Evolution Petroleum has completed the acquisition of non-operated oil and natural gas assets across three US states – New Mexico, Texas and Louisiana.
The $9m acquisition, effective 1 February 2025, was funded through cash and existing credit facilities.
This strategic move aims to enhance Evolution’s portfolio with a focus on long-life oil and gas properties.
The acquisition is valued at approximately 3.4-times the estimated next 12 months adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation), based on current strip pricing.
It is expected to add approximately 440 net barrels of oil equivalent per day (boepd) of stable, low-decline production, comprising 60% oil and 40% natural gas.
This acquisition is set to provide enhanced cash flow visibility and strengthen long-term dividend sustainability.
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By GlobalDataEvolution Petroleum’s acquisition offers low-risk development opportunities with potential for incremental production growth.
The $9m purchase price is set against an estimated $13m of Proved Developed PV-10, highlighting the strategic value of the assets. The company aims to maintain a diversified portfolio through acquisitions and selective development opportunities.
Evolution Petroleum president and CEO Kelly Loyd said: “Despite recent commodity price and market volatility, our TexMex transaction remains highly accretive to both near-term and long-term cash flows and directly supports our core objective – preserving and enhancing the long-term sustainability of our dividend.
“Our negotiated deal represents a significant discount to PV10 at the current strip and, due to its low-decline nature, should only get better if oil prices move back up to a more normalised price range.
“TexMex is yet another execution of our proven strategy and represents exactly the kind of transaction that underpins Evolution’s long-standing commitment to deliver a stable and sustainable dividend.”
Evolution Petroleum’s strategy focuses on building a diverse portfolio of long-life oil and natural gas properties.
The company seeks to achieve this through acquisitions, production enhancements and other exploitation efforts, ensuring long-term sustainability and growth.
