, covenant, percent of borrowings base utilized					25.00%
Line of Credit \| Senior Secured Reserve-Based Credit Facility \| Revolving credit facility \| Minimum
Debt Instrument [Line Items]
Percent of instrument hedged					25.00%
Line of Credit \| Senior Secured Reserve-Based Credit Facility \| Revolving credit facility \| Maximum
Debt Instrument [Line Items]
Percent of instrument hedged					75.00%
Line of Credit \| Senior Secured Reserve-Based Credit Facility \| Revolving credit facility \| Subsequent Event
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 50.0
Margined collateral value			$ 130.0
Percentage of borrowing base to Margined Collateral Value			25.00%
Line of Credit \| Senior Secured Reserve-Based Credit Facility \| LIBOR \| Revolving credit facility
Debt Instrument [Line Items]
Basis spread on variable rate	2.75%
Line of Credit \| Senior Secured Reserve-Based Credit Facility \| Prime Rate \| Revolving credit facility
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%

Derivatives

3 Months Ended

Sep. 30, 2022

Derivatives

Derivatives

Note 7. Derivatives

The Company is exposed to certain risks relating to its ongoing business operations, including commodity price risk and interest rate risk. In accordance with the Company’s policy and the requirements under the Senior Secured Credit Facility (as discussed in Note 5, “Senior Secured Credit Facility”), it may hedge or may be required to hedge a varying portion of anticipated oil and natural gas production for future periods. Derivatives are carried at fair value on the unaudited condensed consolidated balance sheets as assets or liabilities, with the changes in the fair value included in the unaudited condensed consolidated statements of operations for the period in which the change occurs. The Company’s hedge policies and objectives may change significantly as its operational profile changes or as required under the Senior Secured Credit Facility. The Company does not enter into derivative contracts for speculative trading purposes.

It is the Company’s policy to enter into derivative contracts only with counterparties that are creditworthy financial or commodity hedging institutions deemed by management as competent and competitive market makers. As of September 30, 2022, the Company did not post collateral under any of its derivative contracts as they are secured under the Company’s Senior Secured Credit Facility.

The Company has in the past, and may utilize in the future, costless put/call collars and fixed-price swaps to hedge a portion of its anticipated future production. A costless collar consists of a sold call, which establishes a maximum price the Company will receive for the volumes under contract, and a purchased put that establishes a minimum price. Fixed-price swaps are designed so that the Company receives or makes payments based on a differential between fixed and variable prices for the volumes under contract. The Company has elected not to designate its open derivative contracts for hedge accounting. Accordingly, the Company records the net change in the mark-to-market valuation of the derivative contracts and all payments and receipts on settled derivative contracts in “Net gain (loss) on derivative contracts” on the unaudited condensed consolidated statements of operations.

All derivative contracts are recorded at fair market value in accordance with ASC 815, Derivatives and Hedging (“ASC 815”) and ASC 820, Fair Value Measurement (“ASC 820”) and included in the unaudited condensed consolidated balance sheets as assets or liabilities. The “Derivative contract assets” and “Derivative contract liabilities” represent the difference between the market commodity prices and the hedged prices for the remaining volumes of production hedges as of September 30, 2022 (the “mark-to-market valuation”). The following table summarizes the location and fair value amounts of all derivative contracts in the unaudited condensed consolidated balance sheets as of September 30, 2022 and June 30, 2022 (in thousands):


Derivatives not designated
as hedging contracts	Balance sheet	Derivative Contract Assets				Balance sheet	Derivative Contract Liabilities
under ASC 815	location	September 30, 2022		June 30, 2022		location	September 30, 2022		June 30, 2022
Commodity contracts	Current assets - derivative contract assets	$	49	$	170	Current liabilities - derivative contract liabilities	$	924	$	2,164
Commodity contracts	Other assets - derivative contract assets		—		—	Long term liabilities - derivative contract liabilities		—		—
Total derivatives not designated as hedging contracts under ASC 815		$	49	$	170		$	924	$	2,164

The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivative contracts in the Company’s unaudited condensed consolidated statements of operations (in thousands). "Realized gain (loss) on derivative contracts" represents all receipts (payments) on derivative contracts settled during the period. "Unrealized gain (loss) on derivative contracts" represents the net change in the mark-to-market valuation of the derivative contracts.


Derivatives not designated	Location of gain (loss)	Three Months Ended
as hedging contracts	recognized in income on	September 30,
under ASC 815	derivative contracts	2022		2021
Commodity contracts:
Realized gain (loss) on derivative contracts	Other income and expenses - net gain (loss) on derivative contracts	$	(1,722)	$	—
Unrealized gain (loss) on derivative contracts	Other income and expenses - net gain (loss) on derivative contracts		1,119		—
Total net gain (loss) on derivative contracts		$	(603)	$	—

As of September 30, 2022, the Company had the following open crude oil and natural gas derivative contracts:

Weighted Average

Volumes in

Floor Price per

Ceiling Price per

Period

Instrument

Commodity

MMBTU/BBL

October 2022

Collar

Natural Gas

117,523

3.75

5.05

October 2022

Collar

Natural Gas

78,928

5.25

6.67

November 2022 - February 2023

Collar

Natural Gas

443,750

3.75

7.30

November 2022 - March 2023

Collar

Natural Gas

374,072

5.25

7.50

October 2022 - February 2023

Collar

Crude Oil

76,425

70.00

87.50

The Company presents the fair value of its derivative contracts at the gross amounts in the unaudited condensed consolidated balance sheets. The following table shows the potential effects of master netting arrangements on the fair value of the Company’s derivative contracts as of September 30, 2022 and June 30, 2022 (in thousands):


	Derivative Contracts Assets				Derivative Contracts Liabilities
Offsetting of Derivative Assets and Liabilities	September 30, 2022		June 30, 2022		September 30, 2022		June 30, 2022
Gross amounts presented in the Consolidated Balance Sheet	$	49	$	170	$	924	$	2,164
Amounts not offset in the Consolidated Balance Sheet		(7)		(170)		(7)		(170)
Net amount	$	42	$	—	$	917	$	1,994

The Company enters into an International Swap Dealers Association Master Agreements (“ISDA”) with each counterparty prior to a derivative contract with such counterparty. The ISDA is a standard contract that governs all derivative contracts entered into between the Company and the respective counterparty. The ISDA allows for offsetting of amounts payable or receivable between the Company and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency.

Revenue Recognition

3 Months Ended

Sep. 30, 2022

Revenue Recognition

Revenue Recognition

Note 2. Revenue Recognition

The Company’s revenues are primarily generated from its crude oil, natural gas and NGL production from the Jonah Field in Sublette County, Wyoming, the Williston Basin properties in North Dakota, the Barnett Shale properties located in North Texas, the Hamilton Dome Field in Wyoming, and the Delhi Field in Northeast Louisiana. Additionally, an overriding royalty interest retained in a past divestiture of Texas properties provides de minimis revenue. The following table disaggregates the Company’s revenues by major product for the three months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended
	September 30,
	2022		2021
Revenues
Crude oil	$	15,163	$	8,859
Natural gas		19,848		5,458
Natural gas liquids		4,786		4,562
Total revenues	$	39,797	$	18,879

In the Jonah Field, the Company has elected to take its natural gas and NGL working interest production in-kind and markets separately to different purchasers for its natural gas and to Enterprise Products Partners L.P. (“Enterprise”) for its NGLs.

The Company does not take production in-kind at any of its other properties and does not negotiate contracts with customers for such production. The Company recognizes crude oil, natural gas, and NGL production revenue at the point in time when custody and title (“control”) of the product transfers to the customer. The sales of oil and natural gas are made under contracts which the Company’s third-party operators of its wells have negotiated with customers, which typically include variable consideration that is based on pricing tied to local indices and volumes delivered in the current month. The Company receives payment from the sale of oil and natural gas production one to two months after delivery.

Judgments made in applying the guidance in ASC 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 completed 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 by field operators before distributing the Company’s share one to two months after production has occurred, which is typical in the oil and natural gas 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. To estimate accounts receivable from operators’ contracts with customers, the Company uses knowledge of its properties, information from field operators, historical performance, contractual arrangements, index pricing, quality and transportation differentials, and other factors as the basis for these estimates. Because the contractual performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company recognized amounts due from contracts with field operators as “Receivables from crude oil, natural gas, and natural gas liquids sales” on the unaudited condensed consolidated balance sheets. Differences between estimates and actual amounts received for product sales are recorded in the month that payment is received from the purchaser as remitted to the Company by field operators.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Total
Balance (shares) at Jun. 30, 2021	33,515
Balance at Jun. 30, 2021	$ 34,000	$ 42,541,000	$ 12,020,000		$ 54,595,000
Increase (Decrease) in Stockholders' Equity
Issuance of restricted common stock (shares)	197
Forfeitures of restricted stock (shares)	(80)
Common stock repurchases, including stock surrendered for tax withholding				$ (2,000)	(1,599)
Retirements of treasury stock		(2,000)		2,000
Stock-based compensation		198,000			198,000
Net income (loss)			5,218,000		5,218,000
Common stock dividends paid			(2,522,000)		(2,522,000)
Balance (shares) at Sep. 30, 2021	33,632
Balance at Sep. 30, 2021	$ 34,000	42,737,000	14,716,000		57,487,000
Balance (shares) at Jun. 30, 2022	33,471
Balance at Jun. 30, 2022	$ 33,000	42,629,000	32,852,000		75,514,000
Increase (Decrease) in Stockholders' Equity
Issuance of restricted common stock (shares)	79
Common stock repurchases, including stock surrendered for tax withholding				(26,000)	(26,407)
Retirements of treasury stock (in shares)	(4)
Retirements of treasury stock		(26,000)		$ 26,000
Stock-based compensation		208,000			208,000
Net income (loss)			10,707,000		10,707,000
Common stock dividends paid			(4,026,000)		(4,026,000)
Balance (shares) at Sep. 30, 2022	33,546
Balance at Sep. 30, 2022	$ 33,000	$ 42,811,000	$ 39,533,000		$ 82,377,000

Senior Secured Credit Facility

3 Months Ended

Sep. 30, 2022

Senior Secured Credit Facility

Senior Secured Credit Facility

Note 5. Senior Secured Credit Facility

On April 11, 2016, the Company entered into a three-year, senior secured reserve-based credit facility, as amended, (the “Senior Secured Credit Facility”) with MidFirst Bank in an amount up to $50.0 million with a current borrowing base of $50.0 million. On November 2, 2020, the Company entered into the Fifth Amendment to the Senior Secured Credit Facility extending the maturity to April 9, 2024. The borrowing base will be redetermined semiannually, with the lenders and the Company each having the right to one interim unscheduled redetermination between any two consecutive semi-annual redeterminations. The borrowing base takes into account the estimated value of the Company’s oil and natural gas properties, proved reserves, total indebtedness, and other relevant factors consistent with customary oil and natural gas lending criteria. The Senior Secured Credit Facility carries a commitment fee of 0.25% per annum on the undrawn portion of the borrowing base. Any borrowings under the Senior Secured Credit Facility will bear interest, at the Company’s option, at either London Interbank Offered Rate ("LIBOR") plus 2.75%, subject to a minimum LIBOR of 0.25%, or the Prime Rate, as defined under the Senior Secured Credit Facility, plus 1.00%.

The Company may elect, at its option, to prepay any borrowings outstanding under the Senior Secured Credit Facility without premium or penalty. Amounts outstanding under the Senior Secured Credit Facility are guaranteed by the Company’s direct and indirect subsidiaries and secured by a security interest in substantially all of the properties of the Company and its subsidiaries. Borrowings under the Senior Secured Credit Facility may be used for the acquisition and development of oil and natural gas properties, investments in cash flow generating properties complimentary to the production of oil and natural gas, and for letters of credit or other general corporate purposes.

The Senior Secured Credit Facility contains certain events of default, including non-payment; breaches or representation and warranties; non-compliance with covenants; cross-defaults to material indebtedness; voluntary or involuntary bankruptcy; judgments and change in control. The Senior Secured Credit Facility also contains financial covenants including a requirement that the Company maintain, as of the last day of each fiscal quarter, (i) a maximum total leverage ratio of not more than 3.00 to 1.00, (ii) a current ratio of not less than 1.00 to 1.00, and (iii) a consolidated tangible net worth of not less than $40.0 million, each as defined in the Senior Secured Credit Facility. As of September 30, 2022, the Company had $12.3 million borrowings outstanding under its Senior Secured Credit Facility, resulting in $37.8 million of available borrowing capacity. For the three months ended September 30, 2022 and 2021, the weighted average interest on borrowings under the Senior Secured Credit Facility was 4.89% and 3.00% based on LIBOR, respectively. As of September 30, 2022, the Company was in compliance with the financial covenants under the Senior Secured Credit Facility.

On October 1, 2022, the Company was notified by MidFirst Bank that the borrowing base remained at $50.0 million and the Margined Collateral Value, as defined in the Ninth Amendment to the Senior Secured Credit Facility, was set as $130.0 million. The Company is required to enter into hedges on a rolling 12-month basis when the borrowings exceed 25% of the Margined Collateral Value. Based on the current amount outstanding, the utilization percentage under the required hedging covenant is below the minimum utilization threshold of 25% and as a result the Company is not required to enter into additional hedges at this time, although the Company may elect to do so at its discretion.

On February 7, 2022, the Company entered into the Ninth Amendment to the Senior Secured Credit Facility. This amendment, among other things, modified the definition of utilization percentage related to the required hedging covenant such that for the purposes of determining the amount of future production to hedge, the utilization of the Senior Secured Credit Facility will be based on the Margined Collateral Value, as defined in the agreement, to the extent it exceeds the borrowing base then in effect. This amendment also required the Company to enter into hedges for the next 12-month period ending February 2023, covering 25% of expected crude oil and natural gas production over that period.

On November 9, 2021, the Company entered into the Eighth Amendment to the Senior Secured Credit Facility. This amendment, among other things, increased the borrowing base to $50.0 million and added a hedging covenant whereby the Company must hedge a minimum of 25% to 75% of future production on a rolling 12-month basis when 25% or more of the borrowing base is utilized. The hedging covenant was amended in the Ninth Amendment, as discussed above.

On August 5, 2021 the Company entered into the Seventh Amendment to the Senior Secured Credit Facility which, among other things, added definitions for the terms “Acquired Entity or Mineral Interests” and “Acquired Entity or Mineral Interests EBITDA Adjustment.” Additionally, the consolidated tangible net worth covenant level was reduced to $40.0 million from $50.0 million.

On January 5, 2021, and effective as of December 28, 2020, the Company entered into the Sixth Amendment to the Senior Secured Credit Facility which replaced the debt service coverage ratio (as defined therein) maintenance covenant with a new covenant requiring current ratio (as defined therein) of not less than 1.00 to 1.00.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

Stockholders' Equity

3 Months Ended

Sep. 30, 2022

Stockholders' Equity

Stockholders' Equity

Note 11. Stockholders’ Equity

Common Stock

As of September 30, 2022, the Company had 33,546,236 shares of common stock outstanding.

The Company began paying quarterly cash dividends on common stock in December 2013. As of September 30, 2022, the Company has cumulatively paid over $90.3 million in cash dividends. The Company paid dividends of $4.0 million and $2.5 million to its common stockholders during the three months ended September 30, 2022 and 2021, respectively. The following table reflects the dividends paid per share within the respective three-month period:

On September 8, 2022, the Board of Directors approved a share repurchase program, under which the Company is authorized to repurchase up to $25 million of its common stock through December 31, 2024. The Company intends to fund repurchases from working capital and cash provided by operating activities. The Board of Directors along with the management team believe that a share repurchase program is complimentary to the existing dividend policy and is a tax efficient means to further improve shareholder return. The shares may be repurchased from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s shares, the market price of the Company's common stock, general market and economic conditions, and applicable legal requirements. The value of shares authorized for repurchase by the Company's Board of Directors does not require the Company to repurchase such shares or guarantee that such shares will be repurchased, and the program may be suspended, modified, or discontinued at any time without prior notice. No shares were repurchased through this plan during the three months ended September 30, 2022.

During the three months ended September 30, 2022 and 2021, the Company acquired treasury stock from holders of newly vested stock-based awards to fund the recipients’ payroll tax withholding obligations. The treasury shares were subsequently cancelled. Such shares were valued at fair market value on the date of vesting. The following table shows all treasury stock purchases in the last two fiscal years:


	Three Months Ended
	September 30,
	2022		2021
Number of treasury shares acquired		3,805		353
Average cost per share	$	6.94	$	4.53
Total cost of treasury shares acquired	$	26,407	$	1,599

Expected Tax Treatment of Dividends

For the fiscal year ended June 30, 2022, all common stock dividends for that fiscal year were treated for tax purposes as qualified dividend income to the recipients. Based on its current projections for the fiscal year ended June 30, 2023, the Company expects all common stock dividends for such period to be treated as qualified dividend income to the recipients. Such projections are based on the Company’s reasonable expectations as of September 30, 2022 and are subject to change based on the Company’s final tax calculations at the end of the fiscal year.

Stock-Based Incentive Plan

The Evolution Petroleum Corporation 2016 Equity Incentive Plan (“2016 Plan”), approved at the December 2016 annual meeting of stockholders, authorizes the issuance of 1.1 million 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, the Company’s common stock, including its appreciation in value. On December 9, 2020, an amendment to the 2016 Plan was approved by its stockholders which increased the number of shares available for issuance by 2.5 million shares to a maximum of 3.6 million shares. As of September 30, 2022 and June 30, 2022, approximately 1.7 million shares and 1.8 million shares, respectively, remained available for grant under the 2016 Plan.

The Company estimates the fair value of stock-based compensation awards on the grant date to provide the basis for future compensation expense. For the three months ended September 30, 2022, and 2021, the Company recognized $0.2 million for both periods, related to stock-based compensation expense recorded as a component of “General and administrative expenses” on the unaudited condensed consolidated statements of operations.

Time-Vested Restricted Stock Awards

Time-vested restricted stock awards contain service-based vesting conditions and expire after a maximum of four years from the date of grant if unvested. The common shares underlying these awards are issued on the date of grant and participate in dividends paid by the Company. These service-based awards vest with continuous employment by the Company, generally in annual installments over terms of three to four years. Awards to the Company’s directors generally have one-year cliff vesting. For such awards, grant date fair value is based on market value of the Company’s common stock at the time of grant. This value is then amortized ratably over the service period. Previously recognized amortization expense subsequent to the last vesting date of an award is reversed in the event that the holder has no longer rendered service to the Company resulting in forfeiture of the award.

Performance-Based Restricted Stock Awards and Performance-Based Contingent Stock Units

Performance-based restricted stock awards and performance-based contingent stock units contain market-based vesting conditions based on the price of the Company’s common stock, the intrinsic value indexed solely to its common stock and the intrinsic value indexed to its common stock compared to the performance of the common stock of its peers. The common shares underlying the Company’s performance-based restricted stock awards are issued on the date of grant and participate in dividends paid by the Company and expire after a maximum of four years from the date of grant if unvested. Performance-based contingent share units do not participate in dividends and shares are only issued in part or in full upon the attainment of vesting conditions which generally have a lower probability of achievement and expire after a maximum of four years from the date of grant if unvested. Shares underlying performance-based contingent share units are reserved from the 2016 Plan. Performance-based restricted stock awards and contingent restricted stock units are valued using a Monte Carlo simulation and geometric Brownian motion techniques applied to the historical volatility of the Company’s total stock return compared to the historical volatilities of other companies or indices to which the Company compares its performance and/or the Company’s absolute total stock return. For certain awards, this Monte Carlo simulation also provides an expected vesting term. Stock-based compensation is recognized ratably over the expected vesting period, so long as the award holder remains an employee of the Company. Previously recognized

compensation expense is only reversed for the awards with market-based vesting conditions if the requisite service period is not rendered by the holder resulting in forfeiture of the award.

Vesting of grants with performance-based vesting conditions is dependent on the future price of the Company’s common stock. Such awards vest in part or in full if the trailing total returns on the Company’s common stock for a specified three-year period exceed the corresponding total returns of various quartiles of indices consisting of peer companies or, in some cases, vest when the average of the Company’s closing common stock price over a defined measurement period meets or exceeds a required common stock price.

During the three months ended September 30, 2022, the Company granted a total of 0.1 million equity awards primarily to employees under its long-term incentive program together with awards to a director that included 0.03 million time-vested restricted stock awards, 0.04 million performance-based restricted stock awards, and 0.02 million performance-based contingent stock units.

During the three months ended September 30, 2021, the Company granted a total of 0.2 million equity awards to employees under its long-term incentive program that included 0.1 million time-vested restricted stock primarily and 0.1 million performance-based restricted stock awards.

For performance-based awards granted during the months ended September 30, 2022 and 2021, the assumptions used in the Monte Carlo simulation valuations were as follows:


	Three Months Ended
	September 30,
	2022			2021
Weighted average fair value of performance-based awards granted	$	6.78		$	3.31
Risk-free interest rate		3.91	%		0.53	%
Expected term in years		3			3
Expected volatility		69.6	%		64.7	%
Dividend yield		6.1	%		6.3	%

Unvested restricted stock awards as of September 30, 2022 consisted of the following:


		Weighted
	Number of	Average
	Restricted	Grant-Date
Award Type	Shares	Fair Value
Time-vested awards	259,351	$	5.49
Performance-based awards	144,503		4.55
Unvested at September 30, 2022	403,854	$	5.15

The following table sets forth the restricted stock transactions for the three months ended September 30, 2022:


						Weighted
		Weighted		Unamortized		Average
	Number of	Average		Compensation		Remaining
	Restricted	Grant-Date		Expense		Amortization
	Shares	Fair Value		(In thousands)		Period (Years)
Unvested at June 30, 2022	341,211		4.54	$	1,092	2.1
Time-vested shares granted	34,950		7.38
Performance-based shares granted	44,381		7.61
Vested	(16,688)		3.89
Forfeited	—		—
Unvested at September 30, 2022	403,854	$	5.15	$	1,485	2.1

Unvested contingent restricted stock units table below consists solely of performance-based awards for the months ended September 30, 2022:


						Weighted
				Unamortized		Average
	Number of	Weighted Average		Compensation		Remaining
	Restricted	Grant-Date		Expense		Amortization
	Stock Units	Fair Value		(In thousands)		Period (Years)
Unvested at June 30, 2022	50,062		2.21	$	68	1.7
Performance-based awards granted	22,193		5.13
Vested	—		—
Forfeited	—		—
Expired	—		—
Unvested at September 30, 2022	72,255	$	3.11	$	169	2.3

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions	Nov. 07, 2022	Oct. 01, 2022	Apr. 11, 2016
Subsequent Event
Subsequent Event [Line Items]
Dividend declared (in dollars per share)	$ 0.120
Dividend declared, date declared	Nov. 07, 2022
Dividend declared, date of record	Dec. 15, 2022
Dividend declared, date to be paid	Dec. 30, 2022
Revolving credit facility \| Senior Secured Reserve-Based Credit Facility \| Line of Credit
Subsequent Event [Line Items]
Maximum borrowing capacity			$ 50.0
Revolving credit facility \| Senior Secured Reserve-Based Credit Facility \| Line of Credit \| Subsequent Event
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 50.0
Margined collateral value		$ 130.0

Leases (Tables)

3 Months Ended

Sep. 30, 2022

Leases

Schedule of leases

The table below summarized the Company’s leases for the three months ended September 30, 2022 and 2021 (in thousands, except years and discount rate):


	Three Months Ended September 30,
	2022			2021
Statements of Operations:
Operating lease costs	$	13		$	13

Statements of Cash Flow:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases⁽¹⁾	$	21		$	15

Other:
Weighted average remaining lease term in years		0.17			1.17
Weighted average discount rate		5.15	%		5.15	%

The following table presents the Company’s ROU assets and lease liabilities (in thousands):


	September 30, 2022		June 30, 2022
Balance Sheets:
Operating lease ROU asset (included in other assets)	$	9	$	21
Accrued liabilities and other - current⁽¹⁾		5		26

(1)	A portion of the cash paid for operating leases during the three months ended September 30, 2022 includes a prepayment for the subsequent quarter.

Schedule of future minimum lease payments associated with the Company's non-cancellable operating lease for office space

As of September 30, 2022, the future minimum lease payments associated with the Company’s non-cancellable operating lease for office space are as follows (in thousands):


Fiscal Year	September 30, 2022
Remaining in 2023	$	5
Total operating lease payments		5
Less: discount to present value		—
Total operating lease liabilities		5
Less: current operating lease liabilities		5
Non current operating lease liabilities	$	—

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		105 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022
Cash flows from operating activities:
Net income (loss)	$ 10,707	$ 5,218
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation, and accretion	3,598	1,528
Impairment of proved property	0	0
Stock-based compensation	208	198
Settlement of asset retirement obligations	(7)
Deferred income taxes	(36)	(119)
Unrealized loss on derivative contracts	(1,119)
Accrued settlements on derivative contracts	(220)
Other	(8)	(4)
Changes in operating assets and liabilities:
Receivables	6,804	(7,617)
Prepaid expenses and other current assets	33	109
Accounts payable and accrued expenses	(5,173)	4,640
State and federal income taxes payable	2,578	1,639
Net cash provided by operating activities	17,365	5,592
Cash flows from investing activities:
Acquisition of oil and natural gas properties	(31)
Capital expenditures for oil and natural gas properties	(1,848)	(390)
Net cash used in investing activities	(1,879)	(390)
Cash flows from financing activities:
Common stock dividends paid	(4,026)	(2,522)	$ (90,300)
Common stock repurchases, including stock surrendered for tax withholding	(26)	(2)
Repayments of credit facility	(9,000)
Net cash provided by (used in) financing activities	(13,052)	(2,524)
Net increase (decrease) in cash and cash equivalents	2,434	2,678
Cash and cash equivalents, beginning of year	8,280	5,277
Cash and cash equivalents, end of year	10,714	7,955	$ 10,714
Non-cash investing and financing transactions:
Increase (decrease) in accrued expenditure for oil and natural gas properties	$ (872)	$ (111)

Revenue Recognition - Revenues By Major Product (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Revenue Recognition
Total revenues	$ 39,797	$ 18,879
Crude oil
Revenue Recognition
Total revenues	15,163	8,859
Natural gas
Revenue Recognition
Total revenues	19,848	5,458
Natural gas liquids
Revenue Recognition
Total revenues	$ 4,786	$ 4,562

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details