Evolution Petroleum recently agreed to a $29.4 million acquisition of nonoperated assets in Wyoming’s Jonah Field, marking the company’s second acquisition in the Rockies region within the past month.

“This accretive transaction allows us to further diversify into natural gas assets in Wyoming with access to attractive western markets,” Jason Brown, president and CEO of Evolution Petroleum, commented in a company release on Feb. 9.

Based in Houston, Evolution is an oil and natural gas company focused on delivering a sustainable dividend yield to its shareholders through the ownership, management and development of producing properties. Long-term, the company’s goal is to build a diversified portfolio of oil and natural gas assets primarily through acquisition.

Currently, the Evolution portfolio includes nonoperated interests in the Barnett Shale in North Texas, a CO₂ EOR project in Louisiana’s Delhi Field, a secondary recovery project in Wyoming’s Hamilton Dome Field and nonoperated Williston Basin assets in North Dakota, which were recently added through a $25.9 million acquisition that closed on Jan. 20.

Evolution Petroleum Jonah Field Acquisition Map
Evolution Petroleum Jonah Field Acquisition Map

“Our two recent acquisitions in the Williston Basin and Jonah Field have strengthened Evolution’s future cash flow generation and added the ability to invest in, internally maintain, and grow production through low-risk development drilling with our operating partners,” Brown said. “We anticipate that with these acquisitions we have extended dividend support for the next decade.”

Evolution will acquire the nonoperated natural gas assets in the Jonah Field from privately-owned Exaro Energy III LLC. The company expects to fund the $29.4 million transaction using cash on hand and borrowings under its existing senior credit facility.

The assets include an average working interest of 19.3% and an average revenue interest of 14.7% interest in 648 producing wells and approximately 1,040 net acres in Wyoming’s Sublette County in the Jonah Field, which is located in the Greater Green River Basin.

Current net daily production of the acquired assets is approximately 14.2 MMcfe/d with a commodity split of 88% natural gas, 6% oil and 6% NGL. All wells are operated by Jonah Energy, an established operator in Wyoming and has operated in the Jonah Field since 2014.

Evolution Petroleum Growth through Acquisition Investor Presentation

“Over the last two years, Evolution has increased both production and reserves by over 400%. Equally important, we have accomplished this growth and value creation without material shareholder dilution or onerous debt,” said Brown, who noted the recent acquisitions have been accomplished with minimal increases in overhead.

With the expected incremental debt, Brown estimates that Evolution’s debt post-closing will remain below one times its pro forma annualized EBITDA.

The Jonah Field acquisition is expected to close on or about April 1. The transaction has an effective date of Feb. 1.