Earnings Announcement and Conference Call - Epsilon Energy Ltd will release its third quarter 2024 earnings on November 06, 2024 after market close [1] - The company will host a conference call on November 7, 2024 at 2:00 p m Central Time to discuss financial and operating results [1] - Toll-free dial-in numbers are provided for US, Canada, and international participants [1] - A webcast of the conference call will be available at the provided link and a replay will be accessible on the company's website [1] Company Overview - Epsilon Energy Ltd is a North American onshore natural gas and oil production and gathering company [2] - The company has assets located in Pennsylvania, Texas, New Mexico, and Oklahoma [2] - Key executive contacts include CEO Jason Stabell and CFO Andrew Williamson [2]

We wrote about Epsilon Energy Ltd. (NASDAQ: EPSN ) in May of this year, when the North American onshore independent natural gas and oil company was upgraded to a 'Buy'. Since our upgrade, shares have returned just over 15%, including dividend distributions. Although commodity Individual investor with a keen interest in deriving income from investment setups. We do this by buying undervalued profitable stocks with strong balance sheets & minimal debt. Furthermore, when the opportunity arises, we like to writ ...

Epsilon Energy Ltd. (EPSN) delivered a mixed performance in its second-quarter 2024 results, marked by significant growth in oil production that offset declines in natural gas revenues. The company's strategic focus on its Permian assets drove a notable increase in oil output and revenues, while challenges in the Marcellus shale impacted natural gas production. Despite a modest decline in overall profitability, EPSN maintained a strong balance sheet and continued to invest in its asset base, positioning its ...

HOUSTON, July 24, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. ("Epsilon" or the "Company") (NASDAQ: EPSN) today announced that it will issue its second quarter 2024 earnings release on Tuesday, August 13, 2024 after the market close and host a conference call to discuss its financial and operating results on Wednesday, August 14, 2024 at 9:30 a.m. Central Time (10:30 a.m. Eastern Time). Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International par ...

HOUSTON, June 25, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. ("Epsilon" or the "Company") (NASDAQ: EPSN) today reported the results of a borrowing base redetermination on the Company's senior secured reserve-based revolving credit facility (the "Credit Facility") with Frost Bank (the "Lender"). Effective on June 21, 2024, the Lender redetermined the Company's borrowing base at $45 million, which will remain until the next redetermination in the fourth quarter of 2024. The borrowing base now includes the r ...

Effective on June 21, 2024, the Lender redetermined the Company's borrowing base at $45 million, which will remain until the next redetermination in the fourth quarter of 2024. The borrowing base now includes the recently acquired and developed properties in Ector County, Texas. The Lender's total commitment is equal to the borrowing base amount. All other terms of the Credit Facility remain the same. In Ector County, Texas, the recently completed Ava well, the sixth well drilled in the Pradera Fuego projec ...

About Epsilon Andrew Williamson Chief Financial Officer Andrew.Williamson@EpsilonEnergyLTD.com 281-670-0002 HOUSTON, May 31, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. ("Epsilon" or the "Company") (NASDAQ:EPSN) today announced that its Board of Directors has declared a dividend of $0.0625 per share of common stock (annualized $0.25/sh) to the stock holders of record at the close of business on June 14, 2024, payable on June 28, 2024. All dividends paid by the Company are "eligible dividends" as defined in ...

The research report highlights several challenges that could hamper EPSN's growth. While the company has implemented hedging strategies to mitigate price volatility, these measures may not fully offset revenue losses if natural gas and oil prices remain low or become more volatile. The company's current hedging contracts provide some cash flow stability but limit potential gains if prices rebound strongly. Discrepancies between hedged volumes and actual production due to curtailments or other operational is ...

Financial Data and Key Metrics Changes - The company spent over $42 million in the last 12 months, with over 80% allocated to building the Permian business, while the remainder was spent on recently completed Marcellus wells [13] - The company expects flat to slightly down cash flow in 2024 compared to 2023 at current strip prices, but anticipates a material uplift in cash flow in 2025 [12] Business Line Data and Key Metrics Changes - The company has seven completed wells in Pennsylvania, with 0.7 net likely not beginning production until natural gas prices improve sustainably [4] - The new gas gathering agreement will establish fixed rates for gathering, compression, and cross-flow, with gathering rates up 17% year-over-year [7] Market Data and Key Metrics Changes - The company received a $1 premium to NYMEX pricing for crude oil, excluding transportation [8] - The operator has curtailed approximately 4.5 million cubic feet a day of NRI production in response to current pricing, with expectations for this production to return as prices improve [21] Company Strategy and Development Direction - The company is focused on ramping up investment activity, particularly in the Permian assets, which are expected to contribute well over half of upstream cash flow at current strip prices [14] - The company plans to continue investing in its portfolio and potential new opportunities despite a reduction in cash [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the combination of a more diverse revenue mix and a defensive hedging program will support cash flow stability [12] - Management expressed confidence in the performance of the Permian assets and the potential for increased cash flow driven by higher future gas prices [14] Other Important Information - The company is in the final stages of negotiating a new gas gathering agreement that will replace the legacy cost of service agreement, effective January 1, 2024 [7] - The company is currently analyzing the Woodford Court to assess the interval's prospectivity within the current lease position [16] Q&A Session Summary Question: What is the outlook for cash flow in 2024? - Management expects flat to slightly down cash flow in 2024 compared to 2023 at current strip prices, with a potential material uplift in cash flow in 2025 [12] Question: How is the company addressing production curtailments? - The operator has curtailed some existing production in Auburn due to pricing, but management anticipates this production will return as prices improve [21]

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I-FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited Q1 2024 financials show total revenue decreased to **$8.0 million**, net income to **$1.5 million**, and operating cash flow to **$3.7 million** [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$125.1 million**, liabilities to **$25.2 million**, while cash decreased significantly to **$2.3 million** Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | 2,308,633 | 13,403,628 | | Short term investments | 12,238,177 | 18,775,106 | | Total current assets | 22,596,300 | 41,128,796 | | **Non-Current Assets** | | | | Total property and equipment, net | 101,156,665 | 80,188,022 | | **Total Assets** | **125,070,233** | **124,042,613** | | **Liabilities & Equity** | | | | Total current liabilities | 9,667,503 | 7,895,842 | | Total non-current liabilities | 15,539,662 | 15,533,806 | | **Total Liabilities** | **25,207,165** | **23,429,648** | | **Total Shareholders' Equity** | **99,863,068** | **100,612,965** | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Q1 2024 total revenues decreased to **$8.0 million**, operating income to **$1.4 million**, and net income to **$1.5 million** Consolidated Statements of Operations Highlights (Unaudited) | Account | Three months ended March 31, 2024 ($) | Three months ended March 31, 2023 ($) | | :--- | :--- | :--- | | Total revenue | 7,986,743 | 9,356,276 | | Total operating costs and expenses | 6,582,050 | 6,032,147 | | Operating income | 1,404,693 | 3,324,129 | | Net income before income tax expense | 1,560,946 | 4,856,749 | | **NET INCOME** | **1,506,896** | **3,529,827** | | Net income per share, basic | 0.07 | 0.15 | | Net income per share, diluted | 0.07 | 0.15 | [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity decreased to **$99.9 million** in Q1 2024, primarily due to dividends and share buybacks - Key activities affecting **shareholders' equity** in Q1 2024 included net income of **$1.5 million**, dividend payments of **$1.37 million**, and common share buybacks totaling **$1.2 million**[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$3.7 million**, with significant cash used in investing and financing activities Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three months ended March 31, 2024 ($) | Three months ended March 31, 2023 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | 3,691,428 | 7,578,152 | | Net cash used in investing activities | (11,782,670) | (30,921,070) | | Net cash used in financing activities | (2,574,117) | (2,779,880) | | (Decrease) increase in cash, cash equivalents, and restricted cash | (10,664,995) | (26,125,398) | | Cash, cash equivalents, and restricted cash, end of period | 3,208,633 | 19,681,549 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business, policies, and key disclosures including a **$14.8 million** asset acquisition and a **$35 million** undrawn credit facility - Epsilon is a North American on-shore independent natural gas and oil company engaged in acquisition, development, gathering, and production[22](index=22&type=chunk) - During Q1 2024, Epsilon acquired a **25%** working interest in three producing wells and **3,246** gross undeveloped acres in Ector County, Texas, for a total consideration of **$14.8 million**[42](index=42&type=chunk)[46](index=46&type=chunk) - The company has a **$35 million** senior secured revolving credit facility with Frost Bank, which was undrawn as of March 31, 2024[45](index=45&type=chunk)[50](index=50&type=chunk) - On March 20, 2024, the Board authorized a new **share repurchase program** for up to **2,191,320** common shares, or up to **$12.0 million**[52](index=52&type=chunk) - A quarterly dividend of **$0.0625** per common share was declared and paid in Q1 2024, totaling approximately **$1.4 million**[67](index=67&type=chunk) Revenue Breakdown (Q1 2024 vs Q1 2023) | Revenue Source | Q1 2024 ($) | Q1 2023 ($) | | :--- | :--- | :--- | | Natural gas | 2,962,979 | 6,256,178 | | Natural gas liquids | 372,984 | 196,295 | | Oil and condensate | 2,715,082 | 517,108 | | Gathering and compression fees | 1,935,698 | 2,386,695 | | **Total operating revenue** | **7,986,743** | **9,356,276** | - The company's operations are divided into three reportable segments: Upstream, Gas Gathering, and Corporate. For Q1 2024, the Upstream segment generated **$1.8 million** in operating income, and the Gas Gathering segment generated **$1.4 million**[97](index=97&type=chunk)[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes Q1 2024 revenue decline to lower gas prices, with strategy focusing on capital allocation and Permian investments [Overview and Business Strategy](index=25&type=section&id=Overview%20and%20Business%20Strategy) Epsilon's strategy emphasizes **disciplined capital allocation**, **shareholder returns**, and a shift in investment focus to the **Permian Basin** - The company's **business strategy** emphasizes **disciplined capital allocation**, **shareholder returns** (dividends and buybacks), and maintaining a **strong balance sheet**[120](index=120&type=chunk) - Investment focus has recently shifted from the Marcellus in Pennsylvania to the **Permian Basin** in Ector County, Texas[121](index=121&type=chunk)[122](index=122&type=chunk) - On February 27, 2024, Epsilon acquired a **25%** working interest in three producing wells and undeveloped acreage in Ector County, Texas[126](index=126&type=chunk) [Operational Highlights](index=26&type=section&id=Operational%20Highlights) Q1 2024 saw Marcellus gas prices drop **31%**, Permian production at **52.3 Mboe**, and Oklahoma production decrease **36%** - **Marcellus Shale (PA):** Realized natural gas price decreased **31%** YoY to **$1.77** per Mcf. Natural gas production decreased **32%** YoY to **1.6 Bcf**[129](index=129&type=chunk) - **Permian Basin (TX & NM):** Total net production for Q1 2024 was **52.3 Mboe**, with a realized price of **$53.28** per Boe[129](index=129&type=chunk) - **Anadarko (OK):** Total net production for Q1 2024 was **0.11 Bcfe**, a **36%** decrease from Q1 2023[129](index=129&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Total revenues decreased **15%** to **$8.0 million** due to lower gas revenue, partially offset by increased oil revenue - Total revenues decreased **15%** to **$8.0 million** in Q1 2024 from **$9.4 million** in Q1 2023[134](index=134&type=chunk) - Upstream natural gas revenue decreased by **53%** due to lower prices and volumes. This was partially offset by a **425%** increase in oil and condensate revenue from new **Permian Basin** production[135](index=135&type=chunk)[137](index=137&type=chunk) - Gathering system revenue decreased **19%** due to lower anchor shipper volumes[138](index=138&type=chunk) - Upstream operating costs increased by **26%** to **$1.8 million**, primarily due to new wells in the **Permian Basin**[139](index=139&type=chunk)[140](index=140&type=chunk) - General & Administrative (G&A) expenses decreased by **15%** to **$1.9 million**, driven by lower compensation, legal, and consulting fees[145](index=145&type=chunk)[146](index=146&type=chunk) [Non-GAAP Financial Measures-Adjusted EBITDA](index=26&type=section&id=Non-GAAP%20Financial%20Measures-Adjusted%20EBITDA) Adjusted EBITDA for Q1 2024 was **$4.6 million**, a decrease from **$5.6 million** in Q1 2023, reflecting operational performance Reconciliation of Net Income to Adjusted EBITDA | Account | Three months ended March 31, 2024 ($) | Three months ended March 31, 2023 ($) | | :--- | :--- | :--- | | Net income | 1,506,896 | 3,529,827 | | Interest (income) expense, net | (257,512) | (462,325) | | Income tax expense | 54,050 | 1,326,922 | | Depreciation, depletion, amortization, and accretion | 2,380,426 | 1,773,006 | | Stock based compensation expense | 321,569 | 179,748 | | Loss (gain) on derivative contracts net of cash received or paid on settlement | 589,011 | (705,360) | | **Adjusted EBITDA** | **4,595,010** | **5,640,835** | [Capital Resources and Liquidity](index=31&type=section&id=Capital%20Resources%20and%20Liquidity) Working capital surplus was **$12.9 million**, with **$3.7 million** from operations and a **$35 million** undrawn credit facility - **Working capital surplus** was **$12.9 million** at March 31, 2024, a decrease of **$20.3 million** from December 31, 2023[154](index=154&type=chunk) - Net cash from operations decreased by **51%** to **$3.7 million** in Q1 2024 compared to **$7.6 million** in Q1 2023[155](index=155&type=chunk) - The company has a **$35 million** senior secured revolving credit facility which remains undrawn[158](index=158&type=chunk) - In Q1 2024, the company repurchased **248,700** shares for **$1.2 million** under its previous plan. A new **$12.0 million** repurchase program was authorized in March 2024[162](index=162&type=chunk)[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces significant **commodity price risk**, mitigated by derivatives, and **interest rate risk** on its undrawn credit facility - The company's earnings are significantly affected by volatile natural gas and oil prices[169](index=169&type=chunk) - Epsilon uses derivative financial instruments to manage **commodity price risk** and stabilize cash flows[173](index=173&type=chunk) - The company has **interest rate risk** from its variable-rate credit agreement, but the outstanding balance was zero as of March 31, 2024[171](index=171&type=chunk)[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures** were effective as of March 31, 2024[174](index=174&type=chunk) - There were no changes in **internal control over financial reporting** during the quarter that have materially affected, or are reasonably likely to materially affect, the company's **internal control over financial reporting**[176](index=176&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reported no **legal proceedings** during the period - There are no **legal proceedings** to report[179](index=179&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes from the **risk factors** disclosed in the 2023 Annual Report on Form 10-K have occurred - No material changes from the **risk factors** disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023 have occurred[180](index=180&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALE%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased **248,700** shares at **$4.82** per share under its 2023-2024 program in Q1 2024 Purchases of Equity Securities (Q1 2024) | Period | Total number of shares purchased | Average price paid per share ($) | | :--- | :--- | :--- | | January 2024 | 248,700 | 4.82 | | **Total as of March 31, 2024** | **248,700** | **4.82** | - The shares were repurchased under the 2023-2024 **share repurchase program** that commenced on March 27, 2023 and terminated on March 26, 2024[182](index=182&type=chunk) [Item 5. Other Information](index=35&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information was reported for this item - Not applicable[185](index=185&type=chunk) [Item 6. Exhibits](index=36&type=section&id=ITEM%206.%20EXHIBITS) Exhibits filed include **Sarbanes-Oxley certifications** and **Inline XBRL data files** - The exhibits filed with this report include **Sarbanes-Oxley Section 302** and **906 certifications** and various **Inline XBRL documents**[187](index=187&type=chunk)