EVOLUTION PETROLEUM CORP

Results of Operations

Three Months Ended December 31, 2024 and 2023

We reported a net loss of $2.2 million and net income of $0.3 million for the three months ended March 31, 2025 and 2024, respectively. The following table summarizes the comparison of financial information for the periods presented:

Revenues

Crude oil, natural gas and NGL revenues were $22.6 million and $23.0 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in revenues is due to a decrease in production volumes partially offset by an increase in our average realized price per BOE. Average daily equivalent production decreased 7.5% from 7,209 BOEPD in the prior year quarter to 6,667 BOEPD in the current quarter primarily due to planned maintenance at the central facility and NGL plant downtime at Delhi Field, January winter weather impacts at Barnett Shale as well as natural production declines. These production decreases were offset by additional production from our SCOOP/STACK Acquisitions in February 2024 which contributed for a full quarter in fiscal 2025. Our average realized commodity price (excluding the impact of derivative contracts) for the three months ended March 31, 2025 increased approximately $2.50 per BOE, or 7.1%, over the prior year quarter. This increase was primarily due to the 39.7% increase in realized natural gas prices and the 27.8% increase in realized NGL prices partially offset by the 6.4% decrease in crude oil prices from the year-ago quarter.

Lease Operating Costs

Gathering, transportation and other costs were $2.9 million for the three months ended March 31, 2025 compared to $2.5 million for the three months ended March 31,2024. These costs are gathering, transportation and processing fees we incur primarily for our natural gas producing properties. The increase is primarily due to the SCOOP/STACK Acquisitions in February 2024 which increased gathering transportation and other costs by $0.3 million overthe prior year quarter. On a per unit basis, gathering transportation and other costs were $4.86 per BOE and $3.85 per BOE for the three months ended March 31, 2025 and 2024, respectively.

Other lease operating costs were $9.0 million for the three months ended March 31, 2025 compared to $8.6 millionfor the three months ended March 31, 2024. Other lease operating costs increased primarily due to increased CO 2 purchases at Delhi. CO 2 purchases resumed in late October of 2024 after having been suspended in February 2024. We had net purchases of $1.5 million in CO 2 for the three months ended March 31, 2025 compared to net purchases of $1.0 million in theyear-ago quarter. In addition, the SCOOP/STACK Acquisitions in February 2024 increased other lease operating costs by $0.1 million over the prior year quarter. On a per unit basis, other lease operating costs were $15.00 per BOE and $13.17 per BOE for the three months ended March 31, 2025 and 2024, respectively.

Depletion of Full Cost Proved Oil and Natural Gas Properties

Depletion expense decreased $0.9 million or 16.7% from $5.5 million to $4.6 million for the three months ended March 31, 2025 primarily due to a decrease in the depletion rate. On a per unit basis, depletion expense was $7.68 per BOE and $8.43 per BOE for the three months ended March 31, 2025 and 2024, respectively. The depletion rate of our unit of production calculation decreased due to a decrease in our depletable base.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2025 and 2024 were each $1.9 million. On a per unit basis, general and administrative expenses were $3.22 per BOE and $2.85 per BOE for the three months ended March 31, 2025 and 2024, respectively. The increase on a per unit basis is primarily the result of the decrease in production for the current year quarter.

Stock-based Compensation Expense

Stock-based compensation expense for the three months ended March 31, 2025 increased $0.1 million to $0.6 million compared to $0.5 million for theyear-ago quarter. The increase is associated with new awards granted since the year-ago quarter.

Net Gain (Loss) on Derivative Contracts

We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in oil and natural gas prices. Financial hedges are a requirement under our Senior Secured Credit Facility and help establish commodity price floors, contributing to stable cash flows when derivative contracts are settled. 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 unaudited condensed consolidated statements of operations. The amounts recorded on the unaudited condensed 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 SCOOP/STACK Acquisitions in February 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 forward commodity prices since the prior quarter, particularly for natural gas, resulted in a net unrealized loss for the mark-to-market of our hedges for the three months ended March 31, 2025. As of March 31, 2025, we had $0.9 million derivative assets, $0.8 million of which was classified as current, and $5.2 million derivative liabilities, $3.5 million of which was classified as current. Subsequent to the end of the quarter through May 2025, we have seen increased volatility in the crude oil and natural gas commodity markets and we expect to see continued volatility in the fair value of our derivative contracts.

Interest Expense

Interest expense increased $0.2 million for the three months ended March 31, 2025 compared to the prior year period primarily due to borrowings drawn on our Senior Secured Credit Facility to finance our SCOOP/STACK Acquisitions in February 2024.

Income Tax (Expense) Benefit

For the three months ended March 31, 2025, we recognized income tax benefit of $0.7 million on net loss before income taxes of $2.9 million compared to income tax expense of $0.2 million on net income before income taxes of $0.4 million for the three months ended March 31, 2024. The effective tax rates were 24.0% and 35.2% for three months ended March 31, 2025 and 2024, respectively. The decrease in the effective tax rate from the prior year period is due to federal tax credits expected from production on marginal natural gas wells for the calendar year 2024.

Nine Months Ended March 31, 2025 and 2024

We reported a net loss of $1.9 million and net income of $2.8 million for the nine months ended March 31, 2025 and 2024, respectively. The following table summarizes the comparison of financial information for the periods presented:

Revenues

Crude oil, natural gas and NGL revenues were $64.7 million for each of the nine months ended March 31, 2025 and 2024. An increase in production volumes were offset by the decrease in our average realized price per BOE. Average daily equivalent production increased 5.7% from 6,651 BOEPD in the prior year period to 7,033 BOEPD in the current period primarily as a result ofthe SCOOP/STACK Acquisitions in February 2024 and first production of our wells at Chaveroo Field in early February 2024, which collectively increased production by approximately 1,000 BOEPD over the prior year period. The increase in production was partially offset bynatural production declines in our other fields. Our average realized commodity price (excluding the impact of derivative contracts) for the nine months ended March 31, 2025 decreased approximately $1.76 per BOE, or 5.0%, over the prior year period as our realized crude oil decreased 8.0% and realized natural gas prices decreased 4.7% from the nine months ended March 31, 2024.

Lease Operating Costs

Ad valorem and production taxes were $4.3 million and $4.0 million for the nine months ended March 31, 2025 and 2024, respectively. The increase in ad valorem and production taxes is primarily due to our SCOOP/STACK Acquisitions since the prior year period. On a per unit basis, ad valorem and production taxes were $2.25 per BOE and $2.19 per BOE for the nine months ended March 31, 2025 and 2024, respectively.

Gathering, transportation and other costs were $8.6 million for the nine months ended March 31, 2025 compared to $6.9 million for the nine months ended March 31,2024. These costs are gathering, transportation and processing fees we incur primarily for our natural gas producing properties. The increase is primarily due tothe SCOOP/STACK Acquisitions in February 2024 which increased gathering, transportation and other costs by $1.3 million over the prior year period. On a per unit basis, gathering, transportation and other costs were $4.46 per BOE and $3.79 per BOE for the nine months ended March 31, 2025 and 2024, respectively.

Other lease operating costs were $25.1 million for the nine months ended March 31, 2025 compared to $25.9 million for the nine months ended March 31, 2024. Other lease operating costs decreased primarily due to reduced CO 2 purchases at Delhi. CO 2 purchases resumed in late October of 2024 and we had net purchases of $2.6 million of CO 2 for the nine months ended March 31, 2025 compared to net purchases of $4.2 million in theyear-ago period. Partially offsetting the reduction in CO 2 purchases were cost increases due tothe SCOOP/STACK Acquisitions in February 2024, which increased other lease operating costs by $0.9 million over the prior year period. On a per unit basis, other lease operating costs decreased to $13.00 per BOE for the nine months ended March 31, 2025 from $14.18 per BOE in the nine months ended March 31, 2024.

Depletion of Full Cost Proved Oil and Natural Gas Properties

Depletion expense increased $1.3 million or 9.3% from $13.7 million to $15.0 million for the nine months ended March 31, 2025 primarily due to an increase in the depletion rate and increase in depletable assets. On a per unit basis, depletion expense was $7.76 per BOE and $7.48 per BOE for the nine months ended March 31, 2025 and 2024, respectively. The depletion rate of our unit of production calculation increased due to an increase in our depletable base as a result of our SCOOP/STACK Acquisitions and capital expenditures since theyear-ago period.

General and Administrative Expenses

General and administrative expenses for the nine months ended March 31, 2025 and 2023 were each $5.9 million. On a per unit basis, general and administrative expenses were $3.06 per BOE and $3.25 per BOE for the nine months ended March 31,2025 and 2024, respectively. The decrease on a per unit basis is primarily the result of the increase in production for the current year period.

Stock-based Compensation Expense

Stock-based compensation expense for the nine months ended March 31, 2025 increased $0.3 million to $1.9 million compared to $1.6 million for theyear-ago period. The increase is associated with new awards granted since the year-ago period.

Net Gain (Loss) on Derivative Contracts

We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in oil and natural gas prices. Financial hedges are a requirement under our Senior Secured Credit Facility and help establish commodity price floors, contributing to stable cash flows when derivative contracts are settled. 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 unaudited condensed consolidated statements of operations. The amounts recorded on the unaudited condensed 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 SCOOP/STACK Acquisitions in February 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 forward commodity prices, particularly for natural gas, as of March 31, 2025 as compared to June 30, 2024, resulted in a net unrealized loss for the mark-to-market of our hedges for the nine months ended March 31, 2025. As of March 31, 2025, we had $0.9 million derivative assets, $0.8 million of which was classified as current, and $5.2 million derivative liabilities, 3.5 million of which was classified as current. Subsequent to the end of the quarter through May 2025, we have seen increased volatility in the crude oil and natural gas commodity markets and we expect to see continued volatility in the fair value of our derivative contracts.

Interest Expense

Interest expense increased $1.7 million for the nine months ended March 31, 2025 compared to the prior year period primarily due to borrowings drawn on our Senior Secured Credit Facility to finance our SCOOP/STACK Acquisitions in February 2024. The weighted average interest rate on our borrowings was 7.59% for the nine months ended March 31, 2025 compared to 8.13% for the nine months ended March 31, 2024.

Income Tax (Expense) Benefit

For the nine months ended March 31, 2025, we recognized income tax benefit of $0.6 million on net loss before income taxes of $2.5 million compared to income tax expense of $1.2 million on net income before income taxes of $4.0 million for the nine months ended March 31, 2024. The effective tax rates were 22.9% and 29.2% for nine months ended March 31,2025 and 2024, respectively. The decrease in the effective tax rate from the prior year period is due to federal tax credits expected from production on marginal natural gas wells for the calendar year 2024.