Evolution Petroleum Prices $12 Million Stock Sale at $3.25 to Help Fund $16 Million Midland Basin Royalty Purchase

by Carter Whitfield · August 19, 2026

Equities Reporter, The SmallCap Signal

Evolution Petroleum Corporation (NYSE American: EPM) priced an underwritten public offering of 3,700,000 shares of common stock at $3.25 per share on Wednesday, according to the company's Aug. 19 press release. Gross proceeds are expected to be approximately $12,025,000 before underwriting discounts and commissions. Underwriters were granted a 30-day option to purchase up to an additional 555,000 shares at the same price. The offering has priced but has not closed.

Roth Capital Partners acted as sole book-running manager and Northland Capital Markets as co-manager, with A.G.P./Alliance Global Partners serving as financial advisor. The company said the closing of the offering is expected to occur on Aug. 20, 2026, subject to satisfaction of customary closing conditions.

The equity sale is tied to a transaction the company announced a day earlier. In a separate release dated Aug. 18, Evolution said it had agreed to acquire mineral and royalty interests in the core Midland Basin for approximately $16 million, with an effective date of Aug. 1, 2026 and closing expected on or about Aug. 21, 2026. Neither transaction has completed. Notably, the pricing release states that "This offering is not conditioned on the consummation of the Acquisition, and the Company cannot assure that the Acquisition will be consummated on the terms described above or at all."

The asset package covers approximately 3,420 net royalty acres across Reagan, Upton, Glasscock, Midland and Martin Counties, Texas. Evolution put current production from the interests at roughly 210 barrels of oil equivalent per day, of which 65% is liquids — 38% oil and 27% natural gas liquids — with the remaining 35% natural gas. The company counted 832 producing wells, plus seven completed wells, 34 drilled but uncompleted wells, 27 permitted locations and approximately 1,257 identified upside locations.

Evolution's own economics on the purchase, as disclosed in the Aug. 18 release, put next-twelve-month cash flow from the interests at approximately $3.9 million, an acquisition multiple of about 4.1 times, an implied NTM cash flow yield of roughly 24.6%, and a price of $4,678 per net royalty acre. The company said the assets would contribute approximately 20% of its pro forma fiscal 2027 asset cash flow mix. Those are management's figures, not audited results, and they rest on commodity price and timing assumptions the release does not itemize.

Chief Executive Kelly Loyd, in comments included in the acquisition announcement, characterized the purchase as building on the momentum of the company's prior acquisitions and said the Permian interests, combined with Evolution's legacy non-operated and mineral and royalty assets, set the company up well for success now and in the future — a paraphrase of his remarks rather than a direct quotation.

The market's read on the package was blunt. Evolution shares closed Wednesday at $3.34, down 49 cents or 12.79%, according to market data compiled by StockAnalysis, which put the resulting market capitalization at roughly $116.95 million. That left the close above the $3.25 offering price but about 15 cents above the stock's 52-week low of $3.19; the 52-week high is $5.70.

The dilution arithmetic is a large part of why the shares moved. Evolution reported 35,872,725 shares of common stock outstanding as of May 8, 2026 on the cover of its most recent quarterly report on Form 10-Q; that is the most recent share count in a primary filing, not a current one, and it predates the offering. Measured against it, the 3,700,000 new shares equal about 10.3% of the shares then outstanding, or roughly 9.4% of the enlarged post-offering count. If underwriters exercise the full over-allotment, the 4,255,000 total shares equal about 11.9% of the pre-offering count. For a company this size, a raise of that proportion at a price near the stock's 52-week low is a meaningful transfer of ownership.

The balance sheet context makes the raise easier to understand, though the most recent reported figures are now more than four months old. In its fiscal third-quarter results released May 12, covering the quarter ended March 31, 2026, Evolution reported cash and equivalents of just $2.6 million and $56.5 million drawn under its senior secured reserve-based credit facility, with $7.7 million of remaining availability and total liquidity of $10.4 million as of that date. The facility carries a $200.0 million commitment with a borrowing base of $65.0 million, against which $0.8 million of letters of credit were also outstanding at March 31. On those quarter-end figures, available liquidity was below the $16 million purchase price. The company said proceeds would fund a portion of the purchase price alongside borrowings under the credit facility and cash on hand, and go toward general corporate purposes, which may include repaying a portion of outstanding facility borrowings.

That quarter also showed the operating pressure behind the equity decision. Fiscal third-quarter revenue was $20.2 million, down 11% from $22.6 million a year earlier. On a GAAP basis Evolution recorded a net loss of $8.9 million, or a loss of $0.26 per diluted share, versus a $2.2 million loss in the prior-year period. Adjusted EBITDA, a non-GAAP measure, fell to $3.1 million from $7.4 million, a decline the company attributed to unfavorable natural gas differentials, prior-period pricing adjustments at the Delhi Field, realized hedge losses and weather-related production disruptions. Production was essentially flat at 6,700 barrels of oil equivalent per day against 6,667 BOEPD.

The dividend is the pressure point that ties all of this together. Alongside those results Evolution declared a $0.12 per share cash dividend for the fiscal fourth quarter — its 51st consecutive quarterly cash dividend, with approximately $147.4 million returned to holders since inception. At the Aug. 19 close, StockAnalysis puts the indicated annual dividend at $0.48 and the yield at 14.37%. A double-digit yield on a stock trading near its 52-week low reflects the market's pricing of that payout's sustainability rather than an endorsement of it.

Several risks sit plainly in the disclosures. Adjusted EBITDA of $3.1 million in the March quarter did not cover a quarterly dividend obligation of roughly $4.3 million on about 35.9 million shares at $0.12 apiece, and the company is adding shares to that obligation. Revolver availability was thin at the last reported date, and the borrowing base is subject to periodic redetermination that could reduce it. Royalty interests carry no operating cost but also no operational control over drilling pace or timing. Cash flow from both the existing business and the acquired interests is directly exposed to oil, natural gas and NGL prices, which the company does not control. And Evolution is adding an acquisition onto a balance sheet that carried $56.5 million of secured debt against $2.6 million of cash as of the most recent reported quarter.

The offsetting case is the one the company is making: royalty interests require no capital contribution, the approximately 1,257 identified upside locations represent optionality funded by third-party operators, and the disclosed 4.1 times cash flow multiple is the price management says it is paying. Whether the interests deliver the approximately $3.9 million of next-twelve-month cash flow the company projects will depend on Permian activity levels and realized prices, neither of which Evolution controls.

The offering is expected to settle Thursday and the acquisition to close on or about Friday; neither has occurred as of this writing. Evolution has not yet reported fiscal fourth-quarter and full-year fiscal 2026 results, which will be the first look at the company's balance sheet after both transactions.