Evolution Petroleum's preferred stock is in our High Yield Income Portfolio. There is also significant upside in their common stock. Roth Capital issue a new report on the company this morning. Here are their comments. - Dan\
Send John White an e-mail and he will send you their full report. John is a good friend of EPG.
--------------------------------------------------------------
Our Buy rating and $8.50 per share price target are based on: 1) our net asset value analysis (NAV), which indicates EPM’s shares are trading at a 49% discount to our NAV, 2) planned increases in NGL production following completion of the NGL plant at the Delhi Field, 3) shareholder friendly (dividend, buybacks) management, and 4) oil price hedges covering 67% of 1H fiscal 2016 production.
In our view, the risk profile of EPM is noticeably lower relative to many U.S. E&P companies. We believe our risk assessment is supported by:
1) the long and stable production history of the primary asset, the Delhi field,
2) the nature of the Delhi field as a mature yet still improving CO2 flood,
3) EPM's very favorable record of low reserve replacement costs (RRC) and finding and development costs (F&DC),
4) conservative financial management evidenced by a balance sheet with $20 million of cash and free of debt coupled with oil price hedges covering 67% of the next 6 months of production.
John M. White
Senior Research Analyst
Roth Capital Partners
12 Greenway Plaza, Suite 1100
Houston, Texas 77046
Office: 949-720-7115
Cell: 832-415-7848
Fax: 949-720-7218
jwhite@roth.com