Epsilon Energy .(US:EPSN)2024-11-06 22:17Financial Performance - The company reported a net operating revenue of $29,000,000 for the quarter, with an adjusted EBITDA of $10,000,000, indicating a margin of approximately 34.5%[15]. - Total revenue for the three months ended September 30, 2023, was $7,287,941, an increase from $6,310,527 in the same period last year, representing a growth of approximately 15.4%[18]. - Net income for the three months ended September 30, 2023, was $366,021, compared to $388,775 in the prior year, reflecting a decrease of about 5.8%[18]. - Operating income decreased to $240,618 for the three months ended September 30, 2023, down from $746,802 in the same period last year, a decline of approximately 67.8%[18]. - Total operating costs and expenses increased to $7,047,323 for the three months ended September 30, 2023, compared to $5,563,725 in the prior year, marking an increase of about 26.6%[18]. - The company reported a net comprehensive income of $405,866 for the three months ended September 30, 2023, compared to $412,570 in the prior year, a slight decrease of about 1.7%[18]. - Net income for the nine months ended September 30, 2023, was $2,688,577, compared to $4,349,191 for the same period in 2022[33]. - The company reported a net income of $3,570,041 for the nine months ended September 30, 2024, compared to $6,632,419 in the same period of 2023, reflecting a decrease of approximately 46.3%[117]. Asset and Equity Changes - Cash and cash equivalents decreased from $13,403,628 on December 31, 2023, to $8,304,971 on September 30, 2024, representing a decline of approximately 38.5%[15]. - Total current assets decreased significantly from $41,128,796 to $14,811,129, a reduction of about 64.0%[15]. - Shareholders' equity decreased from $100,612,965 to $98,358,664, a decline of approximately 2.2%[15]. - As of September 30, 2023, total shareholders' equity was $99,456,110, a decrease from $105,172,300 at March 31, 2023[21]. - The balance of cash, cash equivalents, and restricted cash at the end of the period was $8,774,971, down from $12,993,051 at the beginning of the period[33]. - Total oil and gas properties, net, increased to $98,473,841 as of September 30, 2024, from $72,060,174 as of December 31, 2023, reflecting an increase of approximately 36.7%[46]. - The total property and equipment, net, increased to $106,147,464 as of September 30, 2024, from $80,188,022 as of December 31, 2023, indicating an increase of approximately 32.4%[46]. Revenue and Production Insights - Gas, oil, NGL, and condensate revenue for the three months ended September 30, 2023, was $6,203,953, up from $3,241,531 in the same period last year, indicating a growth of approximately 91.5%[18]. - Natural gas sales revenue for the nine months ended September 30, 2024, was $6,828,155, compared to $11,351,618 for the same period in 2023, indicating a decrease of about 39.5%[108]. - Total revenues for the nine months ended September 30, 2024, increased by $0.4 million, or 2%, to $22.6 million from $22.2 million in the same period of 2023[167]. - Upstream oil and condensate revenue increased by 310% to $7.7 million for the nine months ended September 30, 2024, compared to the same period in 2023, driven by additional sales volumes from new wells in the Permian Basin[169]. - Total net revenue interest production in the Permian Basin increased by 428% to 73.3 Mboe for Q3 2024 compared to 13.9 Mboe in Q3 2023, and a 565% increase for the nine months ended September 30, 2024, totaling 191.4 Mboe compared to 28.8 Mboe in the same period of 2023[163]. Cost and Expense Management - Interest income for the three months ended September 30, 2023, was $96,220, a decrease from $384,732 in the same period last year, representing a decline of approximately 75.0%[18]. - Total operating costs for the nine months ended September 30, 2024, were $12,641,773, compared to $13,668,534 in 2023, reflecting a decrease of approximately 7.5%[117]. - Operating costs increased by 25% to $1.1 million for the nine months ended September 30, 2024, primarily due to acquired and developed wells in the Permian Basin[170]. - Capital expenditures for the nine months ended September 30, 2024, totaled $32,911,026, up from $16,024,631 in the same period of 2023, representing an increase of approximately 105.5%[117]. Strategic Initiatives and Future Outlook - The company plans to expand its market presence through strategic partnerships and new product launches in the upcoming quarters[12]. - Management anticipates a gradual recovery in commodity prices, which could positively impact revenue in the next fiscal year[12]. - The company is actively pursuing opportunities for acquisitions to enhance its asset portfolio and market share[12]. - The company formed a joint venture in October 2024, earning a 25% working interest across approximately 160,000 gross acres in Alberta, Canada, with a carried interest commitment of $7.3 million[128]. - The company executed a new Anchor Shipper Gas Gathering Agreement in May 2024, establishing fixed rates for gathering services, with a new fixed rate of $0.475 per MMBtu for 2024[162]. Stock and Shareholder Activities - A new share repurchase program was authorized on March 20, 2024, allowing for the repurchase of up to 2,191,320 common shares for an aggregate purchase price of not more than $12 million[54]. - The company repurchased and retired 248,700 shares at an average price of $4.82 per share during the nine months ended September 30, 2024[55]. - The Company declared quarterly dividends of $0.0625 per common share, totaling approximately $4.1 million for the nine months ended September 30, 2024[82]. - The company repurchased 125,000 shares at a price of $5.00 per share under the new program[96]. Tax and Compliance - The effective tax rate for the nine months ended September 30, 2024 was higher than the statutory federal rate due to state income taxes, partially offset by a valuation allowance against the Canadian net operating loss[90]. - The company is currently assessing the potential effects of new accounting standards issued by the FASB, including ASU No. 2023-09, which requires enhanced income tax disclosures effective for fiscal years beginning after December 15, 2024[64].