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Evolution Petroleum Corp. (EPM)

Today we have two recommendations from Jim Oberweis at The Oberweis Report. Oberweis is cashing in his 50%-plus gains in DigitalGlobe (DGI), recommended last October, which no longer looks promising going forward. But he also has a new recommendation, below:

Evolution Petroleum Corp. (EPM)

Evolution Petroleum is a petroleum company engaged primarily...

Today we have two recommendations from Jim Oberweis at The Oberweis Report. Oberweis is cashing in his 50%-plus gains in DigitalGlobe (DGI), recommended last October, which no longer looks promising going forward. But he also has a new recommendation, below:

Evolution Petroleum Corp. (EPM)

Evolution Petroleum is a petroleum company engaged primarily in the acquisition, exploitation and development of properties for the production of crude oil and natural gas, onshore in the U.S. These opportunities involve the application of modern technology, their own proprietary technology and their specific expertise in overlooked areas of the U.S., where they may or may not choose to be the operator.

The company’s exploits currently fit into three types of project opportunities: Enhanced Oil Recovery (EOR), Bypassed Primary Resources, and Unconventional Development, especially utilizing their staff expertise in horizontal drilling.

The company’s largest exposure currently is to the proven Delphi field in northern Louisiana, where the company is participating in a carbon dioxide injection EOR project. Delphi is currently producing and Evolution has a 7.4% royalty interest in the field. Late this year, after certain economic thresholds are met, Evolution will have a 23.9% reversionary working interest, which will significantly accelerate the company’s production and free cash flow.

In the company’s latest reported third quarter, sales increased approximately 24% to $5.6 million from $4.8 million in the third quarter of last year. Evolution reported earnings per share of $0.07 in the latest reported third quarter versus $0.04 in the same quarter of last year. Strong Buy.

Jim Oberweis, CFA, The Oberweis Report, www.oberweisreport.com, 800-323-6166, August 2013