Skip to main content

Epsilon Reports Third Quarter 2024 Results

HOUSTON, Nov. 06, 2024 (GLOBE NEWSWIRE) — Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported third quarter 2024 financial and operating results.

Third Quarter 2024 Highlights:

Epsilon – Q3 2024     
  Q3 2024Q2 2024Q3 2023 QoQ %YoY %
NRI Production      
GasMMcf1,3041,4071,848-7%-29%
OilMbbl53451319%317%
NGLMbbl17199-11%99%
       
Revenues      
Gas$M1,9041,9612,089-3%-9%
Oil$M3,9653,51492513%329%
NGL$M335388228-14%47%
Midstream1$M1,0841,4443,069-25%-65%
       
Realized Prices2      
Gas$/Mcf1.461.391.135%29%
Oil$/Bbl74.2778.4472.27-5%3%
NGL$/Bbl19.5620.2126.50-3%-26%
       
Adj. EBITDA$M3,7443,9043,925-4%-5%
       
Cash + STI3$M8,7759,48131,864-7%-72%
       
Capex$M3,9085,7095,284-32%-26%
       
1) Does not include elimination entry for fees paid by Epsilon   
2) Excludes impact of hedge realizations     
3) Includes restricted cash balance    

  • Returned $2.0 million to shareholders through the quarterly dividend and the repurchase of 125,000 shares during the quarter.
  • Realized gains of $0.5 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 690,000 MMBTU, and losses of $0.02 million on WTI CMA swaps totaling 17 MBbls.

Operations Update:

Epsilon’s capital expenditures were $3.9 million for the quarter ended September 30, 2024. These were primarily related to the completion of one gross (0.25 net) well in Ector Co., Texas and the drilling of two gross (1 net) wells in Alberta, Canada.

The Marcellus wells (7 gross) completed in Q1 2024 were not turned in line during the quarter. Three of the seven wells were put on flowback during the last week of October and are now producing approximately 60 MMcf per day gross. Our operating partner in PA has maintained production curtailments. We estimate that 3-4 MMcf per day of NRI production was offline during the quarter.

Jason Stabell, Epsilon’s Chief Executive Officer, commented, “We delivered our fourth consecutive quarter of liquids volume, revenue and cash flow growth from our Permian assets continuing to fill the gap while we wait for an improved natural gas pricing environment. In Pennsylvania, we are expecting increased production and cash flow in the fourth quarter and next year aided by improving natural gas fundamentals. Our diversified and growing asset portfolio is well positioned to produce volume and cash flow growth in 2025.

The recently announced entry into Alberta, Canada provides an attractive new area to deploy capital starting in in the fourth quarter. We will provide an update on our 2025 Canadian investment plans once finalized with our operating partner.

Finally, our diversified assets, strong balance sheet and liquidity continue to differentiate us in the small cap energy space.”

Current Hedge Book:

Hedge Book        
Trade DateProductStructureRefContract StartContract EndPrice / StrikeOutstandingMetric
10/07/2024Crude OilSwapsNYMEX WTI CMA04/01/202506/30/2025$72.00 7,500BBL
10/02/2024Natural GasSwapsNYMEX Henry Hub (LD)04/01/202510/31/2025$3.23 535,000MMBtu
10/02/2024Natural GasSwapsTenn Z4 300L Basis04/01/202510/31/2025$(1.04)535,000MMBtu
08/28/2024Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.18 225,000MMBtu
08/28/2024Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.68)225,000MMBtu
06/07/2024Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.70 225,000MMBtu
06/07/2024Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.80)225,000MMBtu
04/30/2024Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.54 225,000MMBtu
04/30/2024Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.75)225,000MMBtu
03/28/2024Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.15 77,500MMBtu
03/05/2024Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.28 155,000MMBtu
03/05/2024Natural GasSwapsTenn Z4 300L Basis11/01/202412/31/2024$(1.04)155,000MMBtu
02/26/2024Crude OilSwapsNYMEX WTI CMA03/01/202403/31/2025$74.34 22,898BBL
         

Earning’s Call:

The Company will host a conference call to discuss its results on Thursday, November 7, 2024 at 2:00 p.m. Central Time (3:00 p.m. Eastern Time).

Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the “Epsilon Energy Third Quarter 2024 Earnings Conference Call.”

A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=S0pmngFY. A webcast replay will be available on the Company’s website (www.epsilonenergyltd.com) following the call.

About Epsilon

Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets in Pennsylvania, Texas, Alberta CA, New Mexico, and Oklahoma.

Forward-Looking Statements

Certain statements contained in this news release constitute forward looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, ‘may”, “will”, “project”, “should”, ‘believe”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.

Contact Information:

281-670-0002

Jason Stabell
Chief Executive Officer
Jason.Stabell@EpsilonEnergyLTD.com

Andrew Williamson
Chief Financial Officer
Andrew.Williamson@EpsilonEnergyLTD.com

EPSILON ENERGY LTD.
Unaudited Consolidated Statements of Operations
(All amounts stated in US$)
             
  Three months ended September 30, Nine months ended September 30,
  2024  2023  2024  2023 
Revenues from contracts with customers:             
Gas, oil, NGL, and condensate revenue $6,203,953  $3,241,531  $18,118,368  $14,509,184 
Gas gathering and compression revenue  1,083,988   3,068,996   4,464,134   7,657,755 
Total revenue  7,287,941   6,310,527   22,582,502   22,166,939 
             
Operating costs and expenses:            
Lease operating expenses  2,099,501   1,559,957   5,517,830   4,404,757 
Gathering system operating expenses  490,325   631,725   1,692,862   1,854,000 
Depletion, depreciation, amortization, and accretion  2,698,812   1,392,032   7,127,641   4,780,766 
Loss on sale of oil and gas properties           1,449,871 
General and administrative expenses:            
Stock based compensation expense  309,109   439,653   944,267   799,149 
Other general and administrative expenses  1,449,576   1,540,358   4,486,814   5,160,757 
Total operating costs and expenses  7,047,323   5,563,725   19,769,414   18,449,300 
Operating income  240,618   746,802   2,813,088   3,717,639 
             
Other income (expense):            
Interest income  96,220   384,732   471,435   1,308,695 
Interest expense  (53,125)  (8,760)  (70,644)  (71,619)
Gain (loss) on derivative contracts  440,712   (24,303)  245,095   1,672,535 
Other income, net  9,994   468   111,067   5,169 
Other income, net  493,801   352,137   756,953   2,914,780 
             
Net income before income tax expense  734,419   1,098,939   3,570,041   6,632,419 
Income tax expense  368,398   710,164   881,464   2,283,228 
NET INCOME $366,021  $388,775  $2,688,577  $4,349,191 
Currency translation adjustments  39,845   (846)  62,438   (2,317)
Unrealized gain (loss) on securities     24,641   (1,598)  (22,365)
NET COMPREHENSIVE INCOME $405,866  $412,570  $2,749,417  $4,324,509 
             
Net income per share, basic $0.02  $0.02  $0.12  $0.19 
Net income per share, diluted $0.02  $0.02  $0.12  $0.19 
Weighted average number of shares outstanding, basic  21,948,519   22,118,984   21,954,803   22,616,539 
Weighted average number of shares outstanding, diluted  22,155,292   22,178,686   22,000,881   22,631,550 
             

EPSILON ENERGY LTD.
Unaudited Consolidated Balance Sheets
(All amounts stated in US$)
       
  September 30, December31,
  2024 2023
ASSETS      
Current assets      
Cash and cash equivalents $8,304,971  $13,403,628 
Accounts receivable  4,470,017   6,015,448 
Short term investments     18,775,106 
Fair value of derivatives  150,121   1,219,025 
Prepaid income taxes  1,020,179   952,301 
Other current assets  865,841   763,288 
Total current assets  14,811,129   41,128,796 
Non-current assets      
Property and equipment:      
Oil and gas properties, successful efforts method      
Proved properties  190,162,954   160,263,511 
Unproved properties  28,292,321   25,504,873 
Accumulated depletion, depreciation, amortization and impairment  (119,981,434)  (113,708,210)
Total oil and gas properties, net  98,473,841   72,060,174 
Gathering system  42,988,092   42,738,273 
Accumulated depletion, depreciation, amortization and impairment  (36,221,366)  (35,539,996)
Total gathering system, net  6,766,726   7,198,277 
Land  637,764   637,764 
Buildings and other property and equipment, net  269,133   291,807 
Total property and equipment, net  106,147,464   80,188,022 
Other assets:      
Operating lease right-of-use assets, long term  368,564   441,987 
Restricted cash  470,000   470,000 
Prepaid drilling costs     1,813,808 
Total non-current assets  106,986,028   82,913,817 
Total assets $121,797,157  $124,042,613 
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities      
Accounts payable trade $2,220,394  $3,236,871 
Gathering fees payable  844,163   1,136,237 
Royalties payable  1,149,330   1,422,898 
Accrued capital expenditures  1,758,133   696,761 
Accrued compensation  589,620   636,295 
Other accrued liabilities  599,949   561,537 
Fair value of derivatives  50,702   118,770 
Operating lease liabilities  112,502   86,473 
Total current liabilities  7,324,793   7,895,842 
Non-current liabilities      
Asset retirement obligations  3,590,017   3,502,952 
Deferred income taxes  12,138,030   11,553,943 
Operating lease liabilities, long term  385,653   476,911 
Total non-current liabilities  16,113,700   15,533,806 
Total liabilities  23,438,493   23,429,648 
Commitments and contingencies (Note 10)      
Shareholders’ equity      
Preferred shares, no par value, unlimited shares authorized, none issued or outstanding      
Common shares, no par value, unlimited shares authorized and 21,973,687 shares issued and 21,848,687 shares outstanding at September 30, 2024 and 22,222,722 issued and 22,151,848 shares outstanding at December 31, 2023  116,708,531   118,272,565 
Treasury shares, at cost, 125,000 at September 30, 2024 and 70,874 at December 31, 2023  (627,500)  (360,326)
Additional paid-in capital  11,818,758   10,874,491 
Accumulated deficit  (39,374,242)  (37,946,042)
Accumulated other comprehensive income  9,833,117   9,772,277 
Total shareholders’ equity  98,358,664   100,612,965 
Total liabilities and shareholders’ equity $121,797,157  $124,042,613 
       

EPSILON ENERGY LTD.
Unaudited Consolidated Statements of Cash Flows
(All amounts stated in US$)
       
  Nine months ended September 30,
  2024 2023
Cash flows from operating activities:      
Net income $2,688,577  $4,349,191 
Adjustments to reconcile net income to net cash provided by operating activities:      
Depletion, depreciation, amortization, and accretion  7,127,641   4,780,766 
Accretion of discount on available for sale securities  (297,637)  (574,341)
Gain on available for sale securities     (60,494)
Loss on sale of oil and gas properties     1,449,871 
Gain on derivative contracts  (245,095)  (1,672,535)
Settlement received on derivative contracts  1,245,931   2,979,128 
Settlement of asset retirement obligation  (88,992)  (3,482)
Stock-based compensation expense  944,267   799,149 
Deferred income tax (benefit) expense  584,088   1,188,059 
Changes in assets and liabilities:      
Accounts receivable  1,545,431   3,195,108 
Prepaid income taxes  (67,878)  (814,694)
Other assets and liabilities  (94,360)  (67,008)
Accounts payable, royalties payable and other accrued liabilities  (1,520,707)  (1,191,558)
Net cash provided by operating activities  11,821,266   14,357,160 
Cash flows from investing activities:      
Additions to unproved oil and gas properties  (2,787,448)  (8,017,412)
Additions to proved oil and gas properties  (29,041,344)  (7,860,073)
Additions to gathering system properties  (76,625)  (52,069)
Additions to land, buildings and property and equipment  (13,912)  (49,689)
Purchases of short term investments – held to maturity     (32,812,974)
Purchases of short term investments – available for sale  (4,045,785)   
Proceeds from sales and maturities of short term investments  23,116,930   14,554,976 
Proceeds from sale of oil and gas properties     12,498 
Prepaid drilling costs  1,813,808   (2,891,250)
Net cash used in investing activities  (11,034,376)  (37,115,993)
Cash flows from financing activities:      
Buyback of common shares  (1,831,208)  (5,695,275)
Dividends paid  (4,116,777)  (4,217,471)
Debt issuance costs     (140,000)
Net cash used in financing activities  (5,947,985)  (10,052,746)
Effect of currency rates on cash, cash equivalents, and restricted cash  62,438   (2,317)
Decrease in cash, cash equivalents, and restricted cash  (5,098,657)  (32,813,896)
Cash, cash equivalents, and restricted cash, beginning of period  13,873,628   45,806,947 
Cash, cash equivalents, and restricted cash, end of period $8,774,971  $12,993,051 
       
Supplemental cash flow disclosures:      
Income taxes paid $4,000  $1,442,304 
Interest paid $16,832  $88,835 
       
Non-cash investing activities:      
Change in proved properties accrued in accounts payable and accrued liabilities $818,504  $41,947 
Change in gathering system accrued in accounts payable and accrued liabilities $173,193  $3,441 
Asset retirement obligation asset additions and adjustments $39,597  $4,640 
       

  Three months ended September 30, Nine months ended September 30,
  2024 2023 2024 2023
Net income $366,021  $388,775  $2,688,577  $4,349,191 
Add Back:            
Interest income, net  (43,095)  (375,972)  (400,791)  (1,237,076)
Income tax expense  368,398   710,164   881,464   2,283,228 
Depreciation, depletion, amortization, and accretion  2,698,812   1,392,032   7,127,641   4,780,766 
Stock based compensation expense  309,109   439,653   944,267   799,149 
Loss on sale of assets           1,449,871 
Loss on derivative contracts net of cash received or paid on settlement  44,677   1,370,573   1,000,836   1,306,593 
Foreign currency translation loss     (98)  570   (1,086)
Adjusted EBITDA $3,743,922  $3,925,127  $12,242,564  $13,730,636 
             

Epsilon defines Adjusted EBITDA as earnings before (1) net interest expense, (2) taxes, (3) depreciation, depletion, amortization and accretion expense, (4) impairments of natural gas and oil properties, (5) non-cash stock compensation expense, (6) gain or loss on derivative contracts net of cash received or paid on settlement, and (7) other income. Adjusted EBITDA is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity.

Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Epsilon has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures. It further provides investors a helpful measure for comparing operating performance on a “normalized” or recurring basis with the performance of other companies, without giving effect to certain non-cash expenses and other items. This provides management, investors and analysts with comparative information for evaluating the Company in relation to other natural gas and oil companies providing corresponding non-U.S. GAAP financial measures or that have different financing and capital structures or tax rates. These non-U.S. GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with U.S. GAAP.

Disclaimer & Cookie Notice

Welcome to GOLDEA services for Professionals

Before you continue, please confirm the following:

Professional advisers only

I am a professional adviser and would like to visit the GOLDEA CAPITAL for Professionals website.

Cookie Notice

We use cookies to improve your experience on our website

Information we collect about your use of Goldea Capital website

Goldea Capital website collects personal data about visitors to its website.

When someone visits our websites, we use a third party service, Google Analytics, to collect standard internet log information (such as IP address and type of browser they’re using) and details of visitor behavior patterns. We do this to allow us to keep track of the number of visitors to the various parts of the sites and understand how our website is used. We do not make any attempt to find out the identities or nature of those visiting our websites. We won’t share your information with any other organizations for marketing, market research or commercial purposes and we don’t pass on your details to other websites.

Use of cookies
Cookies are small text files that are placed on your computer or other device by websites that you visit. They are widely used to make websites work, or work more efficiently, as well as to provide information to the owners of the site.