Epsilon Energy .(US:EPSN)2025-11-06 17:00Financial Data and Key Metrics Changes - The company reported year-to-date adjusted earnings of $0.45 per share, which included adjustments for a Canadian impairment and transaction expenses related to the Peak acquisition [9][10] - The pro forma leverage is described as very manageable, allowing the company to execute on capital investment and shareholder return plans over the next few years [9] Business Line Data and Key Metrics Changes - In the Permian, the company participated in the drilling and completion of the eighth well, which commenced production late in the quarter, contributing to strong performance [3][4] - The Marcellus region experienced sub-$2 net gas pricing due to shoulder season inventory builds, leading to operator-elected production curtailments, but pricing improved with a colder start to November [4][6] Market Data and Key Metrics Changes - The company has hedged approximately 60% of PDP oil volumes for 2026 at a weighted average WTI strike price of $63.30 per barrel, and about 50% of gas volumes with a weighted average floor above $3.30 and ceiling above $5.00 [8] Company Strategy and Development Direction - The acquisition of Peak Companies in the Powder River Basin is seen as a major strategic milestone, expected to enhance the company's position for success and outperformance in the medium and long term [3][5] - The company plans to focus on production optimization and the highly economic conventional Parkman inventory post-acquisition [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the integration of the Peak team and the potential for transformational results in 2027 under favorable market conditions [7][32] - The company anticipates increased investment in the Marcellus position over the next several years as the operator shifts focus towards the Auburn area, which holds over 15 gross un-drilled locations [6][15] Other Important Information - The company has executed definitive agreements to acquire Peak Companies, which includes the issuance of up to 8.5 million shares, subject to shareholder approval [5] - The company is in the early stages of exploring a sale of non-core midstream assets in Oklahoma [16] Q&A Session Summary Question: Clarity on BLM permits and development timeline for Parkman wells - Management confirmed that BLM has started reissuing permits in Converse, allowing for initial infrastructure investments, with a focus on development expected to kick off in late 2026 or early 2027 [22][23] Question: Expected activity for 2026 - Preliminary plans indicate approximately $20 million of CapEx in Peak assets, with $6 million allocated for two wells in the Permian and $13 million for Marcellus, though some CapEx may slide into 2027 [27][28] Question: Integration of the Peak team and non-drilling investments - Management expressed confidence in a smooth integration process, having done significant front-end work to ensure the right team is in place post-close [32] Question: Activity of offset operators in Campbell County and Converse - Management noted that most offset operators have drilled up the Parkman due to its economic viability, with ongoing activity in Niobrara and Mowry, and an expectation of increased rig counts in the Powder River Basin [35][36]