Good day, ladies and gentlemen, and welcome to the Evolution Petroleum First Quarter Fiscal 2021 Earnings Release Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, David Joe, Chief Financial Officer of Evolution Petroleum. Sir, the floor is yours.

Thank you, and good afternoon, everyone, and welcome to Evolution Petroleum's earnings call for our fiscal first quarter of 2021. We will discuss operating and financial results for the quarter. And I am David Joe, CFO for the company, and joining me on the call today is Jason Brown, President and Chief Executive Officer. A little bit of housekeeping, if you want to wish -- if you wish to listen to today's call, a replay of today's call, it will be available shortly by going to the company's website and available until December 6, 2020. Please note that any statements and information provided today are time-sensitive and 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 and uncertainties that are listed and described in our filings with the SEC. Actual results may differ materially from those expected. Since detailed numbers are readily available to everyone in yesterday's news release, this call will primarily focus on key results, the continued volatility in oil prices and impairment write-down we had this quarter and a typical update on ops, operations and plans for -- remaining plans for fiscal '21, including capital spending. I would now like to welcome and turn the call over to Jason Brown.

Thank you, David. Good afternoon, everyone, and thanks for joining us today on Evolution's First Quarter Fiscal 2021 Earnings Call. The first quarter of fiscal '21 has continued to be challenging. And although we at Evolution have found ourselves to be quite effective in the remote working arrangement. I know we're all getting a bit fatigued and look forward to better days ahead. To that, I again wish you all very best and staying safe as we all continue to negotiate this uncertain social and economic time together. As you know, it continues to be particularly difficult time in the oil and gas sector, as global COVID-19 pandemic continues to disrupt the balance of oil supply and demand. We continue to monitor the state of COVID-19, making decisions to best protect our employees' health. In order to ensure our financial security, we have continued to focus our efforts on implementing additional cost cutting measures to better protect our investors. We remain well positioned to take advantage of potential opportunities that arise and are focused on our ongoing strategy to create long-term shareholder return as evidenced by a long-standing dividend program. With that, I'm pleased to announce that -- our 28th consecutive quarter issuing a cash dividend. For our first fiscal quarter of 2021, we recorded revenues of $5.6 million, 67% increase from the prior quarter. We ended the quarter with $19.8 million in cash and remain debt free with an undrawn bank revolver that we recently have redetermined to $23 million and extended that revolver for additional 3 years. We continue to concentrate our focus on cash flow and total shareholder return. We provide an attractive cash return to shareholders and with paying our 28th consecutive dividend, we've now returned more than $71 million in cash dividends since the inception…

Thanks, Jason. It's been a real pleasure and honor to work for Bob Herlin and the Board of Directors, it's dedicated employees, both current and past and to serve the company's shareholders for quite a few years now. I remain confident in the asset portfolio and the strategy of the company moving forward. I plan to remain an interested shareholder for many years to follow. I will now like to share some more details regarding our financial results for the first quarter ended September 30. Again, please refer to our press release, in case you missed it yesterday afternoon for full details on the quarter. And be on the lookout for our 10-Q to be filed soon. As Jason already mentioned, we had revenues this quarter of $5.6 million, which was largely attributable to increased oil prices which average about $37 per barrel. Average daily net production was down about 4% this quarter to 1,841 barrels of oil equivalent per day, due to continued suspension of CO2 purchases at Delhi, along with NGL plant downtime and maintenance and some unplanned power outages. Although production was down, we are encouraged to see increasing realized commodity prices for both oil and NGLs quarter-over-quarter. It should be noted that LLS pricing has been volatile this year and the historical stable premium to WTI at Delhi is currently a deduction, as Delhi's realized oil price is approximately $2.20 per barrel below WTI in the quarter ended September 30. Unfortunately, until the global macro environment for oil demand improves, I expect this trend to continue in the near term. In part due to that and due to the low oil price environment we realized in March 2020 through May 2020, the company's ceiling test for the book value of our producing properties was adversely affected.…

Thank you, David. As announced earlier this week, in conjunction with David's upcoming retirement, the Board has appointed a new CFO to be his successor, effective November 18. Although I won't go into all the details of his background, I will say that we're very excited about Ryan Stash coming on board. He comes to Evolution from Harvest Oil & Gas Corporation, where he served as Vice President and CFO since October of '18. Prior to joining Harvest, Mr. Stash spent 11 years in Energy Investment Banking Group for Wells Fargo Securities, here in Houston in several years prior to that as an auditor at Ernst & Young. He's a rare combination of investment banker and CPA big 4 auditor with public company CFO experience. He earned his MBA, Masters in Professional Accounting and the Bachelors in Business all at McCombs School of Business and the University of Texas. We're excited to find such a thoughtful and experienced financial executive as Ryan to carry on the torch that David has carried so well for Evolution in their next chapter. We look forward to integrating a skill set and experience into our team as we look forward to grow our asset base and our dividend. In addition to David's retirement, and announced last week was the -- our Board member and Audit Committee Chair, Marran Ogilvie has elected not to stand for reelection. We wish her the best in her future endeavors and thank her for her years of service as Evolution's Board of Directors. Details of these changes can be seen in our recent filed Form 8-K report. It's a priority for us, as we've said before, to invest in the working relationship we have with our operators. I continue to be pleased with the relationship and dialogue we've been…

[Operator Instructions] Our first question comes from Jeff Grampp with Northland.

Congrats, David, on the retirement. I hope you enjoy some well deserved time yourself.

Thanks, Jeff.

Jason, maybe on the acquisition front, I'll start there. Can you touch on kind of what you're seeing deal flow wise? I guess, particularly curious on maybe generically kind of asset characteristics? Are you seeing more interesting things of the Ham Dome type? Or I know in the past you had said gas could be interesting in certain circumstances and that pricing there is obviously firmed up. So just kind of curious generically where you guys are seeing maybe a little bit more interesting deals across the spectrum?

Sure. I appreciate that. Well, we've been working fast and furious on a number of different strategies. As I've said -- as you and I've talked before, and I've said before on these calls, we're interested in both oil and gas. We like assets like Hamilton Dome and Delhi because they're long life oil and oils kind of be down right now. But if we can get a purchase, it might be a good time over the -- that we would enjoy profits over the next couple of decades there because we're pretty bullish long-term on oil. Right now, it's pretty tough. The landscape there with oil with those types of assets are -- it's still tough right now. The stabilization has now gotten people to the table to do some transactions, but particularly in the private space -- as a public company, our company is measured every day. The private space, they still have a view of what their assets are worth. So there's a little bit of market therapy that's going out there. We're starting to see some deals that have gone on the market for a while and not transacted. So they're coming back for second rounds, which is real positive. The antisense of that to us, we've said before, we're also interested in gas in a regionally probably specific area. And as we've talked about, we like East Texas, North Louisiana, anything that kind of keeps us in that one pipe down to Sabine Pass. Eventually, the drilling out West will kick back up. So we kind of want to stay not competitive with that. And if you get too far away it's a midstream marketing game. So we're digging into East Texas to look for some gas, and we're actually seeing some pretty interesting opportunities there, nonmarket and negotiated. So there's a lot of things about gas we like in the sense that it's -- once it gets to past its initial decline, it stabilizes in a long, flat decline and the lifting costs are very low, much lower than oil. So we like it for that reason, too.

Okay. Great. That's helpful. And final follow-up, maybe to not let David sneak off without putting him on the spot on the call. It seems like you guys had historically kind of moved to a cash taxpayer status, and it's kind of been a little bit choppier in the last few quarters. Just kind of wondering what we should think about in terms of kind of a split between deferred versus current taxes for you guys going forward?

Yes. That's a good question, Jeff. And so given the outlook for oil prices going forward, unfortunately, one would project that Evolution won't be making profits based on strip prices. So like you said -- as you pointed out, we've been a cash payer unlike many E&P registrants. It's hard to project going forward. We're already off to a rough start this first quarter. But I would expect that we're not a cash payer in this fiscal year, at least as I sit and see it today.

Okay. And if oil prices were to rise measurably to a point where you guys are GAAP profitable, should we expect cash taxes to return then? Is that -- is it as simple as that?

Yes, I believe so.

Our next question comes from Richard ( sic ) [ Rob ] Howard with Boiling Point.

Yes, you almost answered my question in the second half there. So, yes, nice quarter. So I see this current asset of the taxes. Do you anticipate that, that cash will actually come in?

Are you referring to the income tax receivable?

Yes, I am, on the balance sheet.

Yes, it's our expectation that we are going to get the income tax refund from the federal taxpayer, and there may even be a state refund barred in there as well, but the majority of it is a federal income tax return from enhanced oil recovery tax credits taken from previous 2 years of returns.

So what is your tax basis of a barrel of oil production? Can you give me just a rough ballpark on that?

I cannot give you a number. I don't have that number off the top of my head, Richard. I don't -- I'm not sure if that's a number I could disclose publicly.

Our next question comes from Andrew Bond with AGP.

So great color on the M&A. So that question was already asked, but just wanted to get an idea, are you able to provide the gross production volumes like you have in quarters past? Or can we expect to see that in the filing when it comes? I know you all don't really report a breakout of production by field, but just trying to get a better sense of production and prices net to EPM between kind of Delhi and Ham Dome?

Yes, Andrew, that information is in the 10-Q. We hope to be filing that today or if not today, Monday.

Our next question comes from John White with ROTH Capital.

Yes. No question from me. I just wanted to tell David Joe, congratulations and have really enjoyed working with you. And thanks for all your help for some of my stupid questions over the years.

John, thank you for that. Let's have lunch when time permits. Enjoyed working with you as well.

And it looks like that was our final question.

Okay. Well, we sure appreciate you guys joining us for our Q1 fiscal 2021 call, and we look forward to updating you on December -- I'm sorry, in early February with our Q2 results.

Thank you. This concludes today's conference call. We thank you for your participation. You may disconnect your lines at this time, and have a great day.