- Evolution Petroleum (EPM, Financial) completes acquisition of non-operated oil and gas assets in New Mexico, Texas, and Louisiana.
- Acquisition valued at $9.0 million, adds approximately 440 net BOEPD of stable, low-decline production.
- The purchase price represents a significant discount to the Proved Developed PV-10 value of approximately $13 million.
Evolution Petroleum Corporation (EPM) has successfully closed its acquisition of non-operated oil and natural gas assets located in New Mexico, Texas, and Louisiana for a purchase price of $9.0 million. The transaction, referred to as the TexMex acquisition, became effective on February 1, 2025, and was strategically funded through a combination of cash on hand and borrowings under the company's existing credit facility.
The acquisition adds approximately 440 net barrels of oil equivalent per day (BOEPD) to Evolution's portfolio, with a production composition of 60% oil and 40% natural gas. This addition is expected to be highly accretive to both near-term and long-term cash flows, thereby enhancing the company’s cash flow visibility and strengthening its long-term dividend sustainability.
The acquisition's valuation stands at approximately 3.4 times the estimated next 12 months Adjusted EBITDA, based on current strip pricing, which is a competitive multiple compared to typical market conditions. Furthermore, the $9.0 million purchase price is significantly lower than the Proved Developed PV-10 value of around $13 million, indicating a strategic financial benefit and immediate value creation for the company.
Kelly Loyd, President and CEO of Evolution Petroleum, stated that despite market volatility, the transaction aligns with the company's objective of preserving and enhancing long-term dividend sustainability. The acquisition is part of Evolution's broader strategy to acquire stable, long-life assets at attractive valuations, thereby supporting sustainable dividend payments to shareholders.
