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

Kelly Loyd: So yes, good question. And I think the answer is — I mean this rundown has really been fairly rapid. And it’s — what we’re going to see at least this is my expectation, you’ll see some of the sellers’ expectations start to move more in line with — if you recall they were extremely right? So sellers generally wanted to get the high front month and keep that flat forever and sell it to you on that kind of a “strip” whereas a conservative prudent buyer, you’re going to have to use a discount to the strip. So now that we’ve come back with the front and the back, are a lot closer to equal, I think you’re going to see — start to come to the realization that this is the real price they’re going to get. So we expect to see some movement there, and we expect it to be helpful from a buyer’s perspective.

And as far as types of deals coming to the market, I just — not particularly yet. I think we will. If — again, we had a production response to high prices, I think we’re going to see a production response to low prices but there was a lag. So I think in the months or whatever time period that we’re going to be down there, I think we’ll have some new assets in the market, and we’ll have some real opportunities.

Jeffrey Robertson: Secondly, on your — on Jonah and the Barnett, are you seeing much from the operators as far as what their plans are for, let’s just say, the next — the rest of your fiscal year over kind of other projects to enhance production or have they slowed workover activity or put some things on that they otherwise might do in just given where prices have fallen to?

Ryan Stash: Yes. I mean I think from the Barnett specifically, right, so they’ve pretty much reactivated most of what they had on their — what their list was when they bought the asset. So at this point, they’re more just fixing things as it comes up. So I don’t know if we’re going to see any more proactive reactivations there. Jonah, I think Jonah is probably pretty similar. I mean there weren’t a lot of reactivations to begin with. They were one recomplete that I think they did finish that, but there’s really not a lot of other activity, at least in our portion of the acreage that we own in Jonah that they’ve sort of hinted. So we haven’t heard a lot that prices, other than, like I said, for the Barnett sort of no longer proactively reacting well on a lot of impact yet to that.

Kelly Loyd: Yes. And so Jonah in the first quarter, did some sort of consolidating of compression, but that’s already been done. So we’re seeing the benefits of that now. But I don’t know that they have a whole lot else other than normal wear and tear.

Operator: And our next question is a follow-up from Donovan Schafer from Northland Capital.

Donovan Schafer: Sure. I’ll just do 2 more quick ones. The first 1 is just for the natural gas pricing west of the Rockies, are there any kinds of lags at all in terms of revenue recognition, just if we’re following that spread and trying to anticipate each quarter based on how that does relative to Henry Hub and everything. Is there like there’s a price blowout near the tail end of December, does that spill over at all in terms of into the next quarter, that last week or something? Or is it a pretty cut and dry, it all falls in whatever you look up in terms of spot pricing, that kind of lines up 1:1.