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The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are part of an effective registration statement filed with the Securities and Exchange Commission. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 23, 2011

Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 333-168107

PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 2, 2010)

400,000 Shares

Evolution Petroleum Corporation

8.5% Series A Cumulative Preferred Stock
$            Per Share
Liquidation Preference $25.00 Per Share

          We are offering 400,000 shares of our 8.5% Series A Cumulative Preferred Stock, par value $0.001 per share, which we refer to in this prospectus supplement as the Series A Preferred Stock. The offering of Series A Preferred Stock contemplated by this prospectus supplement is the first issuance of shares of this series by us. With respect to shares of Series A Preferred Stock issued pursuant to this prospectus supplement, we anticipate setting the record date for a June 2011 partial dividend period on June 30, 2011, with such initial dividend payment to be made at the end of July 2011. Any subsequently issued shares of Series A Preferred Stock will become entitled to dividends commencing on the first monthly record date following the date of issuance, and we anticipate setting record dates as of the fifteenth of every month with dividends to be paid at the end of the month to such holders of record. Dividends will be in the amount of $2.125 per share each year, which is equivalent to 8.5% of the $25.00 liquidation preference per share. If the Series A Preferred Stock, however, is not listed on a "national exchange," as defined in this prospectus supplement, for a total of at least 180 consecutive days after the Series A Preferred Stock becomes eligible for listing on a national exchange or if we fail to pay cash dividends on the outstanding Series A Preferred Stock in full for any monthly dividend period within a quarterly period for a total of four consecutive or non-consecutive quarterly periods and such dividends remain accumulated, accrued and unpaid, subject to our right to remedy these matters as described in this prospectus supplement, investors will be entitled to receive cumulative cash dividends at the increased rate of 10.5% per annum of the $25.00 liquidation preference per share (equivalent to $2.625 per year per share) as outlined in this prospectus supplement.

          Investors in our Series A Preferred Stock generally will have no voting rights other than with respect to the authorization or creation of shares ranking senior to the Series A Preferred Stock, matters directly and adversely impacting the rights of the holders and for certain share exchanges and other acquisitions. However, holders will have limited voting rights if the Series A Preferred Stock is not listed on a national exchange for at least 180 consecutive days after the shares first become eligible for listing, we fail to make a monthly dividend payment on the outstanding Series A Preferred Stock during a quarterly period for four or more consecutive or non-consecutive quarters, and under certain other circumstances. The voting rights of investors in our Series A Preferred Stock are further described in this prospectus supplement under "Description of Series A Preferred Stock—Voting Rights."

          We may not redeem the Series A Preferred Stock before June [    •    ], 2014, except as described below. On or after June [    •    ] , 2014, we may, at our option, redeem the Series A Preferred Stock, in whole or in part, by paying $25.00 per share, plus any accrued and unpaid dividends to the redemption date. If at any time a "Change of Ownership or Control," as defined in this prospectus supplement, occurs, we (or the acquiring company) will have the option to redeem the Series A Preferred Stock, in whole but not in part, within 90 days after the date on which the Change of Ownership or Control has occurred at specified redemption amounts as described in this prospectus supplement. Our Series A Preferred Stock has no stated maturity, will not be subject to any sinking fund or other mandatory redemption, and will not be convertible into any of our other securities.

          Our underwriter is selling shares of the Series A Preferred Stock on a "best efforts" basis. Our underwriter is not required to sell any specific number or dollar amount of securities but will use its best efforts to sell the securities offered in this prospectus supplement. Our underwriter will receive a commission with respect to such sales. There is no arrangement for funds to be received in escrow, trust or similar arrangement. For additional information regarding our arrangement with the underwriter and underwriting compensation, please see "Underwriting" beginning on page S-50 of this prospectus supplement.

          There is currently no public market for our Series A Preferred Stock. Subject to issuance, we anticipate that our shares of Series A Preferred Stock will be approved for listing on the NYSE Amex under the symbol "EPM.PR.A."

          Investing in our Series A Preferred Stock involves a high degree of risk. You should carefully consider the "Risk Factors" beginning on page S-14 of this prospectus supplement and page 13 of our Annual Report on Form 10-K for the year ended June 30, 2010, and as updated in our Quarterly Reports on Form 10-Q for the three month periods ended September 30, 2010, December 31, 2010, and March 31, 2011.

          You should also refer to the "Underwriting" section beginning on page S-50 of this prospectus supplement for further information regarding underwriting commissions.

          We expect that the Series A Preferred Stock will be ready for delivery in book-entry form through The Depository Trust Company on or about June [    •    ] , 2011.

          NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Sole Book Running Manager

The date of this prospectus supplement is June [    •    ], 2011.

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        This prospectus supplement and the accompanying prospectus, including the exhibits and the documents incorporated herein by reference, can be accessed on the Securities and Exchange Commission's website or at the Securities and Exchange Commission's offices described under the heading "Where You Can Find More Information."

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ABOUT THIS PROSPECTUS SUPPLEMENT

        This document is in two parts. The first part is the prospectus supplement, which describes the specific terms of this offering. The second part, the accompanying prospectus, including the documents incorporated by reference, provides more general information, some of which may not apply to this offering. The accompanying prospectus was filed as part of our registration statement on Form S-3 (registration no. 333-168107) with the Securities and Exchange Commission (the "SEC") on July 14, 2010, and amended on August 10, 2010, as part of a "shelf" registration process. Under the shelf registration process, we may offer to sell debt securities, common stock, preferred stock, and warrants, from time to time, in one or more offerings, up to a total dollar amount of $50,000,000. Generally, when we refer to this prospectus supplement, we are referring to both parts of this document combined. We urge you to carefully read this prospectus supplement, the information incorporated by reference, the accompanying prospectus, and any free writing prospectus that we authorize to be distributed to you before buying any of the securities being offered under this prospectus supplement. This prospectus supplement may supplement, update or change information contained in the accompanying prospectus. To the extent that any statement that we make in this prospectus supplement is inconsistent with statements made in the accompanying prospectus or any documents incorporated by reference therein, the statements made in this prospectus supplement will be deemed to modify or supersede those made in the accompanying prospectus and such documents incorporated by reference therein.

        You should rely only on the information contained, or incorporated by reference, in this prospectus supplement, contained, or incorporated by reference, in the accompanying prospectus, or contained in any free writing prospectus we have authorized to be distributed to you in connection with this offering. We have not, and the underwriter has not, authorized anyone to provide you with different or inconsistent information. You should not rely on any unauthorized information or representation. This prospectus supplement is an offer to sell only the securities offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information in this prospectus supplement, the accompanying prospectus and any free writing prospectus authorized to be distributed by us is accurate only as of the date on the front of the applicable document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement, the accompanying prospectus, any free writing prospectus or any sale of a security. Our business, assets, financial condition, results of operations and prospects may have changed since such dates.

        We are not making any representation to you regarding the legality of an investment in Series A Preferred Stock by you under applicable law. You should consult with your own legal advisors as to the legal, tax, business, financial and related aspects of a purchase of the Series A Preferred Stock.

        Information contained on or accessible through our website, www.evolutionpetroleum.com, does not constitute part of this prospectus.

        In this prospectus supplement, "Evolution," the "Company," "we," "us," and "our" refer to Evolution Petroleum Corporation and its subsidiaries.

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PROSPECTUS SUPPLEMENT SUMMARY

        This summary highlights certain information about us, this offering and information appearing elsewhere in this prospectus supplement, in the accompanying prospectus and in the documents we incorporate by reference. This summary is not complete and does not contain all of the information that you should consider before investing in our securities. To fully understand this offering and its consequences to you, you should carefully read this entire prospectus supplement, the accompanying prospectus and any free writing prospectus distributed by us, including the information contained under the heading "Risk Factors" in this prospectus supplement beginning on page S-14 and the financial statements and other information incorporated by reference into this prospectus supplement and the accompanying prospectus, before making an investment decision. See "Glossary of Oil and Natural Gas Terms" beginning on page S-53 of this prospectus supplement for abbreviations and definitions commonly used in the oil and natural gas industry that are used in this prospectus supplement.

Evolution Petroleum Corporation

Our Business

        We are 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 United States. We acquire known, underdeveloped oil and natural gas resources and exploit them through the application of capital, sound engineering and modern technology to increase production, ultimate recoveries, or both. We are focused on increasing underlying asset values on a per share basis. In doing so, we depend on a conservative capital structure, allowing us to maintain control of our assets for the benefit of our shareholders, including approximately 20% beneficially owned by all of our directors, officers and employees.

        Our principal executive offices are located at 2500 City West Blvd, Suite 1300, Houston, Texas 77042, and our telephone number is (713) 935-0122. We maintain a website at www.evolutionpetroleum.com, but information contained on our website does not constitute part of this document. Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K are located at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the SEC's Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy and information statements, and other information regarding our filings at www.sec.gov. In addition, you may read our SEC filings at the offices of the New York Stock Exchange, which is located at 20 Broad Street, New York, New York 10005.

Our Finances

•

Since June 30, 2006:



•

We remained debt free.



•

We funded all of our capital expenditures and operations from our working capital and cash flows from operations.



•

Our operating statement performance has been impacted by $9.1 million of non-cash stock compensation expense we recorded to align our employee's 20% beneficial ownership interests with our shareholders.



•

Our cash flows from operations have generally been positive, aggregating $8.9 million since June 2007.



•

At June 30, 2010 (the date of our last annual reserve reports, using constant NYMEX pricing of $76.21/barrel & $4.10/mcf):



•

Our net proved reserves were 12.4 million barrels of oil equivalent (BOE), with a PV-10 of $266 million*.

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Our net unrisked probable reserves were 7.2 million BOE, with a PV-10 of $64 million*.

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PV-10 is a non-GAAP measure, and is the pre-tax component of the Standardized Measure of Future Net Cash Flows. See the discussion and reconciliation in the footnote at the end of this section.

•

Our depletion rate of $4.31 per BOE was relatively low, especially since our reserves were 91% liquids (83% oil and 9% NGLs), and the cost of our oil and gas assets has never been written down.



•

15.1 million net barrels of our proved and probable oil reserves were attributed to our share of the Delhi CO2 flood project, which bears no capital or operating costs to us until the operator reaches a $200 million payout. See "Our Business Strategy—Delhi Field CO2 EOR (Enhanced Oil Recovery) Project."

•

At March 31, 2011:

•

Our working capital was $3.1 million, compared to working capital of $3.2 million at December 31, 2010 and $4.9 million at June 30, 2010.

•

Completion of our capital expenditure program for our fiscal year ending June 30, 2011 does not depend on proceeds from this offering.

•

Production sales increased 113% at Delhi over the quarter ended December 31, 2010, to 2,003 gross barrels per day, while Giddings sales volumes remained unchanged.

•

For the recent quarter, 98% of Delhi's production came from Phase I of the project, which is smaller than the average planned for each of Phases II through VI. For an explanation of the Phases see "Our Business Strategy—Delhi Field CO2 EOR (Enhanced Oil Recovery) Project."

•

To date, the operator of Delhi had expended $365 million for capital development of the Delhi CO2 project, our share of which was zero.

•

Recent Developments:

•

Our board of directors has authorized us to seek a senior unsecured revolving credit facility in an amount up to $5 million. Our current intention is to maintain this line as a standby facility to meet unplanned investment opportunities that may arise. We are uncertain at this time if or when we would be able to obtain such a facility or, if a facility is obtained, the terms of such arrangement.

Our Business Strategy

        Our strategy is intended to generate scalable, low unit cost, development and re-development opportunities that minimize or eliminate exploration risks. These opportunities involve the application of modern technology, our own proprietary technology and our specific expertise in overlooked areas of the United States.

        The assets we exploit currently fit into three types of project opportunities:

•

Enhanced Oil Recovery (EOR),



•

Bypassed Primary Resources, and



•

Unconventional Gas Development.

        Our active projects in these categories are:

Delhi Field CO₂ EOR (Enhanced Oil Recovery) Project

        Our interests in the Delhi Holt Bryant Unit in the Delhi Field, located in Northeast Louisiana, are currently our most significant assets. Although producing ~20 BOPD upon our purchase in 2003, the

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Unit had a prolific production history totaling ~190 million barrels of oil through primary and partial secondary recovery operations. Through our farm-out in 2006, the Unit is currently being redeveloped as an EOR project utilizing CO₂ flood technology by a subsidiary of Denbury Resources Inc. as Operator, targeting an estimated 68 million barrels of additional gross recovery.

        Our independent reservoir engineers, DeGolyer & MacNaughton ("D&M") assigned the following net reserves to our interests at Delhi using constant operating costs and a constant NYMEX oil price of $76.21, adjusted for field location and grade, as then in effect as of June 30, 2010:

•

9.4 MMBBLs of proved oil reserves, with a PV-10 of $224.5 million*, net to our interest



•

5.7 MMBBLS of probable oil reserves, with a PV-10 of $51.2 million*, net to our interest

        Our net interests in the EOR project in the Delhi Holt Bryant Unit consist of:

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A 7.4% royalty interest, bearing no operating or capital cost burdens to us, in effect throughout the life of the project.



•

A 23.9% reversionary working interest with an associated 19.2% net revenue interest. The working interest reverts to us when the Operator has generated $200 million of field revenue to the 100% working interest, less direct operating expenses including the cost of purchased CO₂.



•

Upon reversion of the deemed $200 million payout, regardless of the Operator's actual capital expenditures, we begin bearing 23.9% of all future operating and capital expense. Also at payout reversion, our net revenue interest increases from 7.4% to an aggregate 26.5%.

        The Operator has planned six phases for the installation of the CO₂ flood. We refer to them as Phases I thru VI.

        Field sales volumes at Delhi averaged 2,003 gross barrels of oil per day (BOPD), or 148 BOPD net to our interest during our third fiscal quarter ended March 31, 2011, or FQ3-11, more than double the 920 gross and 68 net BOPD rate in the immediately prior quarter ended December 31, 2010, or FQ2-11. Gross sales volumes increased steadily throughout FQ3-11 from Phase I of the CO2-EOR project, accounting for approximately 98% of total Delhi volumes in FQ3-11. All net sales at Delhi are currently generated by our 7.4% royalty interest that is free of all cost and expense.

        Implementation of Phase II, which is more than double the size of Phase I, commenced with incremental CO2 injection at the end of December 2010. First tertiary oil response from Phase II occurred during March 2011, ahead of the expected mid-year 2011 first production date, and accounted for approximately 2% of Q3-11 sales volumes. Phase I similarly responded earlier than expected in March 2010. We expect significant increases in EOR production from Phase II during the remainder of fiscal 2011 and into fiscal 2012.

        Phase III is currently being installed with first CO2 injection expected during calendar 2011. We expect that the remaining phases IV-VI will be installed similarly over the next few years and are scheduled to include similar numbers of wells as in Phase II, as compared to the much smaller Phase I.

        During Q3-11, Delhi's Louisiana Light Sweet ("LLS") crude oil sales realized a 12% price premium over the sales price we received from our Giddings production in central Texas. We expect that a similar market differential may continue into fiscal 2012.

Bypassed Primary Resource Projects

Giddings Field

        We have three engineers on our staff possessing experience in the Giddings Field of Central Texas dating back to the late 1980s. Based on this experience, we acquired acreage in Giddings through open leasing, targeting the Austin Chalk, Buda and Georgetown formations.

        In late calendar 2007, we initiated a redevelopment drilling program in the Giddings Field. As of June 30, 2010, we had placed ten wells into production, including seven wells that were re-entered and

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re-drilled, one newly drilled well and two wells that were restored to production through workovers. Of the ten, we owned 100% of the working interests with an approximate 80% net revenue interest on 5,027 net developed acres, representing approximately 36% of our 13,891 net acres at Giddings. Total net proved reserves assigned to our properties in the Giddings Field by our independent reservoir engineer, W.D. Von Gonten & Associates as of June 30, 2010 were:

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2.98 MMBOE of proved reserves, with a PV-10 of $41.3 million*, net to our interest (unadjusted for JDA below)



•

0.98 MMBOE of probable reserves, with a PV-10 of $11.7 million*, net to our interest (unadjusted for JDA below)

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*

PV-10 of proved reserves is a pre-tax non-GAAP measure reconciled to the after-tax Standardized Measure of Future Net Cash Flows below. We believe that the presentation of the non-GAAP financial measure of PV-10 provides useful information to investors because it is widely used by analysts and investors in evaluating oil and natural gas companies. We believe that PV-10 is relevant and useful for evaluating the relative monetary significance of oil and natural gas properties. Further, analysts and investors may utilize the measure as a basis for comparison of the relative size and value of our reserves to other companies' reserves. We also use this pre-tax measure when assessing the potential return on investment related to oil and natural gas properties and in evaluating acquisition opportunities. Because there are many unique factors that can impact an individual company when estimating the amount of future income taxes to be paid, we believe the use of a pre-tax measure is valuable for evaluating our Company. PV-10 is not a measure of financial or operating performance under GAAP, nor is it intended to represent the current market value of our estimated oil and natural gas reserves. PV-10 should not be considered in isolation or as a substitute for the Standardized Measure as defined under GAAP, and reconciled below. Probable reserves are not recognized by GAAP, and therefore the PV-10 of probable reserves can not be reconciled to a GAAP measure.

The following table provides a reconciliation of PV-10 of each of our proved properties to the Standardized Measure.

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        On July 16, 2010, we entered into a joint development agreement ("JDA") with an industry partner. The JDA provides that we operate the drilling of two firm commitment wells on our proved and probable locations in the Giddings Field, with the potential to add up to three option wells as elected by our partner. Under the terms of the JDA, we retain a 10% carried working interest in recognition of our costs to date, a 10% cost bearing working interest for our cash participation, and a 22.5% back-in working interest on each well drilled on our partner's 80% working interest following a simple 2 well basket payout, and a well-by-well simple pay-out on subsequent wells (bringing our after-payout working interest in each well to 38%). The leases carry an approximate 80% net revenue interest to the 100% working interests.

        Since June 30, 2010, we have drilled three wells at Giddings, all under the JDA mentioned above. During our most recent quarter ended March 31, 2011 ("FQ3-11"), our production sales at Giddings averaged 172 net BOE per day to our interests, unchanged from the 172 net BOE per day we averaged during FQ2-11.

        At March 31, 2011, we internally estimate there were 13 proved and 2 probable drilling locations remaining to be developed on our Giddings leasehold.

Artificial Lift Technology

        Our artificial lift technology, GARP™, or Gas Assisted Rod Pump, was developed by Daryl Mazzanti, our Vice President of Operations. Its design is intended to extend the life of horizontal wells with oil or associated water production, with the expectation of recovering an additional 10-15% of cumulative recovery at a cost < $10 BOE. A patent has been applied for and is pending.

        To date, the technology has undergone testing on the few marginal producers we own in our Giddings portfolio. Although the tests were successful in demonstrating that the process works, we initiated these tests knowing that our first test wells were weak candidates due to their low primary recoveries. Since the technology is expected to recover a percentage of cumulative historic production, the actual volumes of oil and gas incrementally recovered is small from these test wells.

        To prove commercial application, we are working to gain access to average or above average cumulative producers that have declined over many years to a low productive level. Since our similar wells are still early in their productive life, we are seeking to venture with industry partners. At March 31, 2011, we were continuing industry join venture negotiations with two third parties to demonstrate the technology in exchange for an interest in the newly re-established production. The first candidate has agreed to the list of target wells, but finalization of the JV is still pending and uncertain. Negotiations with the second candidate are less mature.

Unconventional Gas Resources

Woodford Shale Projects in Oklahoma

        In June 2006, we began the process of identifying unconventional natural gas resource projects, to balance the oil weighted nature of our anticipated Delhi reserves. The parameters we sought are:

•

Low drilling risks, with well AFE costs in the $200,000 to $2 million range.



•

Low reserve risk.



•

Repeatable development performance across a substantial acreage position.



•

Acceptable profitability at $5 NYMEX natural gas prices.

        These parameters led us to the shallower sections of the Woodford Shale in Eastern Oklahoma, where we owned approximately 14,900 net acres at the end of FQ3-11.

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Haskell County

        The Woodford Shale formation in our Haskell County leasehold generally lies at a depth of 4000' to 6000'. Our leasehold is just north of a short horizontal Woodford well with extensive production history that indicates substantial ultimate recovery and good commerciality.

        During FQ3-11, we focused on testing our 5,000' depth unconventional gas project in the John Wells #1 well in Haskell County, a vertical well we re-entered in FQ2-11. Prior to the single stage hydraulic fracturing stimulation completed in early June 2011, the gas sales rate in the John Wells #1-28 was approximately 40-50 MCF per day while dewatering. The sales rate post stimulation is considerably higher, while still dewatering. We are also preparing to re-enter our second Haskell well as a vertical test.

Wagoner County

        The Woodford Shale formation in our leasehold in Wagoner County generally lies at a depth of 1200' to 1600'. Our leasehold is offset by two operators that have combined to drill commercial wells extensively in the Woodford to date, in a much shallower portion of the formation.

        As of March 31, 2011, further testing of our Wagoner County Woodford shale acreage is on hold while we focus on the bigger potential in Haskell County. To date, we have been able to establish attractive production in only one of the three tested acreage blocks in Wagoner County. We have elected to not exercise lease renewal options in certain blocks, while maintaining our leasehold in the block containing our successful test.

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Terms of the Offering

        The following is a brief summary of certain terms of this offering. For a more complete description of the terms of the Series A Preferred Stock, see "Description of Series A Preferred Stock" beginning on page S-33 of this prospectus supplement and "Description of Capital Stock" beginning on page 3 of the accompanying prospectus.

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RISK FACTORS

        An investment in our securities involves a high degree of risk. You should carefully consider the following risks and all of the other information included or incorporated by reference in this prospectus supplement including but not limited to the Company's Form 10-K for the fiscal year ended June 30, 2010 and the Form 10-Qs for the quarters ended September 30, 2010, December 31, 2010 and March 31, 2011, and the accompanying prospectus before making an investment decision. Additional risks related to us and our securities may be in our other filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. In evaluating our company, the factors described below should be considered carefully. The occurrence of one or more of these events could significantly and adversely affect our business, prospects, financial condition, results of operations and cash flows.

Risks Relating to This Offering

The Series A Preferred Stock is a new issuance of securities and does not have an established trading market, which may negatively affect its market value and your ability to transfer or sell your shares; the Series A Preferred Stock has no stated maturity date.

        The shares of Series A Preferred Stock are a new issuance of securities with no established trading market. Since the securities have no stated maturity date, investors seeking liquidity will be limited to selling their shares in the secondary market. Subject to issuance, we anticipate that our shares of Series A Preferred Stock will be approved for listing on the NYSE Amex under the symbol "EPM.PR.A." An active trading market for the shares may not develop or, even if it develops, may not last, in which case the trading price of the shares could be adversely affected and your ability to transfer your shares of Series A Preferred Stock will be limited.

The market value of the Series A Preferred Stock could be adversely affected by various factors.

        The trading price of the shares of Series A Preferred Stock may depend on many factors, including:

•

market liquidity;



•

prevailing interest rates;



•

the market for similar securities;



•

general economic conditions; and



•

our financial condition, performance and prospects.

        For example, higher market interest rates could cause the market price of the Series A Preferred Stock to decrease.

We could be prevented from paying dividends on the Series A Preferred Stock.

        Although dividends on the Series A Preferred Stock are cumulative and arrearages will accrue until paid, you will only receive cash dividends on the Series A Preferred Stock if we have funds legally available for the payment of dividends and such payment is not restricted or prohibited by law, the terms of any senior shares or any documents governing our indebtedness. Our business may not generate sufficient cash flow from operations to enable us to pay dividends on the Series A Preferred Stock when payable. In addition, future debt, credit facility arrangements, contractual covenants or arrangements we enter into may restrict or prevent future dividend payments. Accordingly, there is no guarantee that we will be able to pay any cash dividends on our Series A Preferred Stock. Furthermore,

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in some circumstances, we may pay dividends in stock rather than cash, and our stock price may be depressed at such time.

The Series A Preferred Stock has not been rated and will be subordinated to all of our existing and future debt.

        The Series A Preferred Stock has not been rated by any nationally recognized statistical rating organization. In addition, with respect to dividend rights and rights upon our liquidation, winding-up or dissolution, the Series A Preferred Stock will be subordinated to any existing and future debt and all future capital stock designated as senior to the Series A Preferred Stock. We may also incur additional indebtedness in the future to finance potential acquisitions or the development of new properties and the terms of the Series A Preferred Stock do not require us to obtain the approval of the holders of the Series A Preferred Stock prior to incurring additional indebtedness. As a result, our existing and future indebtedness may be subject to restrictive covenants or other provisions that may prevent or otherwise limit our ability to make dividend or liquidation payments on our Series A Preferred Stock. Upon our liquidation, our obligations to our creditors would rank senior to our Series A Preferred Stock and would be required to be paid before any payments could be made to holders of our Series A Preferred Stock.

Investors should not expect us to redeem the Series A Preferred Stock on the date the Series A Preferred Stock becomes redeemable or on any particular date afterwards.

        The shares of Series A Preferred Stock have no maturity or mandatory redemption date and are not redeemable at the option of investors under any circumstances. By its terms, the Series A Preferred Stock may be redeemed by us at our option either in whole or in part at any time on or after June [    •    ], 2014. Any decision we may make at any time to redeem the Series A Preferred Stock will depend upon, among other things, our evaluation of our capital position, including the composition of our stockholders' equity and general market conditions at that time. In addition, future debt, credit facility arrangements, contractual covenants or arrangements we enter into may restrict or prevent the redemption of equity, including the Series A Preferred Stock.

Holders of Series A Preferred Stock have extremely limited voting rights.

        Except as expressly stated in the certificate of designations governing the Series A Preferred Stock, as a holder of Series A Preferred Stock, you will not have any relative, participating, optional or other special voting rights and powers and your approval will not be required for the taking of any corporate action. For example, your approval would not be required for any merger or consolidation in which we are involved or sale of all or substantially all of our assets except to the extent that such transaction materially adversely changes the express powers, preferences, rights or privileges of the holders of Series A Preferred Stock. None of the provisions relating to the Series A Preferred Stock contains any provisions affording the holders of the Series A Preferred Stock protection in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all of our assets or business, that might adversely affect the holders of the Series A Preferred Stock, so long as the terms and rights of the holders of Series A Preferred Stock are not materially and adversely changed. See "Description of the Series A Preferred Stock—Voting Rights" on page S-38 of this prospectus supplement.

The issuance of future offerings of preferred stock may adversely affect the value of our Series A Preferred Stock.

        Our articles of incorporation, as amended, currently authorizes us to issue up to 5,000,000 shares of preferred stock in one or more series on terms that may be determined at the time of issuance by our board of directors. Upon the completion of the offering described in this prospectus supplement,

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we may sell additional shares of our Series A Preferred Stock on terms that may differ from those described in this prospectus supplement. Accordingly, we may issue additional shares of Series A Preferred Stock and/or other classes of preferred shares that would rank on parity with or senior to the Series A Preferred Stock as to dividend rights or rights upon liquidation, winding up or dissolution. The issuance of additional preferred shares on parity with or, with the consent of the holders of the Series A Preferred Stock, senior to our Series A Preferred Stock would dilute the interests of the holders of Series A Preferred Stock and any issuance of preferred stock that is senior to the Series A Preferred Stock could affect our ability to pay dividends on, redeem or pay the liquidation preference on the Series A Preferred Stock.

This offering is being conducted on a "best efforts" basis.

        Our underwriter is offering the Series A Preferred Stock on a "best efforts" basis, and the underwriter is under no obligation to purchase any shares of Series A Preferred Stock for its own account. Our underwriter is not required to sell any specific number or dollar amount of securities in this offering but will use its best efforts to sell the securities offered in this prospectus supplement. As a "best efforts" offering, there can be no assurance that the offering contemplated hereby will ultimately be consummated.

You may be required to use other sources of funds to pay income taxes in respect of dividends received, or deemed to be received, on the Series A Preferred Stock in certain circumstances.

        If we are required to pay dividends on the Series A Preferred Stock in shares of our common stock or additional shares of Series A Preferred Stock and this stock is not marketable at such time, you will be required to satisfy your income tax liability with respect to such dividends from other sources.

        For additional information concerning these matters, see "Material U.S. Federal Income Tax Consequences" on page S-42 of this prospectus supplement.

Holders of the Series A Preferred Stock may be unable to use the dividends-received deduction and may not be eligible for the preferential tax rates applicable to "qualified dividend income."

        Distributions paid to corporate U.S. holders of the Series A Preferred Stock may be eligible for the dividends-received deduction, and distributions paid to non-corporate U.S. holders of the Series A Preferred Stock may be subject to tax at the preferential tax rates applicable to "qualified dividend income," if we have current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. We currently have accumulated earnings and profits, however, we may not have sufficient current earnings and profits during future fiscal years for the distributions on the Series A Preferred Stock to qualify as dividends for U.S. federal income tax purposes. If the distributions fail to qualify as dividends, U.S. holders would be unable to use the dividends-received deduction and may not be eligible for the preferential tax rates applicable to "qualified dividend income." If any distributions on the Series A Preferred Stock with respect to any fiscal year are not eligible for the dividends-received deduction or preferential tax rates applicable to "qualified dividend income" because of insufficient current or accumulated earnings and profits, it is possible that the market value of the Series A Preferred Stock might decline.

        For additional information concerning these matters, see "Material U.S. Federal Income Tax Consequences" on page S-42 of this prospectus supplement.

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Non-U.S. holders may be subject to U.S. income tax with respect to gain on disposition of their Series A Preferred Stock.

        If we are a U.S. real property holding corporation at any time within the five-year period preceding a disposition of Series A Preferred Stock by a non-U.S. holder or the holder's holding period of the stock disposed of, whichever period is shorter, such non-U.S. holder may be subject to U.S. federal income tax with respect to gain on such disposition. If we are a U.S. real property holding corporation, which we expect we are, so long as our Series A Preferred Stock is regularly traded on an established securities market, a non-U.S. holder will not be subject to U.S. federal income tax on the disposition of the Series A Preferred Stock if it holds and has held (during the shorter of the five-year period immediately preceding the date of disposition or the holder's holding period) not more than 5% of the total outstanding shares of our Series A Preferred Stock.

        For additional information concerning these matters, see "Material U.S. Federal Income Tax Consequences" on page S-42 of this prospectus supplement.

Our Series A Preferred Stock is not convertible and purchasers may not realize a corresponding benefit if the Company prospers.

        Our Series A Preferred Stock is not convertible into our common stock and earns dividends at a fixed rate. Accordingly, the market value of our Series A Preferred Stock may depend on dividend and interest rates for other preferred stock, commercial paper and other investment alternatives and our actual and perceived ability to pay dividends on, and in the event of dissolution satisfy the liquidation preference with respect to, our Series A Preferred Stock. Moreover, our right to redeem the Series A Preferred Stock on or after June [    •    ], 2014 or in the event of a change in control could impose a ceiling on its value.

Risks Relating to the Company

Operating results from oil and natural gas production may decline.

        In the near term, our production is totally dependent on our Giddings Field and our 7.4% royalty interests in EOR production that began at our Delhi Field in March 2010. The targeted reservoirs in the Giddings Field typically experience flush initial production, followed by steep harmonic decline rates that steadily flatten to much shallower decline rates. Although EOR production from proved reserves at Delhi has and is expected to grow over time, without further development activities in the Giddings Field, Delhi or our other properties, or without acquisitions of producing properties, our net production of oil and natural gas could decline significantly over time, which could have a material adverse effect on our financial condition.

The types of resources we focus on have substantial operational risks.

        Our business plan focuses on the acquisition and development of known resources in partially depleted reservoirs, naturally fractured or low permeability reservoirs, or relatively shallow reservoirs. Shallower reservoirs usually have lower pressure, which translates into fewer natural gas volumes in place; low permeability reservoirs require more wells and substantial stimulation for development of commercial production; naturally fractured reservoirs require penetration of sufficient undepleted fractures to establish commercial production; and depleted reservoirs require successful application of newer technology to unlock incremental reserves.

        Our CO₂-EOR project in the Delhi Field, operated by a subsidiary of Denbury Resources Inc., requires significant amounts of CO₂ reserves, development capital and technical expertise, the sources of which have been committed by the Operator. Although initial CO₂ injection began at Delhi in November 2009 and an initial oil production response began in March 2010 and a large part of the

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capital budget has already been expended, substantial capital remains to be invested to fully develop the EOR project and further increase production. The Operator's failure to manage these and other technical, strategic, financial and logistical risks may render ultimate enhanced recoveries from the planned CO₂ -EOR project to fall short of our expectations in volume and or timing. Such occurrences would have a material adverse effect on the Company and its results of operations.

        The existing well bores we are re-entering in the Giddings Field were originally drilled as far back as the 1980's. As such, they contain older casing that could be more subject to failure, or the well files, if available, may be incomplete or incorrect. Such problems can result in the complete loss of a well or a much higher drilling and completion cost. Our proved undeveloped locations in the Giddings Field are direct offsets to current or previously producing wells, and there may be unusually long fractures that will connect our well to another producing or depleted well, thus reducing the potential recovery, increasing our drilling costs, or delaying production due to recovery of drilling fluid lost during drilling into the depleted fractures.

        Our other projects in Oklahoma and Texas, although believed to have oil and/or gas resources, have yet to exhibit significant proved reserves. Therefore, their economic outcome is uncertain.

        Our projects generally require that we acquire new leases in and around established fields or other known resources, and drill and complete wells, some of which may be horizontal, as well as negotiate the purchase of existing well bores and production equipment or install our proprietary artificial lift technology that has yet to be universally proven. Leases may not be available and required oil field services may not be obtainable on the desired schedule or at the expected costs. While the projected drilling results may be considered to be low to moderate in risk, there is no assurance as to what productive results may be obtained, if any.

Our limited operating history and limited production makes it difficult to predict future results and increases the risk of an investment in our company.

        We commenced our crude oil and natural gas operations in late 2003 and have a limited operating history, particularly in our currently producing fields. All of our current production is the result of recent operational activities, thus our future production retains substantial variability. Therefore, we face all the risks common to companies in their early stage of development, including uncertainty of funding sources, high initial expenditure levels and uncertain revenue streams, an unproven business model, and difficulties in managing growth. Our prospects must be considered in light of the risks, expenses, delays and difficulties frequently encountered in establishing a new business. Any forward-looking statements in this report do not reflect any possible effects on us from the outcome of these types of uncertainty. Prior to the Delhi Farmout, we had incurred significant losses since the inception of our oil and natural gas operations and we have since resumed incurring losses until the quarter ended Mach 31, 2011, which was profitable. We cannot assure future profitability or success. While members of our management team have previously carried out or been involved with acquisition and production activities in the crude oil and natural gas industry while employed by us and other companies, we cannot assure you that our intended acquisition targets and development plans will lead to the successful development of crude oil and natural gas production or additional revenue.

The loss of a large single purchaser of our oil and natural gas could reduce the competition of our production.

        For the year ended June 30, 2010, five purchasers each accounted for all of our oil and natural gas revenues. The loss of a large single purchaser for our oil and natural gas production could negatively impact the prices we receive.

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We may be unable to continue licensing from third parties the technologies that we use in our business operations.

        As is customary in the crude oil and natural gas industry, we utilize a variety of widely available technologies in the crude oil and natural gas development and drilling process. We do not have any patents or copyrights for the technology we currently utilize, but a patent application is pending on one of our technologies. We generally license or purchase services from the holders of such technology, or outsource the technology integral to our business from third parties. Our commercial success will depend in part on these sources of technology and assumes that such sources will not infringe on the proprietary rights of others. We cannot be certain whether any third-party patents will require us to utilize or develop alternative technology or to alter our business plan, obtain additional licenses, or cease activities that infringe on third-parties' intellectual property rights. Our inability to acquire any third-party licenses, or to integrate the related third-party products into our business plan, could result in delays in development unless and until equivalent products can be identified, licensed, and integrated. Existing or future licenses may not continue to be available to us on commercially reasonable terms or at all. Litigation, which could result in substantial cost to us, may be necessary to enforce any patents licensed to us or to determine the scope and validity of third-party obligations.

Our proprietary technology may not be awarded patent protection and may not result in a commercial service or product.

        We have developed and field tested our artificial lift technology that we hope to commercialize and generate material value. Our success in commercializing the technology will depend upon additional positive field tests, acceptance by industry and our ability to defend the technology from competitors through confidentiality and/or patent protection. Although our patent is pending, there is no assurance that a patent will be awarded or that we will have the ability to exercise patent defense against competitors.

Regulatory and accounting requirements may require substantial reductions in reporting proven reserves.

        We review on a periodic basis the carrying value of our crude oil and natural gas properties under the applicable rules of the various regulatory agencies, including the SEC. Under the full cost method of accounting that we use, the after-tax carrying value of our oil and natural gas properties may not exceed the present value of estimated future net after-tax cash flows from proved reserves, discounted at 10%. Application of this "ceiling" test requires pricing future revenues at the previous 12-month average beginning-of-month price and requires a write down of the carrying value for accounting purposes if the ceiling is exceeded. We may in the future be required to write down the carrying value of our crude oil and natural gas properties when crude oil and natural gas prices are depressed or unusually volatile. Whether we will be required to take such a charge will depend in part on the prices for crude oil and natural gas during the previous period and the effect of reserve additions or revisions and capital expenditures during such period. If a write down is required, it would result in a current charge to our earnings but would not impact our current cash flow from operating activities.

Our profitability is highly dependent on the prices of crude oil, natural gas, and natural gas liquids, which have historically been very volatile.

        Our estimated proved reserves, revenues, profitability, operating cash flow and future rate of growth are highly dependent on the prices of crude oil, natural gas and NGLs, which are affected by numerous factors beyond our control. Historically, these prices have been very volatile and are likely to remain volatile in the future. A significant and extended downward trend in commodity prices would have a material adverse effect on our revenues, profitability and cash flow, and could result in a reduction in the carrying value of our oil and natural gas properties and the amounts of our estimated proved oil and natural gas reserves. To the extent that we have not hedged our production with

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derivative contracts or fixed-price contracts, any significant and extended decline in oil and natural gas prices may adversely affect our financial position.

We may be unable to acquire and develop the additional oil and natural gas reserves that are required in order to sustain our business operations.

        In general, the volumes of production from crude oil and natural gas properties decline as reserves are depleted, with the rate of decline depending on reservoir characteristics. Except to the extent we acquire properties containing proved reserves or conduct successful development activities, or both, our proved reserves will decline. Our future crude oil and natural gas production is, therefore, highly dependent upon our level of success in finding or acquiring additional reserves. Due to decline characteristics of our Giddings wells, our near-term future growth and financial condition are dependent upon our ability to realize production increases expected at Delhi, and /or the development of additional oil and natural gas reserves.

We are subject to substantial operating risks that may adversely affect our results of operations.

        The crude oil and natural gas business involves numerous operating hazards such as well blowouts, mechanical failures, explosions, uncontrollable flows of crude oil, natural gas or well fluids, fires, formations with abnormal pressures, hurricanes, flooding, pollution, releases of toxic gas and other environmental hazards and risks. We could suffer substantial losses as a result of any of these events. While we carry general liability, control of well, and operator's extra expense coverage typical in our industry, we are not fully insured against all risks incident to our business.

        We may not be the operator of some of our wells in the future, and we are not the operator of our high value assets in the Delhi Field. As a result, our operating risks for those wells and our ability to influence the operations for these wells will be less subject to our control. Operators of these wells may act in ways that are not in our best interests. If this occurs, the development of, and production of crude oil and natural gas from, some wells may not occur timely or at all, which would have an adverse affect on our results of operations.

The loss of key personnel could adversely affect us.

        We depend to a large extent on the services of certain key management personnel, including our executive officers, the loss of any of whom could have a material adverse affect on our operations. In particular, our future success is dependent upon Robert S. Herlin, our President and Chief Executive Officer, Sterling H. McDonald, our Chief Financial Officer, and Daryl V. Mazzanti, our Vice-President of Operations, for sourcing, evaluating and closing deals, capital raising, and oversight of development and operations. Presently, the Company is not a beneficiary of any key man insurance.

The loss of any of our skilled technical personnel could adversely affect our business.

        We depend to a large extent on the services of skilled technical personnel to lease, drill, complete, operate and maintain our crude oil and natural gas fields. We do not have the resources to perform all of these services and therefore we outsource many of our requirements. Additionally, as our production increases, so does our need for such services. Generally, we do not have long-term agreements with our drilling and maintenance service providers. Accordingly, there is a risk that any of our service providers could discontinue servicing our crude oil and natural gas fields for any reason. Although we believe that we could establish alternative sources for most of our operational and maintenance needs, any delay in locating, establishing relationships, and training our sources could result in production shortages and maintenance problems, with a resulting loss of revenue to us. We also rely on third-party carriers for the transportation and distribution of our production, the loss of any of which could have a material adverse affect on our operations.

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We may have difficulty managing future growth and the related demands on our resources and may have difficulty in achieving future growth.

        Although we hope to experience growth through acquisitions and development activity, any such growth may place a significant strain on our financial, technical, operational and administrative resources. Our ability to grow will depend upon a number of factors, including:

•

our ability to identify and acquire new development or acquisition projects;



•

our ability to develop existing properties;



•

our ability to continue to retain and attract skilled personnel;



•

the results of our development program and acquisition efforts;



•

the success of our technologies;



•

hydrocarbon prices;



•

drilling, completion and equipment prices;



•

our ability to successfully integrate new properties;



•

our access to capital; and



•

the Delhi Field operator's ability to: deliver sufficient quantities of CO₂ from its reserves in the Jackson Dome, secure all of the development capital necessary to fund its and Evolution's cost interests and to successfully manage technical, strategic and logistical development and operating risks.

        We can not assure you that we will be able to successfully grow or manage any such growth.

We face strong competition from larger oil and gas companies.

        Our competitors include major integrated crude oil and natural gas companies and numerous independent crude oil and natural gas companies, individuals and drilling and income programs. Many of our competitors are large, well-established companies with substantially larger operating staffs and greater capital resources than we have. We may not be able to successfully conduct our operations, evaluate and select suitable properties and consummate transactions in this highly competitive environment. Specifically, these larger competitors may be able to pay more for development projects and productive crude oil and natural gas properties and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, such companies may be able to expend greater resources on hiring contract service providers, obtaining oilfield equipment and acquiring the existing and changing technologies that we believe are and will be increasingly important to attaining success in our industry.

Our crude oil and natural gas reserves are only estimates and may prove to be inaccurate.

        There are numerous uncertainties inherent in estimating crude oil and natural gas reserves and their estimated values. Our reserves are only estimates that may prove to be inaccurate because of these uncertainties. Reservoir engineering is a subjective and inexact process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner. Estimates of economically recoverable crude oil and natural gas reserves depend upon a number of variable factors, such as historical production from the area compared with production from other producing areas and assumptions concerning effects of regulations by governmental agencies, future crude oil and natural gas product prices, future operating costs, severance and excise taxes, development costs and work-over and remedial costs. Some or all of these assumptions may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of crude oil and natural gas

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attributable to any particular group of properties, classifications of such reserves based on risk of recovery, and estimates of the future net cash flows expected there from prepared by different engineers or by the same engineers but at different times, may vary substantially. Accordingly, reserve estimates may be subject to downward or upward adjustment. Actual production, revenue and expenditures with respect to our reserves will likely vary from estimates, and such variances may be material. The information regarding discounted future net cash flows included in this report should not be considered as the current market value of the estimated crude oil and natural gas reserves attributable to our properties. The estimated discounted future net cash flows from proved reserves are based on the previous 12-month average beginning-of-month price and costs as of the date of the estimate, while actual future prices and costs may be materially higher or lower. Actual future net cash flows also will be affected by factors such as the amount and timing of actual production, supply and demand for crude oil and natural gas, increases or decreases in consumption, and changes in governmental regulations or taxation. In addition, the 10% discount factor, which is required by the SEC to be used in calculating discounted future net cash flows for reporting purposes, is not necessarily the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the crude oil and natural gas industry in general. PV-10 does not necessarily correspond to market value.

We cannot market the crude oil and natural gas that we produce without the assistance of third parties.

        The marketability of the crude oil and natural gas that we produce depends upon the proximity of our reserves to, and the capacity of, facilities and third-party services, including crude oil and natural gas gathering systems, pipelines, trucking or terminal facilities, and processing facilities necessary to make the products marketable for end use. The unavailability or lack of capacity of such services and facilities could result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. A shut-in or delay or discontinuance could adversely affect our financial condition. In addition, federal and state regulation of crude oil and natural gas production and transportation could affect our ability to produce and market our crude oil and natural gas on a profitable basis.

Our operations require significant amounts of capital and additional financing may be necessary in order for us to continue our exploration activities, including meeting certain drilling obligations under our existing lease obligations.

        Our cash flow from our reserves may not be sufficient to fund our ongoing activities at all times. From time to time, we may require additional financing in order to carry out our oil and gas acquisitions, exploitation and development activities. Certain of our undeveloped leasehold acreage is subject to leases that will expire unless production is established. If our revenues from our reserves decrease as a result of lower oil and natural gas prices or otherwise, it will affect our ability to expend the necessary capital to replace our reserves or to maintain our current production. If our cash flow from operations is not sufficient to satisfy our capital expenditure requirements, there can be no assurance that additional debt or equity financing will be available to meet these requirements or available to us on favorable terms.

Risks Relating to the Oil and Gas Industry

Crude oil and natural gas development, re-completion of wells from one reservoir to another reservoir, restoring wells to production and drilling and completing new wells are speculative activities and involve numerous risks and substantial uncertain costs.

        Our growth will be materially dependent upon the success of our future development program. Drilling for crude oil and natural gas and re-working existing wells involve numerous risks, including the risk that no commercially productive crude oil or natural gas reservoirs will be encountered. The

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cost of drilling, completing and operating wells is substantial and uncertain, and drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors beyond our control, including:

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unexpected drilling conditions;



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pressure fluctuations or irregularities in formations;



•

equipment failures or accidents;



•

inability to obtain leases on economic terms, where applicable;



•

adverse weather conditions;



•

compliance with governmental requirements; and



•

shortages or delays in the availability of drilling rigs or crews and the delivery of equipment.

        Drilling or re-working is a highly speculative activity. Even when fully and correctly utilized, modern well completion techniques such as hydraulic fracturing, horizontal drilling or CO₂ or other injectants do not guarantee that we will find and produce crude oil and/or natural gas in our wells in economic quantities. Our future drilling activities may not be successful and, if unsuccessful, such failure would have an adverse affect on our future results of operations and financial condition. We cannot assure you that our overall drilling success rate or our drilling success rate for activities within a particular geographic area will not decline. We may identify and develop prospects through a number of methods, some of which do not include horizontal drilling, hydraulic fracturing or tertiary injectants, and some of which may be unproven. The drilling and results for these prospects may be particularly uncertain. Our drilling schedule and costs may vary from our capital budget. The final determination with respect to the drilling of any scheduled or budgeted prospects will be dependent on a number of factors, including, but not limited to:

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the results of previous development efforts and the acquisition, review and analysis of data;



•

the availability of sufficient capital resources to us and the other participants, if any, for the drilling of the prospects;



•

the approval of the prospects by other participants, if any, after additional data has been compiled;



•

economic and industry conditions at the time of drilling, including prevailing and anticipated prices for crude oil and natural gas and the availability of drilling rigs and crews;



•

our financial resources and results;



•

the availability of leases and permits on reasonable terms for the prospects; and



•

the success of our drilling, complete and production technology, and our ability to control these operations.

        We cannot assure you that these projects can be successfully developed or that the wells discussed will, if drilled, encounter reservoirs of commercially productive crude oil or natural gas. There are numerous uncertainties in estimating quantities of proved reserves, including many factors beyond our control.

Crude oil and natural gas prices are highly volatile in general and low prices will negatively affect our financial results.

        Our revenues, operating results, profitability, cash flow, future rate of growth and ability to borrow funds or obtain additional capital, as well as the carrying value of our properties, are substantially dependent upon prevailing prices of crude oil and natural gas. Lower crude oil and natural gas prices

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also may reduce the amount of crude oil and natural gas that we can produce economically. Historically, the markets for crude oil and natural gas have been very volatile, and such markets are likely to continue to be volatile in the future. Prices for crude oil and natural gas are subject to wide fluctuation in response to relatively minor changes in the supply of and demand for crude oil and natural gas, market uncertainty and a variety of additional factors that are beyond our control, including:

•

worldwide and domestic supplies of crude oil, natural gas and NGLs;



•

the level of consumer product demand;



•

weather conditions;



•

domestic and foreign governmental regulations;



•

the price and availability of alternative fuels;



•

political instability or armed conflict in oil-producing regions;



•

the price and level of foreign imports; and



•

overall domestic and global economic conditions.

        It is extremely difficult to predict future crude oil and natural gas price movements with any certainty. Declines in crude oil and natural gas prices may materially adversely affect our financial condition, liquidity, ability to finance planned capital expenditures and results of operations. Further, crude oil and natural gas prices do not move in tandem. Because approximately 83% of our proved reserves at June 30, 2010 are crude oil reserves and 8% are natural gas liquids reserves, we are heavily impacted by movements in crude oil prices, which also influence natural gas liquids prices.

Oil field service and materials' prices may increase, and the availability of such services may be inadequate to meet our needs.

        Our business plan to develop or redevelop crude oil and natural gas resources requires third party oilfield service vendors and various materials such as steel tubulars, which we do not control. Long lead times and spot shortages may prevent us from, or delay us in, maintaining or increasing the production volumes we expect. In addition, if costs for such services and materials increase, it may render certain or all of our projects uneconomic, as compared to the earlier prices we may have assumed when deciding to redevelop newly purchased or existing properties. Further adverse economic outcomes may result from the long lead times often necessary to execute and complete our redevelop plans.

Government regulation and liability for environmental matters may adversely affect our business and results of operations.

        Crude oil and natural gas operations are subject to extensive federal, state and local government regulations, which may be changed from time to time. Matters subject to regulation include discharge permits for drilling operations, drilling bonds, reports concerning operations, the spacing of wells, unitization and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of crude oil and natural gas wells below actual production capacity in order to conserve supplies of crude oil and natural gas. There are federal, state and local laws and regulations primarily relating to protection of human health and the environment applicable to the development, production, handling, storage, transportation and disposal of crude oil and natural gas, by-products thereof and other substances and materials produced or used in connection with crude oil and natural gas operations. In addition, we may inherit liability for environmental damages, whether actual or not, caused by previous owners of property we purchase or lease or nearby properties. As a result, we may incur substantial liabilities to

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third parties or governmental entities. We are also subject to changing and extensive tax laws, the effects of which cannot be predicted. The implementation of new, or the modification of existing, laws or regulations could have a material adverse affect on us, such as diminishing the demand for our products through legislative enactment of proposed new penalties, fines and/or taxes on carbon that could have the effect of raising prices to the end user.

        For example, currently proposed federal legislation, that, if adopted, could adversely affect our business, financial condition and results of operations, includes the following:

•

Climate Change.  On June 26, 2009, the U.S. House of Representatives passed the "American Clean Energy and Security Act of 2009," or "ACESA," which would establish an economy-wide cap-and-trade program to reduce U.S. emissions of greenhouse gases, including carbon dioxide and methane. ACESA would require a 17 percent reduction in greenhouse gas emissions from 2005 levels by 2020 and just over an 80 percent reduction of such emissions by 2050. Under this legislation, the EPA would issue a capped and steadily declining number of tradable emissions allowances to certain major sources of greenhouse gas emissions so that such sources could continue to emit greenhouse gases into the atmosphere. These allowances would be expected to escalate significantly in cost over time. The net effect of ACESA would be to impose increasing costs on the combustion of carbon-based fuels such as oil, refined petroleum products, and natural gas. President Obama has indicated his support of legislation to reduce greenhouse emissions through an emission allowance system. At the state level, more than one-third of the states, either individually or through multi-state regional initiatives, already have begun implementing legal measures to reduce emissions of greenhouse gases. The U.S. Environmental Protection Agency (EPA) has also taken recent action related to greenhouse gasses. Based on recent developments, the EPA now purports to have a basis to begin regulating emissions of greenhouse gasses under existing provisions of the federal Clean Air Act. It is not possible at this time to predict whether or when the U.S. Senate may act on climate-change legislation, however any future federal laws or implementing regulations that may be adopted to address greenhouse gas emissions could require us to incur increased operating costs and could adversely affect demand for the oil and natural gas that we produce.



•

Taxes.  President Obama's Fiscal Year 2011 Budget Proposal includes provisions that would, if enacted, repeal of the percentage depletion allowance for oil and natural gas properties, eliminate the immediate deduction for intangible drilling and development costs and eliminating the deduction from income for domestic production activities relating to oil and natural-gas exploration and development, and



•

Hydraulic Fracturing.  The U.S. Congress is currently considering legislation that could adversely affect the use of the hydraulic-fracturing process. Currently, regulation of hydraulic fracturing is primarily conducted at the state level through permitting and other compliance requirements. This legislation, if adopted, could establish an additional level of regulation, permitting and restrictions at the federal level, that could adversely affect the development of unconventional oil and natural gas resources, particularly our Oklahoma shale projects.

We could be adversely affected by a weak domestic or global economy.

        The current anemic recovery from a recessionary economic environment has limited the recovery in demand for oil and natural gas and, therefore, in commodity prices, particularly natural gas. If the current economic environment continues, lower realized prices may result, and result in continued or increased operating losses. These factors could negatively impact our operations and may limit our growth.

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FORWARD-LOOKING STATEMENTS

        The statements and information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein that are not statements of historical fact, including all estimates and assumptions contained herein, are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These forward looking statements include, among others, statements, estimates and assumptions relating to our business and growth strategies, budgets, projected costs, capital expenditures, savings and plans, competition, our oil and gas reserve estimates, our ability to successfully and economically explore for and develop oil and gas resources, our exploration and development prospects, future inventories, projects and programs, expectations relating to availability and costs of drilling rigs and field services, anticipated trends in our business or industry, our future results of operations, our liquidity and ability to finance our exploration and development activities, market conditions in the oil and gas industry and the impact of environmental and other governmental regulation. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "could", "should", "expect", "intend", "estimate", "budget", "forecast", "predict", "assume", "anticipate", "believe", "project", "pursue", "plan" or "continue" or the negative thereof or variations thereon or similar terminology. These forward-looking statements are subject to numerous assumptions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in the section entitled "Risk Factors" above and elsewhere in this prospectus supplement, accompanying prospectus and the documents we have incorporated by reference herein.

        Because forward-looking statements are subject to risks and uncertainties, our actual results may differ materially from those expressed or implied by such statements. Readers are cautioned not to place undue reliance on forward-looking statements, contained herein, which speak only as of the date of this prospectus supplement. Other unknown or unpredictable factors may cause our actual results to differ materially from those projected by the forward-looking statements. Unless otherwise required by law, we undertake no obligation to publicly update or revise any information contained in forward-looking statements. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.

USE OF PROCEEDS

        We estimate that we will receive net proceeds of approximately $[    •    ] million from the sale of the Series A Preferred Stock offered by this prospectus supplement and the accompanying prospectus, after deducting our estimated offering expenses and the estimated underwriting commissions.

        We intend to use the net proceeds from the sale of the securities offered by us under this prospectus supplement for general corporate purposes, which may include without limitation, capital expenditures on oil and gas properties. Pending any specific application, we may initially invest funds in short-term marketable securities.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following table presents our selected historical consolidated financial and operating data. The historical consolidated financial data as of, and for the fiscal years ended, June 30, 2010, 2009, 2008 and 2007 are derived from our audited consolidated financial statements for those periods.

        The information in the following table is only a summary and is not indicative of the results of our future operations. You should read the following information together with our Annual Report on Form 10-K for the year ended June 30, 2010, and our Quarterly Reports on Form 10-Q for the three month periods ended September 30, 2010, December 31, 2010, and March 31, 2011, as well as other information that we have filed with the SEC and incorporated by reference herein. See "Where You Can Find More Information" beginning on page S-52 of this prospectus supplement.

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(1)

G&A for the quarter ended June 30, 2010, includes the reversal of accrued bonuses of $587,033 ($19.21 per BOE of 4^th quarter production), due to the decision to issue common stock to employees in lieu of a cash bonus.

(2)

G&A: Stock-based compensation for the quarter ended June 30, 2010, includes a charge of $587,033 ($19.21 per BOE of 4^th quarter production), related to the payment of 2010 bonuses through the issuance of common stock.

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(1)

For purposes of determining the ratio of earnings to fixed charges, interest charge is an estimate of the interest within rental expense, except for 2006, which includes interest incurred from financing.

(2)

In all periods, except for the year ended June 30, 2006, earnings were insufficient to cover fixed charges, and therefore no ratios are shown.