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Evolution Petroleum Seals $26MM Deal for Exaro's Jonah Field Assets

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   |    Monday,April 04,2022

Evolution Petroleum announced that its transaction to acquire non-operated natural gas assets in the Jonah Field in Sublette County, Wyoming from privately-owned Exaro Energy III, LLC closed on April 1, 2022.

The net purchase price for the Transaction was $26.2 million, including customary preliminary purchase price and closing adjustments, as well as exercised preferential rights, based on an effective date of February 1, 2022.

Acquisition Highlights:

  • Provides immediate accretive cash flow, product diversity, increased scale, and extended dividend support with minimal incremental overhead;
  • Increases pro forma net daily production by 37% to approximately 8,000 barrels of oil equivalent per day(1);
  • Evaluated solely on proved developed producing ("PDP") reserves based on forward prices substantially below current levels;
  • Adds approximately 38 billion cubic feet of natural gas equivalent of long-life PDP reserves(2);
  • Field has access to multiple attractive markets, including west to the Opal market hub and optionality to flow to eastern markets;
  • Operated since 2014 by Jonah Energy LLC ("Jonah Energy"), a top-tier, responsible, and established operator in the region; and
  • Transaction funded from cash on hand and $17 million of borrowings under the Company's existing senior credit facility.

The acquisition includes an average net working interest of 19.6% and an average net revenue interest of 14.9% in 595 producing wells and 956 net acres. Current estimated net daily production from the asset is approximately 10.8 million cubic feet of natural gas, 120 barrels of natural gas liquids, and 112 barrels of oil. With the incremental debt, the Company's ratio of debt to pro forma annualized Adjusted EBITDA(3) remains well below the targeted level of one times.

CEO Jason Brown said: "We are pleased to successfully close on another accretive transaction - the acquisition of non-operated natural gas assets in the prolific and long-life Jonah Field in Wyoming. The Company has a clear strategy based on evaluating and executing accretive transactions that meet stringent criteria while keeping debt levels at a conservative level. We remain focused on securing incremental long-life and low-decline reserves that generate strong cash flow, further supporting the long-term strategy of providing a meaningful return of capital to shareholders through a quarterly cash dividend program that has been in place for more than eight years. We are especially pleased to partner with Jonah Energy, a proven operator that is highly regarded."

Brown continued, "In 2022 Evolution has executed two strategic acquisitions that have substantially evolved its commodity product mix, expanded its asset footprint, strengthened future cash flow generation, and added inventory of low-risk development drilling. As a result, we have been able to restore our cash dividend back to the pre-pandemic level while substantially increasing free cash flow to rapidly pay down our modest amount of outstanding debt and fund development drilling of our proved undeveloped location inventory in the Williston Basin. We appreciate the continued support of shareholders as we integrate these properties into the Company and extend dividend support for the next decade. Going forward, our priorities will be the evaluation and execution on additional targeted transactions that complement our portfolio, as well as conservative development of existing assets that further support meaningful ongoing cash return of capital to shareholders."

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