EVOLUTION PETROLEUM CORP

Results of Operations

Years Ended June 30, 2024 and 2023

We reported net income of $4.1 million and $35.2 million for the years ended June 30, 2024 and 2023, respectively. The following table summarizes the comparison of financial information for the periods presented:

Revenues

Crude oil, natural gas and NGL revenues were $85.9 million and $128.5 million for the fiscal years ended June 30, 2024 and 2023, respectively. The decrease in revenues is primarily due to the decrease in our average realized price per BOE coupled with a decrease in our sales volumes. Our average realized commodity price (excluding the impact of derivative contracts) decreased approximately $15.00 per BOE, or 30.3%, for the fiscal year ended June 30, 2024 compared to June 30, 2023. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, weather, inventory storage levels, basis differentials and other factors. Realized natural gas prices decreased 62.7% from the prior fiscal year, which was the largest portion of the driver of the decrease in revenues. This was partially attributed to the prior fiscal year benefit of strong natural gas price differentials received at the Jonah Field where we realized an average natural gas price of $10.63 per MCF in the prior fiscal year compared to $3.55 for the current fiscal year. Average daily equivalent production decreased 4.4% from 7,104 BOEPD to 6,790 BOEPD in the current fiscal year as a result of natural production declines in our properties combined with operational issues and downtime at certain properties throughout the year. As of June 30, 2024, due to low natural gas prices, certain wells at Barnett Shale are shut-in and remain offline which has continued to negatively impact production volumes. The overall decrease in production was partially offset by the acquisitions of non-operated working interests in the SCOOP/STACK in February 2024 and first production at our wells in the Chaveroo Field in early February 2024, which collectively increased production for the year ended June 30, 2024 by approximately 601 BOEPD. Combined production at these two fields is primarily oil, thus increasing our oil volumes year over year.

Lease Operating Costs

Ad valorem and production taxes were $5.3 million and $8.2 million for the years ended June 30, 2024 and 2023, respectively. On a per unit basis, ad valorem and production taxes were $2.13 per BOE and $3.15 per BOE for the years ended June 30, 2024 and 2023, respectively. The decrease in ad valorem and production taxes is primarily due to decreases in our realized oil and natural gas prices as well as decreased production volumes described above as production taxes are based on sales at the wellhead.

The following table summarizes CO 2 costs per Mcf and CO 2 volumes for the years ended June 30, 2024 and 2023. CO 2 purchase costs are for the Delhi Field. Under our contract with the Delhi Field operator, purchased CO 2 is priced at 1% of the realized oil price in the field per Mcf, plus sales taxes and transportation costs as per contract terms.

The $3.1 million decrease in CO 2 costs for the fiscal year ended June 30, 2024 was primarily due to a 41.0% decrease in purchased CO 2 volumes combined with a 2.0% decrease in CO 2 costs per MCF, which was driven by a decrease in our average realized oil price. In February 2024, CO 2 purchased volumes were suspended due to maintenance on the CO 2 pipeline. CO 2 purchases provide approximately 20% of the injected volumes in the field and the field’s recycle facilities provide the other 80%. We do not have any ownership in the CO 2 pipeline which is owned and operated by Denbury. On a per unit basis, CO 2 costs were $1.71 per BOE and $2.84 per BOE for the years ended June 30, 2024 and 2023, respectively. CO 2 purchases are expected to restart in early second quarter of fiscal 2025.

Other lease operating costs decreased $5.3 million, or 12.0%, compared to the prior fiscal year primarily due to lower production combined with the lower commodity price environment. On a per unit basis, other lease operating costs decreased to $15.59 per BOE in the current year from $16.97 per BOE in the prior year. The largest decrease in other lease operating costs is at our Barnett Shale properties and the Delhi Field. At the Barnett Shale, significant cost savings efforts are being prioritized due to the lower realized natural gas prices and the shut-in of certain low margin wells at current natural gas prices. We are incurring lower operating costs in all cost categories, especially lower water hauling costs and lower gathering, transportation and processing charges. At Delhi Field, we have seen lower electricity charges due to lower commodity prices and decreased electrical demand due the installation of heat exchangers. These decreases are partially offset by increases in other lease operating costs associated with ouracquisitions of non-operated working

interests in the SCOOP/STACK in February 2024 and first production at our wells in the Chaveroo Field in early February 2024.

Depletion of Full Cost Proved Oil and Natural Gas Properties

Depletion expense increased $5.5 million or 41.6% from $13.1 million for the fiscal year ended June 30, 2023 to $18.6 million for the fiscal year ended June 30, 2024 primarily due to an increase in the depletion rate. On a per unit basis, depletion expense was $7.49 per BOE and $5.07 per BOE for the fiscal years ended June 30, 2024 and 2023, respectively. The depletion rate of our unit of production calculation increased primarily due to an increase in our depletable base due to our SCOOP/STACK Acquisitions and capital expenditures since the prior year period.

General and Administrative Expenses

General and administrative expenses for the fiscal year ended June 30, 2024 decreased $0.4 million, or 5.6%, to $7.5 million compared to $7.9 million for the fiscal year ended June 30, 2023. The decrease primarily relates to lower consulting fees totaling approximately $0.3 million related to our search for a CEO in the prior year period. On a per unit basis, general and administrative expenses were $3.02 per BOE and $3.06 per BOE for the years ended June 30, 2024 and 2023, respectively.

Stock-based Compensation Expenses

Stock-based compensation increased $0.5 million to $2.1 million for the year ended June 30,2024 compared to $1.6 million the prior period due primarily to the addition of new personnel and the associated new awards granted during the current year period to all staff and directors.

Net Gain (Loss) on Derivative Contracts

Periodically, we utilize commodity derivative financial instruments to reduce our exposure to fluctuations in oil and natural gas prices. We have elected not to designate our open derivative contracts for hedge accounting, and accordingly, we recorded the net change in the mark-to-market valuation of the derivative contracts in the consolidated statements of operations. The amounts recorded on the consolidated statements of operations related to derivative contracts represent the (i) gains (losses) related to fair value adjustments on our open, or unrealized, derivative contracts, and (ii) gains (losses) on settlements of derivative contracts for positions that have settled or been realized. The table below summarizes our net realized and unrealized gains (losses) on derivative contracts as well as the impact of net realized (gains) losses on our average realized prices for the periods presented.

As a result of our acquisitions during fiscal years 2024 and the corresponding borrowings on our Senior Secured Credit Facility, we were required by terms in our Senior Secured Credit Facility to hedge a portion of our production. The increase in commodity prices since entering into the hedges and the continued increase in forward commodity prices resulted in a realized loss on hedges for the current year and an unrealized loss on the mark-to-market of our hedges. As of June 30, 2024, we had $0.8 million derivative assets, $0.6 million of which was classified as current, and a $1.7 million derivative liability, $1.2 million of which was classified as current.

Interest Expense

Interest expense increased $1.0 million during the fiscal year ended June 30, 2024 compared to fiscal year 2023 primarily due to borrowings drawn on our Senior Secured Credit Facility to finance our SCOOP/STACK Acquisitions during the current year. In addition, the weighted average interest rate on our borrowings increased to 8.12% for the fiscal year ended June 30, 2024 compared to 5.25% for fiscal year 2023.

Income tax (expense) provision

For the year ended June 30, 2024, we recognized income tax expense of $1.4 million on net income before income taxes of $5.5 million compared to an income tax expense of $10.1 million on net income before income taxes of $45.3 million for the year ended June 30, 2023. The effective tax rates were 25.8% and 22.2% for the years ended June 30, 2024 and 2023, respectively. The effective tax rate increased compared to the prior year period as projected state income taxes have become a larger component of our overall income tax expense during the period.