Evolution Petroleum Q1 2027: Derivative Loss Masks 11% Price Gains
As seen on the 24/7 Wall St. homepage on November 10, 2026.
A $5.4 million net loss on derivative contracts, most of it unrealized, turned a quarter of 11% higher realized prices into a double miss. Management is still funding the 53rd straight quarterly dividend at $0.12 while paying down a credit facility with just $9.2 million of availability left.
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Evolution Petroleum's fiscal first quarter of 2027 ended September 30, 2026 produced a result that looked worse than the underlying business warranted. A $5.37 million net loss on derivative contracts, of which $4.05 million was unrealized, overwhelmed what was otherwise a solid pricing environment and pushed the company to a GAAP net loss of $2.99 million for the period.
The operational story was more encouraging. Average realized prices climbed 11% year over year to $35.13 per BOE, lifting revenue 6% to $22.57 million. That was still 1.3% below the $22.88 million consensus estimate, and adjusted EPS of negative $0.01 came in missing expectations of $0.0125. Production slipped 5% to 6,978 BOEPD, with unplanned compressor downtime at the Delhi and TexMex properties and natural decline accounting for the shortfall.
The balance sheet is the most pressing watch item heading into the next quarter. The borrowing base was redetermined down to $70.0 million, leaving only $9.2 million of availability against $60.0 million of outstanding credit facility borrowings. Management is prioritizing debt reduction while simultaneously funding the 53rd consecutive quarterly dividend of $0.12 per share, declared November 9 for payment December 31.
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On the asset side, the recently acquired Permian Minerals position averaged approximately 218 BOE per day since its August 20 effective date, exceeding acquisition expectations. CEO Kelly Loyd noted that a full quarter of Permian Minerals ownership, combined with additional Haynesville and Bossier Shale wells coming online, should meaningfully add to cash flow in coming quarters.
The company also moved to generate near-term liquidity from non-core acreage. After quarter-end, Evolution sold 636 net acres from its roughly 40,000-net-acre Williston Basin position for $2.5 million while retaining a 0.25% overriding royalty interest, following a $3.0 million sale of nonproducing mineral acreage the prior quarter. Management said it is negotiating additional farmouts of nonproducing working interest acreage across the portfolio and expects to announce further agreements.
Mentioned: EPM