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- Although Q3 results were weak as revenue and EPS fell Y/Y and sequentially, the major positive news was that starting November, EPM will have higher share on the Delhi field.
- After strong 2013 performance, the stock weakened in 2014, in line with the oil & gas industry’s weakness, exacerbated by the recent oil price slump. The stock now yields ~4.56% in dividends.
- I reiterate my long thesis based on the expected FCF growth from the Delhi field. My target price of $11 offers a 26% upside within a year.
- Evolution Petroleum Corporation is engaged in a low risk and slow growth business.
- The company's stock has enjoyed a nice gain over the last two years, but it has corrected somewhat lately.
- Further downside from the current levels is not out of the question.