Delhi

Evolution owns a total net revenue interest of 26.2%, including a 23.9% non-operated working interest, a 19.0% revenue interest, and an overriding royalty and mineral interest of 7.2% in the Delhi Field in northeast Louisiana in Franklin, Madison, and Richland Parishes. Delhi Field is operated by Denbury Resources and produces out of the Tuscaloosa and Paluxy (Holt-Bryant) reservoirs via CO2 Enhanced Oil Recovery (EOR). CO2 EOR is a tertiary recovery method which allows improved mobility of the oil from the reservoir via CO2 injection, or flooding.

CO2 flooding is a commonly applied EOR method that is used wherever CO2 is readily available to be injected into oil reservoirs. Naturally occurring reserves of CO2 are present in the Jackson Dome Field, also operated by Denbury Resources, in northwest Mississippi. Jackson Dome Field is approximately 100 miles east of Delhi Field, making it an excellent candidate for CO2 EOR. CO2 injection generally, but not always, follows water flooding. The CO2 aids oil recovery primarily by absorbing into the oil and reducing oil viscosity and surface tension to allow the oil to move more easily (improved mobility). The CO2 also causes the oil to swell, thereby increasing localized pressure. When CO2 injection is continuous or combined with water injection to help move the oil, industry experience has shown that incremental recovery of an amount of oil of around 10% to 20% of the original oil in the reservoir can be produced, depending upon type of rock, original oil saturation, level of secondary recovery (water injection), amount of CO2 injected, reservoir depth, and other factors.

The State of Louisiana has approved Delhi Field as a qualified tertiary recovery project. Due to this categorization of the producing method at Delhi Field, we do not expect to pay any severance taxes on our net production until the full project reaches payout, including cost of capital, which is not expected to occur within our proved reserve lifetime.

Through primary (initial conventional development) and secondary recovery (water flood development), Delhi Field produced approximately 195 million barrels of oil and substantial amounts of natural gas. Since 2009, after the implementation of tertiary recovery (CO2 flood development), over 23 million barrels of oil have been produced. Much of the natural gas produced since 2009 was processed to remove natural gas liquids (NGLs) and re-injected for reservoir pressure maintenance.

As of June 30, 2021, Evolution has recorded a total of 6.66 MMBOE net proved developed reserves and 1.81 MMBOE net proved undeveloped reserves at Delhi Field.