Ladies and gentlemen, hello and thank you for joining today's Evolution Petroleum Fiscal Second Quarter 2020 Conference Call. All participants are in a listen-only mode but you'll be given an opportunity to ask questions after today's prepared remarks.And with that, I'm pleased to turn the floor over to Evolution CFO, Mr. David Joe. Welcome David.

Thank you.Good morning, and welcome to Evolution Petroleum's earnings call for our fiscal second quarter ended December 31, 2019. We will discuss operating and financial results for the quarter. I'm, as you said, David Joe, Chief Financial Officer of Evolution. And joining me on the call today is Jason Brown, President and Chief Executive Officer.Couple of quick housekeeping notes. If you wish to listen to a replay of today's call, it would be available shortly by going to the company's website and be stored for the next month.Please note that any statements and information provided there are time-sensitive and may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information.These forward-looking statements are subject to risks and uncertainties that are listed and described in our filings with the SEC. Actual results may differ materially from those expected.Since numbers are readily available to everyone in yesterday's news release, this call will primarily focus on key results, operations, and an update on our capital spending and the plans for the remainder of our fiscal 2020.I would now like to welcome and turn the call over to our President and Chief Executive Officer, Jason Brown.

Thank you, David, and good morning, everyone, and thanks again for joining us today on Evolution's second quarter fiscal 2020 earnings call.I'm pleased to announce that Evolution has once again delivered earnings and positive cash flow for its shareholders for the 17th consecutive quarter. We continue to generate consistent positive financial results and improve the sustainability of our dividend despite the continued low commodity price and low capital spending environment throughout the industry.I'm delighted that we have announced our 26 consecutive quarterly cash dividend and perhaps more importantly, our ninth dividend in a row at $0.10 per share. There have been tremendous swings in commodity price over those 26 quarters even brief periods of oil price below $30 a barrel. But Evolution has consistently delivered and we feel very proud of this accomplishment in the ability to generate long-term stability for our shareholders.During the quarter, we were able to successfully close the acquisition of an interest in Hamilton Dome field in Hot Springs, Wyoming, operated by Marriott Energy. It's worth noting that although Evolution has not closed any recent acquisitions we were able to not only get this closed but also integrated into our operations seamlessly without adding any material overhead.This was an important first step in demonstrating that the Evolution board and our management team have both the will and the ability to transact on oil and gas asset opportunities that fit within our strategy. Although this quarter only reflects two months' worth of production, we're pleased with the performance of Hamilton Dome as that is meeting our expectations on production, price realization, and cash flow.Similar to other oil and gas producers, our overall performance during the quarter was impacted by lower price realizations. During the quarter, Evolution was further impacted by the short-term repair to the oil sales pipeline from Delhi which more than offset the increased volumes. This is a good example of why we're pleased with the Hamilton Dome acquisition and as a second source of cash flow and are committed to further acquisitions that will support our dividend.With that, I'll now turn the call back over to David to run through financial highlights and then I'll wrap up the call briefly speaking about strategy and the outlook on the M&A landscape.

Thanks, Jason.I will share and reiterate highlights of our financial results of our fiscal second quarter. Please refer to our press release from yesterday afternoon for additional information and details and be on the lookout for our Form 10-Q to be filed shortly.So the biggest highlight, as previously mentioned, we acquired oil producing assets in the Ham Dome field in Wyoming on November 1 for $9.5 million of cash. However, based on the effective date of October 1, 2019, we received and recorded a cash payment from the seller for approximately $0.2 million, thereby reducing the purchase price from $9.5 million to $9.3 million.As you review and digest our quarterly financial results, it should be clarified that Ham Dome results are for only two months in the current quarter and includes production revenues, LOEs, DD&A, cash flow.Other highlights in the quarter include continue our returning cash to the shareholders with our lengthy history of consecutive quarterly dividend supported by our oil assets, this yield is in excess of 7%.We generated total revenues of $9.4 million in the quarter, up 2.5% from the prior-quarter despite lower realized oil pricing and despite the temporary additional trucking costs incurred to Delhi which has now been resolved.We reported net income of $1.7 million for the quarter marking the 17th consecutive quarter of positive net income. And if you go back further, it's more like 26 out of the last 28 quarters with just a couple quarters of losses back in 2014 and 2016.We ended the quarter with about $21 million in cash and we still have a $40 million undrawn credit facility.Going into the quarter in a little bit more detail, gross production averaged approximately 8,500 barrels of oil equivalent per day during the quarter, a 16% increase from the prior-quarter and a 9%…

Thanks, David.The company continues to be positioned to fund further profitable development of its producing assets, while retaining sufficient financial resources to capitalize on new growth opportunities and funding for the current dividend strategy. Evolution continues to focus on cash flow, stability, and overall shareholder return.Although Evolution is excited to add another long-life producing assets to our reserves that will provide diversity and support to our dividend. We will continue to evaluate acquisition opportunities to further grow the company. The company is uniquely positioned to pursue growth and we'll look to take advantage where we can in the market. The current weakness in oil and gas prices presents an opportunity to acquire long-life production with upside at a very attractive price per BOE. I think it also validates Evolution's prudent decisions over the recent years to retain substantial liquidity with no debt.As previously mentioned, Evolution is seeking long-life producing reserves, much like the recent acquisition that will provide diversity long-term sustainability and support to grow our dividend.With that, I think we're ready to take questions. Operator, please open the lines.

Gentlemen, thank you for your remarks this morning. [Operator Instructions].We'll hear first from Jeff Grampp at Northland Capital. Please go ahead.

Jason, I was wondering first now you guys have had Hamilton Dome under your belt for a few months here now, I was wondering as you guys are kind of looking at that asset or trying to I guess, characterize how we should be thinking about it going forward? Are you guys seeing any kind of upside opportunities there in conversations with the operator, your own assessment? And just any I guess capital that could go to work there over the next couple years or so? Or should we more think about that as just kind of a terminal decline asset with some good cash flow?

I think it's fair to look at it as the latter. I think that's why we bought it; it's been producing for over 100 years. So it's not going to be a high growth asset, but it's very, very stable, very predictable.That being said, Merit is, this is right in the middle of their fairway of what they do, and they're just one of the best at controlling costs and looking out as much value as possible.So, in this situation, I've never been, I think about part of any non-op deal that I closed on that I didn't get hit with a few AFEs as soon as we close. And this is no different. So I think we saw a few workovers here in the first couple months, P&A on a couple of wells and then also a couple of workovers that they've been waiting to do. But in that I think we've got a pretty predictable go-forward P&A schedule, maybe a couple of wells a year, which is pretty reasonable. Those are not expensive. And the workovers one of which the reason I'm bringing it up is it's kind of an innovative new ESP, and so it's all about trying to save costs up there.So that's almost the PD&P in a field like Hamilton Dome. We know the reservoir, we understand the production. And they've put in a new SP that we feel pretty happy, is going to save a tremendous amount of the electricity costs. And so as we move forward, when pumps go down, and that sort of thing, that's the plan is to replace them with these new pumps that both deliver a higher volume at lower costs. So I think that's the best way to answer that.

Got it. No, that's great detail. I appreciate that. And as we look at Delhi and I think David noted, production was down a few percent sequentially. Was that kind of in line with your expectations? Or was any that related to that that pipeline repair, I know you guys obviously highlighted the trucking cost, but was there actually any production impact from that repair? Or was production basically kind of where you guys thought it would shake out?

Well, it's a little; there is kind of two questions there. I think we were a little disappointed with production. I can't say that we attribute it to the repair. That was the planned repair of the integrity, the pipeline, so it was needed to happen. But there are sort of trickle things that happen there. For instance, on blending projects, where we were able to get an upgrade in pricing, we had to dial that back in terms of the amount that we could go. So there's a little less lost revenue there as well. And I think that we didn't ramp up -- we didn’t ramp up some of the wells that had to be shut down with a high CO2 in September, we didn't see the production come back as quickly as we thought that it would.And I think it was probably being less aggressive because of that situation. Every dollar that they're increasing there is hit a little harder because of the trucking. So it's a little bit qualitative, and we don't quite have the quantitative but overarchingly I think we were a little disappointed and we expect to see some of that in January.

Got it. So just to dig on that a little deeper from here and you're right, it sounds like from your perspective that you're thinking that maybe the operator was a little bit, I guess cautious and in terms of ramping up production, just given the pricing discount that you guys were observing during this period? And maybe with that now kind of in the rear view that there's some opportunities for them to I guess not be as conservative in producing some of the wells?

Well, I think -- okay, that's speculating just a little bit. And then there are several variables on the table as well. We saw them not do workovers in the last few couple months. At Conformis workovers, which are more typical, and I think there's some budgetary issues over there. And now that we're into a new budget year, we've seen fired up and we've approved three and they're getting going on those. So I think it's kind of a combination of timing and several issues. So I think that's a fair assessment. We're feeling pretty positive.

Next we'll hear from Bhakti Pavani at Alliance Global Partners. Please go ahead. Your line is open.

Just wanted to touch based upon the oil price realization. I know you mentioned that they were kind of lower this quarter. So how do we just wanted to get a better understanding on what factors are driving those realization lower and do you expect them to kind of remain at this level going forward?

Well, the biggest impact was Delhi and beyond the normal WTI fluctuation that we've seen, we've seen a lower amount, we generally get an LLS premium of -- last year it averaged $4. Right now, I think it's closer to $3.70. It's kind of creeping its way back up. But the biggest impact is we sort of lost that premium because we had to pay for 54.60 a barrel for trucking during November and December. So that kind of eroded the premium that we had. So that that impacted us. Now that I think they were expecting that to go into March. And we're very happy to hear, we had our operations meeting with Denbury a couple of weeks ago, which was great, by the way to dive into that technically, and we're very happy that they got that finished. Planes got that finished ahead of time. So we actually the pressure back up this last weekend, and we're all flowing through the pipeline now. So the trucking costs have ended.

Perfect. So for the $0.4 million that was accounted or expensed in Q2 will be only cost, you don't expect anything to be accounted in Q3 at this point, is that correct?

Just to be clear, Bhakti this is David. That $0.4 million estimate of erosion costs; it’s not recorded in the book as an expense. Its lost value in a reduction of price as a result of trucking fees and the lower realized price we received. So we're just trying to quantify what could have been if there were no trucking but it was a necessity and that's a reality we have to live with. And that will also flow to the January number in the next quarter as well.

Got it.

To give it, I think we got back online February 1 or 2nd flowing. Yes, so yes, I would expect that in January's numbers Bhakti.

[Operator Instructions].We'll hear next from Bruce Brown with Brown Capital.

Good morning, gentlemen. The question I have is at what point do you consider repurchasing stock a better investment than expanding production?

Well I tell you, this is a good question. And it's one that we talk about. And it's -- it's one that we talk about both internally and with the board and also with investors and it seems like everybody has different opinions. So far our posture has been one of, I would describe defense. And we have a stock buyback program out there that was approved. There's still a couple million left on that. And it has different tiers different tickers, and it's mainly like I say a defense to catch-up, catch a falling knife, if things move in the markets as I do sometimes in the market.It traditionally it hasn't taken too many purchase shares for us to sort of quail any falling prices. We feel like that's in line with supporting our shareholders and protecting them. Now, at what point is it switched to become an offensive strategy where we're going at that as an acquisition mode. Certainly, I can understand the idea that we definitely believe that our stock is undervalued, and every share that we take off the market by purchasing it, it’s real to us because it's almost 8% yield that we don't have to pay on it. That being said, we just feel like we're in a really good position. We're seeing a lot of deal flow, and we think the next six, to eight months are going to be more important than that short-term grab.I came to the Dome for instance, like I said, it's been producing for over 100 years. We're thinking about this, how are we going to support our dividend in 2030. The $13 million to pay that, I need barrels in 2030 to do that. Well, if you discount those barrels back to the day that most people don't value those at all, but they are tremendously value to us and value to our shareholders.So we feel like it’s the right opportunity and time for us to be able to almost get option value on our capital and our financial position to be able to garner a tremendous inventory of reserves to support that and be a healthy company for the next 10, 15, 20 years. So that's the kind of start with us, we're just -- we're pretty excited about the opportunities.

[Operator Instructions].And gentlemen, I do not see any signals from our phones. I will turn it back to you Mr. Brown for any additional or closing remarks.

All right. Well thank you and thanks everyone for your participation on today's call. Please feel free to contact us with any questions. I look forward to providing you with an update in May.

Ladies and gentlemen, this does conclude today’s telephone conference. We thank you all for your participation and you may now disconnect your lines.