Epsilon Energy .(US:EPSN)2023-08-12 01:29Financial Data and Key Metrics Changes - The company reported no free cash flow in the quarter for the first time during the CEO's tenure, attributed to depressed natural gas pricing and significant capital investments in the Permian [26] - The company expanded its liquidity by $5 million under a new $35 million credit facility, enhancing financial flexibility [25][30] Business Line Data and Key Metrics Changes - The company closed investments in two areas in the Permian Basin, which added geographic operator and commodity diversity to its business [25] - The New Mexico wells began contributing to revenue, partially offsetting declines in Pennsylvania due to lower natural gas prices [31] Market Data and Key Metrics Changes - The average netback in the Marcellus for the second quarter was reported at approximately $1.35 per Mcf, indicating a challenging pricing environment [11] - The company noted that the lack of in-basin demand in the Marcellus has led to significant pricing pressure during the summer months [11] Company Strategy and Development Direction - The company is focused on deploying resources to create durable growth in per share equity value, with a disciplined approach to new investments [27] - The company plans to continue its appraisal program in Ector County, with expectations for additional wells in 2024 [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about potential price improvements as production moderates and weather conditions normalize [13] - The next 90 days are deemed critical for determining future pricing trends in the natural gas market [13] Other Important Information - The company has been active in pursuing new investments, with some opportunities expected to be accretive from day one [27] - A buyback of 0.5 million shares was executed in July, indicating a proactive approach to managing capital [17][18] Q&A Session Summary Question: Comments on natural gas pricing strategies - Management acknowledged concerns about inventory overbuilds and noted that they currently have no additional hedges beyond October, but are monitoring the situation closely [7][8] Question: Future pricing expectations - Management indicated that if prices align with current strip forecasts, it would represent a substantial uptick compared to the previous year [11] Question: Expansion opportunities in the Permian - Management confirmed ongoing activity in Ector County and plans for additional wells, with more updates expected in the next call [15][34]