Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Evolution Petroleum Corp. (NYSEMKT:EPM)

Wall Street Analyst Forum

September 9, 2008 11:10 am ET

Executives

Bob Herlin - CEO

Helen Baud - Wall Street Analyst Forum

Helen Baud

Well hello, everybody. Thank you for your patience. My name is [Helen Baud] with Wall Street Analyst Forum and I am your host in this room for today. I would ask at this time that anyone who has a cell phone, BlackBerry, pager, or any other electronic device to please turn either it to the silent or off position. The University Club does have a very strict policy regarding cell phone use in the building and they do enforce their requirements that there is no cell phone used anywhere in the public area.

After the presentation, there will be a breakout session in conference room C and anyone who wishes to join Evolution Petroleum may join them back in that room at that time.

Evolution Petroleum Corporation acquired mature onshore oil and gas resources and applies conventional and specialized technology to accelerate production and develop incremental reserves and values. The company focuses on initiatives in enhanced oil recovery, bypassed resources and unconventional gas development.

Principal assets of the Company include 7.4% in overriding royalty interest and a 25% after payout reversionary working interest, 20% revenue interest, in the 13,636 acre Delhi Field Holt Bryant Unit in northeast Louisiana. Having already produced 190 million barrels of oil through primary and secondary recovery methods, the Delhi Holt Bryant Unit is being redeveloped to use CO2 enhanced oil recovery technology.

The Company also earns working interest in leases with proved and other than proved undeveloped resources covering approximately 35,000 net acres in Texas and Oklahoma, and is active engaged in development projects for EOR, conventional redevelopment of bypassed resources and unconventional gas resources.

Presenting today for you is the, Chief Executive Officer, Bob Herlin.

Bob Herlin

Good morning and thank you for attending, I appreciate the opportunity to visit with you today. My name is Bob Herlin I am the Co-Founder of the Company, President, and CEO. Let me direct your attention to the standard statement, forward-looking statements, as well as the oil and gas reserve estimates cautionary language.

We have a real simple business model. What we do is to identify opportunities to redevelop known resources. These are typically within existing oil and gas fields, they are mature or abandoned. We redevelop them with our own particular expertise that we have in a variety of technologies.

Quick overview of the company, we are on American Stock Exchange on July of '06. We went public in '04 to reverse merger, symbol is EPM, currently trading enterprise, values the company in a market cap of about $100 million. About 26.8 million shares outstanding, which is owned 20% by employees, about 19 to 20% by institutions and about 38% by non-management directors, primarily my co-founders, a Merchant Bank Group out at California.

As of July 1st of '08, after the end of our fiscal year on June 30, we had SEC crude reserves of 4 million barrels, with the PV-10 of $160 million. We had probable reserves which were not SEC reserves from another $3 million barrels equivalent, again all in the sense Gidding Field. We had another 13.5 million barrels associated with the CO2 flood project in northeast of Louisiana. In addition to all that, we have substantial acreage in a gas shale play in Oklahoma.

Highlights for investors of company, we have in the last five years demonstrated a consistent track record of growing production, growing reserves and revenues. We have generated a substantial amount of reserve potential in our particular projects. We have ongoing development in central Texas that where we have about 27 crudes undeveloped locations. This is in addition to the 6 that we have already drilled earlier this year.

We have two major gas shale projects in Oklahoma, in the Woodford Shale. As you go through the calculations, the PV-10 using current oil and gas prices and ignoring the gas shale potential, you can come up with an intrinsic asset value for fully diluted share of about $13. To support all this, we have a very strong balance sheet. We have no debt. We have a substantial amount of working capital to fund our program.

We do not need to go to the markets to carry out our program. Again to demonstrate the growth that we have had, started in 2003 with absolutely nothing but $3 million of invested equity cash, we have steadily grown that overtime to where we are today. In fact the whole company was created and has been grown up of $8.5 million of total invested equity cash.

So from that we are now a $100 million market cap in all the reserves. Again the growth pattern on our revenues from a zero starting position and in about three were we have unaudited revenues in excess of $4 million for the prior fiscal year. Everything that we do fits into one of three basic conditions. The first is enhanced oil recovery through gas floods, primarily CO2 gas floods.

We have one project underway as we speak, we have others in development. We have another initiative which is we call our conventional redevelopment of non-resources. This is primarily used in our expertise in horizontal drilling and in a way of completions artificial lift.

Our first example, of that is our Gidding Field project where we have a very substantial position. We have a new project in this area that we have just started our leasing activity on, also in Texas. Our third area is unconventional gas development or gas shale's. Here we have a project or two projects underway in Oklahoma, in the Woodford Shale and I have gone in little more detail on that earlier on.

We have financially won our Delhi Field in northeast Louisiana, you can see northeast corner to state there just eastern in row next to Mississippi river. This is an interesting field discovered back in the mid-40s and a depth of about 3300 feet. Original oil in play throughout the field is about 400 million barrels which put in to a small giant category.

It produces about 190 million barrels from the field today, covers over 13,000 acres, producing from two primary formation for test conclusive production. If you look at the history of it, the first discovery in 45, that was essentially fully developed by the end of the 40s and produced by a wide variety of operators. By the 1950 the production had started to decline and pressure had dropped in fields.

So all the operators abandoned together and did what we call unitization, where it puts all 250 some odd leases that covered the field into one legal structure unit, it is called the Holt Bryant Unit. This unit was operated by Sun Oil Company and they began to process a pressure maintenance volume checking water at the low end of the field. It was not a full pledge water flow.

It was just injecting water at the bottom of the field and then slowly letting it work it is way up to maintain pressure and therefore oil production. This was successful in maintaining production up until the early 80s. the mid-80s oil crashed in '86 production was down, cost were up and so Sun and his partner Murphy elected to sell of the field, which they did by the early 90s to first to several increasingly smaller independent operators.

So by the time that I acquired it in 2003, the whole unit was down to about 20 barrels a day of production from a half dozen wells. Now I paid that $2.8 million for the privilege of owning that 20 barrels day production. Which at that time sounded pretty stupid, oil price was about $27 a barrel obviously was not make any cash flow. We looked at it and said it has a lot of asset value, lot of potential value.

We knew that there was still 700 million barrels of oil left in the ground. Even more importantly that unit was intact, allowing us to do operations throughout the whole field without risk of loosing any of it. Then of course, oil prices immediately started to climb after we bought the property. We had begun an immediate program of redevelopment. We spent another $2.5 million on the field.

We got production up to about 145 barrels a day equivalent. During that process going through all the wells we found that in 1985, the operator Sun had done some CO2 for us pilots in 1985 which were very successful and then when oil price collapsed they lost interest. We quickly realized that what the meaning of all this was.

Contacted all the major CO2 operators in the US, looking for partner and of those four candidates, three said yes, they were very interested in doing a deal with us. Of course, it took 18 months in negotiations to get to the right deal. That ‘right deal’ was with Denbury in June of '06 and Denbury agreed to pay us $50 million cash for the privilege of taking on this project.

They agreed to fully fund the project and the whole of cost and expense. They agreed to commit to spending over $100 million on developing this project and they agreed to commit their proved reserves of CO2 and to build the pipeline for the field. In return, we kept separate 7.5% overriding royalty interest and we also kept a 25% interest after payout to define payout.

So the payout will occur when production from the field times where the oil prices at the field rest to direct operating cost in the field, yet a fixed amount, has nothing to do with how much they actually spend. Given the way oil and gas service costs have gone up that turned out to be a particularly smart thing to do. I hope I could say it was a smart thing to do as oppose, we are just lucky. But, anyway it worked out pretty well.

Denbury has actually spent quite a bit of money to date. They spent over $70 million last year. They are spending $80 million this year and they will continue spending a fair amount of capital on the field. Their expectations now that they have announced are that the pipeline to the field will completed sometime in early 2009.

Injection will begin immediately with CO2 and the first production should be sometime around the end of calendar '09. Payout therefore from my calculation is based on oil price of $96 a barrel flat will occur sometime in late 2013. So between now and 2013 we benefit from our 7.5% overriding royalty interest which of course has no cost or expenses associated with it.

We just take our share of production and that is it. It would be nothing, but any excise taxes to go with them. Then of course we look at how the CO2 project gets value. Well CO2 flood technology is a very well established technology has been placed for 20 to 30 years in industry in West Texas and in Mississippi. Denver Denbury has over half dozen active projects in Mississippi and it growing that rapidly.

So, the only question is really how much recovery of the oil you get? Of course when you look at the swift are in place, which is how much of the regional oil and reservoir is being contacted by the CO2. Standard recovery with the CO2 for always anywhere from 10% to 20%, Denbury has been averaging around 17% recovery of that oil original oil in place.

On that basis we look at and say okay look anywhere from 11% up to 17% with the mid case of 15% and you can see the gross production from this project is anywhere from 40 million to 60 million barrels of oil. We also worked through the numbers, our royalty will generate anywhere from 3 million to 4.5 million barrels on that basis.

Payout is roughly 5 million barrels to occur leaving us with a quarter was rough therefore our total recovery from this project at Delhi is anywhere from 10 million barrels up to over 15 million barrels on these particular ranges of outcomes. That mid case actually ties into at Denbury it has efficiently and publicly disclosed and what they think they are going to get.

Their efficient net is I think they can get 33 million barrels to their interest. That ties into that 13.4 million barrels, which is what we would get on that same basis. I would like looking in sensitivities what happens if. So, person we look at is or say, what is the impact on our share price based on different recoveries of oil and price anywhere from 10% or 11% up to the 17%.

Again looking at $96 flat oil price and looking on a fully diluted share case it impacts us by being worth anywhere from $6 to almost $10 a share and the reason for that $96 oil case is that the oil price in Denbury used in their end of their fiscal year, which is 12/31 of '07 and again a flat pricing, no escalation of oil pricing no escalation cost.

If you look at it and say what happens that different oil prices the impact is also very significant. If you go way down to a flat $70 oil price, it adds around $6 per share. If you look at $110 flat, it goes up to about $10 a share and you look at what $96 within sale pay, we are going to escalate that 3% a year and escalate costs and expenses and so forth 3% in that value is closer to $11 a share.

So, it is a very substantial impact on the company in foreign excess of our current market product. So, that is our one major project we have in and it is all covered. We have another project that we are working on, as we speak which is our second initiative, which is a more conventional redevelopment of known resources, again using our particular expertise and horizontal drilling and our official work in completion.

We look at a field called the Gidding Field in central Texas and the reason that we think this is that goes back to the expertise from my staff. My VP of Operations is over 20 years in the business primarily in horizontal development in pressured reservoirs. He actually was the production manager for Anadarko in the Gidding's Field and there is biggest player, where they had over 1200 wells in the field, 25,000 barrels of a production.

He is responsible for some of the major developments in horizontal drilling back in 1990. My General Manager of drilling is also in Anadarko. He was the manager of drilling. He has drilled 800 wells to his credit, several 100 of those been horizontal in Texas, and this particular area. So, we have a tremendous amount of expertise, even I was responsible for drilling some 20 well program back in 1990, when it was an really an hard form and we thought we are doing great to get out 2000 or 3000 feet on single lateral with about 7000 foot depth.

So, we have all the expertise necessary to be successful with area and we have the background to develop these opportunities. The Gidding Field covers about 30 to 40 miles wide, 100 miles long. It is primarily Austin Chalk, Georgetown due to formation. These are formations; there are rocks that are very dense. They are almost like just looking cement almost and the reason that they hold on gases because hundreds and millions years ago there is tremendous pressure underneath them.

They uplifted on and cause national fracturing. These fractures are aware of the oil and gas resides and these are naturally oriented in certain direction, all parallel to each other. So, if you can go away with horizontal well and perpendicularly intersect these fractures, you can actually create substantial oil and gas reserves. These wells typically averaged 100, 200,000 barrels historically on the vertical well up to a million plus barrels of oil and gas equivalent.

We have today drilled six wells in this field. They have met our expectations. We have leased about 18,000 net acres, in addition to six wells we have drilled; we have got another 27 locations that we have fully leased that our offsite engineer has characterized as proved undeveloped reserves. We have a second project that we are also developing in Texas in this particular area.

It has more to do with heavy oil on water, in a particular type of completion technology that we developed in another field. Giddings Field, today we have 100% working interest in seven producing wells, five of those are wells that we drilled as re-entry. One is a grassroots well, meaning that we started from service drill to vertical section, down to where we cut out in the horizontal.

We have one well that we put back on production through a work over. These wells typically are producing at a vertical depth of anywhere from 8000 feet down to 13,000 feet. The horizontal sections range from anywhere from a 1000 feet long to multiple 3000 foot horizontal sections. We have additional locations that we are leasing on as we speak and we will be adding to our portfolio during the course for our fiscal year.

Typical well comes at a very high rate and declines very rapidly what we call, harmonic decline. It will stabilize at a lower, much lower production level, but a very low decline level, anywhere from 12 to 24 months out. You get typically healthier production in the first 18 months in the life of the well.

So, in terms of building revenues quickly, this is a great place to be. In terms of building long lived reserves, that does not do it for you, but that is okay because that is not what we are trying to accomplish. We are trying to accomplish high revenues in the early stages.

Going forward, we have a ten well program, re-entry program, average cost of about $1.5 million per well. We are developing reserves at a cost of about $16 per barrel equivalent, barrel of oil equivalent. Again looking at a typical re-entry, the existing wells on the right side, this is again at a depth of about 2 miles from the surface. We have an original horizontal that goes out 3000, 4000, 5000 feet, gets all fractures that is produced and depleted.

We got into that well bore, we plug off the old lateral, and then we cut a window and we drill out a new section, and because we do not have to reproduce that vertical section cost, we are able to chase after a small amount of reserves and economically develop those.

Our third area of activity or initiatives consists of these gas shale projects in Oklahoma. This is in the Woodford trend where we are trying to develop reserves at a fairly shallow depth therefore for keeping our well cost low, and also keeping our total cost at $2 of less per million Btu.

Today, we have at leased over 17, 000 net acres, again these are in two areas, one is a shallow Woodford trend play at about 1,500 foot depth. The second is a little deeper, it is between 4000 and 6000 foot depth, these are all on trend with the major Woodford shale production that is been going on for the last two or three years. Our lease terms are fairly good, a typically three year primarily lease with the option to renew of additional two or three years.

So we have plenty of time to develop this acreage. If you go anywhere from 80 to 160 acres for a horizontal well, that means that we have developed anywhere from 100 to 200 drilling locations. We can increase this position through forced pooling which is allowed in Oklahoma, where people that you can not find or will not leave are just difficult to deal with.

After you make a good faith effort to try and lease them, you can go to a Corporation Commission hearing, and you can present your case, and typically you are allowed to force them into leasing to you, on where the drilling terms are in that area. We expect to start drilling in these plays in calendar 2009.

The important aspect of this particular play, it is a busy looking slide, but, you see the map of Oklahoma on the left and the highlight area is what I am blowing up here. The main Woodford trend, Newfield, Chesapeake and that all are developing is in that oval shape with all the blue dots. Those are all existing wells been produced out of the Woodford trend, typically depths of 8,000 to 9,000 feet.

They will go up 3,000, 4,000 foot lateral, they are spending anywhere from $4, $5 to $6 million per well, and they are developing reserves at a cost of about $2 per million Btu. What we are doing is we are following there trends to the North, Northeast and then to the Northeast. Then East-North East, the blue dots over there, that is our medium depth Woodford trend project and then shallower one, is more to the North.

What is interesting is what is going on; if you see all those blue dots on the far side, adjacent to our acreage, other operation area have started drilling around us. There is actually been over 50 wells drilled near our acreage. They have established commercial production from the Woodford. So, this is gone from been somewhat risky. We knew there was gas. We just did not know it was commercial.

Now we know it is commercial and it is just a question of what ultimate reserves we can get from these wells. We are very optimistic and very bullish about both of these projects. I think we can develop substantial reserves. Again our potential here is to drill up to 200 wells in this acreage, so all that is summed in to this particular plot, showing our overall business plan.

We take our current working capital that we have enhanced we are using that to buy the acreage of these various projects. Then we are trying to using it also to fund our initial development in a Gidding Field. We already have substantial production at least relative to our size. In the Gidding Field cash flow from that project and our working capital will be then used to further develop our other projects.

Then as the time goes on Delhi Holt will start kicking in revenue, substantial cash flow in early 2010 that we can then use to further develop our gas shale projects, as well as our new projects that we have on the drawing board.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Our fiscal '09.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

What is our total production rate would be?

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

We do not provide guidance on production going forward, reason being that we are early stage company still. Oil production is tied to small number of wells in our drilling activity. If I knew exactly, which well is going to be the one that is above the average or below average, I have a better idea. I just, I can not tell you that, it would not be a good number. This is representative, this is scamac. It is not intended to be an actual number. It is just to outline our expectation. This is a free hand with power-point type of drawing here.

It is a fairly accurate representation of what our business plan is, what we are trying to accomplish. We will be drilling in Oklahoma on our gas shale in 2009. We will be developing new projects, we have one already that we will be drilling on in calendar 2009, actually fiscal '09. The Delhi Holt CO2 is definitely on track to start producing by the end of 2009 from which we will be generating substantial revenues from our overriding royalty interest.

Capital budget that we recently announced 10 horizontal wells to be drilled, through entries and then Gidding Field. Incremental leasing to maintain our inventory of PUDs and getting incremental leasing to finish up the project in Oklahoma and then we have new project in Texas that we are commencing leasing on and then we expect it will be drilling on next year, for our calendar fiscal '09.

All this is going to be funded from our current working capital and cash flow from operations for the most part. It is a possibility that we may elect to do some project financing to accelerate some of our drilling opportunities. Well that would be the one that we will be cut off.

The intrinsic value calculations, if you take our working capital and exercise proceeds from our options warrants that is little less than a $1 per share. Our proved reserves, again if you adjust that to current oil and gas prices that is about $3 a share. If you add in our probable reserves at the Gidding Field again at current pricing that is another $1 per share.

Our probable reserves in our Delhi Holt CO2 project using the $96 flat price that Denbury has disclosed, that is another eight in a quarter per share. Then right now I am just using our historical cost basis for our Oklahoma gas shale, but that potentially can be up to 200 wells. We have guided here on the slide showing it at on the historical cost basis which is about $0.17 a share. It all adds up to little over $13 with substantial room for increases all for that.

So just to summarize, we have demonstrated that we have a record of growth both in reserves and asset value production and revenues. Our management team has a great track record both individually then as working as a team at Evolution. We have an inventory of drilling opportunities to allow us to continue growing the company, a steady development drilling program.

Our CO2 project at Delhi Holt with Denbury is continuing. It is fairly on track. It is got maybe three months from our earlier projections. Strong balance sheet, we have the ability to carry this program out. We do not have to go to market to make it work. We have a tremendous asset value per share that is far in excess of our current market price.

So with that, we will take any questions right now, since we have little time, yes sir.

Question-and-Answer Session

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

If you all remember they had put a pipeline across Mississippi River and they also had put a pipeline through various wetlands and so forth, all that requires core engineer permit might remember over the last year core engineers has had a few other things on its mind they did involve worrying about our public companies put the pipeline across there are flooding in the Mississippi river New Orleans and so forth.

So, that whole process was a much longer timeframe to get regulatory approval in the way we expecting. They gotten that approval to moving forward they brought the pipe so that is not constraining more. Now this is the question of getting the pipe rate.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Pipe is already laid up to field called Tinsley.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

You see the solid line there Tinsley Field just on the other side of the river in Mississippi and so part of that finished with this last 50 miles from Tinsley down to Delhi.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

They respecting it is completely be ready to go about second calendar quarter of '09.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Yes.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Yes. If you go look at that it is not in the farmland crop some pastures, foresters is not really anything difficult.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

We have processes is already ongoing. I mean it is a parallel process, where there actually as a field for that 80 million is out in the field, where they are doing infrastructure if they are recompleting wells drilling new wells, tank batteries, the whole nine yards. Now they are not doing the whole field at once. They are doing it in phases and they actually have a cutoff in about six different phases and a question is really more how quickly do they, do that phase in process of the whole field.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

The question is there, yes the projects we are looking up at long range. Yes, there are we have another CO2 project that we are working on.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

No. It is with other parties and other part of the country. We have a major project in Texas that we are working on, this utilizing technology that we developed in Louisiana. We actually owned another field in Louisiana called Tullos. We sold that earlier this calendar year, but in the process of owning that and operating that field. We drilled a well and tested some technology that worked and we are then start looking for an opportunity deploy that, but in more profitable location.

We have found that location. We have started leasing in that area. It is a mature field in a sense that it is already closed and abandoned. Very well known, well developed and we have a lot of data on it. We feel real good about the opportunity to develop significant amount of reserves there and in regulated field. So, we have that going on as well.

As most other companies are constrained is equal, in terms of getting qualified people to do the work. There is a shortage of engineers. There is a shortage of geologist and when you do find them you are very extensive to get and to keep. So, that is our primary constraint that we have and so far we are in pretty good shape.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Yes, the oil production.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Its not a secondary recovery, is a conventional.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Right.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Right.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Primary.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

There is a different way; it is a different way of to clean the wells, a different way of producing it, using technology. You can call us secondary it really it is a modern of technologies.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

No. We are drilling new wells.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Right.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Remember that our oil and gas fields were have been developed and produced over the last 100 years.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

A lot of those were abandoned when oil prices were not $100. They are abandoned when they were at $15 or $12. So, when you combine a higher price scenario with improved technologies and that opens up a lot of opportunities, because all these fields are abandoned. They are abandoned a very lower coverage. Typical oil field is abandoned, when there is still 70% of oil left in the ground.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Question is our new projects would be on a royalty basis or not? Almost always our projects are done on a 100% working in this basis, where we control it. We own it outright 100%. We typically would bring in the partner in order to finance the low risk development aspect of it. It involved more capital then what we are willing to spend. I do not want to borrow a lot of money. I am not going to put my pound jewels at risk by having to place in this collateral nor do I want to raise a lot of equity capital and dilute my shareholders, until my stock price is closer to where I think is worth.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Yes, sir. My operating staffs all did that hence had a quite bit of experience with them. Sir…

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

CO2 asset; the question is, how do CO2 prices impact the project like this or these. The key in today's market is the access in CO2 and second at a cost that is economic for a project. So what you have to do is make sure that whatever project you do has a built in source, you can not just go and found eventually going to find a CO2 source. Now, I think down the road CO2 is going to be a commodity because everyone is going to be forced to find a place for that CO2 is being generated, but that is not a case now.

So the projects we are looking at are tied to a captive source of CO2. That is what happens with our Delhi project we went with the partner that had the CO2 in hand committed to the project. The pricing of that at Delhi, the CO2 is priced at $0.20 an mcf, plus 1% of price of oil at the field. So, Denbury makes the money on CO2 but only if oil prices are high, if oil prices are high, I do not much care that CO2 is an extra $0.20 or $0.30 because I am making far more than that on the oil being sold. Also to large extent Denbury is paying, charges itself to way 75% of project after payout.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Well obviously, my shareholders are always keenly interested in how they are going to make money on their shares is that, through dividends, is that through a buyback or is that through a liquidation. All of those are candidates, for how we get value to the shareholder. Given that the staff owns 20% of the Company, we are all keenly interested in that topic as well. So we are in this to make the stock worth more to everybody.

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

The oil and gas business is so fragmented. There are so many players. We have our niche. I mean we have competitors and the options of getting field, arranging from [Interwest] to GeoSouthern to GeoResources to Chesapeake and Apache, and they are all playing it. In the CO2 area, obviously there is Denbury, but they have their own geographical niche. You have got the people in west Texas and there are a whole lot of players over there doing the CO2, Northern Rockies, you have Anadarko and Exelon and so forth. So it is a lot of variety of players.

We have a lot of competition. We like to have our own little niche. Obviously everybody here knows who is playing the gas shale. We are trying to stay out of the way and we would. Last thing I am going to do is buy a lease for $10,000 an acre. I am just not going to do that. What I want to do is develop projects where I can get in at a cost of 200 or 300 an acre and then someone else can come in and participate with me at 10,000 acres. Sir?

Unidentified Audience Member

[Question Inaudible]

Bob Herlin

Your question is on property sales, what was the basis of those sales? We sold Delhi because we needed somebody who could put up to $200 million that it was going to take to make that project happen. We could do that cheaper to a joint venture, and we could by raising money ourselves. So it is a real simple decision. We sold Tullos not because we needed the cash, but because I think it was draining too much of my staff time.

It was 150 wells making 100 barrels a day, high water content, a lot of maintenance repairs, since it was draining time without very much upside. I would rather take those funds and that resource of the staff and apply it to other areas where I could make a whole lot more money. In terms of the metric, whatever you can get it is just depends on his own (inaudible) to buy a property.

Any questions? Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Evolution Petroleum Corp. Wall Street Analyst Forum Presentation Transcript
This Transcript
All Transcripts