Key Highlights

  • Total revenues for the fiscal first quarter ended September 30, 2026 were USD 22.6 million, up from USD 21.3 million a year earlier, while the company reported a net loss of USD 2,992 thousand, or USD 0.08 per diluted share, against Net Income of USD 824 thousand.
  • A net loss of USD 5,365 thousand on derivative contracts, including a USD 4.1 million unrealized loss, drove the swing, as income from operations improved to USD 1,861 thousand from a loss of USD 85 thousand.
  • Adjusted EBITDA was USD 6.8 million, up from the prior quarter but below USD 7.3 million a year ago, while production averaged 6,978 barrels of oil equivalent per day, down 5% year over year, management said.
  • The board declared a quarterly Dividend of USD 0.12 per share, the 53rd consecutive payment, while borrowings under the Credit Facility rose to USD 60.0 million and cash fell to USD 3.1 million.

Hedging Losses Turn Stronger Operations Into a Net Loss

Evolution Petroleum (NYSEAMERICAN:EPM) filed its Form 10-Q on November 10, 2026 for the quarter ended September 30, 2026 and held its call on November 11, 2026. The independent energy company owns non-operated working interests and mineral and Royalty interests in basins including the Permian and Haynesville. Revenues rose to USD 22,573 thousand from USD 21,288 thousand, helped by realized prices before hedge settlements that management said were 11% higher than a year ago. Operating Income was USD 1,861 thousand, but a USD 5,365 thousand derivative loss, mostly unrealized, produced a pretax loss of USD 4,523 thousand. Management said the loss was due in large part to hedging losses, most of which were noncash.

Permian and Louisiana Mineral Purchases Add Production Without Drilling Capital

During the quarter the company closed a USD 16 million Permian minerals Acquisition and added to its Haynesville and Bossier royalty position. Management said Permian production averaged about 218 barrels of oil equivalent per day from August 20 through September, ahead of its expectation of 200 to 210, and that Louisiana royalty production grew about 92% from the fourth quarter. Operators bear drilling and completion costs on those interests, and the company pays no lifting expense on them. Offsetting that, total production fell 5% from a year earlier because of unplanned downtime at Delhi and TexMex and natural declines. After quarter end, management said it farmed out Williston Basin acreage for about USD 2.5 million.

Debt, Dilution and Dividend Coverage Are the Pressure Points

The company sold about 4.3 million new shares during the quarter for roughly USD 13.0 million before offering costs, lifting shares outstanding to 40,646,428 from 35,949,843. Dividends paid were USD 4,878 thousand, above net cash from operations of USD 3,288 thousand. Credit facility borrowings stood at USD 60.0 million, and the borrowing base was set at USD 70.0 million as of October 20, 2026. Management said it intends to use farm-out proceeds to cut revolver debt. Hedges covered about 73% of expected proved developed oil production for the rest of calendar 2026, according to management, which management said can cause losses in some periods.

Where Things Stand

The loss came from accounting for hedges, not from weaker operations. Evolution Petroleum (NYSEAMERICAN:EPM) grew Revenue 6%, cut Lease operating costs and moved to a USD 1.9 million operating profit, but derivative losses of USD 5.4 million pushed the Bottom Line to a USD 3.0 million loss. The pressure points are real: dividends exceeded operating cash flow, Debt rose and the share count grew about 13% (calculated). Management gave no formal guidance, so watch Permian and Louisiana volumes, further farm-out cash for debt reduction and the fiscal second-quarter results.