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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Mar. 31, 2012	May 08, 2012
Document and Entity Information
Entity Registrant Name	EVOLUTION PETROLEUM CORP
Entity Central Index Key	0001006655
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		27,816,963
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

Consolidated Balance Sheets - USD ($)	Mar. 31, 2012	Jun. 30, 2011
Current assets
Cash and cash equivalents	$ 15,223,417	$ 4,247,438
Certificates of deposit	250,000	250,000
Restricted cash from joint interest partner	60,565	118,194
Receivables
Oil and natural gas sales	2,082,481	1,559,404
Joint interest partner	20,622	86,105
Income taxes	20,224	28,680
Other	311	167
Prepaid expenses and other current assets	149,275	67,852
Total current assets	17,806,895	6,357,840
Property and equipment, net of depreciation, depletion, and amortization
Oil and natural gas properties - full-cost method of accounting, of which $695,544 and $2,940,199 at March 31, 2012 and June 30, 2011, respectively, were excluded from amortization.	35,189,511	33,447,564
Other property and equipment	89,943	69,262
Total property and equipment	35,279,454	33,516,826
Other assets	260,753	77,287
Total assets	53,347,102	39,951,953
Current liabilities
Accounts payable	534,544	514,177
Joint interest advances	60,565	105,567
Accrued compensation	620,099	682,850
Royalties payable	529,335	742,651
Income taxes payable	116,224	82,122
Other current liabilities	61,493	84,565
Total current liabilities	1,922,260	2,211,932
Long term liabilities
Deferred income taxes	5,308,762	3,330,266
Asset retirement obligations	945,265	859,586
Deferred rent	74,297	85,412
Unsecured revolving credit agreement	0
Total liabilities	8,250,584	6,487,196
Commitments and contingencies (Note 10)
Stockholders' equity
Common stock; par value $0.001; 100,000,000 shares authorized and 28,605,163 shares issued; outstanding 27,816,963 shares and 27,612,916 shares at March 31, 2012 and June 30, 2011, respectively.	28,605	28,400
Additional paid-in capital	28,817,290	20,761,209
Retained earnings	17,132,328	13,557,170
Stockholders equity before treasury stock	45,978,540	34,346,779
Treasury stock, at cost, 788,200 shares as of March 31, 2012 and June 30, 2011.	(882,022)	(882,022)
Total stockholders' equity	45,096,518	33,464,757
Total liabilities and stockholders' equity	53,347,102	39,951,953
Series A Cumulative Preferred Stock
Stockholders' equity
Preferred stock, par value $0.001; 5,000,000 shares authorized: 8.5% Series A Cumulative Preferred Stock, 1,000,000 shares designated, 317,319 shares issued and outstanding at March 31, 2012, with a total liquidation preference of $7,932,975 ($25.00 per share)	$ 317

Consolidated Balance Sheets (Parenthetical) - USD ($)	9 Months Ended
Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2012	Jun. 30, 2011
Oil and natural gas properties, excluded from amortization (in dollars)	$ 695,544	$ 2,940,199
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	28,605,163
Common stock, shares outstanding	27,816,963	27,612,916
Treasury stock, shares	788,200	788,200
Series A Cumulative Preferred Stock
Cumulative Preferred Stock (as a percent)	8.50%
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, shares authorized	5,000,000
Preferred stock, shares designated	1,000,000
Preferred stock, shares issued	317,319
Preferred stock, shares outstanding	317,319
Preferred stock, total liquidation preference	$ 7,932,975
Preferred stock, liquidation preference (in dollars per share)	$ 25.00

Consolidated Statements of Operations - USD ($)

3 Months Ended

9 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Mar. 31, 2012

Mar. 31, 2011

Revenues

Crude oil

$ 4,532,942

$ 1,607,521

$ 12,212,738

$ 3,034,333

Natural gas liquids

128,319

228,050

499,745

669,463

Natural gas

187,273

181,504

667,609

661,807

Total revenues

4,848,534

2,017,075

13,380,092

4,365,603

Operating Costs

Lease operating expenses

662,461

284,577

1,277,848

950,382

Production taxes

15,165

26,308

47,925

54,084

Depreciation, depletion and amortization

316,665

132,516

834,351

358,963

Accretion of asset retirement obligations

20,124

16,233

56,712

43,314

General and administrative expenses

^[1]

1,560,658

1,359,161

4,454,091

3,976,115

Total operating costs

2,575,073

1,818,795

6,670,927

5,382,858

Income (loss) from operations

2,273,461

198,280

6,709,165

(1,017,255)

Other income (expense)

Interest income

6,205

1,562

20,163

13,034

Deferred loan cost amortization and bank fees

(5,577)

Net income (loss) before income tax benefit

2,274,089

199,842

6,723,751

(1,004,221)

Income tax (provision) benefit

(805,989)

(29,416)

(2,686,778)

227,778

Net Income (loss) attributable to the Company

1,468,100

170,426

4,036,973

(776,443)

Dividends on Preferred Stock

168,575

461,815

Earnings (loss) attributable to common shareholders

$ 1,299,525

$ 170,426

$ 3,575,158

$ (776,443)

Basic (in dollars per share)

$ 0.05

$ 0.01

$ 0.13

$ (0.03)

Diluted (in dollars per share)

$ 0.04

$ 0.01

$ 0.11

$ (0.03)

Weighted average number of common shares

Basic (in shares)

27,816,963

27,521,957

27,759,487

27,379,023

Diluted (in shares)

31,785,184

30,833,505

31,558,152

27,379,023

[1]

General and administrative expenses for the three months ended March 31, 2012 and 2011 included non-cash stock-based compensation expense of $354,469 and $392,533, respectively. For the corresponding nine month periods' non-cash stock-based compensation expense was $1,126,034 and $1,143,413, respectively.

Consolidated Statements of Operations (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Consolidated Statements of Operations
General and administrative expenses, non-cash stock-based compensation expense	$ 354,469	$ 392,533	$ 1,126,034	$ 1,143,413

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Mar. 31, 2012	Mar. 31, 2011
Cash flows from operating activities
Net Income (loss) attributable to the Company	$ 4,036,973	$ (776,443)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	837,673	358,963
Stock-based compensation	1,126,034	1,143,413
Accretion of asset retirement obligations	56,712	43,314
Payments on asset retirement obligations	(30,969)	(1,847)
Deferred income taxes	1,978,496	(261,965)
Deferred rent	(11,115)	2,833
Other		32,080
Changes in operating assets and liabilities:
Receivables from oil and natural gas sales	(523,077)	(526,375)
Receivables from income taxes and other	8,346	1,125,374
Due from joint interest partner	78,110	(230,227)
Prepaid expenses and other current assets	(81,423)	(70,060)
Accounts payable and accrued expenses	32,397	273,286
Royalties payable	(213,316)	433,113
Income taxes payable	34,102	(7,683)
Net cash provided by (used in) operating activities	7,328,943	1,537,776
Cash flows from investing activities
Proceeds from asset sale	103,184	231,326
Development of oil and natural gas properties	(2,386,332)	(2,320,102)
Acquisitions of oil and natural gas properties	(304,272)	(814,323)
Capital expenditures for other property and equipment	(47,475)
Maturities of certificates of deposit		1,100,000
Other assets	(27,295)	(25,532)
Net cash used in investing activities	(2,662,190)	(1,828,631)
Cash flows from financing activities
Proceeds from the issuance of restricted stock		28
Proceeds from the exercise of stock options		106,049
Proceeds from issuances of preferred stock, net	6,930,535
Preferred stock dividends paid	(461,815)
Deferred loan costs	(159,494)
Net cash provided by financing activities	6,309,226	106,077
Net increase (decrease) in cash and cash equivalents	10,975,979	(184,778)
Cash and cash equivalents, beginning of period	4,247,438	3,138,259
Cash and cash equivalents, end of period	15,223,417	2,953,481
Supplemental disclosures of cash flow information:
Income taxes paid	610,000	152,000
Income tax refunds and carry backs received	28,680	979,177
Non-cash transactions:
Decrease in accounts payable used to acquire oil and natural gas leasehold interests and develop oil and natural gas properties	(97,853)	(196,557)
Increase in accounts payable related to joint venture activities		144,942
Oil and natural gas properties incurred through recognition of asset retirement obligations	$ (59,936)	$ (25,115)

Organization and Basis of Preparation

9 Months Ended

Mar. 31, 2012

Organization and Basis of Preparation

Organization and Basis of Preparation

Note 1 — Organization and Basis of Preparation

Nature of Operations. Evolution Petroleum Corporation (“EPM”) and its subsidiaries (the “Company”, “we”, “our” or “us”), is an independent petroleum company headquartered in Houston, Texas and incorporated under the laws of the State of Nevada. We are engaged primarily in the acquisition, exploitation and development of properties for the production of crude oil and natural gas. We acquire properties with known oil and natural gas resources and exploit them through the application of conventional and specialized technology to increase production, ultimate recoveries, or both.

Interim Financial Statements. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with 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 accounting principles generally accepted in the United States 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 2011 Annual Report on Form 10-K for the fiscal year ended June 30, 2011, as filed with the SEC. The results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year.

Principles of Consolidation and Reporting. Our consolidated financial statements include the accounts of EPM and its wholly-owned subsidiaries: NGS Sub Corp and its wholly owned subsidiary, Tertiaire Resources Company, NGS Technologies, Inc., and Evolution Operating Co., Inc. All significant intercompany transactions have been eliminated in consolidation. The consolidated financial statements for the prior period may include certain reclassifications that were made to conform to the current presentation. Such reclassifications have no impact on previously reported loss or stockholders’ equity.

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

- Definition

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References + Details

Property and Equipment

9 Months Ended

Mar. 31, 2012

Property and Equipment

Property and Equipment

Note 2 — Property and Equipment

As of March 31, 2012 and June 30, 2011 our oil and natural gas properties and other property and equipment consisted of the following:

	March 31, 2012			June 30, 2011
Oil and natural gas properties
Property costs subject to amortization	$	40,654,659		$	35,860,517
Less: Accumulated depreciation, depletion, and amortization	(6,160,702		)	(5,353,152		)
Unproved properties not subject to amortization	695,554			2,940,199
Oil and natural gas properties, net	$	35,189,511		$	33,447,564

Other property and equipment
Furniture, fixtures and office equipment, at cost	$	308,814		$	261,340
Less: Accumulated depreciation	(218,871		)	(192,078		)
Other property and equipment, net	$	89,943		$	69,262

Unproved properties not subject to amortization includes: unevaluated acreage of $0.7 million and $2.9 million as of March 31, 2012 and June 30, 2011, respectively, of which (i) $0.7 million as of March 31, 2012 and June 30, 2011, related to our interests in the Delhi Field in Louisiana; and (ii) $6,000 and $2.2 million as of March 31, 2012 and June 30, 2011, respectively, related to Woodford Shale trend in Oklahoma. Development of our unproved properties is expected to be completed within five years. Our evaluation of impairment of unproved properties occurs, at a minimum, on a quarterly basis. During the nine months ended March 31, 2012, our evaluations determined that approximately $2.2 million of our unevaluated Woodford Shale trend property was impaired and, accordingly, was moved to the full cost pool.

During the quarter the Company sold a portion of its Woodbine lease rights and realized net proceeds of $103,184 and recorded a corresponding reduction to its full cost pool. There were no proved reserves associated with these rights.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

Joint Interest Drilling Arrangement

9 Months Ended

Mar. 31, 2012

Joint Interest Drilling Arrangement

Joint Interest Drilling Arrangement

Note 3 — Joint Interest Drilling Arrangement

In July 2010, we entered into a drilling arrangement with an industry partner to drill up to five horizontal development wells in the Giddings Field in central Texas. Our industry partner has funded $7.7 million through March 31, 2012, their portion of the approval for expenditure (“AFE’) for three wells, including a sales line. As of March 31, 2012, $60,565 of their funding has yet to be expended with respect to those wells. We have billed our industry partner $20,622 for operating expense recovery and costs incurred for their share of costs. Amounts pertaining to our industry partner’s share of the joint interest drilling arrangement included in our balance sheet as of March 31, 2012, are as follows:

Restricted cash from joint interest partner	$	60,565
Amounts due from joint interest partner	20,622
Accounts payable	8,910
Joint interest advances	60,565

Asset Retirement Obligations

9 Months Ended

Mar. 31, 2012

Asset Retirement Obligations

Asset Retirement Obligations

Note 4 — Asset Retirement Obligations

Our asset retirement obligations represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the end of their productive lives in accordance with applicable laws. The following is a reconciliation of the beginning and ending asset retirement obligation for the nine months ended March 31, 2012:

Asset retirement obligations — beginning of period	$	859,586
Accretion expense	56,712
Payments on asset retirement obligations	(30,969		)
Acquisition of oil and gas properties	153,668
Revision of estimate	(93,732		)
Asset retirement obligations — end of period	$	945,265

Stockholders' Equity

9 Months Ended

Mar. 31, 2012

Stockholders' Equity

Stockholders' Equity

Note 5 — Stockholders’ Equity

Common Stock

On September 9, 2011, a contractor of the Company net exercised 20,000 stock options issued under the 2004 Stock Plan for a net issuance of 7,941 shares of our common stock. The options were granted in March 2008 at an exercise price of $4.10 per share.

On August 31, 2011, the Board of Directors authorized the issuance of 161,861 shares of restricted common stock from the 2004 Stock Plan to all employees as a long-term incentive award. Total unrecognized stock-based compensation expense of $1,029,436 related to the long-term incentive award will be recognized ratably over a four year period as, if and when the restricted common stock vests.

On December 5, 2011, a total of 34,245 shares of our restricted common stock were issued pursuant to the 2004 Stock Plan to five outside directors as part of their annual board compensation for calendar year 2012. The value of the shares issued was $249,955, based on the fair market value on the date of issuance. All issuances of our common stock were subject to vesting terms per individual stock agreements, which is one year for directors.

See Note 6.

Series A Cumulative Perpetual Preferred Stock

During the nine months ended March 31, 2012, we sold 317,319 shares of our 8.5% Series A Cumulative (perpetual) Preferred Stock at a weighted average sales price of $23.80 per share, with a liquidation preference of $25.00 per share. All shares were underwritten or sold through McNicoll Lewis & Vlak LLC (MLV), 220,000 of which were sold in an underwritten public offering and 97,319 shares of which were sold under an at-the-market sales agreement (ATM), providing aggregate net proceeds of $6,930,535 after- market discounts, underwriting fees, legal and other expenses of the offerings. The Series A Cumulative Preferred Stock cannot be converted into our common stock and there are no sinking fund or redemption rights available to holders thereof. Optional redemption can only be made by us on or after July 1, 2014 for the stated liquidation value of $25.00 per share plus accrued dividends, or by an acquirer under a change of control prior to such date at redemption prices ranging from $25.25 to $25.75 per share. With respect to dividend rights and rights upon our liquidation, winding-up or dissolution, the Series A Preferred Stock ranks senior to our common shareholders, but subordinate to any of our existing and future debt. Dividends on the Series A Cumulative Preferred Stock accrue and accumulate at a fixed rate of 8.5% per annum on the $25.00 per share liquidation preference, payable monthly at $0.177083 per share, as, if and when declared by our Board of Directors.

During the nine months ended March 31, 2012, we paid dividends of $461,815 to holders of our Series A Preferred Stock.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Number 210
-Article 4
-Section 08
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7, 11A
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Article 4

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Stock-Based Incentive Plan

9 Months Ended

Mar. 31, 2012

Stock-Based Incentive Plan

Stock-Based Incentive Plan

Note 6 — Stock-Based Incentive Plan

We have granted option awards to purchase common stock (the “Stock Options”), restricted common stock awards (“Restricted Stock”), and/or unrestricted fully vested common stock, to employees, directors, and consultants of the Company and its subsidiaries under the Natural Gas Systems Inc. 2003 Stock Plan (the “2003 Stock Plan”) and the Evolution Petroleum Corporation Amended and Restated 2004 Stock Plan (the “2004 Stock Plan” or together, the “EPM Stock Plans”). Option awards for the purchase of 600,000 shares of common stock were issued under the 2003 Stock Plan. The 2004 Stock Plan authorized the issuance of 5,500,000 shares of common stock with an additional 1,000,000 shares authorized by a December 5, 2011 plan amendment approved by a vote of our shareholders. No shares are available for grant under the 2003 Stock Plan and 1,012,111 shares remain available for grant under the 2004 Stock Plan as of March 31, 2012.

We have also granted common stock warrants, as authorized by the Board of Directors, to employees in lieu of cash bonuses or as incentive awards to reward previous service or provide incentives to individuals to acquire a proprietary interest in the Company’s success and to remain in the service of the Company (the “Incentive Warrants”). These Incentive Warrants have similar characteristics of the Stock Options. A total of 1,037,500 Incentive Warrants have been issued, with Board of Directors approval, outside of the EPM Stock Plans. We have not issued Incentive Warrants since the listing of our shares on the NYSE Amex (formerly, the American Stock Exchange) in July 2006.

Stock Options and Incentive Warrants

Non-cash stock-based compensation expense related to Stock Options and Incentive Warrants for the three months ended March 31, 2012 and 2011 was $49,252 and $172,728, respectively. For the nine months ended March 31, 2012, and 2011, non-cash stock-based compensation expense related to Stock Options and Incentive Warrants was $281,390 and $542,299, respectively.

There were no Stock Options granted during the nine months ended March 31, 2012 and 2011.

We estimated the fair value of Stock Options and Incentive Warrants issued to employees and directors at the date of grant using a Black-Scholes-Merton valuation model. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term (estimated period of time outstanding) of Stock Options and Incentive Warrants is based on the “simplified” method of the estimated expected term for “plain vanilla” options allowed by the SEC Staff Accounting Bulletin (“SAB”) No. 107 and SAB No. 110, and varied based on the vesting period and contractual term of the Stock Options or Incentive Warrants. Expected volatility is based on the historical volatility of the Company’s closing common stock price and that of an evaluation of a peer group of similar companies trading activity. We have not declared any cash dividends on the Company’s common stock.

The following summary presents information regarding outstanding Stock Options and Incentive Warrants as of March 31, 2012, and the changes during the fiscal year:

	Number of Stock Options and Incentive Warrants		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)		Weighted Average Remaining Contractual Term (in years)

Stock Options and Incentive Warrants outstanding at July 1, 2011	5,392,820		$	1.84

Granted	—		—
Exercised	(20,000	)	$	4.10
Cancelled or forfeited	—		—
Expired	—		—

Stock Options and Incentive Warrants outstanding at March 31, 2012	5,372,820		$	1.83	$	40,114,930	3.7

Vested or expected to vest at March 31, 2012	5,372,820		$	1.83	$	39,926,985	3.7

Exercisable at March 31, 2012	5,337,191		$	1.82	$	40,114,930	3.7

(1) Based upon the difference between the market price of our common stock on the last trading date of the period ($9.30 as of March 30, 2012) and the Stock Option or Incentive Warrant exercise price of in-the-money Stock Options and Incentive Warrants.

There were 20,000 Stock Options exercised during the nine months ended March 31, 2012 with an aggregate intrinsic value of $54,000. There were 86,875 Stock Options that were exercised during the nine months ended March 31, 2011, with an aggregate intrinsic value of $493,923.

A summary of the status of our unvested Stock Options and Incentive Warrants as of March 31, 2012 and the changes during the nine months ended March 31, 2012, is presented below:

	Number of Stock Options and Incentive Warrants		Weighted Average Grant- Date Fair Value

Unvested at July 1, 2011	173,877		$	2.20

Granted	—		—

Vested	(138,248	)	$	2.14

Forfeited	—		—

Unvested at March 31, 2012	35,629		$	2.41

During the nine months ended March 31, 2012 and 2011, there were 138,248 and 289,498 Stock Options and Incentive Warrants that vested with a total grant date fair value of $295,851 and $576,101, respectively.

The total unrecognized compensation cost at March 31, 2012, relating to non-vested Stock Options and Incentive Warrants was $72,659. Such unrecognized expense is expected to be recognized over a weighted average period of 0.44 years.

Restricted Stock

Stock-based compensation expense related to Restricted Stock grants for the three months ended March 31, 2012 and 2011 was $305,217 and $219,805, respectively. Stock-based compensation expense related to Restricted Stock grants for the nine months ended March 31, 2012 and 2011 was $844,644 and $601,114, respectively.

The following table sets forth the Restricted Stock transactions for the nine months ended March 31, 2012:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value

Unvested at July 1, 2011	495,689		$	4.30

Granted	196,106		$	6.52

Vested	(176,324	)	$	4.57

Forfeited	—		—

Unvested at March 31, 2012	515,471		$	5.06

At March 31, 2012, unrecognized stock compensation expense related to Restricted Stock grants totaled $2,422,316. Such unrecognized expense will be recognized over a weighted average period of 2.47 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

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-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

Income Taxes

9 Months Ended

Mar. 31, 2012

Income Taxes

Income Taxes

Note 7 — Income Taxes

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

There were no unrecognized tax benefits nor any accrued interest or penalties associated with unrecognized tax benefits during the nine months ended March 31, 2012. We believe that we have 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 our 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 years ending June 30, 2007 through June 30, 2011.

The Company recognized income tax expense of $805,989 and $29,416 for the three months ended March 31, 2012 and 2011, respectively, with corresponding effective rates of 35.4% and 14.7%. We recognized income tax expense of $2,686,778 in the nine months ended March 31, 2012 compared to an income tax benefit of $227,778 for the nine months ended March 31, 2011. Effective tax rates for these 2012 and 2011 nine-month periods were 40.0% and 22.7% respectively.

Our effective tax rate for any period may differ from the statutory federal rate due to our state income tax liability in Louisiana and due to stock-based compensation expense related to qualified incentive stock option awards (“ISO awards”), both of which create a permanent tax difference for financial reporting, as these types of awards, if certain conditions are met, are not deductible for federal tax purposes. The effective tax rate for the nine months ended March 31, 2011 was also affected by additional income tax expense recorded in December 2011 in connection with finalizing the Company’s June 30, 2010 income tax returns.

- 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.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

Net Income (loss) Per Share

9 Months Ended

Mar. 31, 2012

Net Income (loss) Per Share

Net Income (loss) Per Share

Note 8 — Net Income (loss) Per Share

The following table sets forth the computation of basic and diluted income (loss) per share:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2012		2011		2012		2011
Numerator
Net income (loss) attributable to common shareholders	$	1,299,525	$	170,426	$	3,575,158	$	(776,443	)

Denominator*
Weighted average number of common shares — Basic	27,816,963		27,521,957		27,759,487		27,379,023

Effect of dilutive securities:
Common stock warrants issued in connection with equity and financing transactions	66,826		110,940		62,684		—
Stock Options and Incentive Warrants	3,901,395		3,200,608		3,735,981		—
Total weighted average dilutive securities	3,968,221		3,311,548		3,798,665		—

Weighted average number of common shares and dilutive potential common shares used in diluted EPS	31,785,184		30,833,505		31,558,152		27,379,023

Net income (loss) per common share — Basic	$	0.05	$	0.01	$	0.13	$	(0.03	)
Net income (loss) per common share — Diluted	$	0.04	$	0.01	$	0.11	$	(0.03	)

* Potential dilutive common shares are excluded from the computation of net loss per common shares because their effect will always be anti-dilutive.

Outstanding potentially dilutive securities, before adjustment for net exercise, as of March 31, 2012 are as follows:

Outstanding Potential Dilutive Securities	Weighted Average Exercise Price		Outstanding at March 31, 2012

Common stock warrants issued in connection with equity and financing transactions	$	2.50	92,635
Stock Options and Incentive Warrants	$	1.83	5,372,820
Total	$	1.84	5,465,455

Outstanding potentially dilutive securities as of March 31, 2011 are as follows:

Outstanding Potential Dilutive Securities	Weighted Average Exercise Price		Outstanding at March 31, 2011

Common stock warrants issued in connection with equity and financing transactions	$	1.87	159,308
Stock Options and Incentive Warrants	$	1.85	5,392,820
Total	$	1.85	5,552,128

Unsecured Revolving Credit Agreement

9 Months Ended

Mar. 31, 2012

Unsecured Revolving Credit Agreement

Unsecured Revolving Credit Agreement

Note 9 - Unsecured Revolving Credit Agreement

On February 29, 2012, Evolution Petroleum Corporation entered into a Credit Agreement (the “Credit Agreement”) with Texas Capital Bank, N.A. (the “Lender”). The Credit Agreement provides the Company with a revolving credit facility (the “facility”) in an amount up to $50,000,000 with availability governed by an Initial Borrowing Base of $5,000,000. A portion of the facility not in excess of $1,000,000 is available for the issuance of letters of credit.

The facility is unsecured and has a four year term. The Company’s subsidiaries guaranteed the Company’s obligations under the facility. The proceeds of any loans under the facility are to be used by the Company for the acquisition and development of Oil and Gas Properties (as defined in the facility), the issuance of letters of credit, and for working capital and general corporate purposes.

Semi-annually, the Borrowing Base and a Monthly Reduction Amount are re-determined from reserve reports. Requests by the Company to increase the $5,000,000 initial amount are subject to the Lender’s credit approval process, and are also limited to 25% of the value Oil and Gas Properties.

At the Company’s option, borrowings under the facility bear interest at a rate of either (i) an adjusted LIBOR rate (LIBOR rate divided by the remainder of 1 less the Lender’s Regulation D reserve requirement), or (ii) an adjusted Base Rate equal to the greater of the Lender’s prime rate or the sum of 0.50% and the Federal Funds Rate. A maximum of three LIBOR based loans can be outstanding at any time. Allowed loan interest periods are one, two, three and six months. LIBOR interest is payable at the end of the interest period except for six-month loans for which accrued interest is payable at three months and at end of term. Base Rate interest is payable monthly. Letters of credit bear fees reflecting 3.5% per annum rate applied to their principal amounts and are due when transacted. Their maximum term is one year.

A commitment fee of 0.50% per annum accrues on unutilized availability and is payable quarterly. The Company is responsible for certain administrative expenses of the Lender over the life of the Credit Agreement as well as for compensating the Lender $50,000 for incurred loan costs upon closing.

The Credit Agreement also contains financial covenants including a requirement that the Company maintain a current ratio of not less than 1.5 to 1; a ratio of total funded Indebtedness to EBITDA of not more than 2.5 to 1, and a ratio of EBITDA to interest expense of not less than 3 to 1. The agreement specifies certain customary covenants, including restrictions on the Company and its subsidiaries from pledging their assets, incurring defined Indebtedness outside of the facility other that permitted indebtedness, and it restricts certain asset sales. Payments of dividends for the Series A Preferred are only restricted by the EBITDA to interest coverage ratio, wherein Series A dividends are a 1X deduction from EBITDA (as opposed to a 3:1 requirement if dividends were treated as interest expense). The Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the Lender may declare all amounts outstanding under the Credit Agreement to be immediately due and payable.

As of March 31, 2012, the Company had no borrowings and no outstanding letters of credit issued under the facility, resulting in an available borrowing base capacity of $5,000,000. The Company was in compliance with all the covenants of the Credit Agreement.

In connection with this agreement the Company incurred $159,494 of debt issuance costs, which have been capitalized in Other Assets and are being amortized on a straight-line basis over the term of the agreement.

- 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.

+ References + Details

Commitments and Contingencies

9 Months Ended

Mar. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

Note 10 — Commitments and Contingencies

We are subject to various claims and contingencies in the normal course of business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdiction in which we operate. We disclose such matters if we believe it is reasonably possible that a future event or events will confirm a loss through impairment of an asset or the incurrence of a liability. We establish reserves if we believe it is probable that a future event or events will confirm a loss and we can reasonably estimate such loss. Furthermore, we will disclose any matter that is unasserted if we consider it probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable.

Lease Commitments. We have a non-cancelable operating lease for office space that expires on August 1, 2016. Future minimum lease commitments as of March 31, 2012 under this operating lease are as follows:

For the twelve months ended March 31,
2012	$	159,011
2013	159,011
2014	159,011
2015	159,011
Thereafter	52,203
Total	$	688,247

Rent expense for the three months ended March 31, 2012 and 2011 was $36,808 and $36,808, respectively. For the nine months ended March 31, 2012 and 2011 rent expense was $110,425 and $109,455, respectively.

Employment Contracts. We have entered into employment agreements with the Company’s three senior executives. The employment contracts provide for a severance package for termination by the Company for any reason other than cause or permanent disability, or in the event of a constructive termination, that includes payment of base pay and certain medical and disability benefits from six months to a year after termination. The total contingent obligation under the employment contracts as of March 31, 2012 is approximately $588,000.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

Subsequent Events

9 Months Ended

Mar. 31, 2012

Subsequent Events

Subsequent Events

Note 11 — Subsequent Events

Effective April 17, 2012, a wholly owned subsidiary of the Company entered into definitive agreements with Orion Exploration Partners, LLC (“Orion”) to acquire and develop an undivided 45% interest in oil and gas leases, associated surface rights and related assets located in the Mississippian Lime formation aggregating 11,700 acres (5,265 net acres) in 38 sections in Kay County, Oklahoma. The Company has agreed to contribute cash and a drilling carry to earn its 45% non-operating interest in the joint venture. Orion is contributing the leases, its portion of the drilling capital, its operating expertise in the area and the Mississippian Lime play.

In April we made our initial $4,083,780 cash outlay for the purchase of our 45% share of the JV leasehold and partial prepayment of our drilling and completion costs of the first three commitment wells. Our acquisition cost also includes carrying our partner for a minor portion of their drilling and completion costs over the next year, not to exceed approximately $2.2 million.

Not including any future leases acquired though forced pooling or other additions, the Company’s initial interests are estimated to have up to 25 to 33 potential drilling locations net to the Company, subject to ultimate spacing per horizontal well, including water disposal facilities. Field operations are expected to begin in May 2012 with the drilling of a water disposal well, followed by the scheduled drilling of two producer wells. The agreement commits the parties to drill between six and fourteen gross wells over the next twelve months.

In April and May 2012, the Company received proceeds totaling $669,845, and the retention of overrides and back-in interests, for the farmout of some of its Woodbine rights at Giddings.