Epsilon Energy .(US:EPSN)2024-05-12 00:11Financial 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]