Evolution Petroleum Corporation (AMEX:EPM) Q2 2023 Earnings Call Transcript

Kelly Loyd: Yes, that’s — so I’m not going to — I don’t want to say too much as far as going forward. Now looking backwards, what I can say is overall, the net impact was about 5%. We have a corporate decline rate, which lower than 5% per quarter. So yes, I think you can kind of understand the impact there. I don’t want to get too specific, and I don’t want to give guidance, but we were lower than when we ought to have been doing the impacts of these things.

Ryan Stash: Yes, it’s hard to say, Don, if the Barnett was, as you can probably see the most of the impact quarter-to-quarter or to say with any degree of complete certainty where we would have been if this hadn’t have occurred, right? We certainly would have been closer to last quarter than we are today, but it is on decline. And Diversified has done a great job reactivating wells. And but at this point, they’ve reacted most of what they’re probably going to. And so we’re probably going to expect to see some decline going forward, but we would certainly hope that there would be some bump to your point, next quarter from this quarter with some of these issues have been rectified. Assuming nothing else crops up, right, as you know, can have in this field.

Donovan Schafer: Okay. Okay. That’s helpful. And then I’d like to dig a little bit deeper into the production costs since from my perspective, that was kind of a major driver behind the EBITDA . I think — could we talk through that some more and help me think about how to model it going forward. So one of the key things look like — I understand sort of ad valorem and all that stuff. But the biggest driver you said was the change in estimates from prior periods. And I think in the past, you said that has to do with a lag in commodity price changes and that impact on LOEs, something like if you’re consuming gas on site to drive the compressors or something like that, then, of course, that “cost” is going to be tied very closely to commodity prices and then it’s sort of a billing cycle thing that creates the lag.

Is it a pretty straightforward one quarter lag where I could do — if I did say like a correlation analysis, where I took commodity prices, but it did a one quarter lag versus forecasting, would that hone in on a good prediction there? Or would that kind of lead me astray? Not really 1 quarter, but it was…

Ryan Stash: it was easy, right? So I mean a lot of the costs we have in the — let’s talk about the where we tend to see — we see more variability here that most of our costs, a lot of the LOEs in gathering, right? And we get built out a 2-month lag for that. So it’s really not 1 month, that’s 2 months. And there is impacts there from commodity prices on gathering and processing side. And so as we’ve seen, as I mentioned last quarter, as we’ve seen prices go up, that does filter through in our estimates have updated throughout. And so while we had a negative impact past quarter, we had a official positive impact this quarter in the Barnett. And so we reported around a barrel you can see in our press release for this quarter on LOE for the Barnett.