Evolution Petroleum Aktie

Thanks for joining us for today's fireside chat with Evolution Petroleum's Chief Executive Officer, Kelly Lloyd, Chief Financial Officer, Ryan Stash and Chief Operating Officer, Mark Bunch.

Before we begin, I would like to remind participants that our discussion could contain forward-looking statements as of today, June 10, 2026. Disclosures regarding forward-looking statements can be found under the Investor Relations tab of Evolution's Home page. Evolution's asset base includes a diverse mix of producing properties located in multiple regions, including Northeast Louisiana, North Texas, the Mid-Continent, the Permian Basin, Wyoming and in North Dakota. The company's strategy is built on growing its long-lived asset base through producing property acquisitions and low-risk organic investment while maintaining a conservative balance sheet and returning cash to shareholders.

For the fiscal third quarter, which ended March 31, Evolution recorded a $3.1 million and average production of approximately 6,700 BOEs per day.

Kelly, Brian, Mark. Thanks for joining us today.

Thank you, Jeff.

Yes. Thanks, Jeff. Good to see you.

I'd like to just get started and touch on acquisitions, which, as I mentioned, have played a critical role in building the company's asset base. Evolution closed its first acquisition of mineral and royalty interest in August of 2025 and then added multiple -- added more on multiple deals that have closed since December of 2025. Kelly, we've often talked about the company's strategy of generating cash flow to support the Board's total shareholder return goals. How do royalty assets complement the strategy to diversify the asset base and lower the company's capital intensity?

Sure. Yes. First of all, Jeff, thanks for having us. We always enjoy talking to you and your listeners about the unique and exciting developments that we have going on here at Evolution Petroleum. Now to answer your question, as you know, over the last several years, we've been very intentional about evolving honey answer that, but evolving into a more diversified energy ownership platform. And like our goal has never been growth for growth's sake. It's always been to build a portfolio that can generate durable cash flow across commodity cycles. And also, we want to require less capital to sustain and grow.

And so royalty and mineral layers really fit perfectly within that vision. They allow us to participate in some of the best resource plays in North America and reduce our exposure to operating costs, development costs and execution risk. Interestingly, right, pretty soon, you're going to have to start adding the Haynesville and Bossier shale plays into our asset base because we're starting to get a pretty significant foothold there. But like I said, Jeff, we think these assets -- they are highly efficient ownership interest in long-life energy resources, which, as you mentioned, that complement our strategy. We already have a model built around partnering with strong operators. -- and allocating capital where we see attractive risk-adjusted returns and royalties just had really another highly efficient ownership structure that can improve margins, diversify cash flow and reduce our capital intensity of the overall business.

Evolution declared its 51st consecutive quarterly dividend in the amount of $0.12 a share that will be paid to shareholders on June 30 -- to shareholders of record actually on June 15. How should investors think about the dividend support that royalty mineral assets provide given some of the things you talked about, Kelly, with respect to margins and capital requirements?

Yes. So I mean, look, as you alluded to, the dividend is really an important part of Evolution's identity, right? Royalty assets can strengthen the foundation of that model over time. And one of the things that really most attracted us to minerals and royalties is their ability to convert revenue into free cash flow at really exceptionally high rates. That doesn't mean they're risk-free. As you know, they're still exposed to commodity prices, operator activity and natural production declines. But our margin profile on these is very attractive. .

As we continue to add these, we're effectively increasing the percentage of our portfolio that generates cash flow without requiring future capital reinvestment and is generally less exposed to inflationary operating costs. That creates a stronger foundation underneath the dividend program.

Do you have any goals in mind with respect to the scale that royalty assets could become in the company's asset base?

So I would put it this way. We're less focused on a specific percentage and really more focused on building the highest quality portfolio we can. Sometimes, our best opportunity is going to be a non-op, sometimes it's going to be in minerals and royalties. And the decision really comes down to return profile, the risk, commodity mix, decline characteristics, all those sort of -- that are important across everything we do. So -- that said, look, we see the royalty ownership becoming an increasingly important component of Evolution's future. We believe that the combination of high-quality working interest and high-margin royalty interest creates a differentiated business model that really can compound value through multiple market environments.

As opportunities arise, Jeff, we're going to evaluate both asset classes on the relative merits, but we intend to continue building a portfolio that balances growth, cash generation, risk management and will support long-term shareholder returns.

Evolution has been pretty consistent in the acquisition market in recent years, closing the SCOOP/STACK nonop working interest acquisition at TexMex SCOOP/STACK Minerals and now Louisiana Minerals for a total of about $75 million since February of 2024. Including the recent -- how does the cumulative impact of the latest transactions impact the asset diversity and dividend policy or dividend visibility of the company?

Yes. I think good of you to point that out. I mean we think the cumulative impact is very significant. Look, Evolution today is substantially more diversified than it was just a few years ago. We've got exposure across multiple basins, multiple operators, multiple commodity streams and now multiple ownership structures. That diversification, as you know, is quite important. It reduces our dependence on any single asset, field, operator or really commodity price point, while it also broadens our sources of cash flow. .

At the same time, the growing contribution for royalty assets is increasing the durability of our cash flow generation. That puts us in a great spot to continue to execute on our shareholder return strategy and maintain flexibility to pursue future growth opportunities. We think it's terrific.

Evolution to asset base is still dominated by the nonoperating working interest that had been the backbone of the company's portfolio. Mark, can you describe the nature of the conversations that the company has with some of the asset operators just regarding field level production costs and field production levels, especially in light of where we are with today's oil prices?

Yes. Sure thing, Jeff. One of our strengths, we're a pretty active owner with most of our operators because we have a really great technical team. We're really engaged with partners. We spend a lot of time reviewing their production and capital programs, field performance and long-term development plans. And our operating partners, they bring like the hands-on day-to-day field execution, but we're there to like your view, provide capital discipline portfolio perspective, things. And then -- and we look at it from -- obviously, from our standpoint, which is -- and then we'll kind of give them ideas about what they should do.

And then that relationship really tends to work really well with the operators that we deal with, and it creates a lot of value for us and for them as well. But the goal is to ensure that we maximize our value across the portfolio while maintaining a long-term perspective on resource development. And we view our operator relationships as partnerships, and those relationships continue to be a competitive advantage for Evolution. And we're always in our conversation with them discussing ways to reduce operating costs or ideas that could improve operations. So it's just one of the things that we have to do on a regular basis.

A couple of years ago, Evolution formed a joint development agreement with [indiscernible] field in New Mexico, which added an element of organic growth potential. And obviously, with the royalty interest and the inventory you've added there. That adds an element of organic growth potential with that bears no capital costs. Mark, [ Ponevco ] merged with some entities of Juniper Capital in the fourth quarter of last year, which gave them a bigger footprint in the Rockies. Has that acquisition affected any of the field operations at Sabre or any of the plans you all might have under the joint development agreement?

Well, at this point, we haven't seen anything change in the field operations. Still, they've done a good job. They're very receptive to our comments and discussions that we have with them. And then it seems to still hold -- Chevre still seems to hold a meaningful place with the DevCo in their long-term development. We've just been discussing getting back out there to drill similar wells. We've come out of the much lower price environment. And we're focused on making the most of that partnership and trying to get as much put in place so that we can move forward with it. And -- but DevCo combined organizational strengths with their team has really been improved when they combined with Juniper. They got some additional people in there to help out.

And so I think that's going to be very helpful. The underlying resource still remains attractive, and we're encouraged by the long-term potential of the project.

Mark, can you remind us what kind of oil price environment and maybe cost environment that you and DevCo would like to see to put additional capital to work in that field?

Well, I guess, kind of a funny answer would be as high as possible. But the reality is, I mean, we bought into this deal a long time ago without looking at a specific price. I mean when prices get low, obviously, we find better uses of capital. But generally speaking, we're looking at -- we're spending time figuring out how we can drill the wells cheaper, reduce costs out there, make the decline profiles more consistent. And because at the end of the day, the dollars that we've put into Chaveroo have to compete with this step that's in the rest of the portfolio that we could do. And so you're looking for a return that's compelling on a risk-adjusted basis, not just a project that works at like a single price or something.

But as commodity price strengthens, that development economics obviously improve Chaveroo should become an increasingly meaningful contributor to our long-term value creation. Our focus on ensuring this future activity generates compelling returns and aligns with our broader capital allocation priorities. And we originally bought into this whole deal because we wanted to have an organic growth component to our company, and we wouldn't be just wholly owned to -- we have to spend capital on doing acquisitions. And so in certain times, there's going to be there going to be times where I think Chaveroo going to be extremely valuable to us.

The TexMex acquisition closed in April of 2025. Since then, operating costs have been pretty high due to high level of expense workovers. Mark, what's the status of the workover program in those assets and that you and the operator have owned now for just over a year.

Well, when we acquired TexMex, we recognize there's going to be a period of high investment, either CapEx or OpEx to get the field back in shape and we actually modeled that into our acquisition. That was -- and that turned out to really what we felt like was part of the opportunity that we felt like that we could improve the asset over time. Right now, we are still in the midst of finishing up that final workover program. We also have some work we have to do to fix some things that had to do with weather-related damage, but that stuff is kind of almost in place now. And so we're looking forward to kind of returning to a more normal run rate scenario.

So over the last year, we've worked closely with the operator to address high priority project statement improved improving our liability, restoring production, reducing downtime and just positioning the asset for a more stable performance because these are mature assets and mature assets have to be taken care of. And -- but we're encouraged by the progress. We're getting really close to finishing really the final big workover program. And so we're looking forward to the fact that the costs are going to more moderate, turn into more normal management of the field. And that's exciting to us because we think it will unlock additional value for the asset and provide for a really long, meaningful life.

Completing that workover program, Mark, and hopefully bringing production up in the field in the second half of 2026, it's probably a much different oil price environment than what you were thinking about at the time of the acquisition. Can you just share with us how that calculus plays into what evolution you use to underwrite the deal?

Well, when we underwrote the deal, we underwrote it based on essentially a strip price at the time. So we really weren't our investment thesis wasn't -- didn't involve having higher prices to make it work. We actually got a great deal at the prices at the time. So obviously, now that prices have really improved a lot it really generates a lot more cash flow. And so as the higher prices, the revenue improves and things get better. Now obviously, costs are probably going to go up. Capital might creep up a little bit. But overall, it's going to look a lot better. So we didn't really buy it looking for a higher price, but hey, that's certainly isn't going to heard anything. It certainly didn't hurt my feelings.

Though I'd say a little bit of luck goes a long way in the oil and gas business.

Yes, I would say it's better to be lucky than good.

As we touched on earlier, as we begin our conversation, we talked about the mineral royalty interest component of the asset base growing over the past year. Ryan, can you talk a little bit about the depth of the market for those types of assets and maybe how that compares to the nonoperated interest that you all have looked at traditionally?

Sure. I'd say the royalty market in general is obviously very active, and there's a lot of buyers in the space. You've got private equity-backed groups, dedicated royalty companies, and consolidators, you have family office money even so public, right? A lot of the publics aren't necessarily competing with the types -- sizes of deals that we're looking at, but there's definitely a lot of competition. And really, even despite all of that, we're still finding a lot of good opportunities where we can use our expertise and knowledge of basins to underwrite deals and use our obviously, industry partnerships to find attractive acquisitions out there.

Actually, I think Kelly kind of mentioned this, but in the past couple of weeks, we've actually are in process of closing on call it about $1 million worth of additional minerals and royalties in the Haynesville/Bossier Shales what we feel really attractive rates. And so we're remaining patient and focused and continuing to find opportunities that we think are going to be accretive

One of the things we've talked about in the past, and Kelly touched on it is that diversity in the asset portfolio, owning nonoperated interest is low evolution to manage a diverse asset base with relatively low overhead. This the royalty market or the royalty nature, Ryan, just going to add to what you all can do in the sense of adding cash flow without adding costs?

Fully, I mean, the cash flow margins really would attracted us to the space. You're right. I mean, you're not going to see as much top line sort of growth with the royalty acquisitions and revenue and production that you will in a non-op working interest deal. But they're very, very accretive free cash flow, right, ultimately, dividend and kind of balancing our strategy and our model there. I mean they obviously don't have any CapEx or really traditional lifting cost.

From the G&A side, obviously, we're able to leverage our existing team. The royalty assets are generally easier to manage. You're not worrying about on the gym side and OpEx side, as I mentioned, it's really just revenue checks that you're processing. So we think about it and it's important for investors to think about it as this becomes kind of a maybe a more meaningful piece of our business is you may not see the growth and necessarily production that you would and the other assets, but really on the cash flow margin basis, that's where you're going to see the accretion.

Any issue with mailbox money?

No.

Kelly, how do you think about valuations in today's market between the nonoperated working interest and mineral and royalty interests?

Yes. So I mean, again, not to sound redundant, but like we view every acquisition through the lens of long-term value creation and sort of risk-adjusted return. So don't approach it as one asset class being better than the other in all environments. And we always ask, what are we paying? What are the cash flows we're buying and what risks are we taking and how does it improve sort of our portfolio. So sometimes it's going to lead us to work in interest, other times, it will be a royalty. It's not really drive by asset type by returns and strategic fit as much as anything.

So as Ryan mentioned, you may see a headline number that sounds a lot higher on a royalty than it would on a working interest, but the margin is so much better. Sometimes that's an even more accretive deal. So you're going to look at it, the top line numbers are going to sound different, but what you got to get down to is the free cash flow.

Just to expand on that a little bit, Kelly. Mark talked about the Chaveroo and Chaveroo competing for capital in the asset base. For the company, does the decision really to transact on an acquisition or development well at Chaveroo. Does it really just depend on the absolute return that you spoke about and the company's ability to enhance the asset portfolio that grow the base of the company, but also to support future dividend payments?

100%. Yes. I mean, like every transaction we do is must help us advance sort of our core mission of growing long-term shareholder value. We want transactions that make evolution stronger. We're not just larger. -- scale can be helpful, but really only if it improves on a per share value. That means we got to generate attractive returns, which improve the portfolio quality, strengthen our free cash flow and support our ability to return capital to shareholders. In our case, that generally means paying dividends. So Yes, absolute return matters. But so does the quality of cash flow, risk profile, funding structure and how it fits. .

Net debt totaled $54 million as of March 31, 2026, and total liquidity was about $10 million. Ryan, how are you thinking about access to capital in the context of evaluating incremental property acquisitions? And then secondly, how does the ATM program, which was renewed in February of this year. factor into the company's acquisition funding decisions.

Yes. So I mean, obviously, we don't really feel capital has been limiting factor in the types of sizes and deals that we've been able to look at and complete. And the ATM program has been really efficient means for us to sort of keep our leverage in check, raise proceeds for very accretive acquisitions, even when looking at our overall cost of capital, which is obviously how we evaluate deals when we see if they're accretive or not. .

The other thing to kind of point out here, and it's kind of more recent, one other avenue for us is potentially bringing forward value and selling off some acreage in areas that we don't think may be drilled in the near term. We did that in the SCOOP/STACK minerals here recently, and we'll continue to look at that as we aggregate assets. The royalty space is a great place for that because there are some pieces of acreage that we might get access to or included in the transaction that we think the value is further off of the curve and someone else may disagree, right? And so is able for us to really take that, bring money forward and redeploy it.

How do banks think about the collateral value of royalty mineral assets when they look at your RBL?

They've been very constructive. A lot of the types of assets that we've been buying on the royalty side have been more near term, right? So it's some PDP or wells that are DUCs or actually drilling or permits that we have to drill schedule necessarily for. And so the bank has been very supportive in giving us credit for that. So we definitely felt good about the way that we've worked with them and able to get credit for the transactions that we've done here recently.

There's been a lot of consolidation in the industry in recent years. Has consolidation impacted the slice of the bank market that Evolution participates in?

I think -- yes, I think for the better, really. I mean, as you're continuing to see -- as you mentioned, the consolidation, we're seeing banks even the larger banks, not just the regional become more interested in the space. So they've got a lot of capital that's been returned to them from all these deals, and they're actively looking to deploy it. So I think the bank market, in general, for the Upstream has been as healthy as I've seen in a number of years, and we're not having any issues finding potential capital providers. .

Mark, since you run point on a lot of the discussions with the operators of the company's assets, can you share any color on what CapEx might look like through the end of calendar 2026? And have you seen any -- or have you had any conversations about incremental AFEs as companies look to maybe take advantage of the current high oil price environment with respect to either returning production to returning production to online or drilling new wells, especially in an area like SCOOP/STACK?

Yes. We've noticed that the operators seem to still be pretty disciplined. But we have seen a fair number of AFEs come through to -- in the -- especially in the SCOOP/STACK area. And the industry today is really focused on returns and capital efficiency, value creation much more so than in prior cycles, and that aligns well with kind of how we look at things. And commodity prices as they stabilize and service costs kind of become more manageable, we're seeing operators kind of identify attractive opportunities, invest in projects that can generate really strong economic returns.

We had a number of wells in the SCOOP/STACK that we received AFEs on that we actually didn't even have on our books. Based on our discussions in the AFEs we're reviewing, we believe there are several opportunities that you really provide incremental production cash flow through the balance of '26. The important point is capital is being evaluated with the return threshold in mind, which aligns well with Evolution's approach. We don't see a lot of chromystuff coming across that there's like no way we participate in. I'm trying to remember most of the stuff we've evaluated, we've actually really wanted to participate in.

So we continue to think that's a good indication of where the market is with the operators. Their cost estimates need to be realistic. We expect return and will compete with other uses of capital. But right now, it's so far that things happen. And while the timing and see if we're encouraged by the quality of the opportunities that we get to see in that comes in across the portfolio. And also too, even we're working on stuff to like advance the ball at Chaveroo if possible with our partner. Those kind of things are all on the available especially as prices stay higher if they stabilize there.

Mark, to follow up on SCOOP/STACK. You -- when Evolution bought that asset, you talked about a number of potential wells that could be drilled on your working interest position there. Are you -- do you think with some of the AFEs you're seeing, as that inventory of future opportunities increased over the last couple of years as the companies have -- as the operators have developed that play? Or is it kind of stay the same with what your expectations were when the acquisition was closed?

Yes, it's probably been pretty close to what we expected when the acquisition closed. I mean in the previous years, it had been really, really high. and we really didn't believe that was a sustainable rate. We do have lots of potential locations out there. And I can't really speak to how the operators view it because -- for the most part, we have very small ownership. So when we get an AFE in hand, that's when we typically work on it. But we've had a pretty steady flow of AFEs. And -- and when you change like when gas prices were higher and now oil prices are just kind of changes in the basin in the SCOOP/STACK were the operators to drill. But I haven't -- I don't think it's particularly that much different. I do know that if you -- if we look at our -- what we bought on, we're actually ahead of the curve like on a production basis than what we originally bought on.

Kelly, to during our discussion today to ahead, can you just share your thoughts on Evolution's positioning in the context of the strategy to generate total shareholder return?

Absolutely. Look, I think right now, Evolution is sort of in one of the most compelling periods in the company's history. I mean we spent years building a business that's designed to perform across commodity cycles. It's built on diversification, disciplined asset allocation and sustainable shareholder returns. Today, right now, as we speak, we have a broader opportunity set than we've ever had before. We've got exposure to high-quality working interest in expanding royalty program. We've got really good relationships with strong operators and a proven acquisition strategy.

But look, it pulls out to, we're creating a company that can compound value over time. Our objective is not simply to grow production, as we've talked about. It's -- we're asset size. It's really to build durable energy ownership that consistently generates cash flow supports our shareholder returns and creates long-term value per share. So as we look ahead, we're very excited about the opportunities that laid out in front of us, and we really remain committed to executing that vision for our shareholders.

I think we'll leave our discussion there today and pick it up again in the future on another fireside chat. Kelly, and Mark, Ryan, thank you so much for taking the time today.

Yes. Thank you great job. Appreciate it. see you. Bye-bye. .

And for our participants, thank you for joining today's fireside chat with Kelly Lloyd, Ryan Stash and Mark Bunch from Evolution Petroleum. Our research can be accessed from our website, www.watertowerresearch.com. The views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research and are provided for informational purposes only. This fireside chat may not be distributed or reproduced without the written consent of Water Tower Research and should not be considered research nor a recommendation.

WT is an investor engagement firm, not a licensed broker-dealer, market maker, investment bank, underwriter or investment adviser. Additional disclaimers can be found at our website, watertowerresearch.com. Once again, thank you for joining us today.

Thank you. Bye-bye.

Thanks.

Good morning, and welcome to the Evolution Petroleum Third Quarter 2026 Earnings Release Conference Call. [Operator Instructions] Please also note, today's event is being recorded.

At this time, I would now like to turn the conference over to Brandi Hudson, Investor Relations Manager. Please go ahead.

Thank you. Welcome to Evolution Petroleum's Fiscal Q3 2026 Earnings Call. I'm joined today by Kelly Loyd, President and Chief Executive Officer; Mark Bunch, Chief Operating Officer; and Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer.

We released our fiscal third quarter 2026 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release in the Investors section of our website.

Please note that any statements and information provided in today's call speak only as of today's date, May 13, 2026, and any time-sensitive information may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to the risks, assumptions and uncertainties as described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statements.

During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Reconciliations to the most directly comparable GAAP measures are included in our earnings release.

Kelly will begin with opening remarks, followed by Mark with an operational update, and then Ryan will review the financial results. After our prepared comments, the management team will open the call for questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the Investors section of our website.

With that, I will turn the call over to Kelly.

Thank you, Brandi, and good morning, everyone. Before walking through the quarter, I want to step back and provide some context on where we are as a company and how we are thinking about the path forward.

Over the last 7 years, we have deliberately reshaped Evolution's portfolio, expanding beyond our legacy asset base into a more diversified capital-efficient platform designed to generate durable free cash flow through commodity cycles. That has meant adding long-life, low-decline assets such as Jonah and Barnett, expanding our nonoperated working interest base through acquisitions like TexMex, and most recently, building a minerals and royalty platform that we believe can become a durable and growing component of our portfolio.

The common thread across these decisions is the same, building a business with long-life assets, modest capital requirements, sustainable free cash flow and the ability to support our dividend while compounding per share value over time. That is the framework through which we evaluate every capital allocation decision, and it is the lens through which I would encourage investors to evaluate our results, including in quarters like this one, where reported results were impacted by items that do not reflect the underlying earnings power of the business.

With that context, let me address the fiscal third quarter directly. This was a more challenging period than the second quarter, and I want to be transparent about what drove the variance. A combination of isolated and largely nonoperational items weighed on our reported results, including regional natural gas pricing dislocations that impacted realized prices at Jonah and Barnett, a $1.2 million onetime prior period transportation adjustment at Delhi related to changes made by the operator dating back to 2024 and weather-related production disruptions across multiple fields during the January ice storms. These are not structural issues. They don't reflect any change in the underlying quality of our assets or our cost structure or our strategy. These were largely timing related and onetime in nature, and we expect underlying performance to normalize as they roll off.

Setting those items aside, what stands out to me is how the portfolio held up despite those headwinds. Production was essentially flat year-over-year at 6,700 BOE per day, a result we view as a meaningful sign of resilience given the level of weather-related disruption and downtime we experienced in the quarter. Contributions from our new acquisitions helped offset downtime and natural declines at certain assets, which is exactly the kind of portfolio level stability we have been working to build. This reflects the benefits of diversification across assets, commodities and operating partners. That diversification is not accidental. It is the direct result of the capital allocation discipline we have applied consistently over multiple years.

On our mineral and royalty program, we continue to make progress during the quarter. We completed 2 additional Louisiana mineral and royalty acquisitions targeting the Haynesville and Bossier shales, bringing the total consideration for our Louisiana minerals to approximately $5 million. These assets are being actively developed by operators in the area. Wells are being drilled and completed, and we expect contributions from these positions to begin building as that activity translates into production.

All of that to say, the financial contribution from our minerals platform is still in early stages. However, the activity we see from operators gives us confidence that the production ramp we underwrote when we made these acquisitions is right on track. We will provide more specific updates as those results come through.

As we move into the fiscal fourth quarter, we expect the picture to look meaningfully different. The prior period Delhi adjustment is behind us. The February gas dislocation at Jonah was a singular weather event. Differentials are returning to more normal levels. The TexMex workover program is in its final phase, and we expect that asset to be a more meaningful contributor as that work is completed.

The combination of these factors alongside the continued ramp of our minerals and royalty assets gives us confidence that the fourth quarter will better reflect the underlying earnings power of this business. We expect to generate robust cash flow in the fourth quarter and beyond, which reinforces our continued confidence in the dividend. In addition, we believe the current commodity price environment provides incremental upside from here.

On May 11, our Board declared our 51st consecutive quarterly dividend and 16th consecutive dividend at $0.12 per share, a milestone that reflects the durability of our underlying cash generation across a range of commodity environments. Our capital allocation framework has not changed, protect the balance sheet, support a dividend we believe is sustainable through cycles and deploy capital where we see compelling risk-adjusted returns. As always, dividends are paid at levels that are meant to be sustainable given the current outlook for multiple years to come. This portfolio has always been designed to withstand any ill effects of the odd difficult quarter, and it is this same framework that gives us confidence in what we expect to be a strong finish to fiscal 2026.

Before I hand it over to Mark for more detail on our operations, I want to leave you with one final thought. Looking at the broader picture for commodity prices, in March of 2026, WTI oil prices reached their highest levels since 2022 and remain at elevated although highly backwardated risk premium levels. The significant increase in forward oil commodity prices as of March 31 resulted in an unrealized loss on the mark-to-market value of our hedges for the quarter.

Additionally, the large noncash loss associated with unrealized hedge losses was based off of a crude oil strip at the end of March where spot prices for WTI were over $100 per barrel. No one knows where WTI will be at 6/30/2026, but where we sit today, we think it is likely that the unrealized losses will show a reversal in the next quarter.

Although our unrealized gains and losses on hedges will fluctuate as forward commodity prices change, I sometimes think that people forget that selling oil for higher prices than our hedges is a really good thing. The current oil price environment will provide incremental upside in the fourth quarter as we expect to benefit from the higher pricing to the extent that prices exceed our applicable oil hedges. Additionally, our NGLs, which are priced as a percentage of crude oil remain unhedged and should receive the full benefit of pricing. As far as our natural gas hedges are concerned, we expect to realize a benefit as our hedges are priced at levels higher than current strip pricing.

With that, I'll turn the call over to Mark.

Thank you, Kelly, and good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings press release and filings for additional details across our asset base. Overall, our operations continued to demonstrate steady base performance across the portfolio during the quarter. The results were impacted by the weather-related disruptions and onetime items Kelly described.

Now on to our assets. At our Haynesville and Bossier shales, we continue to build scale and are prioritizing value on wells that are either currently producing or expected to be producing within 1 year of purchase. To that end, we expect 23 wells to be brought online and meaningfully contribute to revenue and cash flow in the fiscal fourth quarter. At SCOOP/STACK, production from the mineral and royalty interest acquired in August 2025 modestly contributed to overall volumes during the quarter. Additionally, there are 7 gross wells in progress and 12 gross wells on production that we are still awaiting first production and revenue data.

At Chaveroo, production increased year-over-year, reflecting the benefit of wells brought online over the past 12 months. The January winter storm and gas interference on the wells with ESPs decreased production by 30 net BOE per day quarter-over-quarter. Subsequent to quarter end, we converted 1 well from ESP to rod pump. Currently, all but 1 of our 7 wells has now been converted to rod pumps. We continue to advance permitting for the next 6 wells and expect to have those permits in hand before the end of fiscal 2026.

At TexMex, oil production increased quarter-over-quarter due to a successful workover program. At the end of the prior quarter, however, January winter storms not only impacted production, but also caused power outages and surface equipment damages that required repairs. This led to higher expenses in the quarter. We expect TexMex to continue to improve. Subsequent to quarter end, we began a new workover program, which we expect will increase production by an additional 100 net BOE per day by the end of fiscal Q4.

At Delhi, revenues were impacted by the onetime prior period transportation adjustment Kelly described earlier, which is now behind us. The January winter storm outages impacted production for 6 days during the quarter and the CO2 recycle compressor, which is down for most of the prior quarter, remained down for 40 days during fiscal Q3, negatively affecting production. These issues were resolved during the quarter. Despite this, field level profitability remained strong, supported by lower operating costs, reflecting the continued benefit of the cessation of CO2 purchases that concluded late in fiscal Q3 of last year. We expect production volumes to improve as operational stability continues.

At Barnett, quarterly production was heavily impacted by the winter storm as well, resulting in a decline of approximately 160 BOE per day. The impacts carried into February and restored by March. Across the portfolio, production was heavily impacted by the January winter storm and other downtime accounting for over 300 net BOE per day. However, these have been resolved during the quarter, and we remain focused on maintaining operational flexibility, optimizing our cost structure and deploying capital where returns are most attractive.

With that, I will turn it over to Ryan.

Thank you, Mark, and good morning, everyone. As Brandi mentioned earlier, we released our earnings yesterday, which contains more information on our results. For today, I'd like to go through our fiscal third quarter financial highlights. In fiscal Q3, we had total revenues of $20.2 million, down 11% year-over-year. The decrease in revenues was primarily driven by an 11% decline in average realized equivalent prices, partially offset by a slight increase in production volumes. The decline in pricing reflected regional natural gas pricing dislocations at Jonah and Barnett during the quarter, but especially in the month of February, as well as $1.2 million in onetime prior period transportation adjustments at Delhi related to a new marketing contract entered into by the operator and dating back to December 2024.

Net loss for the quarter was $8.9 million or $0.26 per diluted share compared to a net loss of $2.2 million or $0.07 per diluted share in the year ago period. This quarter was negatively impacted by $7.6 million in unrealized hedge losses due to the spike in crude oil prices with the war in Iran. Excluding the impact of selected items, including the unrealized hedge losses, adjusted net loss for the quarter was $2.9 million compared to $0.8 million in adjusted net income in the year ago period. Adjusted EBITDA was $3.1 million compared to $7.4 million in the prior year quarter, reflecting lower revenues due to historically unfavorable differentials, production downtime in many of our assets and realized losses on derivative contracts.

More specifically, as it relates to differentials, in Jonah, the winter differentials were the worst since we have owned the asset and the lowest in the past 10 years due to the warmest winter on record for the West Coast. Going forward, we would expect differentials at Jonah and our other natural gas assets to return to more historical levels. We estimate that the winter differentials negatively impacted our realized price per BOE by approximately $3.39 as compared to the prior year period.

Lease operating expenses improved to $13 million or $21.49 per BOE compared to $22.32 per BOE in the prior year quarter. The decrease was primarily driven by reduced ad valorem taxes at Barnett Shale and the continued benefit of the cessation of CO2 purchases at Delhi, partially offset by the addition of the TexMex properties and incremental workover activity during the quarter. The addition of our royalty assets in Oklahoma and Louisiana have also contributed to higher margins and lower operating costs for our asset base.

On the hedging front, we have continued to add additional hedges to comply with our credit facility covenants. Our ongoing goal remains to reduce downside commodity price risk and protect cash flow for our shareholder return strategy while preserving the maximum potential upside. This strategy can result in realized and unrealized losses on our hedges in some periods, such as the current quarter, but benefit us in other periods and will provide more predictable and stable cash flows over time.

Turning to the balance sheet. As of March 31, 2026, cash on hand totaled $2.6 million. Borrowings under our credit facility stood at $56.5 million with $0.8 million in letters of credit outstanding. Total liquidity, including cash and available borrowing capacity, was approximately $10.3 million, providing us with the flexibility to support our ongoing operations, capital allocation priorities and selective growth initiatives.

During the quarter, we paid dividends totaling $4.3 million. As previously announced, the Board declared a quarterly cash dividend of $0.12 per share, reflecting our continued commitment to returning capital to shareholders. Overall, our asset base and balance sheet strength position us to continue returning capital to shareholders while selectively deploying capital into opportunities that we expect to be accretive over the long term, just as we have done over the past 7 years.

I'll now hand it back over to Kelly for closing comments.

Thanks, Ryan. To sum it up, fiscal Q3 was a quarter shaped by temporary headwinds rather than structural weakness. The portfolio held up well at the asset level. Our minerals and royalty strategy continued to advance, and we maintained the dividend for the 51st consecutive quarter, which we believe speaks to the durability of our underlying cash flow. As these onetime items roll off and our recent acquisitions contribute more fully, we expect our results to better reflect the earnings power we have built in this business in the fiscal Q4 and thereafter. We look forward to updating you on our progress.

With that, I'll turn it over to the operator to begin the Q&A session. Thank you.

[Operator Instructions] Our first question comes from Jeff Robertson with Water Tower Research.

Mark, at Delhi, with the new crude marketing agreement that the operator entered into, can you talk about how much flexibility Evolution has to -- and whether you want to do -- as you alluded to in the press release, to do anything different with respect to marketing your equity production from that field?

Yes, Jeff, I'm going to flip that, actually. I know you asked me, but I'm going to flip it over to Ryan to answer.

Yes. So that's part of the thing we've actually been kind of actively looking at, and we do actually have a lot of flexibility in the JOA to take the production in kind, which we're actively looking at now.

The other one point I'll make on the actual changes is, obviously, it was a move from Denbury to Exxon. The ultimate contract with Plains hasn't changed that much other than they're now trucking where in the past, they had a pipeline that went down. So that's really the biggest difference in kind of charges. But to directly answer your question, we're definitely looking at that, and it's something that we're actively considering, and we think we probably can do a little bit better than what they are in the market.

Ryan, in the second quarter and going forward, do you expect the GPT charges to be similar to what they were last year as opposed to, obviously, the -- I'm sorry, in previous quarters as opposed to what they were in your second fiscal quarter?

Yes. I mean in gathering, there's nothing that's been out of the ordinary that I'm aware of in the past quarter. I mean those have been relatively constant. I mean there are some contracts we mentioned in the past like Barnett that is tied a little bit to natural gas pricing, so it will move a bit. But overall, it's more volume driven, right? And so I wouldn't expect those to vary much from historical.

And can you talk about what kind of communications you're having from your operators with respect to any initiatives they might have to go out and do short-cycle workover type projects or whether there are opportunities to bring wells back online to take advantage of the high oil prices we have at least for the next month -- at least the next couple of months?

Yes. So Jeff, this is Mark. And yes, our operators are all working towards that. In fact, we actually mentioned one in particular. TexMex, they really accelerated their second round of workovers to bring things online in New Mexico, largely because the prices went up and so the timing was really good. So we speeded that up somewhat. So yes, everybody is looking at making sure that they keep as much production -- oil production on as possible.

And Jeff, this is Kelly. I'll just add on. I mean Mark is right, across the board, we're seeing it. And look, these are simple projects that are fast, right? Drilling takes longer to get on production. But if you do a workover that takes a week and things are back up producing, I mean, we evaluate these. I mean, these are very, very high return projects that can get done quickly and could be meaningful. So we've seen a lot of guys try to do that as much as they can. In Hamilton Dome, you're seeing activity increase really across the board.

And then lastly, before getting back in the queue, Kelly, can you speak to the state of both the non-op market and the minerals market, just given volatility in commodity prices and what that means for trying to value transactions?

Yes. It's interesting. On the non-op side, it's -- I mean, I would almost argue it's kind of a dearth of availability. Like there isn't a whole lot that we've seen out there. On the minerals side, again, working with some folks that we have a whole lot of confidence and trust in, we've been able to do sort of I don't know if you want to call it bespoke, but deals we put together along with them and go execute on. So -- and minerals, just in general, especially when you're able to build them in little onesies and twosies like we have been, they're more liquid. And we can find real dislocations and opportunities, which, like I said, we and the folks we're working with have been doing a great job of finding those, and we expect to see that continuing.

There will be a flip. At some point, the non-op will come back in vogue and we'll start seeing better returns. But when you only have a couple of deals and a bunch of people bidding on them, it just hasn't -- in the last couple of quarters, it really hasn't been super attractive.

Our next question comes from Poe Fratt with Alliance Global Partners.

I'm trying to figure out what your run rate is for the June quarter right now. You reported 6,700 BOE. You talked about 300 BOE of impact on production from storms and other things. Are you above 7,000 right now as a run rate for the June quarter? Or can you just help me calibrate that?

Sure. Poe, this is Kelly. Thanks for calling. Yes, I think we made it clear. I want to speak out of school or Ryan will slap me. But we -- the 300 is almost substantially all back online and was starting to get there before the end of the quarter. And if there was anything left over, it's pretty much there now. We are well underway in our progress on adding about 100 net BOE per day in TexMex.

And we also have -- and I'll be a little cautious here. We have 12 wells in our royalty properties alone in the SCOOP/STACK that we know are on production, and they have been completed. We just don't have data yet. Again, in Oklahoma, it can take a while. So we expect to get data where -- we don't want to aggregate if we have no data. You don't want to guess. We have type curves, but you need to actually get data before you put it on there. So we've got 12 wells that we're a part of there that we're going to get -- we expect to get data on and be able to include in our fourth quarter results.

Same thing with our Haynesville and Bossier Shale assets, we've got 24 wells that we expect to get data on and have production from during the fourth quarter. We know that at least 20 of them have already been completed and others are sort of in process. So I can't really quantify that number. I mean, I could guess off my type curve, Poe, but that wouldn't be appropriate.

So again, we've got the 300 back online. We've got another 100 we fully expect and is in progress and working towards at TexMex plus additionals from new wells that we don't have data on that we're either already producing or getting there very shortly.

Yes. It's probably -- Poe, this is Ryan. It's probably helpful just sometimes to remind you guys on how from the non-op perspective, how it works. We -- there are some wells in some areas we have real-time data, but certainly not all across our portfolio. We won't probably really know true April production for another week or 2 until we actually start getting our revenue statements in from the month of April, right? So as we sit today, we still don't have actual revenue statements yet for April production. We have -- we do know of some areas, obviously, as Kelly said, and we do know of things that have returned to normal, but we won't know for a fact like what production actually was for April yet.

Yes. And then -- and from the royalty side, Poe, it's even more delayed just because you're further removed from the operator. So those almost -- those like in Oklahoma can be somewhat delayed like by 180 days. So it's -- when we get information, we start applying and accruing for it. But sometimes we don't know about it until it actually comes on.

Okay. And I'm not going to hold you to any guesses, but is there -- it sounds like the SCOOP/STACK, you might get some data, maybe 2 months would potentially hit the production for the June quarter. And then the Haynesville and the Bossier is probably first quarter next year or the September quarter. But I guess a short question, what could potentially be the impact from SCOOP/STACK if you do get the data in the June quarter? Is it 50, 25? Sort of just -- I'm not going to hold you to any guesses that you make, but I'm just trying to calibrate.

I understand. But I mean -- I don't think I'm comfortable speculating on that.

Okay. I'm not going to -- I'm not going to beat the dead horse then. You talked about Chaveroo that the permits are potentially in place for the next 6 wells or the next pad there by the end of June. Do you think the operator there will pull the trigger in the September quarter? Or is it more December quarter with potential impact in calendar '27?

So as you know, the operator there has undergone a merger, and it is our understanding that they are prioritizing assets and coming up with schedule. We're working with them closely. And I would just -- it's just too early to say at this exact point in time. But we are working on that and trying to get things scheduled as quickly as we can and to understand from our own capital needs exactly when this is going to work out. So I don't want to speculate and answer for them. So I'm going to wait for that, Poe. But we will update you when we know. How about that?

Yes. I guess, from a conceptual standpoint, those are shorter term, shorter lead time, they're permitted. There's -- generally, you can drill a lot quicker there than you can in other places. But -- okay. And then on Delhi, is there any legal recourse that you have? I mean this is -- there's quite a delay between the time that the contract went in place and then it hit the quarter. Did I read in between the lines that you may have a legal recourse?

I'm officially not going to answer that.

Our next question comes from John Blair (sic) [ John Bair ] with Ascend Wealth Advisors.

There's no L in there. That's Christmas time. Thank you. It's Bair, B-A-I-R. I appreciate you taking my call. And you touched on a number of aspects of my questions. Is it fair to say that you add back -- I mean this was a quarter, pardon the pun, but a really perfect storm, right? All 5 of your areas impacted here. Your comments are that the flow rates are back. And -- so I'm just wondering, do you have any -- was there any impact that is known as to flow rates or any reservoir damage, anything like that while these wells were shut in?

No, this is -- there weren't any damages. This is the typical thing we have happened in the wintertime when we have bad weather. So pardon me, getting over a cold. But -- we do -- like typically, we see at Barnett, which is -- it's the one that's slowest to come back, but it comes back. It just takes a few weeks to get back up to full rate.

Yes. And back to your perfect storm. We have one area where a lightning strike blew up a tank battery, right? I mean -- yes. Again, all covered by insurance, all fixed, but caused downtime for sure.

And then one thing, John -- and this is Kelly by the way. Thanks for calling. On the West Coast, we talk about some of the impacts of differentials from our Jonah gas and how far from normal it was. I mean, Ryan talked about it a little bit. I mean, once in 100 years plus kind of winter. What did they draw on the West Coast for gas, Ryan?

I mean it was probably about 60, 65 Bcf, which is pretty much the lowest I can find for a long period of time, right?

Yes.

I was going to say that it went the other way, I think not long after you purchased that property.

Sure. Yes.

So that was kind of another follow-on question I was going to say is, okay, so you got impacted because of warmer winter, but if it's a more hotter or more severe summer and there's higher demand, then this could flip the other way. Is that a fair way of looking at it?

Yes, for sure. So Ryan and I were doing some research on this. In the -- on the West Coast, right, it's not just California. Let's look at the whole West Coast. When you have a good snowpack, right, a nice wet, cold winter, in the summer months, when it's hot, you get a lot of hydro. Hydro is the cheapest, best, easiest way for them to generate electricity. And it can be -- in a wet cold winter, it can be up to 50% of the power in some of those areas.

When you have no snowpack essentially, and you're expecting no hydro, Ryan, I think your research showed it can use an extra 1.1 plus kind of Bcf a day of natural gas usage. So there will be a bounce back effect that's to our favor on this during the summer.

Yes. No, we think there's definitely potential for -- the differentials that we see right now in the summer months might be overstating kind of the potential high storage that we're going into right now in the injection season. So it was kind of a normal to warm summer, a low snowpack could set up for hopefully a little bit better demand on the summer heating -- sorry, summer cooling.

Yes. And from whatever -- what we're seeing out there now, California is in a pretty bad state given they have to import just about everything, it seems, whether it's energy from Asia since they've run off the industry internally, their water and their electric. So they're kind of in a bad spot there as far as I'm...

We talk about elevated storage there. I mean, honestly, they have so few days of coverage. I mean, it just happened this particular winter, there was no sort of gas-on-gas competition because they didn't hardly use any gas. So it goes away and switches very quickly. It's very light storage relative to usage there. As a matter of fact, I would say out of all the regions of the country, it has the least sort of storage relative to usage.

I mean they've got around -- assuming they wouldn't inject which they will, they've got generally 30 days or less of storage based on typical demand out there, which is very low. They've also had storage come out of the system, right, over the past 5 years, which has kind of increased the volatility. As you mentioned, John, I mean, we're kind of -- we're not benefiting from this winter, but we've definitely been a beneficiary of winter pricing due to this volatility since we've owned the asset. We can't complain that much.

Going back to Delhi for just a moment. Is there any anticipation that CO2 purchases will need to be resumed or ramped up anytime soon that could be impactful?

John, this is Mark. No, they don't have any plans currently to purchase any additional CO2. And honestly, with the reservoir work that we've done, we actually think CO2 utilization has probably improved by dropping the amount of CO2 that's being put in the system. So we don't have any disagreements with it, and it helps our operating costs.

A little disconcerting is, I think it was referenced in an earlier call, earlier questioner, the kind of lack of communication that you've had with -- or by the operator. So hopefully, in all areas, you'll be able to somehow improve that communication and updates so that you're a little bit better aware of what's going on and what they anticipate and realize that as a non-op, it's perhaps a little more difficult, but still. Okay. That's...

Well, we -- John, just to weigh on that. Just to -- so we really actually have a very good relationship with Exxon, in my opinion, for -- I've worked with Exxon before and it's tough because they're a big company and big companies do different things differently. But we actually have a good relationship with them, I think, and they do talk to us. It's just they've had some difficult maintenance issues going on. And we treat them pretty much like the rest of our partners. And actually, I'd say they're definitely not the worst. So that's -- which is a big plus because I was kind of afraid they could have been. But we've been really happy with them with what they're doing.

Okay. Well, that's good to hear. And I suppose that this field is kind of somewhat off their radar in the grand scheme of things for their size and so forth.

Our next question comes from Nicholas Pope with ROTH Group.

Kelly, you -- I think you made a comment that the non-op -- the market for kind of non-op assets has been a little tight right now. So I thought it was kind of encouraging that there's -- that you sold was $3.3 million of SCOOP/STACK non-op assets post quarter end. I'm curious...

Can I give you a little color on that?

Yes, that's exactly what I wanted. So go ahead.

Yes. So just to be clear, that is -- it is SCOOP/STACK, but it was from our minerals package, right? If you recall, we paid $17 million before post-effective date. What was the ultimate adjusted price? $16.1 million for that package of royalties. But when you factor in the difference between effective date and closing date cash flows, and we placed the vast majority of that on all the stuff we kept, right? There were some locations that were -- again, they could absolutely be viable home run candidates, but they were further out in time. And so when we put most of our valuation work, we front-loaded that.

So if you take that evaluation, which, again, we think has borne out to be a very good, high-return project at $16.1 million. If you knock another $3.25 million, $3.3 million off of that, it's an absolute home run. And so what do you do with that capital? Well, you go try to redeploy it, right, sort of high grade that portfolio from stuff that, again, we think is good. It has value, clearly. We sold it, but into stuff that is going to be completed in our opinion, more near term and begin to add cash flows in the near term. So that was the sort of process behind that. Let's see if we can put some of these potentially longer-dated, to-be-completed stuff, flip that into stuff that we think is going to be more nearer term and also very attractive rates, which we were buying it. So that was the process there, Nick.

I mean I think it makes total sense. I mean it's -- I think you all have been active in the past in divestitures, and it sounds like maybe the non-op market is a bit of a seller's market right now just with the -- how quickly commodity prices have moved. Is there other opportunities? I mean, is that something -- I know you are always active kind of looking at your own assets and high grading stuff. I mean, is there other opportunities you think might be possible to divest here in the near term with some non-op stuff?

There are -- for sure, yes. There are a couple that I would say need to sort of be seasoned a little more, but that could be very impactful. And then there's always little stuff on the margin that you could flip around with. So if I were modeling, I probably wouldn't account for it. But it -- we call that as Cajun say, Lagniappe, right?

Up next, we have a follow-up from Jeff Robertson with Water Tower Research.

Ryan, on CapEx, do you have much visibility into the rest of calendar '26 from your operating partners?

No. I mean, I think at this point, it's going to be probably the -- we don't really on the SCOOP/STACK, which is the majority, as you know, kind of our CapEx other than Chaveroo. And at that, we're not getting a lot of drill schedules, unfortunately, from them. And we're seeing AFEs and activities, but we don't have a ton of insight there as to how much capital. So we're not budgeting much more than we've probably spent this year right now.

We have -- we'll come out with our official kind of '27 budget here probably on our next fiscal '27 that is on our next call. But at this point, no, we haven't seen a lot of activity or that we would know of really on the non-op side, right? Now I will say, as you know, obviously, the activity we've talked about on the mineral side, I mean, that doesn't impact our capital budget, which is the nice thing about it. So all those wells coming on for SCOOP/STACK are not going to impact our capital budget.

I guess to that note, the mineral interest production that you talked about that should come on near term should have -- be a high-margin addition to cash flow?

Yes, absolutely. And yes, we're excited about it. But it's -- again, we're going to gain more info this quarter and even more going forward as we get more wells being completed over time. So again, very excited about that.

Our next question is a follow-up with John Bair from Ascend Wealth Advisors.

Thanks for taking the follow-up here. Just a quick question. Are you looking at any adjustments or any ways that you can adjust your hedging program given the current elevated prices and whatever? Is there any way that you can kind of high-grade that? And my personal take is these prices, even if some solution to the Persian Gulf Strait of Hormuz thing was resolved, you've got a long lead time to get all that cargo out of there. So I know the market response would probably try to reflect it. But given where we're at right now and all those uncertainties, are you looking at any -- doing any high grading of that hedging program?

Yes, John, this is Ryan. So unfortunately, in the near term, right, we definitely have looked at restructuring, but most of the restructuring opportunities would be things like converting our collars to swaps, which isn't really that beneficial to create upside. Given where the prices are, it could be too expensive to take a lot of those swaps out or just take them off. What we are doing is we've taken the opportunity to start adding hedges in calendar '27. So we're able to get 70-plus swaps and floors in some instances with higher collars. And so those prices into calendar '27 are pretty attractive, right? So to us, adding hedges out in the future at good prices is really what we're doing for the most part with this kind of spike.

The other point I'd make is while we do have -- we are not completely hedged out on our crude, right? So we've still got for this kind of our fiscal fourth quarter, at least 30% unhedged on the crude side. All of our NGLs are unhedged. So we definitely have upside there from the run in kind of the heavier parts of the barrel for the NGLs. So we're still going to see some of that upside, as Kelly kind of mentioned in his comments. But really near term, there's not a lot of restructuring opportunities. We're just going to take advantage of adding stuff in '27.

Very good. I think one of the big takeaways from what's been going on is domestic production, I think globally, you're going to be looking at it more cautiously at where you source your crude from, right? So I think from that standpoint, being a domestic producer should be given a little bit of a premium perhaps, I don't know, but just kind of food for thought there.

John, really appreciate your interest in our call. And we agree. Yes, I think good old USA is the place to be.

This concludes our question-and-answer session. I would like to turn the call back over to Kelly Loyd for any closing remarks.

Yes. Thank you, and thank you, everybody, for attending. As we move forward, like I said, we're excited about the future here. So thanks again for your interest. Really appreciate it.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, everyone, and welcome to the Evolution Petroleum Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please also note, today's event is being recorded. [Operator Instructions]

At this time, I'd like to turn the call over to Brandi Hudson, the company's Investor Relations Manager. Ma'am, please go ahead.

Thank you. Welcome to Evolution Petroleum's Fiscal Q2 2026 Earnings Call. I'm joined by Kelly Loyd, President and Chief Executive Officer; Mark Bunch, Chief Operating Officer; and Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer.

We released our fiscal second quarter 2026 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release on the Investors section of our website.

Please note that any statements and information provided today speak only as of today's date, February 11, 2026. Our discussion contains forward-looking statements of management's beliefs and assumptions based on currently available information and is subject to the risks, assumptions and uncertainties described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statements.

During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Reconciliations to the most directly comparable GAAP measures are included in our earnings release. Kelly will begin with opening remarks, followed by Mark with an operational update, and then Ryan will review the financial results. After our prepared comments, the management team will open the call for questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the Investors section of our website.

With that, I will turn the call over to Kelly.

Thank you, Brandi, and good morning, everyone. This quarter demonstrated the resiliency of our portfolio and the benefits of the strategic steps we've taken over the past several years. Despite a mixed commodity price environment, we delivered improved profitability and stronger cash flow, reflecting the diversification of our asset base, increased exposure to natural gas and continued cost discipline. Importantly, these results were achieved without meaningfully increasing capital intensity, underscoring the durability of our underlying assets and the consistency of our strategy.

Stepping back, what stands out this quarter is the operating leverage embedded in Evolution's portfolio, improved natural gas pricing, incremental contributions from our minerals and royalty investments and lower operating costs across several assets combined to meaningfully drive higher earnings and cash flow compared to the prior year. While commodity prices will always fluctuate, our goal has been to build a portfolio that can perform across cycles and we believe this quarter is another example of that approach in action.

From a financial standpoint, that operating leverage clearly showed in our results. In fiscal second quarter 2026, adjusted EBITDA increased by 41% year-over-year despite revenue increasing only 2%. From a portfolio perspective, we continue to benefit from a balanced mix of oil and natural gas assets with a low base decline and modest capital requirements. Our assets are diversified not only by commodity but also by basin and operating partners, which helps reduce concentration risk and smooth performance over time. This approach has been intentional and remains a core pillar of how we think about capital allocation and risk management.

A newer component of that diversification is our growing minerals and royalty platform. Over the past several months, we've been building a new network funnel and increasing our exposure to capital-light assets that generate high-margin production and long-lived inventory without imposing an incremental operating burden or requiring development capital from Evolution.

Recent activity across our SCOOP/STACK minerals demonstrates this strategy in action with several wells turning to sales or entering drilling and completion operations even ahead of schedule. This activity is already driving incremental cash flow and accelerating returns while reinforcing our emphasis on assets that combine current production, near-term 0 cost drilling exposure and long-term upside.

As we move forward into quarter 3 and beyond, we anticipate meaningful contributions from our newly acquired Haynesville Bossier Shale mineral and royalty assets. While we will always remain opportunistic with our A&D activities, we are confident that this new network will provide us with repeatable, highly accretive, tailored opportunities to enhance our portfolio. We believe this strategy enhances the durability of our cash flow profile and provides meaningful flexibility in how we deploy capital over time.

Operationally, we made progress during the quarter on cost control and efficiency initiatives across the portfolio. Several assets delivered meaningful improvements in operating margins driven by lower costs and better uptime. While certain fields experienced temporary downtime during the quarter, these issues were largely mechanical or timing-related rather than structural in nature. Importantly, field level profitability remains solid.

Our operating philosophy continues to emphasize flexibility. We work closely with our operating partners to adjust activity levels based on commodity prices, market conditions and expected returns. This approach allows us to protect capital during periods of volatility while remaining positioned to benefit when conditions improve. We believe this flexibility is especially important in today's environment where price signals can change quickly and disciplined capital management is critical. As always, we will continue to evaluate the most effective ways to deploy capital for long-term shareholder value.

Looking ahead, our strategy is consistent. We will continue to prioritize assets with durable cash flow characteristics, modest capital requirements and attractive risk-adjusted returns. We will also continue to evaluate opportunities to expand our portfolio through acquisitions, particularly in areas where we can leverage our experience, relationships and disciplined underwriting approach.

Our goal is not growth for growth sake, but rather growth that enhances per share value and supports sustainable shareholder returns. Our recent mineral and royalty acquisitions fit those parameters very well. The combination of low decline assets, capital light exposure and disciplined reinvestment gives confidence in our ability to navigate commodity cycles while continuing to reward shareholders.

With that, I'll turn the call over to Mark for more details on our operations.

Thanks, Kelly, and good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings and press release and filings for additional details across our asset base. Overall, our operations performed largely as expected during the quarter, with steady base performance across most assets and continued progress on optimization issues.

Starting with SCOOP/STACK, activity on our legacy working interest position remained steady with 3 additional wells in progress during the quarter. On the mineral and royalty side, activity continues to ramp. Three wells are converted to producing status during the quarter with 16 additional wells in progress, supporting incremental high-margin production. We expect to continue to benefit from these improved margins since royalty properties have inherently higher margins.

At Chaveroo, production increased year-over-year, reflecting wells brought online over the past 12 months. While no new drilling occurred during the quarter given low oil prices, we continue to advance permitting and planning activities to ensure we are well positioned when market conditions improve. We transitioned all but two of the wells from electric submersible pumps to rod pumps across the Chaveroo field. This significantly improved lifting efficiency, reduced downtime and stabilized production, resulting in field performance trending about 5% above initial expectations. Thereby boosting capital efficiency and long-term asset value.

At TexMex, we focus on optimization initiatives across the assets. Progress was made through targeted workover activities and facility upgrades aimed at improving reliability and performance. While these efforts took time to implement during the transition. We believe the bulk of that work is now behind us. As additional workovers are completed and recently resolved downtime normalizes, we expect production and lifting costs to continue to improve and better reflect the underlying potential of the asset moving forward.

At Delhi, production was impacted during the quarter by equipment-related downtime primarily related to CO2 compressor issues that limited injection volumes for much of the period. Importantly, field level profitability remained strong, aided by materially lower operating costs following the cessation of CO2 purchases. On a per BOE basis, operating costs at Delhi declined meaningfully year-over-year, and we expect sales volumes to improve moving forward as operational issues are resolved.

At Jonah and Barnett production volumes were relatively stable on a sequential basis, consistent with the low decline nature of both assets. Realized natural gas pricing improved compared to prior year. The results during the quarter were partially impacted by wider regional differentials, driven by mild winter conditions in the Western U.S. in calendar Q4. Across the portfolio, we remain focused on maintaining operational flexibility, managing costs and deploying capital where returns are most compelling.

Over to you, Ryan.

Thanks, Mark, and good morning, everyone. As Brandi mentioned earlier, we released our earnings yesterday, which contains more information on our results. For today, I'd like to go through our fiscal second quarter financial highlights.

In fiscal Q2, we had total revenues of $20.7 million, up 2% year-over-year. The increase in revenues was primarily due to a 6% increase in production and higher realized natural gas prices. which were offset by lower oil and NGL pricing. The increase in production volumes was largely attributable to contributions from our mineral and royalty acquisitions in the SCOOP/STACK, as well as steady base production across the majority of our portfolio.

Net income for the quarter was $1.1 million or $0.03 per diluted share compared to a net loss of $1.8 million or $0.06 per share in the year ago period. Adjusted EBITDA increased 41% year-over-year to $8 million, reflecting stronger natural gas revenues realized gains on derivative contracts and lower lease operating costs. Lease operating expenses improved to $11.5 million or $16.96 per BOE compared to $20.05 per BOE in the prior year quarter, reflecting both underlying cost improvements due to our mineral and royalty acquisitions and the cessation of CO2 purchases at Delhi, and the benefit of certain onetime items recognized during the quarter.

On the hedging front, our ongoing goal is to reduce downside commodity price risk while preserving the maximum potential upside. We have continued to add hedges, and we'll continue to use a mix of swaps and collars for both oil and gas, and we'll monitor the market for any additional hedge opportunities if market conditions present themselves.

Turning to the balance sheet. As of December 31, 2025, cash on hand totaled $3.8 million and borrowings under our credit facility stood at $54.5 million. Total liquidity, including cash and available borrowing capacity increased to approximately $13.5 million versus $11.9 million last quarter. During the quarter, we paid dividends totaling $4.2 million. As previously announced, the Board declared a quarterly cash dividend of $0.12 per share.

Overall, our strong asset base and financial position continue to support returning capital to shareholders and pursuing accretive opportunities that enhance long-term shareholder value.

I'll now hand it back over to Kelly for closing comments.

Thanks, Ryan. To sum it up, we're very pleased with our performance this quarter and encouraged by the tangible results we're seeing from our strategy, particularly the growing contribution from our minerals and royalty platform that we built out and the momentum we continue to see in our acquisition pipeline. Our diversified asset base, growing minerals and royalty platform and disciplined approach to capital allocation, continue to support strong cash flow generation and consistent shareholder returns.

With that, I'll turn it over to the operator to begin the Q&A session.

[Operator Instructions] Our first question today comes from Jeff Robertson from Water Tower Research.

Kelly, you talked about the diversity in Evolution's asset base. Can you talk about -- or can you provide an update or some color on how the minerals acquisitions that you have completed have affected the company's natural decline rate?

Yes, Jeff, thanks for the question. So what we -- the beauty of this is, over time, right, there are a lot of locations associated with these minerals, which we don't have to pay for. So as these locations get built out, it will add incremental production that doesn't have any cost. Now on an individual basis, every well is different, right? Some of them are newer, some of them are older, and they're going to decline at different rates. But the fact that there's a bunch of inventory that's going to get added, any incremental cost to Evolution is one of the reasons we think it's so attractive.

Can you share any color on the -- what kind of production levels that the Haynesville/Bossier acquisitions will add? And given the late December and January closings, that impact, I assume, will be felt in the first -- or the -- I'm sorry, your third fiscal quarter and the fourth.

Yes, that's correct. They essentially had 0 impact on the previous quarter that just ended. As we go forward, we will expect to see the production there both come on as well as are -- a lot of these wells are DUCs that are being completed right now, eyes on the ground seeing the completion rigs on there. So we expect to see it ramp up relatively quickly over the next few quarters.

So anyway, excited about the prospects there. And again, the PDP will start to hit, but we also have DUCs that are being converted as we speak.

Yes. Jeff, this is Ryan. The other thing too, obviously, as you know, on the royalty side, the production impact is going to be less impressive than the cash flow, right, because of the margin. So obviously, I think we're excited about the absolute free cash flow impact, but the production impact will be there, but it won't be as impactful as the cash flow impact.

One more, if I may, Kelly, can you share your thoughts on valuation comparisons that you see in today's market versus nonoperating working interest opportunities and royalty opportunities.

So yes, as Ryan just mentioned, on a production sort of level metric, obviously, the royalties are going to look like they're more expensive. But from a cash flow level perspective, we are finding the opportunities to be very competitive relative to non-op working interest. As a matter of fact, most of these ones we're looking at now, the reason we went with them is because they were more attractive than what we've been seeing out there.

And the other thing I'd like to point out, most of our acquisitions over time have either been led by us doing a bunch of research and finding an opportunity out there or having an opportunity come to us. We think with this sort of network that we've built out and the partners we have that we can go be more proactive and go make offers and lots and lots of offers that are tailored to the kind of reserve categories that we want to see in our purchases. Like I said, we've seen some early success, and we're excited about where it's going forward from there.

[Operator Instructions] Our next question comes from Nicholas Pope from ROTH Capital.

The question I had, I'm kind of curious with the Delhi Field. You mentioned expectation of things kind of ramping back up after some downtime. But I'm more curious after the kind of cessation of the third-party CO2 volumes kind of going just recycle only, how, I guess, the field has performance and how you kind of view the performance of that asset without that additional CO2 volume getting put into the reservoir.

Well, I mean -- this is Mark, and I'll answer the question. With all of the facilities issues that we've had with compressors and stuff going down and also coming out of the summertime where we have limited injectivity because of the heat. It's been kind of difficult really to quantify everything, what's going on. So we're -- we still think that from a standpoint of how the field is operated, it's very profitable because the -- if we don't inject CO2, even if we have a reduction in rate we are much more profitable because we're spending a lot less money on operating costs every month.

So we're actually happy with the way it's performing right now. And we expect that it will level out here after we -- in the next few quarters after we get past this downtime at the plant and also get past the summer season. Then we'll have a much better idea about what it's doing.

So I guess with the expectation that you could see kind of a return to production, I mean, are you all expecting production volumes to kind of return to that 600 barrels a day kind of rate in the field on the net to you guys?

Well, that's -- I think right now, the difficulty with what we've had -- with the amount of downtime we've had at the plan, it's -- honestly, it's really hard to quantify.

Yes. I mean so Nick, I mean their stated plan on the field, right, is that they're still injecting , what is it, like 84% of the injections were recycled anyway, right? And so that difference with increased water injection to make up voidage we have yet to see really the full results of how that will play out.

So as Mark said, it's kind of early because you have a compressor go down for basically the whole quarter. It makes things tough.

Got it. I'll drop the topic and move on, one other item, just kind of to clarify with the Haynesville minerals. Looks like there was some movement in and out just with the cash flow statement from the previous transactions. I was curious how much of that kind of $4.5 million spent is fiscal 2Q versus what's going to show up in fiscal 3Q?

Yes. So very -- this is Ryan. I'll take that real quick. So the majority of kind of the $4 million is going to be in our fiscal Q3. We ended up spending, call it, less than $1 million in actually at the very end of our last fiscal quarter. So the majority of that CapEx is going to be kind of in the beginning of this fiscal Q3.

And our next question comes from Poe Fratt from Alliance Global Partners.

It is on mute, pardon me. Just a quick question on OpEx for LOE. You had good gains on absolute basis in Barnett, Delhi and TexMex. Can you just talk about forward-looking into third -- the March quarter? I think you said that -- Mark may have said that he expected an additional improvement in LOE. Can you just sort of quantify that? And then also where might we see additional improvement?

Yes. Yes, this is Mark. So I'd say like on -- I think you're talking about TexMex. And at TexMex we had a transition was slower than we expected from the old operator, the new operator. That's kind of passed. And we had a bunch of catch-up work, workovers to do. So that came in. We -- I think we told everybody last time. We look at this as like at least getting down to a dollar per BOE level of what the Williston runs. And I think that's actually kind of what we're aiming for because we feel like that the cost will stay either flat or maybe go down slightly, but the BOE per day should will be ramping up. So anyway, that kind of probably -- should help you answer your question about how to look at it.

Yes. I would just add, this is Ryan. Just to add. I think some of it is going to -- remains to be seen as far as kind of how much the royalties were lower our overall LOE per barrel, right? You've seen a big improvement in SCOOP/STACK. Obviously, you're not really seeing that yet in the Haynesville/Bossier. And some of that is just based on data, right? On the royalty side, we get data much more slowly than we do on some of the other assets. So a little bit of that remains to be seen. So we do think that's going to help, over time, overall lower our LOE per barrel.

Yes. And one other quick deal, like we did 14 workovers at TexMex and spent a couple of hundred thousand dollars net to us. And it netted back about 80 barrels of net barrels of oil per day. Now that wasn't all at once, obviously, it was spread out over the quarter. So that kind of step is when you make the denominator a little bit bigger, it's going to drop the dollar per BOE.

A lot of those were sort of -- this Kelly. A lot of those were catch-up workovers that we've overcome. We're obviously still going to have it in an old field, you're always going to have some workover activity, but that was a pretty high number.

Not 14.

Excuse me.

Yes. Yes. No, no. I mean there shouldn't be 14 every quarter.

Going forward, correct.

And we do have a few additional workovers that we know we're going to be doing and their high impact, but there -- it's from a standpoint of production. -- but it's not -- it's only 4 additional workovers that we have identified right now.

Yes. I guess I was looking at -- thanks for the color on the TexMex, OpEx or I was looking more at the big number, a big downdraft in Barnett Shale production costs sequentially and then also year-over-year. Can you just highlight what's going on there? And then is that durable into the second half of the fiscal year?

So I think as we disclosed, there was some benefit from [indiscernible] in that -- in the quarter. So on the ad valve, especially for all of them, we get a bill once a year, and so we make an accrual -- and so it's an estimate for most of the year, and when we get to build at the end of the year, we make an adjustment. Now obviously, the bill came in less than we had accrued. And we do think some of that's going to be sustainable going forward at the Barnett. So we do think [indiscernible] will go down going forward? Is it going to be as low as this quarter? Probably not as low as it was this quarter, but we will see an improvement, we think, going forward from what we've seen historically.

But as we kind of mentioned too, any increase we might see from this core in the Barnett, we will have offsets in obviously, SCOOP/STACK and as Mark mentioned, TexMex. So there are going to be offsets for kind of that if that -- if the Barnett goes back up a little bit, we'll have some other offsets there.

Our next question comes from John Blair (sic) [ John Bair ] from Ascend Wealth Advisors, LLC.

The last name is Bair, no L in there. In looking at your asset base, one very large basin is not represented, and that's the Northeast in the Utica and Marcellus. And I'm just wondering if that's an area that you're looking at been approached with any ideas there? What your outlook is on that? Any interest in that area?

Yes. Thanks, John. I think we've -- as we've spoken in the past, I think those are some tremendous wells on just a pure amount you get out for amount you put in, it's a tremendous basin. The problem is it has takeaway capacity. I think it's -- as opposed to the Haynesville where we focused on here recently, which is sort of first to go to you could argue any incremental production up in the Northeast would be last to go to LNG.

So we -- again, like I said, a tremendous asset. It's got takeaway constraints that -- from what I understand, it some they put more on, frankly, the back pressure of the existing wells fill it up, they don't even have to drill anymore. So again, we'd have to find the right deal with the right sort of firm takeaway. And I'm sure we looked and we just haven't had anything that meets our return expectations there.

Okay. Given that it's a very old area of production, there's probably a lot of properties that could conceivably fit into your business plan there. Another question I have is there's seeing more interest in the data center build out around production areas. I'm wondering if any of your assets might lend themselves to that idea of putting a data center in where they can directly tap resource rather than having to go through distribution lines.

So again, this is Kelly. We have talked to a couple of our operators where we thought this might make sense. And so far, we've kind of gotten -- they've explored it, and they're aware and they'd like to do something if the opportunity arose, but nothing has sort of presented itself. But yes, for sure, that's something -- again, we're thinking along the same lines. If we can do direct-to-consumer and lock in long-term prices, that would be something -- they are fully aware that we'd be interested if the right opportunity came along.

Very good. And last question is what is your outlook or focus on trying to reduce overall debt levels?

Yes. This is Ryan, John. As far as overall debt levels, I would say we've sort of said that our long-term target is 1x net debt. Now we're a little bit higher than that. So yes, there is a plan to sort of reduce over time around to that level. But on an absolute debt basis, we certainly don't feel uncomfortable with the absolute debt level is out given the leverage and given kind of the outlook of the asset base. And frankly, given we actually have quite a bit of production and cash flow hedged at fairly attractive prices. So we feel very comfortable on the debt level. But to answer your question, yes, over time, our goal is to get the leverage down close to that 1x.

And the other thing I'll just throw in there. This is Kelly. That Look, if we have opportunities that we can invest the money in that earn significantly higher than what we're paying on our debt it just makes a lot more sense to buy something at a 20% discount rate to use the capital to do that versus using capital pay down, whatever, 6.8% interest on our debt.

[Operator Instructions] Our next question is a follow-up from Jeff Robertson from Water Tower Research.

Ryan, one question to follow on the LOE discussion. Gathering and transportation costs were much lower in the quarter versus where they had been in the second quarter and a year ago. Is that part of the LOE reduction sustainable?

Overall, which area are you looking at, Jeff? Sorry.

I'm just looking at the table in the press release in the detail where you have your cost per unit broken out. It's right above the real production table.

Yes. So on the gathering side, so that's lumping in obviously a bunch of different areas. I would say area by area. There hasn't been a huge amount of movement. Now some of it is tied a little bit to commodity prices. There are some contracts that go into commodity prices. So that does move around a bit, especially in the Barnett, right? So the largest gathering kind of costs we have are in the Barnett, there's some -- obviously, some in Jonah where the gas processing is. So I would say some of that at a lower price, it is a little bit more sustainable, but there's nothing fundamentally different. Other than -- the one point I will add, sorry, is the gathering -- I think we mentioned that's right. So the gathering contract of Barnett did get restructured. There is going to be some benefit there going forward. But if prices go up, I will expect to see the cost -- gathering costs go up slightly if that makes sense. .

And then lastly, Ryan, given you've got two more quarters in this fiscal year, can you share any color on what you think CapEx might be between now and June 30.

I mean I think the full range that we put out, we still feel good about, which is that $4 million to $6 million range. So at this point, it would just be any sort of capital projects we get from operators or could be some still, and we are still seeing some activity in AFEs and SCOOP/STACK. So we did actually put that in our budget. So I still think that's a good range. I mean, some of it is subject to if we get an AFE, right? But we're not talking huge AFEs, as you know, in the SCOOP/STACK. And the ones we've seen have been very attractive. So we're generally consenting to the ones we see in the SCOOP/STACK.

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Kelly Loyd for any closing remarks.

Thank you very much. We just want to say thank you to everyone for participating, and we look forward to moving forward with you guys. Thank you.

And with that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Good morning, and welcome to the Evolution Petroleum First Quarter and Fiscal Year 2026 Earnings Release Conference Call. [Operator Instructions] Please also note that today's event is being recorded.

At this time, I would like to turn the conference over to Brandi Hudson, Investor Relations Manager. Please go ahead.

Thank you. Welcome to Evolution Petroleum's Fiscal Q1 2026 Earnings Call. I'm joined by Kelly Lloyd, President and Chief Executive Officer; Mark Bunch, Chief Operating Officer; and Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer.

We released our fiscal first quarter 2026 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release on the Investors section of our website. Please note that any statements and information provided on today's call speaks only as of today's date, November 12, 2025, and any time-sensitive information may not be accurate at a later date.

Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to the risks, assumptions and uncertainties as described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statements.

During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release.

Kelly will begin today's call with opening comments. Mark will provide an update on our properties and plans as they relate to our ongoing strategy of maximizing shareholder returns. Ryan will then provide a brief overview of our fiscal quarter highlights. After our prepared remarks, the management team will be available to answer any questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the Investors section of our website.

With that, I will turn the call over to Kelly.

Thank you, Brandi, and good morning, everybody. We entered fiscal 2026 in a solid position, building on the momentum we carried through last year. Our first quarter reflected continued execution across a broad and diversified portfolio, underscoring the resiliency of our business model through commodity price cycles.

Total revenue was $21.3 million, a modest decline from the prior year period, driven primarily by lower realized oil and NGL prices partially offset by a 43% increase in natural gas pricing. Even in a softer pricing environment, our assets performed in line with expectations, generating positive earnings and meaningful cash flow.

From a strategic standpoint, this was an important quarter for Evolution. We closed our first acquisition consisting only of minerals and royalties in the SCOOP/STACK, expanding our exposure to high-quality, long-lived reserves while maintaining the capital-light profile that defines our portfolio. The structure of this transaction allows us to participate in future development in over 650 gross locations across a highly active basin that we are very familiar with, given our other assets in the region with minimal operating expenses and no future capital commitments presents us with meaningful upside.

We are maintaining a strong financial foundation with ample liquidity and low leverage, supported by the credit facility expansion completed at the end of fiscal '25. That flexibility continues to position us well to pursue accretive opportunities while maintaining a consistent return of capital to shareholders through our regular dividend. To that end, yesterday, we declared our 49th consecutive quarterly cash dividend and our 14th consecutive cash dividend of $0.12 per share for the fiscal second quarter.

As for the macro outlook and how it will affect evolution, we'll start with crude oil. It's in the middle of a tug of war between OPEC+ trying to appease the U.S. by keeping prices lower and depleting sovereign wealth funds. When will we begin filling the strategic petroleum reserve, will the ceasefires hold? With global supply and demand so close to being in balance, there are a lot of questions as to when and where the next marginal barrel will be needed. With the futures market at or near all-time net short levels at present, the herd has spoken and pushed crude to around $60 per barrel.

A couple of points here. First, I don't think anybody would argue with this, but at $60 a barrel, CapEx budgets are beginning to be reduced which will lead to, at some point, prices needing to move higher to spur enough drilling to meet demand. Second, with the speculative net short position, any geopolitical catalysts can quickly trigger a short covering rally. With our resilient portfolio, whether the upswing in the cycle occurs in the next few quarters or next few years, Evolution and its shareholders will be there to reap the rewards.

As for natural gas, the electrification of everything, everywhere and ongoing carbon intensity reduction efforts along with growing exports, create a rapidly growing demand environment set to persist for at least the next decade. Weather remains all important. However, with an estimated 20 to 30 Bcf per day of coming demand over the next decade or so off of a current 105-ish Bcf per day supply base. There is a reason the futures curves for natural gas currently range from the high 3s to the high 4s for as far out as they trade. Of note, our natural gas revenues were up 38% over the year ago quarter, and Henry Hub only averaged $3.03 for the quarter, whereas the calendar 2026 strip is currently over $4.

Turning back to our assets. We were encouraged this quarter by the continued operational consistency across our portfolio. Each of our assets delivered steady results during the quarter reflecting the quality of our fields and the strong relationships we maintain with our operating partners. Importantly, we have flexibility across our asset base to adjust development activity based on market conditions which allows us to balance near-term returns with long-term value creation. We expand drilling when prices are high and acquire assets when prices are low, all while benefiting from our low decline producing reserves to maintain strong cash flows throughout the cycle.

Our strategy remains consistent. Operate efficiently, allocate capital prudently and return capital to shareholders while maintaining financial strength. We remain focused on generating sustainable free cash flow that supports our regular dividend and positions us to take advantage of attractive acquisition opportunities as they arise. That discipline has been a cornerstone of Evolution's success for more than a decade, and it will continue to guide our decisions in fiscal 2026 and beyond.

With that, I'll hand it over to Mark for more details on the assets.

Thanks, Kelly. Good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings press release and filings for additional details across our asset base. Starting with the SCOOP/STACK, 3 wells were turned to sales and 2 additional wells remain in progress from prior periods. Additionally, we have seen current drilling activity on 12 gross wells from our newly acquired mineral acreage.

At Chaveroo, operations remained stable. We continue to build optimization efforts, including converting electric submersible pumps to rod lift on 5 of our 7 wells which should help our -- help lower our future operating costs. No new drilling occurred during the quarter and permitting continues for the next development pad with timing of drilling contingent on oil prices. In the Williston Basin, we continue to see horizontal drilling activity moving towards our approximately 40,000 net acres, and we are very excited to see what may come out of this.

At Delhi, we continue to recycle CO2 with no new capital activity. Delhi production was impacted this quarter because of downtime related to the unscheduled turbine repair and higher summer temperatures, which reduced CO2 activity in the field. The turbine has been repaired and temperatures are already cooler. At Jonah, production increased in fiscal Q1 as the field worked off prior pipeline imbalance volumes from fiscal Q4 2025. With imbalanced corrections substantially completed by October, sales volumes have now returned to expected levels.

Turning to the Barnett Shale, field performance remained consistent with expectations. Production was stable, supported by targeted workovers and higher realized gas prices versus the year ago quarter. At Hamilton Dome, lease operating expenses normalized in fiscal Q1 following elevated workover activity in prior periods, A slower pace of workovers is expected during the fall and winter months with efforts focused on maintaining key wells.

Finally, at TexMex, integration efforts progressed during the quarter, where we did see some higher operating costs resulting from the transition to the new operator. which is accounted for in the acquisition and is customary. The new operator performed repair and maintenance work on several existing wells and identify candidates for further reactivation as part of a broader field optimization plan. Ongoing activity remains focused on restoring production, evaluating future opportunities across the acquired acreage, consistent with our expectations at the time of the acquisition last fiscal year.

All said, we expect production to increase and operating cost per barrel to decrease moving forward. Overall, our assets continue to perform as expected, and we remain disciplined in allocating capital to the highest return opportunities while maintaining operational flexibility.

Over to you, Ryan.

Thanks, Mark, and good morning, everybody. As Brandy mentioned earlier, we released our earnings yesterday, which contains more information on our results. For today, I'd like to go through our financial highlights. For the first fiscal quarter of 2026, total revenue was $21.3 million compared to $21.9 million in the same period last year and up from fiscal Q4. The modest decline year-over-year was driven primarily by lower realized oil and NGL prices, down 14% and 8%, respectively, partially offset by a 43% increase in natural gas prices.

The quarter's revenue mix was 60% oil, 28% natural gas and 12% NGLs, and our average realized price was $31.63 per BOE. Net income for the quarter was $0.8 million or $0.02 per diluted share compared to $2.1 million or $0.06 per share in the year ago quarter. Adjusted EBITDA was $7.3 million compared to $8.1 million last year, reflecting the impact of lower oil and NGL prices and higher lease operating costs at our text mix asset, as previously discussed.

Cash provided by operating activities increased to $7.8 million for the quarter compared to $7.6 million last year, and capital expenditures incurred for drilling and completion activities were $1.9 million. At September 30, 2025, cash and cash equivalents totaled $0.7 million. We had $53 million of borrowings and $0.8 million in letters of credit outstanding under our revolving credit facility resulting in total liquidity of approximately $11.9 million, including cash and cash equivalents.

The reduction in net working capital this quarter is related to the integration of 2 recent acquisitions, and we expect this to improve over the coming months. During the quarter, we returned $4.1 million to shareholders through our consistent $0.12 per share quarterly dividend, marking the 49th consecutive quarterly dividend and 14th consecutive at the current rate. To date, Evolution has returned approximately $139 million or $4.17 per share back to stockholders in common stock dividends.

On the hedging front, we have continued to add hedges to maintain compliance with our credit facility covenants and protect cash flow for our shareholder return program. Overall, our strong asset base and financial position continue to support both the dividend and our ability to pursue accretive acquisitions that enhance long-term shareholder value.

I'll now hand it back over to Kelly for closing comments.

Thanks, Ryan. As we progress with fiscal '26, we're encouraged by the continued consistency of our operations and the strength of our asset base. We'll continue to return meaningful capital to shareholders through our dividend program, maintaining our policy of setting the dividend at a level that we view to be sustainable for multiple years.

We believe Evolution is well positioned for both the year ahead and many years to come, and we remain steadfast in executing on our strategy to deliver long-term shareholder value creation through disciplined capital management, strategic acquisitions and conservative cost management, all to ensure the strength and continuity of our quarterly cash dividend through all market environments. Listen, we've been doing this for many years, and we continue to do this for 2026 and beyond.

With that, I'll turn it over to the operator to begin our Q&A session. Thank you.

[Operator Instructions] The first question comes from Jeff Gramp with Northland Capital Markets.

I wanted to start at TexMex, it sounds like the results from the quarter probably understate the potential of that asset in the quarters ahead. So I was just kind of wondering if you guys have -- is there a way to quantify, I guess, what a normalized LOE would be for that asset? And what kind of upside you guys are maybe expecting from some of the optimization workover activities that you and the operator have identified so far?

Okay. Yes, Jeff, I'll take that one in. Now when we bought this, we expected that there's -- will be extra costs and stuff going forward upfront. And just to get it up to where we wanted to be, that we agreed with the new operator about that. But we also had a little hiccup in the road and the transition time between transferring operators took a little longer. So we had some production that dropped down. They weren't able to get back online. We've actually started doing that now.

So really with the production being brought back up to where we expect it to be, and we've also seen the costs -- the baseline costs dropping with the new operator taking over control, we expect the lifting cost to get back to a more reasonable level. It's not going to stay at $47.

And we will probably have a little bit higher workover costs here going forward. but it's not going to be excessive. And so far, the 3 workovers that the new operator has done they've done for significantly under budget. So we're really pretty happy with the way the asset is going.

I kind of look at this asset on a going-forward basis. Kind of look -- I think a lot of is it looks a lot like the lifting costs for like Williston or something like that. That's how I kind of look at it. But right now, I don't know what I can -- I can't give you more guidance than that on what I think it would do just because we haven't really seen enough going forward with the new operator.

Understood. And just to dive in on that with one more follow-up. Is do you think you get some of that production benefit in the current fiscal quarter we're in? Or what's kind of the cadence of when some of these can flow through into production results?

Once the operator took over and got control of -- the new operators took over and got control, they've already done 3 of 7 that they've already proposed to us, and they're going to have some more. They're going to be proposing. So I expect the lion's share of that will be back this quarter.

But maybe not the full effect for the whole quarter, right, but as we progress through the quarter.

That's correct, Kelly.

Understood. Okay. That's really helpful. And for my follow-up, I'll ask the obligatory M&A question and just kind of get an update from you guys on deal flow. And I guess it's an interesting time with the dichotomy of gas versus oil prices? And just kind of wondering if you guys are seeing any major delta in terms of bid-ask spreads for oil-weighted deals versus gas-weighted deals and how you guys balance your focus?

Sure. Yes. Thanks, Jeff. This is Kelly. I'll take that. We are seeing a number of attractive or potentially attractive deals that we're looking at. And it is kind of across both fronts. The gas being attractive because they're sort of trading on current terms, whereas we have some futures markets where we can lock in nice returns. And then on the oil side, they're also trading on futures terms, which, again, are pretty muted at the moment. And at least our group doesn't think for the next 5 years, you're going to see oil prices at $60. We just don't think that's remotely sustainable to meet the demand that's going forward. So yes, we're seeing a lot of good stuff.

I will say one of the things that's interesting on the acquisition front, we've been always opportunistic, and that's what we like to look at. I will say right now, looking at the minerals deal we did, buying that at 3.4x, 3.5x multiple. Those are multiples that we consider really attractive for minerals with upside and inventory. So if minerals are going to be competitive with working interest buys, that's something we're going to continue to look at. So anyway, we're excited about what we're looking at going forward. Thanks for the question.

The next question comes from Jeff Robertson with Water Tower Research.

Mark, to follow up on the question around TexMex. Can you -- over the next several quarters, can you talk about the trajectory of workovers that will flow through the LOE line. And I think you said you thought if I heard right, that, that asset from an LOE standpoint could normalize somewhere around the level of your Williston Basin properties. Is that correct?

To answer your last -- the last thing you said there was the Williston Basin, yes, that's kind of what I look at is where -- because it's kind of similar type property. And then I think -- I mean, I don't -- right now, I actually don't know if we'll be completely finished by the end of the -- of this quarter. I would suspect it may bleed over to the next. It's the same deal. There's -- it's going to be a process, just fixing things up. We got a good deal on this thing for a reason. And we knew that we're going to have to do some work on it. And I think over the course of time, it's going to turn into something really valuable for us.

Jeff, to follow up on that, this is Kelly. We do expect to see the numerator and the denominator move, right? So we're putting production back online as we go to, so.

Yes, we had -- because the operator was because the transition time took a lot longer. And honestly, that was really a problem with the state. It wasn't really a problem with the operator, the goal poster kind of change. That's actually what kind of put us a little bit behind on keeping the production up was that the new operator couldn't get on some of the wells. And so now that they're back on them, they are working really fast. They've gotten a lot of stuff done faster than I actually expected. so far, we're excited about how things are going.

And then from a margin standpoint, can you just elaborate on what's going on at Delhi and how you think that -- how you think expenses there will trend over the next couple of quarters, I think you all are now just recycling CO2 rather than purchasing and injecting CO2.

Yes. The -- since we're not -- I think from a total cost basis, those -- that's going to stay fairly consistent to where it has been. We expect the production rates will come back up, which will help the lifting costs in dollars per BOE terms just because we're going to be -- we're getting back in the cooler months, and so oil rates go up, and we also have had good run times from the NGL plant after we got the turbine [indiscernible]. So I think that you'll see overall the cost per BOE to improve slightly.

Yes. I mean I think I think that's right, Jeff. Like on -- if you look on a total cost basis, right, sequential quarters, it was pretty flat, [indiscernible] is slightly down this quarter, but obviously, production took a hit from some of the downtime in the summer why they're so dollar per BOE basis, it should trend down a little bit, but you can see the overall cost relatively flat.

Then lastly, are you having any conversations yet with the operators, some of your more significant properties on any plans that they have as they look into 2026 to maintain production levels?

Sorry, Jeff, you broke up a little bit. Could you repeat that, please?

Sure. Kelly, are you all having any conversations that you can talk about with the operators of some of your major properties like the Barnett or like Jonah as far as what they intend to do or what they might think about doing in 2026 just try to maintain production levels?

Sure. The honest answer there is that with prices where they are, they have told us they intend to do everything they can to keep production as high as they can. There's not a whole lot of levers they can pull, but prices -- we have seen in the past some prices get really low. They sort of -- [indiscernible] well goes down, they may let it stay down. That won't be the case for the natural gas properties right now, so.

[Operator Instructions] The next question comes from Ron Abry with RJ Abry Investments.

Pretty much want to focus on natural gas. It looks like just revenues and production, healthy 5% quarter-on-quarter growth. And I'm just wondering when you look at your hedging program for future natural gas production, what percent is that currently?

Yes. So on the hedging basis, because of our credit facility requirements, we're over 50% hedged, actually closer to probably 70% hedged for the next year. But what we've done on the hedging programs, we try to maintain upside, right? So we've done a mix of collars and swaps, trying to lean more towards collars to range for the upside. So our floors are generally in the $3.50 to $3.60 range for next year, but in a lot of the ceilings for the [indiscernible], you've got almost $5, right? High $4 to $5.

So we want to maintain that upside, but protecting the downside. And I think in the natural gas market, certainly, we're a little more apt to hedge into the contango, right, gas curve versus the crude, right? On crude, we're trying to stay much more near term as far as the crude because it's flat to backward dated generally historically. So I'd say we're probably more hedged than typical in gas, but a lot of that is just because of the opportunity set to in the gas book.

Yes. That's very helpful. And nice to see, Jonah, coming back to normal sales volumes, especially going into winter. What does the outlook look like for West Coast pricing as a premium to Henry Hub?

It's -- this is Kelly. Thanks for the question. It's always pretty variable. But we -- the expectations are for that area to be normal, which I don't know if normal is plus $150 plus $2, but we've certainly seen higher than that and in an awful winter, we've seen less than that. But I think everybody's expectation there now is for a pretty healthy premium, so.

Yes, I mean a lot of it is going to depend on obviously -- I mean it goes without saying weather, right? I mean some of the forecasts call for a colder West Coast, but we'll just see. The thing about the West Coast is the storage levels are just not very abundant. So it doesn't take a lot of cold weather to get spikes there, but we're just going to have to wait and see for the weather. But we generally will expect a premium to Henry Hub in the winter, [indiscernible] very warm winter, it should still be a premium to Henry Hub.

Yes. Ryan brings up a really good point. You can look at, oh, West Coast storage is full, it's high. Well, that is a matter of days of coverage. I mean, if you get the weather come in and any reasonable normal, I'm not asking for extraordinary any kind of normal way. They don't have near enough storage to cover their demand that would be drawn on a normalized weather basis. So you can see some pretty good movements there. And again, that's why we intentionally wanted to get exposed to that market.

Fair enough. And one final question on Barnett. It looks like their production is relatively flat quarter-by-quarter, which is fine, but we saw a pretty significant increase in their LOEs. Was that a one-off thing? Or is that -- can you give you some color on that?

Yes. That's -- the reason you saw the increase from consecutive quarters is because you probably forgot that we had an out-of-period adjustment due to an audit settlement with the operator. And that's what lowered it down below $9. And now it's back up to a normal run rate.

Fair enough. Thanks for all your answers and continued operating this company in a wonderful way.

The next question comes from Jeff Robertson with Water Tower Research.

Ryan, can you -- is there any color you could share on the bank market as you all look at acquisition opportunities and availability for increase the RBL if you were to need one?

Yes. So the bank market still remains pretty healthy. In fact, the conversations I've had with bankers, a lot of them are actually looking now to deploy capital again. getting back more and aggressive nature, I wouldn't call it's ever going to see what we did a few years ago with those kind of terms and aggression. But terms are generally to a little better, right, for borrowers. And the market for the size facilities we're looking at is really healthy.

A lot of the regional banks and even some of the larger banks I'm hearing are getting a little bit more aggressive into the -- coming down to the [indiscernible] gas space. So I think people are seeking returns really on the bank side. So certainly, we wouldn't -- we don't feel like we have an issue increasing the size of the facility if needed for the right acquisition.

And to follow up with that, one of the reasons, Jeff, that we redid are our RBL before the end of the year was to add other partners and have it be very syndicatable. So if something was highly accretive and would work out great for us that it needed some bank piece to it. We are well set up to be there for it.

The next question comes from Paul Fratt with Alliance Global Partners.

Just a couple of cleanup questions. What did the minerals acquisition at in the quarter? And then is there a another step up in the coming quarter as far as -- was it in for the full quarter?

This is Kelly. I appreciate the question. Yes. No, it was only for a couple of months of the quarter. So...

2 months

A little less than 2 months of the quarter. So Absolutely, we do expect that we'll see a full benefit of that coming in this quarter. And it's really in line with what we said in the press release. The volumes are coming in good. So are revenues.

Okay. Great. And then when I sort of look at SCOOP/STACK up a little bit, TexMex should be up a little bit, Delhi should be up a little bit for the next quarter. But would you take a stab at the full year production guidance, I think with all the puts and takes, I'm looking at sort of a flat year from a production standpoint, fiscal '26 versus fiscal '25. Any comments on that would be helpful.

Yes. I mean, obviously, we kind of have provided guidance just on a yearly basis on production, really, frankly, just because of the control factor. But to your point, I mean, there are going to be puts and takes. And some of it is going to be on development, right, in SCOOP/STACK. We are seeing good activity on our asset. But with the delays in reporting, especially on the royalty side, it's hard to get a good feel for where direction of production.

You obviously also have Chaveroo and the timing of those wells, which we're getting permits and obviously continuing to monitor those. But like a flattish outlook, it's probably not -- that's not a bad assumption, but ultimately, it's hard for us to really provide guidance until we see some of the activity levels like I said, in SCOOP/STACK.

That's helpful color. And then when I look at the CapEx side, $3.8 million in the first quarter, is that I know that there's some uncontrollables in that number. But would $15 million for the year be a reasonable target?

No. Actually, we put out kind of our -- in our year-end, we said kind of 4% to 6% was our guidance range for 2026. And actually, we'll have to -- we can look offline, but we're -- we only reported about $2 million in capital first quarter and some of that...

1.9%.

Yes. Some of that's a little bit front loaded in the front for some of the work we had to do on the wells out in Cheverouo to convert some of the pumps. So I still think 4% to 6% for a range still makes sense, all things considered for actually this upcoming fiscal year.

About half of that was spent in the first quarter, the September quarter, right?

About 1/3 of it, yes.

Yes, about 1/3. And that was mainly because of the 5 pump jacks we put in at Chaveroo replacing the ESPs.

Okay. And then since you mentioned Chaveroo a couple of times, any early read on what's going to happen with Chaveroo considering the pivot by the operator to become more of a Rockies flare

Sure. We've had brief discussions with them and [indiscernible] the thing that we're told business as usual. So we have a really good relationship with them. And look, that -- so far, that's what we've been told business as usual. And we both agree on timing and when to start things. And I think we mentioned this last quarter, but we don't believe that $60-ish per barrel, we're in the rest to go out and start drilling wells right now there.

Yes. I was just looking at more from a strategic standpoint for Chaveroo, so.

Yes, it has been changes for them. We've got plenty of ways that we can all work together on that as well. But again, from what they're telling us so far, it's business as usual.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Kelly Lloyd for any closing remarks.

I appreciate that. Thank you. Listen, we want to thank everybody for taking the time and showing the interest in asking your questions. We really appreciate it. Just in summary, we're really excited about fiscal '26 and beyond where the -- where our portfolio is and the outlook going forward. It's going just as we expected. So we're excited going forward and happy to have you all along with us. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Evolution Petroleum Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please also note, today's event is being recorded.

At this time, I would now like to turn the conference over to Brandi Hudson, Investor Relations Manager. Please go ahead.

Thank you. Welcome to Evolution Petroleum's Fiscal Q4 2025 Earnings Call. I'm joined by Kelly Loyd, President and Chief Executive Officer; Mark Bunch, Chief Operating Officer; and Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer.

We released our fiscal fourth quarter and full year 2025 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release in the Investors section of our website.

Please note that any statements and information provided in today's call speak only as of today's date, September 17, 2025, and any time-sensitive information may not be accurate at a later date.

Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to risks, assumptions and uncertainties as described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statements.

During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release.

Kelly will begin today's call with opening comments. Mark will provide an update on our properties and plans as they relate to our ongoing strategy of maximizing shareholder returns, and Ryan will provide a brief overview of our financial highlights. After our prepared remarks, the management team will be available to answer any questions.

As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the Investors section of our website.

With that, I will turn the call over to Kelly.

Thank you, Brandi, and good morning, everyone. We demonstrated another solid quarter of execution in fiscal Q4. Evolution reported a material improvement in net income of $3.4 million and adjusted EBITDA of $8.6 million, underpinned by a balanced commodity mix and prudent cost controls. Average production was 7,198 BOE per day, and our revenue mix was 61% oil with natural gas and NGLs providing a meaningful offset in a volatile oil backdrop.

We also declared a $0.12 per share dividend for fiscal Q1 '26, extending our record of dependable cash returns for shareholders. We have now consistently issued a dividend every quarter since 2013.

We continued to upgrade the portfolio in ways that improve durability and capital efficiency. During the fiscal fourth quarter, we closed our highly accretive $9 million TexMex acquisition, which included nonoperated oil and natural gas assets across New Mexico, Texas and Louisiana. This acquisition adds roughly 440 net BOE per day of stable, low decline production with a roughly 60-40 mix of oil and natural gas with relatively low cost behind pipe upside potential.

Subsequent to quarter end, we closed the largest minerals only acquisition in company history in the SCOOP/STACK. Approximately 5,500 net royalty acres with roughly 420 net BOE per day at the effective date with years of upside drilling that comes with no net cost to evolution.

Minerals cash flows are very high margin as they come without lifting cost, which pairs beautifully with our existing position in the basin. These acquisitions are a great example of the kind of low decline, high return exposure that we seek, scalable capital-light and immediately cash generative. They also represent a clear demonstration of our ability to effectively adapt to market environments and deploy capital in the most effective manner. When oil prices are low, it presents compelling M&A opportunities rather than drilling opportunities and vice versa.

In the market environment and what's going on there, commodity prices remained choppy through the quarter. Our model, which is grounded in diversified commodity exposure and tight cost discipline did what it is designed to do. It smoothed out cash flows and supported returns which is further reflected by our improved profitability despite essentially flat revenue and production.

For oil, we see the demand picture of kind of steady as she goes. Over the last 10 years, on average, demand has grown at a little over 1% per year, and we expect this trend to continue. OPEC+ is continuing to add back supply. This has recently put the global speculative trading community on defense to the point where net positioning has reached some of the shortest net positioning observed in the past decade.

On the other end of the spectrum, there's very little geopolitical risk priced into the forward curves, although potential disruptive hotspots are popping up all over from Russia to the Middle East, down to Southeast Asia and to South America. Additionally, we all know that the best cure for low oil prices is low oil prices, but it doesn't happen overnight. If prices stay in the 60s, we fully expect there to be a negative production response, and we're already seeing many examples of CapEx budgets here in the U.S. being reduced.

If the demand picture holds, it's reasonable to assume that if more U.S. barrels are needed, we will see higher near-term prices as flowing barrels are more sought after as well as higher long-dated prices to incentivize increased CapEx from the North American E&P community. We're certainly not calling for it, but we could see a sharp snapback just like we did the last time WTI averaged in the 60s at $68 a barrel in 2021 and 2022's average WTI price increased to roughly $95 a barrel.

For natural gas, we see the setup for a very strong forward demand curve. Current and planned incremental LNG exports as well as increased industrial demand tied to natural gas' portion of incremental power generation are the main drivers behind this. What is driving the expected increase in power usage, well, that's in large part related to new data centers, AI implementation and cryptocoin mining.

In most years, since the beginning of the shale era, producers have needed forward Henry Hub prices of greater than $3.50 to grow production sufficiently enough to meet these levels of forward demand expectations. However, we must always remember that weather is a huge player for natural gas prices, and can cause sharp near-term swings.

The weak weather scenario that requires a curtailment of supply has a far lesser financial impact on evolution than the positive financial benefit that we would receive from the opposite weather scenario, one where it's so cold that there's much more demand than supply. Overall, our portfolio of low decline producing assets with additional upside potential from new drilling locations to behind pipe prospects is primed to both ride out any weakness and flourish when there's strength.

Regardless of the market environment, our capital allocation framework is unchanged, prioritize durable free cash flow, return cash through a reliable dividend and pursue accretive low-decline opportunities, both organic and inorganic. These will improve our per share value over time. The $0.12 per share dividend we recently declared for fiscal first quarter '26 reflects that discipline and our confidence in the portfolio and future cash flows.

We also took a significant step to enhance flexibility with an amended and restatement of our senior secured reserve-based credit facility. The intent is straightforward: maintain conservative leverage and position our balance sheet with ample dry powder to capitalize on accretive opportunities for shareholders, be it organic or inorganic.

With that, I'll hand it over to Mark for more details on the assets.

Thanks, Kelly, and good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings press release and filings for additional details across our asset base.

Beginning with SCOOP/STACK on our working interest position, activity moderated late in the quarter with several wells in progress and late quarter contributions beginning to come through now in the fiscal first quarter of 2026.

On the minerals package that closed after quarter end, we anticipate a gradual ramp-up aligned to operator schedules, with the majority of initial royalty cash flow beginning in fiscal 1Q '26 and building from there. As Kelly mentioned earlier, mineral interest provide royalty cash flows without typical working interest expenses and complement our existing footprint.

In Chaveroo, we turned in line 4 gross wells on time and under budget, and early results are ahead of plan. We are advancing permits for the next phase and will pace activity to commodity prices to support returns and cash flow consistency. In Delhi, operations experienced downtime from shut-ins related to facility safety upgrades. We also experienced some seasonal effects related to the high ambient temperatures limiting the amount of CO2 injection. The operator continues to inject only recycled CO2, which remains economically favorable for this field.

And in Jonah, operations were stable with reported sales volumes lower due to pipeline balancing. We expect makeup volumes to contribute in the first quarter of fiscal 2026. Across the portfolio, our properties -- our priorities are unchanged: safety, cost control and capital efficiency. We will continue to deploy capital where it competes best on a risk-adjusted per share basis.

Over to you, Ryan.

Thanks, Mark, and good morning, everyone. As Brandi mentioned earlier, we released our earnings yesterday, which contains more information on our results. For today, I'd like to walk through our financial highlights.

In fiscal Q4 2025, we had total revenues of $21.1 million, essentially flat year-over-year. This reflected flat production at 7,198 BOE per day and overall pricing that was roughly unchanged on an aggregate basis given our diversified commodity mix.

Realized natural gas prices increased 66% year-over-year However, oil prices declined 20% year-over-year and NGL prices declined 12% year-over-year. Operationally, temporary downtime at Delhi and pipeline balancing at Jonah weighed on reported sales volumes while our 4 new Chaveroo wells turned in line and production from our TexMex acquisition helped to offset the downtime.

Quarterly net income improved materially, both sequentially and year-over-year to $3.4 million or $0.10 per diluted share. Adjusted EBITDA for the quarter was $8.6 million, up 7% year-over-year and 16% sequentially, driven by portfolio mix and cost discipline as well as positive impacts from our hedge portfolio. On a per unit basis, LOE was $17.35 per barrel and G&A, excluding stock-based compensation, was $2.99 per barrel. Cash provided by operating activities was $10.5 million for the quarter, and capital expenditures were $4.7 million.

Our hedging program remains a core pillar of risk management. We maintain a balanced portfolio with our ultimate goal to protect downside while retaining prudent upside. We evaluate markets regularly and will layer in hedges when required by our credit facility covenants or when economics support our objectives, which are supporting our dividend program, locking in returns for capital plans and preserving balance sheet flexibility. We align hedge levels with expected volumes and the pace of development, consistent with our focus on maintaining free cash flow through commodity cycles.

At June 30, 2025, we had cash and cash equivalents totaling $2.5 million, borrowings of $37.5 million and total liquidity of approximately $30 million. As Kelly mentioned earlier, on June 30, we amended and restated our senior secured reserve-based credit facility, adding a second lender and establishing a $65 million borrowing base under a $200 million revolving credit facility that matures on June 30, 2028. Subsequent to year-end, we funded our acquisition of mineral and royalty interest in the SCOOP/STACK with $15 million in borrowings under our revolver and cash on hand. We returned $4.1 million through common dividends in the quarter and $16.3 million in fiscal 2025.

On September 11, 2025, the Board declared a $0.12 per share dividend for fiscal 1Q '26 payable September 30, 2025, to holders of record September 22, 2025, marketing the company's 48th consecutive quarterly dividend and 13th consecutive at the current level. Cumulatively, Evolution has returned approximately $134.8 million or $4.05 per share in common stock dividends, reinforcing our priority of steady capital returns and a dividend program built to remain dependable through cycles.

Now I'll hand it back over to Kelly for closing comments.

Thanks, Ryan. To close, our team executed very well in both Q4 and fiscal 2025, especially when considering the volatile oil market, we've been navigating this calendar year. We are very excited as we enter fiscal '26. We are well positioned to accelerate growth and advance the company's strategy with multiple tailwinds in place, including our recent acquisitions of TexMex and SCOOP/STACK minerals along with multiple organic opportunities across our asset base.

At Chaveroo and across the portfolio, we will pace development to market conditions and stay focused on our core objectives, creating durable free cash flow, a reliable dividend and disciplined accretive opportunities that compound per share value over time.

With that, I'll turn it over to the operator to begin the Q&A session. Thank you very much.

[Operator Instructions] And your first question comes from Poe Fratt with Alliance Global Partners.

I have a couple of questions, if I may. The first of which is, can you just give me an idea of sort of where your run rates are right now for like the SCOOP/STACK and also Barnett and even Chaveroo, if you wouldn't mind?

Sure. You're talking about on a production basis?

Yes. BOE, whatever the measure you want to use.

Okay. Yes. So the SCOOP/STACK is -- I mean it's in line with where we were in the quarter, honestly. And Chaveroo, where we're doing with that. So you see that the wells came on and they're going to decline pretty -- what mark on the first year average sort of 50% over the course of the year. So I apologize, but we don't like to give out intra-quarter sort of exact run rate. So I'm being a little evasive on purpose here for you. But it's in line with what we were in the quarter on the sort of natural declines we're talking about. So...

Okay. Maybe on Chaveroo, when did you hit full production there? When did all 4 wells hit full production.

Like between -- in the first 2 weeks of May.

Okay. Great. And then can you talk about CapEx looking into fiscal '26?

Yes. So right now, we're -- and I'll let Mark and Kelly comment on Chaveroo specifically. But our budget currently is around $4 million to $6 million is what we're thinking for fiscal year '26, and that's primarily SCOOP/STACK CapEx, along with other maintenance CapEx that we typically see in our other areas. So right now, we're not currently budgeting any CapEx in that range for Chaveroo, and that's obviously dependent on our partner and just the outlook for oil prices in general.

Yes. And I'd like -- excuse me, I got choked for a second. Yes, I'd like to say like we have -- we're continuing to process to permit the wells and get them ready to drill. But we haven't yet decided whether we're going to pull the trigger on drilling them right now. It's going to depend upon commodity prices at the time. And we have a very similar viewpoint with our partner out there. So we'll be making that decision sometime much closer when -- sometime in probably calendar year '26.

Yes, I'll just follow up. Look, we consider these to be really valuable locations. And obviously, when you're drilling new wells, they come on flush production. And again, we'll make that decision later on, but we're doing everything we need to, so we can dynamically change in response to prices. But we'd rather not go full board drilling when prices are in the low 60s. So we'd rather save that for when prices are better and take advantage of that.

Understood. And just one last one, if you wouldn't mind, on the cost side. Can you just talk about where you might see LOE on SCOOP/STACK go? And also with the Barnett, you had the audit benefit for the fiscal fourth quarter on that asset? And can you just talk about a run rate for LOE for the Barnett looking at fiscal '26?

Okay. So on the first question with regards to SCOOP/STACK LOE, the way we intend to do it, right, it's one asset for us, and we're going to look at it together. So we're still assessing the impact as cash flows come in, but we definitely -- obviously, there will be a material improvement with the Minerals acquisition.

Mark, did you want to add to that?

Yes. I'd say on SCOOP/STACK, like it's where it runs right. We don't expect on a BOE per basis for it to increase substantially. So I mean, we should stay right where it is. It's a good asset. It's very, very profitable for us.

But again, when you combine it with the minerals, it will be...

Even better. But I mean I'm talking about just the -- I'm just talking about the operating side. I mean, it's been a star from a standpoint of cost per BOE.

Yes, I'm guessing you see at least a 10% decline in your per BOE/LOE on SCOOP/STACK in the fiscal first quarter or maybe for the full year?

We will -- obviously, that will get refined as we sort of integrate more of these cash flows as they come in. But I mean for a starting point, I think that's a pretty good idea.

Yes. On the Barnett, to answer your question, obviously, we're looking at -- if you look at our last quarter in our press release, it was about $18.50 a barrel all-in for the Barnett. We do see some of those costs hopefully going down a little bit going forward. I mean we do think there are going to be some benefits from the audit in terms of processes that were changed, but also there were gathering contracts where we negotiated by the operator diversified that it's going to have some benefit.

So I would say run rate, we're seeing current levels be just slightly lower than that. So we should hopefully do a little better than that March 31 number that we have there in the press release.

[Operator Instructions] Your next question comes from Chris Degner with Water Tower Research.

I just wanted to ask a bit more about the recent SCOOP/STACK acquisition that was mostly mineral acreage. And curious if that's a shift in strategy or was more focused on that specific opportunity and how you think about acquisitions with working interest versus minerals?

Yes, Chris, thank you. This is Kelly. I appreciate the question. This was done on a truly an opportunistic basis. As you know, we screen many, many, many deals every year. And what we look at chiefly is how accretive will it be to our cash flow per share, i.e., our ability to fund our dividend, both near term and long term. And this one, it fits perfectly. We bought it for what I think is a very reasonable price on PDP alone. I'd say more than 80% of the value we placed on just the PDP side of it.

But of those 5,500 sort of -- it's actually 5,603 net royalty acres, there are a ton of upside drilling locations. And as you know, with minerals, you don't pay for those. So it worked out to be something that -- again, we're really happy with the deal and where it's looking plus we understand the basin really well. So we understood how those locations are probably going to perform. And anyway, I think it's a really good deal.

So going forward, it will be sort of the same strategy, Chris. If it's working interest, if it's minerals, we're going to go for whatever adds the most accretion to our cash flow per share going forward.

This concludes our question-and-answer session. I would like to turn the conference back over to Kelly Loyd for any closing remarks.

Thank you very much. And we want to thank everyone for taking the time to be here and to listen to us. As you know, you can follow up with our IR department with Brandi Hudson, if you want to arrange for any more questions. Like I said, just really proud of the team and all the great work they've done putting this portfolio together that is truly primed to do really, really well when we get some favorable tailwinds on pricing and ride out all the storms. So thank you very much for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.