Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Epsilon Reports Third Quarter 2023 Results By: Epsilon Energy Ltd. via GlobeNewswire November 09, 2023 at 16:05 PM EST HOUSTON, Nov. 09, 2023 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported third quarter 2023 financial and operating results. Third Quarter Financial Highlights: Reported net revenue interest (NRI) production of 2.0 Bcfe (21.5 MMcfe per day) for the quarter ended September 30, 2023, a decrease of 14% compared to the prior quarter. As previously disclosed in our August operational update, the quarter over quarter decrease was caused in part by seven wells brought offline for 52 days during the quarter in Pennsylvania to accommodate a workover operation (cumulative NRI production rate for the wells before shut-in was 3.5 MMcf per day). These wells are now back online. Realized average price of $2.32 per Mcfe including hedges ($1.64 per Mcfe excluding hedges) for the quarter ended September 30, 2023, a decrease of 5% compared to the prior quarter. Reported total revenues of $6.3 million for the quarter ended September 30, 2023, a decrease of 3% compared to the prior quarter. $3.2 million from natural gas, oil, and NGL sales, a decrease of 25% compared to the prior quarter$3.1 million from gathering and compression fees through our ownership in the Auburn Gas Gathering System, after eliminating revenue earned from Epsilon production ($0.3 million), an increase of 39% compared to the prior quarter. This included $1.0 million of revenue received from a backward looking fee adjustment as a result of an internal audit by the system operator. Reported Adjusted EBITDA of $3.9 million for the quarter ended September 30, 2023. Cash, cash equivalents (including restricted cash), and short term investments totaled $31.9 million at September 30, 2023. Returned $4.0 million to shareholders during the quarter ended September 30, 2023. $2.6 million through the repurchase of 525,000 shares at $5.00 per share, over a 2% reduction of shares outstanding$1.4 million through the quarterly dividend1.4 million shares remain under the approved buyback program (expires in March 2024) Realized gains of $1.3 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 455,000 MMBTU. Placed Henry Hub (HHUB) and TGP Z4 basis swaps for November 2023 through March 2024 (at a net realized price of $2.59 per MMBTU, for 380,000 MMBTU) and April 2024 through October 2024 (at a net realized price of $2.05 per MMBTU, for 1,070,000 MMBTU). After quarter-end, we placed additional Henry Hub (HHUB) and TGP Z4 basis swaps for November 2023 through March 2024 (at a net realized price of $2.65 per MMBTU, for 380,000 MMBTU) and April 2024 through October 2024 (at a net realized price of $2.09 per MMBTU, for 535,000 MMBTU). Third Quarter Operating Results: Epsilon’s capital expenditures were $5.5 million for the quarter ended September 30, 2023, including certain pre-paid well costs. This capital was primarily related to the drilling of one gross (0.25 net) well and the completion of two gross (0.5 net) wells in Ector Co. Texas ($4.8 million). During the quarter, we received well proposals from our operating partner in Pennsylvania for the drilling and completion of seven gross wells (0.74 net). The first three wells have been drilled, and drilling is expected to commence on the fourth this month. All seven wells are expected to be drilled by year end with completions expected in the first half of 2024. In addition, initial investment plans for 2024 on our position in Ector Co. Texas call for the drilling and completion of up to four gross (1.0 net) wells, starting in the first quarter. The two gross (0.5 net) wells drilled in 2023 are now completed and on flowback. Initial results are encouraging and in-line with our pre-drill projections. Jason Stabell, Epsilon's Chief Executive Officer, commented, "Our announced investments and ongoing activities in Pennsylvania and Texas position the company for per share volume and cash flow growth next year, and represent the next step in our objective to deliver sustainable and attractive returns across a more diversified portfolio. These investments will be comfortably funded from cash flow and cash on hand while allowing us to pursue additional opportunities on existing assets and in new areas, to pay our annual dividend and to repurchase our shares opportunistically.” Earning’s Call: The Company will host a conference call to discuss its results on Friday, November 10, 2023 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the “Epsilon Energy Third Quarter 2023 Earnings Conference Call.” A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=TKIiaI4y. A webcast replay will be available on the Company’s website (www.epsilonenergyltd.com) following the call. About Epsilon Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets in Pennsylvania, Texas, New Mexico, and Oklahoma. For more information, please visit www.epsilonenergyltd.com, where we routinely post announcements, updates, events, investor information, presentations and recent news releases. Forward-Looking Statements Certain statements contained in this news release constitute forward looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, ‘may”, “will”, “project”, “should”, ‘believe”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon. Contact Information: 281-670-0002 Jason StabellChief Executive OfficerJason.Stabell@EpsilonEnergyLTD.com Andrew Williamson Chief Financial Officer Andrew.Williamson@EpsilonEnergyLTD.com EPSILON ENERGY LTD. Unaudited Consolidated Statements of Operations (All amounts stated in US$) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $3,241,531 $19,171,121 $14,509,184 $48,566,282 Gas gathering and compression revenue 3,068,996 2,072,806 7,657,755 6,180,747 Total revenue 6,310,527 21,243,927 22,166,939 54,747,029 Operating costs and expenses: Lease operating expenses 1,559,957 2,024,229 4,404,757 5,681,736 Gathering system operating expenses 631,725 600,672 1,854,000 1,666,275 Development geological and geophysical expenses - 2,387 - 7,159 Depletion, depreciation, amortization, and accretion 1,392,032 1,706,030 4,780,766 4,898,988 Loss (gain) on sale of oil and gas properties - - 1,449,871 (221,642)General and administrative expenses: Stock based compensation expense 439,653 500,597 799,149 836,949 Other general and administrative expenses 1,540,358 2,015,272 5,160,757 4,651,547 Total operating costs and expenses 5,563,725 6,849,187 18,449,300 17,521,012 Operating income 746,802 14,394,740 3,717,639 37,226,017 Other income (expense): Interest income 384,732 89,638 1,308,695 126,804 Interest expense (8,760) (17,501) (71,619) (33,565)(Loss) gain on derivative contracts (24,303) (929,637) 1,672,535 (1,124,547)Other income (expense), net 468 (32,777) 5,169 (99,896)Other income (expense), net 352,137 (890,277) 2,914,780 (1,131,204) Net income before income tax expense 1,098,939 13,504,463 6,632,419 36,094,813 Income tax expense 710,164 3,896,010 2,283,228 10,097,484 NET INCOME $388,775 $9,608,453 $4,349,191 $25,997,329 Currency translation adjustments (846) (34,524) (2,317) (48,272)Unrealized gain (loss) on securities 24,641 - (22,365) - NET COMPREHENSIVE INCOME $412,570 $9,573,929 $4,324,509 $25,949,057 Net income per share, basic $0.02 $0.42 $0.19 $1.11 Net income per share, diluted $0.02 $0.41 $0.19 $1.11 Weighted average number of shares outstanding, basic 22,118,984 23,011,729 22,616,539 23,419,666 Weighted average number of shares outstanding, diluted 22,178,686 23,169,658 22,631,550 23,524,574 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets (All amounts stated in US$) September 30, December 31, 2023 2022ASSETS Current assets Cash and cash equivalents $12,498,051 $45,236,584 Accounts receivable 4,006,278 7,201,386 Short term investments 18,870,468 - Fair value of derivatives - 1,222,090 Prepaid income taxes 1,954,788 1,140,094 Other current assets 920,224 632,154 Operating lease right-of-use assets - 31,383 Total current assets 38,249,809 55,463,691 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 154,190,226 148,326,265 Unproved properties 26,185,843 18,169,157 Accumulated depletion, depreciation, amortization and impairment (111,142,288) (107,729,293)Total oil and gas properties, net 69,233,781 58,766,129 Gathering system 42,694,512 42,639,001 Accumulated depletion, depreciation, amortization and impairment (35,241,595) (34,500,740)Total gathering system, net 7,452,917 8,138,261 Land 637,764 637,764 Buildings and other property and equipment, net 303,211 286,035 Total property and equipment, net 77,627,673 67,828,189 Other assets: Operating lease right-of-use assets, long term 468,833 - Restricted cash 495,000 570,363 Fair value of derivatives, long term 42,005 - Prepaid drilling costs 2,891,250 - Total non-current assets 81,524,761 68,398,552 Total assets $119,774,570 $123,862,243 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $1,855,591 $1,695,353 Gathering fees payable 556,437 935,012 Royalties payable 1,241,533 2,223,043 Accrued capital expenditures 195,917 41,694 Accrued compensation 631,646 598,351 Other accrued liabilities 556,814 690,655 Fair value of derivatives 126,508 - Operating lease liabilities 55,656 35,299 Total current liabilities 5,220,102 6,219,407 Non-current liabilities Asset retirement obligations 2,794,743 2,780,237 Deferred income taxes 11,805,453 10,617,394 Operating lease liabilities, long term 498,155 - Total non-current liabilities 15,098,351 13,397,631 Total liabilities 20,318,453 19,617,038 Commitments and contingencies (Note 10) Shareholders' equity Preferred shares, no par value, unlimited shares authorized, none issued or outstanding - - Common shares, no par value, unlimited shares authorized and 22,126,800 shares issued and outstanding at September 30, 2023 and 23,117,144 issued and outstanding at December 31, 2022 118,209,690 123,904,965 Additional paid-in capital 10,655,378 9,856,229 Accumulated deficit (39,158,820) (39,290,540)Accumulated other comprehensive income 9,749,869 9,774,551 Total shareholders' equity 99,456,117 104,245,205 Total liabilities and shareholders' equity $119,774,570 $123,862,243 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) Nine months ended September 30, 2023 2022Cash flows from operating activities: Net income $4,349,191 $25,997,329 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 4,780,766 4,898,988 Accretion of discount on available for sale securities (574,341) - Gain on available for sale securities (60,494) - Loss (gain) on sale of oil and gas properties 1,449,871 (221,642)(Gain) loss on derivative contracts (1,672,535) 1,124,547 Settlement received (paid) on derivative contracts 2,979,128 (1,396,698)Settlement of asset retirement obligation (3,482) (118,259)Stock-based compensation expense 799,149 836,949 Deferred income tax expense (benefit) 1,188,059 439,857 Changes in assets and liabilities: Accounts receivable 3,195,108 (5,472,585)Prepaid income taxes (814,694) - Other assets and liabilities (67,008) (205,717)Accounts payable, royalties payable and other accrued liabilities (1,191,558) 1,511,652 Income taxes payable - 2,021,246 Net cash provided by operating activities 14,357,160 29,415,667 Cash flows from investing activities: Additions to unproved oil and gas properties (8,017,412) (226,439)Additions to proved oil and gas properties (7,860,073) (5,528,037)Additions to gathering system properties (52,069) (129,985)Additions to land, buildings and property and equipment (49,689) (13,258)Purchases of short term investments (32,812,974) - Proceeds from short term investments 14,554,976 - Proceeds from sale of oil and gas properties 12,498 200,000 Prepaid drilling costs (2,891,250) - Net cash used in investing activities (37,115,993) (5,697,719)Cash flows from financing activities: Buyback of common shares (5,695,275) (6,234,879)Exercise of stock options - 747,112 Dividends paid (4,217,471) (4,422,720)Debt issuance costs (140,000) - Net cash used in financing activities (10,052,746) (9,910,487)Effect of currency rates on cash, cash equivalents, and restricted cash (2,317) (48,272)(Decrease) increase in cash, cash equivalents, and restricted cash (32,813,896) 13,759,189 Cash, cash equivalents, and restricted cash, beginning of period 45,806,947 27,065,423 Cash, cash equivalents, and restricted cash, end of period $12,993,051 $40,824,612 Supplemental cash flow disclosures: Income taxes paid $1,442,304 $7,626 Interest paid $88,835 $50,872 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $41,947 $(194,391)Change in gathering system accrued in accounts payable and accrued liabilities $3,441 $12,882 Asset retirement obligation asset additions and adjustments $4,640 $10,821 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022Net income $388,775 $9,608,453 $4,349,191 $25,997,329 Add Back: Interest (income) expense, net (375,972) (72,137) (1,237,076) (93,239)Income tax expense 710,164 3,896,010 2,283,228 10,097,484 Depreciation, depletion, amortization, and accretion 1,392,032 1,706,030 4,780,766 4,898,988 Stock based compensation expense 439,653 500,597 799,149 836,949 Loss (gain) on sale of assets - - 1,449,871 (221,642)Loss (gain) on derivative contracts net of cash received or paid on settlement 1,370,573 908,227 1,306,593 (272,151)Foreign currency translation loss (98) 907 (1,086) 1,517 Adjusted EBITDA $3,925,127 $16,548,087 $13,730,636 $41,245,235 Epsilon defines Adjusted EBITDA as earnings before (1) net interest expense, (2) taxes, (3) depreciation, depletion, amortization and accretion expense, (4) impairments of natural gas and oil properties, (5) non-cash stock compensation expense, (6) gain or loss on derivative contracts net of cash received or paid on settlement, and (7) other income. Adjusted EBITDA is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Epsilon has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures. It further provides investors a helpful measure for comparing operating performance on a "normalized" or recurring basis with the performance of other companies, without giving effect to certain non-cash expenses and other items. This provides management, investors and analysts with comparative information for evaluating the Company in relation to other natural gas and oil companies providing corresponding non-U.S. GAAP financial measures or that have different financing and capital structures or tax rates. These non-U.S. GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with U.S. GAAP. Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Epsilon Reports Third Quarter 2023 Results By: Epsilon Energy Ltd. via GlobeNewswire November 09, 2023 at 16:05 PM EST HOUSTON, Nov. 09, 2023 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported third quarter 2023 financial and operating results. Third Quarter Financial Highlights: Reported net revenue interest (NRI) production of 2.0 Bcfe (21.5 MMcfe per day) for the quarter ended September 30, 2023, a decrease of 14% compared to the prior quarter. As previously disclosed in our August operational update, the quarter over quarter decrease was caused in part by seven wells brought offline for 52 days during the quarter in Pennsylvania to accommodate a workover operation (cumulative NRI production rate for the wells before shut-in was 3.5 MMcf per day). These wells are now back online. Realized average price of $2.32 per Mcfe including hedges ($1.64 per Mcfe excluding hedges) for the quarter ended September 30, 2023, a decrease of 5% compared to the prior quarter. Reported total revenues of $6.3 million for the quarter ended September 30, 2023, a decrease of 3% compared to the prior quarter. $3.2 million from natural gas, oil, and NGL sales, a decrease of 25% compared to the prior quarter$3.1 million from gathering and compression fees through our ownership in the Auburn Gas Gathering System, after eliminating revenue earned from Epsilon production ($0.3 million), an increase of 39% compared to the prior quarter. This included $1.0 million of revenue received from a backward looking fee adjustment as a result of an internal audit by the system operator. Reported Adjusted EBITDA of $3.9 million for the quarter ended September 30, 2023. Cash, cash equivalents (including restricted cash), and short term investments totaled $31.9 million at September 30, 2023. Returned $4.0 million to shareholders during the quarter ended September 30, 2023. $2.6 million through the repurchase of 525,000 shares at $5.00 per share, over a 2% reduction of shares outstanding$1.4 million through the quarterly dividend1.4 million shares remain under the approved buyback program (expires in March 2024) Realized gains of $1.3 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 455,000 MMBTU. Placed Henry Hub (HHUB) and TGP Z4 basis swaps for November 2023 through March 2024 (at a net realized price of $2.59 per MMBTU, for 380,000 MMBTU) and April 2024 through October 2024 (at a net realized price of $2.05 per MMBTU, for 1,070,000 MMBTU). After quarter-end, we placed additional Henry Hub (HHUB) and TGP Z4 basis swaps for November 2023 through March 2024 (at a net realized price of $2.65 per MMBTU, for 380,000 MMBTU) and April 2024 through October 2024 (at a net realized price of $2.09 per MMBTU, for 535,000 MMBTU). Third Quarter Operating Results: Epsilon’s capital expenditures were $5.5 million for the quarter ended September 30, 2023, including certain pre-paid well costs. This capital was primarily related to the drilling of one gross (0.25 net) well and the completion of two gross (0.5 net) wells in Ector Co. Texas ($4.8 million). During the quarter, we received well proposals from our operating partner in Pennsylvania for the drilling and completion of seven gross wells (0.74 net). The first three wells have been drilled, and drilling is expected to commence on the fourth this month. All seven wells are expected to be drilled by year end with completions expected in the first half of 2024. In addition, initial investment plans for 2024 on our position in Ector Co. Texas call for the drilling and completion of up to four gross (1.0 net) wells, starting in the first quarter. The two gross (0.5 net) wells drilled in 2023 are now completed and on flowback. Initial results are encouraging and in-line with our pre-drill projections. Jason Stabell, Epsilon's Chief Executive Officer, commented, "Our announced investments and ongoing activities in Pennsylvania and Texas position the company for per share volume and cash flow growth next year, and represent the next step in our objective to deliver sustainable and attractive returns across a more diversified portfolio. These investments will be comfortably funded from cash flow and cash on hand while allowing us to pursue additional opportunities on existing assets and in new areas, to pay our annual dividend and to repurchase our shares opportunistically.” Earning’s Call: The Company will host a conference call to discuss its results on Friday, November 10, 2023 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the “Epsilon Energy Third Quarter 2023 Earnings Conference Call.” A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=TKIiaI4y. A webcast replay will be available on the Company’s website (www.epsilonenergyltd.com) following the call. About Epsilon Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets in Pennsylvania, Texas, New Mexico, and Oklahoma. For more information, please visit www.epsilonenergyltd.com, where we routinely post announcements, updates, events, investor information, presentations and recent news releases. Forward-Looking Statements Certain statements contained in this news release constitute forward looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, ‘may”, “will”, “project”, “should”, ‘believe”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon. Contact Information: 281-670-0002 Jason StabellChief Executive OfficerJason.Stabell@EpsilonEnergyLTD.com Andrew Williamson Chief Financial Officer Andrew.Williamson@EpsilonEnergyLTD.com EPSILON ENERGY LTD. Unaudited Consolidated Statements of Operations (All amounts stated in US$) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $3,241,531 $19,171,121 $14,509,184 $48,566,282 Gas gathering and compression revenue 3,068,996 2,072,806 7,657,755 6,180,747 Total revenue 6,310,527 21,243,927 22,166,939 54,747,029 Operating costs and expenses: Lease operating expenses 1,559,957 2,024,229 4,404,757 5,681,736 Gathering system operating expenses 631,725 600,672 1,854,000 1,666,275 Development geological and geophysical expenses - 2,387 - 7,159 Depletion, depreciation, amortization, and accretion 1,392,032 1,706,030 4,780,766 4,898,988 Loss (gain) on sale of oil and gas properties - - 1,449,871 (221,642)General and administrative expenses: Stock based compensation expense 439,653 500,597 799,149 836,949 Other general and administrative expenses 1,540,358 2,015,272 5,160,757 4,651,547 Total operating costs and expenses 5,563,725 6,849,187 18,449,300 17,521,012 Operating income 746,802 14,394,740 3,717,639 37,226,017 Other income (expense): Interest income 384,732 89,638 1,308,695 126,804 Interest expense (8,760) (17,501) (71,619) (33,565)(Loss) gain on derivative contracts (24,303) (929,637) 1,672,535 (1,124,547)Other income (expense), net 468 (32,777) 5,169 (99,896)Other income (expense), net 352,137 (890,277) 2,914,780 (1,131,204) Net income before income tax expense 1,098,939 13,504,463 6,632,419 36,094,813 Income tax expense 710,164 3,896,010 2,283,228 10,097,484 NET INCOME $388,775 $9,608,453 $4,349,191 $25,997,329 Currency translation adjustments (846) (34,524) (2,317) (48,272)Unrealized gain (loss) on securities 24,641 - (22,365) - NET COMPREHENSIVE INCOME $412,570 $9,573,929 $4,324,509 $25,949,057 Net income per share, basic $0.02 $0.42 $0.19 $1.11 Net income per share, diluted $0.02 $0.41 $0.19 $1.11 Weighted average number of shares outstanding, basic 22,118,984 23,011,729 22,616,539 23,419,666 Weighted average number of shares outstanding, diluted 22,178,686 23,169,658 22,631,550 23,524,574 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets (All amounts stated in US$) September 30, December 31, 2023 2022ASSETS Current assets Cash and cash equivalents $12,498,051 $45,236,584 Accounts receivable 4,006,278 7,201,386 Short term investments 18,870,468 - Fair value of derivatives - 1,222,090 Prepaid income taxes 1,954,788 1,140,094 Other current assets 920,224 632,154 Operating lease right-of-use assets - 31,383 Total current assets 38,249,809 55,463,691 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 154,190,226 148,326,265 Unproved properties 26,185,843 18,169,157 Accumulated depletion, depreciation, amortization and impairment (111,142,288) (107,729,293)Total oil and gas properties, net 69,233,781 58,766,129 Gathering system 42,694,512 42,639,001 Accumulated depletion, depreciation, amortization and impairment (35,241,595) (34,500,740)Total gathering system, net 7,452,917 8,138,261 Land 637,764 637,764 Buildings and other property and equipment, net 303,211 286,035 Total property and equipment, net 77,627,673 67,828,189 Other assets: Operating lease right-of-use assets, long term 468,833 - Restricted cash 495,000 570,363 Fair value of derivatives, long term 42,005 - Prepaid drilling costs 2,891,250 - Total non-current assets 81,524,761 68,398,552 Total assets $119,774,570 $123,862,243 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $1,855,591 $1,695,353 Gathering fees payable 556,437 935,012 Royalties payable 1,241,533 2,223,043 Accrued capital expenditures 195,917 41,694 Accrued compensation 631,646 598,351 Other accrued liabilities 556,814 690,655 Fair value of derivatives 126,508 - Operating lease liabilities 55,656 35,299 Total current liabilities 5,220,102 6,219,407 Non-current liabilities Asset retirement obligations 2,794,743 2,780,237 Deferred income taxes 11,805,453 10,617,394 Operating lease liabilities, long term 498,155 - Total non-current liabilities 15,098,351 13,397,631 Total liabilities 20,318,453 19,617,038 Commitments and contingencies (Note 10) Shareholders' equity Preferred shares, no par value, unlimited shares authorized, none issued or outstanding - - Common shares, no par value, unlimited shares authorized and 22,126,800 shares issued and outstanding at September 30, 2023 and 23,117,144 issued and outstanding at December 31, 2022 118,209,690 123,904,965 Additional paid-in capital 10,655,378 9,856,229 Accumulated deficit (39,158,820) (39,290,540)Accumulated other comprehensive income 9,749,869 9,774,551 Total shareholders' equity 99,456,117 104,245,205 Total liabilities and shareholders' equity $119,774,570 $123,862,243 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) Nine months ended September 30, 2023 2022Cash flows from operating activities: Net income $4,349,191 $25,997,329 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 4,780,766 4,898,988 Accretion of discount on available for sale securities (574,341) - Gain on available for sale securities (60,494) - Loss (gain) on sale of oil and gas properties 1,449,871 (221,642)(Gain) loss on derivative contracts (1,672,535) 1,124,547 Settlement received (paid) on derivative contracts 2,979,128 (1,396,698)Settlement of asset retirement obligation (3,482) (118,259)Stock-based compensation expense 799,149 836,949 Deferred income tax expense (benefit) 1,188,059 439,857 Changes in assets and liabilities: Accounts receivable 3,195,108 (5,472,585)Prepaid income taxes (814,694) - Other assets and liabilities (67,008) (205,717)Accounts payable, royalties payable and other accrued liabilities (1,191,558) 1,511,652 Income taxes payable - 2,021,246 Net cash provided by operating activities 14,357,160 29,415,667 Cash flows from investing activities: Additions to unproved oil and gas properties (8,017,412) (226,439)Additions to proved oil and gas properties (7,860,073) (5,528,037)Additions to gathering system properties (52,069) (129,985)Additions to land, buildings and property and equipment (49,689) (13,258)Purchases of short term investments (32,812,974) - Proceeds from short term investments 14,554,976 - Proceeds from sale of oil and gas properties 12,498 200,000 Prepaid drilling costs (2,891,250) - Net cash used in investing activities (37,115,993) (5,697,719)Cash flows from financing activities: Buyback of common shares (5,695,275) (6,234,879)Exercise of stock options - 747,112 Dividends paid (4,217,471) (4,422,720)Debt issuance costs (140,000) - Net cash used in financing activities (10,052,746) (9,910,487)Effect of currency rates on cash, cash equivalents, and restricted cash (2,317) (48,272)(Decrease) increase in cash, cash equivalents, and restricted cash (32,813,896) 13,759,189 Cash, cash equivalents, and restricted cash, beginning of period 45,806,947 27,065,423 Cash, cash equivalents, and restricted cash, end of period $12,993,051 $40,824,612 Supplemental cash flow disclosures: Income taxes paid $1,442,304 $7,626 Interest paid $88,835 $50,872 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $41,947 $(194,391)Change in gathering system accrued in accounts payable and accrued liabilities $3,441 $12,882 Asset retirement obligation asset additions and adjustments $4,640 $10,821 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022Net income $388,775 $9,608,453 $4,349,191 $25,997,329 Add Back: Interest (income) expense, net (375,972) (72,137) (1,237,076) (93,239)Income tax expense 710,164 3,896,010 2,283,228 10,097,484 Depreciation, depletion, amortization, and accretion 1,392,032 1,706,030 4,780,766 4,898,988 Stock based compensation expense 439,653 500,597 799,149 836,949 Loss (gain) on sale of assets - - 1,449,871 (221,642)Loss (gain) on derivative contracts net of cash received or paid on settlement 1,370,573 908,227 1,306,593 (272,151)Foreign currency translation loss (98) 907 (1,086) 1,517 Adjusted EBITDA $3,925,127 $16,548,087 $13,730,636 $41,245,235 Epsilon defines Adjusted EBITDA as earnings before (1) net interest expense, (2) taxes, (3) depreciation, depletion, amortization and accretion expense, (4) impairments of natural gas and oil properties, (5) non-cash stock compensation expense, (6) gain or loss on derivative contracts net of cash received or paid on settlement, and (7) other income. Adjusted EBITDA is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Epsilon has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures. It further provides investors a helpful measure for comparing operating performance on a "normalized" or recurring basis with the performance of other companies, without giving effect to certain non-cash expenses and other items. This provides management, investors and analysts with comparative information for evaluating the Company in relation to other natural gas and oil companies providing corresponding non-U.S. GAAP financial measures or that have different financing and capital structures or tax rates. These non-U.S. GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with U.S. GAAP.
HOUSTON, Nov. 09, 2023 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported third quarter 2023 financial and operating results. Third Quarter Financial Highlights: Reported net revenue interest (NRI) production of 2.0 Bcfe (21.5 MMcfe per day) for the quarter ended September 30, 2023, a decrease of 14% compared to the prior quarter. As previously disclosed in our August operational update, the quarter over quarter decrease was caused in part by seven wells brought offline for 52 days during the quarter in Pennsylvania to accommodate a workover operation (cumulative NRI production rate for the wells before shut-in was 3.5 MMcf per day). These wells are now back online. Realized average price of $2.32 per Mcfe including hedges ($1.64 per Mcfe excluding hedges) for the quarter ended September 30, 2023, a decrease of 5% compared to the prior quarter. Reported total revenues of $6.3 million for the quarter ended September 30, 2023, a decrease of 3% compared to the prior quarter. $3.2 million from natural gas, oil, and NGL sales, a decrease of 25% compared to the prior quarter$3.1 million from gathering and compression fees through our ownership in the Auburn Gas Gathering System, after eliminating revenue earned from Epsilon production ($0.3 million), an increase of 39% compared to the prior quarter. This included $1.0 million of revenue received from a backward looking fee adjustment as a result of an internal audit by the system operator. Reported Adjusted EBITDA of $3.9 million for the quarter ended September 30, 2023. Cash, cash equivalents (including restricted cash), and short term investments totaled $31.9 million at September 30, 2023. Returned $4.0 million to shareholders during the quarter ended September 30, 2023. $2.6 million through the repurchase of 525,000 shares at $5.00 per share, over a 2% reduction of shares outstanding$1.4 million through the quarterly dividend1.4 million shares remain under the approved buyback program (expires in March 2024) Realized gains of $1.3 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 455,000 MMBTU. Placed Henry Hub (HHUB) and TGP Z4 basis swaps for November 2023 through March 2024 (at a net realized price of $2.59 per MMBTU, for 380,000 MMBTU) and April 2024 through October 2024 (at a net realized price of $2.05 per MMBTU, for 1,070,000 MMBTU). After quarter-end, we placed additional Henry Hub (HHUB) and TGP Z4 basis swaps for November 2023 through March 2024 (at a net realized price of $2.65 per MMBTU, for 380,000 MMBTU) and April 2024 through October 2024 (at a net realized price of $2.09 per MMBTU, for 535,000 MMBTU). Third Quarter Operating Results: Epsilon’s capital expenditures were $5.5 million for the quarter ended September 30, 2023, including certain pre-paid well costs. This capital was primarily related to the drilling of one gross (0.25 net) well and the completion of two gross (0.5 net) wells in Ector Co. Texas ($4.8 million). During the quarter, we received well proposals from our operating partner in Pennsylvania for the drilling and completion of seven gross wells (0.74 net). The first three wells have been drilled, and drilling is expected to commence on the fourth this month. All seven wells are expected to be drilled by year end with completions expected in the first half of 2024. In addition, initial investment plans for 2024 on our position in Ector Co. Texas call for the drilling and completion of up to four gross (1.0 net) wells, starting in the first quarter. The two gross (0.5 net) wells drilled in 2023 are now completed and on flowback. Initial results are encouraging and in-line with our pre-drill projections. Jason Stabell, Epsilon's Chief Executive Officer, commented, "Our announced investments and ongoing activities in Pennsylvania and Texas position the company for per share volume and cash flow growth next year, and represent the next step in our objective to deliver sustainable and attractive returns across a more diversified portfolio. These investments will be comfortably funded from cash flow and cash on hand while allowing us to pursue additional opportunities on existing assets and in new areas, to pay our annual dividend and to repurchase our shares opportunistically.” Earning’s Call: The Company will host a conference call to discuss its results on Friday, November 10, 2023 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the “Epsilon Energy Third Quarter 2023 Earnings Conference Call.” A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=TKIiaI4y. A webcast replay will be available on the Company’s website (www.epsilonenergyltd.com) following the call. About Epsilon Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets in Pennsylvania, Texas, New Mexico, and Oklahoma. For more information, please visit www.epsilonenergyltd.com, where we routinely post announcements, updates, events, investor information, presentations and recent news releases. Forward-Looking Statements Certain statements contained in this news release constitute forward looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, ‘may”, “will”, “project”, “should”, ‘believe”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon. Contact Information: 281-670-0002 Jason StabellChief Executive OfficerJason.Stabell@EpsilonEnergyLTD.com Andrew Williamson Chief Financial Officer Andrew.Williamson@EpsilonEnergyLTD.com EPSILON ENERGY LTD. Unaudited Consolidated Statements of Operations (All amounts stated in US$) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $3,241,531 $19,171,121 $14,509,184 $48,566,282 Gas gathering and compression revenue 3,068,996 2,072,806 7,657,755 6,180,747 Total revenue 6,310,527 21,243,927 22,166,939 54,747,029 Operating costs and expenses: Lease operating expenses 1,559,957 2,024,229 4,404,757 5,681,736 Gathering system operating expenses 631,725 600,672 1,854,000 1,666,275 Development geological and geophysical expenses - 2,387 - 7,159 Depletion, depreciation, amortization, and accretion 1,392,032 1,706,030 4,780,766 4,898,988 Loss (gain) on sale of oil and gas properties - - 1,449,871 (221,642)General and administrative expenses: Stock based compensation expense 439,653 500,597 799,149 836,949 Other general and administrative expenses 1,540,358 2,015,272 5,160,757 4,651,547 Total operating costs and expenses 5,563,725 6,849,187 18,449,300 17,521,012 Operating income 746,802 14,394,740 3,717,639 37,226,017 Other income (expense): Interest income 384,732 89,638 1,308,695 126,804 Interest expense (8,760) (17,501) (71,619) (33,565)(Loss) gain on derivative contracts (24,303) (929,637) 1,672,535 (1,124,547)Other income (expense), net 468 (32,777) 5,169 (99,896)Other income (expense), net 352,137 (890,277) 2,914,780 (1,131,204) Net income before income tax expense 1,098,939 13,504,463 6,632,419 36,094,813 Income tax expense 710,164 3,896,010 2,283,228 10,097,484 NET INCOME $388,775 $9,608,453 $4,349,191 $25,997,329 Currency translation adjustments (846) (34,524) (2,317) (48,272)Unrealized gain (loss) on securities 24,641 - (22,365) - NET COMPREHENSIVE INCOME $412,570 $9,573,929 $4,324,509 $25,949,057 Net income per share, basic $0.02 $0.42 $0.19 $1.11 Net income per share, diluted $0.02 $0.41 $0.19 $1.11 Weighted average number of shares outstanding, basic 22,118,984 23,011,729 22,616,539 23,419,666 Weighted average number of shares outstanding, diluted 22,178,686 23,169,658 22,631,550 23,524,574 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets (All amounts stated in US$) September 30, December 31, 2023 2022ASSETS Current assets Cash and cash equivalents $12,498,051 $45,236,584 Accounts receivable 4,006,278 7,201,386 Short term investments 18,870,468 - Fair value of derivatives - 1,222,090 Prepaid income taxes 1,954,788 1,140,094 Other current assets 920,224 632,154 Operating lease right-of-use assets - 31,383 Total current assets 38,249,809 55,463,691 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 154,190,226 148,326,265 Unproved properties 26,185,843 18,169,157 Accumulated depletion, depreciation, amortization and impairment (111,142,288) (107,729,293)Total oil and gas properties, net 69,233,781 58,766,129 Gathering system 42,694,512 42,639,001 Accumulated depletion, depreciation, amortization and impairment (35,241,595) (34,500,740)Total gathering system, net 7,452,917 8,138,261 Land 637,764 637,764 Buildings and other property and equipment, net 303,211 286,035 Total property and equipment, net 77,627,673 67,828,189 Other assets: Operating lease right-of-use assets, long term 468,833 - Restricted cash 495,000 570,363 Fair value of derivatives, long term 42,005 - Prepaid drilling costs 2,891,250 - Total non-current assets 81,524,761 68,398,552 Total assets $119,774,570 $123,862,243 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $1,855,591 $1,695,353 Gathering fees payable 556,437 935,012 Royalties payable 1,241,533 2,223,043 Accrued capital expenditures 195,917 41,694 Accrued compensation 631,646 598,351 Other accrued liabilities 556,814 690,655 Fair value of derivatives 126,508 - Operating lease liabilities 55,656 35,299 Total current liabilities 5,220,102 6,219,407 Non-current liabilities Asset retirement obligations 2,794,743 2,780,237 Deferred income taxes 11,805,453 10,617,394 Operating lease liabilities, long term 498,155 - Total non-current liabilities 15,098,351 13,397,631 Total liabilities 20,318,453 19,617,038 Commitments and contingencies (Note 10) Shareholders' equity Preferred shares, no par value, unlimited shares authorized, none issued or outstanding - - Common shares, no par value, unlimited shares authorized and 22,126,800 shares issued and outstanding at September 30, 2023 and 23,117,144 issued and outstanding at December 31, 2022 118,209,690 123,904,965 Additional paid-in capital 10,655,378 9,856,229 Accumulated deficit (39,158,820) (39,290,540)Accumulated other comprehensive income 9,749,869 9,774,551 Total shareholders' equity 99,456,117 104,245,205 Total liabilities and shareholders' equity $119,774,570 $123,862,243 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) Nine months ended September 30, 2023 2022Cash flows from operating activities: Net income $4,349,191 $25,997,329 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 4,780,766 4,898,988 Accretion of discount on available for sale securities (574,341) - Gain on available for sale securities (60,494) - Loss (gain) on sale of oil and gas properties 1,449,871 (221,642)(Gain) loss on derivative contracts (1,672,535) 1,124,547 Settlement received (paid) on derivative contracts 2,979,128 (1,396,698)Settlement of asset retirement obligation (3,482) (118,259)Stock-based compensation expense 799,149 836,949 Deferred income tax expense (benefit) 1,188,059 439,857 Changes in assets and liabilities: Accounts receivable 3,195,108 (5,472,585)Prepaid income taxes (814,694) - Other assets and liabilities (67,008) (205,717)Accounts payable, royalties payable and other accrued liabilities (1,191,558) 1,511,652 Income taxes payable - 2,021,246 Net cash provided by operating activities 14,357,160 29,415,667 Cash flows from investing activities: Additions to unproved oil and gas properties (8,017,412) (226,439)Additions to proved oil and gas properties (7,860,073) (5,528,037)Additions to gathering system properties (52,069) (129,985)Additions to land, buildings and property and equipment (49,689) (13,258)Purchases of short term investments (32,812,974) - Proceeds from short term investments 14,554,976 - Proceeds from sale of oil and gas properties 12,498 200,000 Prepaid drilling costs (2,891,250) - Net cash used in investing activities (37,115,993) (5,697,719)Cash flows from financing activities: Buyback of common shares (5,695,275) (6,234,879)Exercise of stock options - 747,112 Dividends paid (4,217,471) (4,422,720)Debt issuance costs (140,000) - Net cash used in financing activities (10,052,746) (9,910,487)Effect of currency rates on cash, cash equivalents, and restricted cash (2,317) (48,272)(Decrease) increase in cash, cash equivalents, and restricted cash (32,813,896) 13,759,189 Cash, cash equivalents, and restricted cash, beginning of period 45,806,947 27,065,423 Cash, cash equivalents, and restricted cash, end of period $12,993,051 $40,824,612 Supplemental cash flow disclosures: Income taxes paid $1,442,304 $7,626 Interest paid $88,835 $50,872 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $41,947 $(194,391)Change in gathering system accrued in accounts payable and accrued liabilities $3,441 $12,882 Asset retirement obligation asset additions and adjustments $4,640 $10,821 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022Net income $388,775 $9,608,453 $4,349,191 $25,997,329 Add Back: Interest (income) expense, net (375,972) (72,137) (1,237,076) (93,239)Income tax expense 710,164 3,896,010 2,283,228 10,097,484 Depreciation, depletion, amortization, and accretion 1,392,032 1,706,030 4,780,766 4,898,988 Stock based compensation expense 439,653 500,597 799,149 836,949 Loss (gain) on sale of assets - - 1,449,871 (221,642)Loss (gain) on derivative contracts net of cash received or paid on settlement 1,370,573 908,227 1,306,593 (272,151)Foreign currency translation loss (98) 907 (1,086) 1,517 Adjusted EBITDA $3,925,127 $16,548,087 $13,730,636 $41,245,235 Epsilon defines Adjusted EBITDA as earnings before (1) net interest expense, (2) taxes, (3) depreciation, depletion, amortization and accretion expense, (4) impairments of natural gas and oil properties, (5) non-cash stock compensation expense, (6) gain or loss on derivative contracts net of cash received or paid on settlement, and (7) other income. Adjusted EBITDA is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Epsilon has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures. It further provides investors a helpful measure for comparing operating performance on a "normalized" or recurring basis with the performance of other companies, without giving effect to certain non-cash expenses and other items. This provides management, investors and analysts with comparative information for evaluating the Company in relation to other natural gas and oil companies providing corresponding non-U.S. GAAP financial measures or that have different financing and capital structures or tax rates. These non-U.S. GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with U.S. GAAP.
