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 Second Quarter 2023 Results By: Epsilon Energy Ltd. via GlobeNewswire August 10, 2023 at 22:11 PM EDT HOUSTON, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2023 financial and operating results. Second Quarter Financial Highlights: Reported net revenue interest (NRI) production of 2.3 Bcfe (24.9 MMcfe per day) for the quarter ended June 30, 2023. Realized average price of $2.45 per Mcfe including hedges ($1.89 per Mcfe excluding hedges) for the quarter ended June 30, 2023. Delivered total revenues of $6.5 million for the quarter ended June 30, 2023, a decrease of 31% compared to the prior quarter. $4.3 million from natural gas, oil, and NGL sales (including $0.7 million from the recently acquired New Mexico properties), a decrease of 38% compared to the prior quarter$2.2 million from gathering and compression fees through our ownership in the Auburn Gas Gathering System, after eliminating revenue earned from Epsilon production ($0.4 million), a decrease of 8% compared to the prior quarter Reported Adjusted EBITDA of $4.2 million for the quarter ended June 30, 2023. Cash, cash equivalents (including restricted cash), and short term investments totaled $36.8 million at June 30, 2023, a decrease of 26% compared to March 31, 2023, due to the Permian investments made during the quarter. Returned $3.1 million to shareholders during the quarter ended June 30, 2023. $1.7 million through the repurchase of 325,055 shares (average price of $5.17 per share), representing a 1% reduction of shares outstanding$1.4 million through the quarterly dividendAn additional 525,000 shares were repurchased after the quarter end in a block trade (at $5.00 per share)1.4 million shares remain under the approved buyback program (expires in March 2024) Realized gains of $0.6 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 455,000 MMBTU. The current unrealized gain on the remaining hedge book for 2023 is $1.3 million at June 30, 2023. Closed two liquids focused investments in the Permian Basin, as previously disclosed.Closed a new $35 million credit facility, as previously disclosed. Second Quarter Operating Results: Epsilon’s capital expenditures were $12.4 million for the quarter ended June 30, 2023. This capital was primarily related to leasehold acquisitions costs in Ector Co. Texas ($7.5 million), the drilling of one gross (0.25 net) well in Ector Co. Texas ($2.4 million), the drilling and completion of two gross (0.2 net) wells in Eddy Co. New Mexico ($2.1 million), and the completion of one gross (0.11 net) well in Dewey Co. Oklahoma ($0.2 million). At June 30, 2023, the Company has one gross (0.25 net) Ector Co. Texas well waiting on completion. Jason Stabell, Epsilon's Chief Executive Officer, commented, "We had a solid quarter in a difficult natural gas price environment. We made two liquids focused investments in the Permian, added liquidity with a new credit facility, and returned $3.1 million to our shareholders through a combination of dividends and share buybacks. Early results on our New Mexico investment are very encouraging and activity is continuing in Texas which we expect to add additional oil volumes in the 4th quarter of this year. Epsilon’s increasingly diversified asset based and strong balance sheet keep us well positioned to continue to create value for our shareholders. An example of this is our opportunistic purchase of 525,000 shares in early July at $5 per share.” Earning’s Call: The Company will host a conference call to discuss its results on Friday, August 11, 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 Second Quarter 2023 Earnings Conference Call”. A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=f2b93UmU. 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 June 30, Six months ended June 30, 2023 2022 2023 2022Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $4,298,072 $17,915,836 $11,267,653 $29,395,161 Gas gathering and compression revenue 2,202,064 1,987,168 4,588,759 4,107,941 Total revenue 6,500,136 19,903,004 15,856,412 33,503,102 Operating costs and expenses: Lease operating expenses 1,440,521 2,252,017 2,844,800 3,657,507 Gathering system operating expenses 570,934 541,228 1,222,275 1,065,603 Development geological and geophysical expenses — 2,386 — 4,772 Depletion, depreciation, amortization, and accretion 1,615,728 1,803,739 3,388,734 3,192,958 Loss (gain) on sale of oil and gas properties 1,449,871 (221,642) 1,449,871 (221,642)General and administrative expenses: Stock based compensation expense 179,748 194,050 359,496 336,352 Other general and administrative expenses 1,596,626 1,465,143 3,620,399 2,636,275 Total operating costs and expenses 6,853,428 6,036,921 12,885,575 10,671,825 Operating income (loss) (353,292) 13,866,083 2,970,837 22,831,277 Other income (expense): Interest income 433,201 21,945 923,963 37,166 Interest expense (34,422) (745) (62,859) (16,064)Gain (loss) on derivative contracts 628,178 776,994 1,696,838 (194,910)Other income (expense) 3,066 (61,713) 4,701 (67,119)Other income (expense), net 1,030,023 736,481 2,562,643 (240,927) Net income before income tax expense 676,731 14,602,564 5,533,480 22,590,350 Income tax expense 246,142 4,019,576 1,573,064 6,201,474 NET INCOME $430,589 $10,582,988 $3,960,416 $16,388,876 Currency translation adjustments 1,129 (19,150) (1,471) (13,748)Unrealized loss on securities (47,006) — (47,006) — NET COMPREHENSIVE INCOME $384,712 $10,563,838 $3,911,939 $16,375,128 Net income per share, basic $0.02 $0.45 $0.17 $0.69 Net income per share, diluted $0.02 $0.44 $0.17 $0.69 Weighted average number of shares outstanding, basic 22,749,322 23,576,746 22,869,440 23,627,015 Weighted average number of shares outstanding, diluted 22,783,987 23,822,123 22,904,922 23,796,166 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets(All amounts stated in US$) June 30, December 31, 2023 2022ASSETS Current assets Cash and cash equivalents $9,488,094 $45,236,584 Accounts receivable 4,355,076 7,201,386 Short term investments 26,804,482 — Fair value of derivatives 1,286,070 1,222,090 Prepaid income taxes 1,233,669 1,140,094 Other current assets 391,007 632,154 Operating lease right-of-use assets — 31,383 Total current assets 43,558,398 55,463,691 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 152,014,489 148,326,265 Unproved properties 25,989,679 18,169,157 Accumulated depletion, depreciation, amortization and impairment (109,996,874) (107,729,293)Total oil and gas properties, net 68,007,294 58,766,129 Gathering system 42,673,506 42,639,001 Accumulated depletion, depreciation, amortization and impairment (35,026,730) (34,500,740)Total gathering system, net 7,646,776 8,138,261 Land 637,764 637,764 Buildings and other property and equipment, net 312,830 286,035 Total property and equipment, net 76,604,664 67,828,189 Other assets: Operating lease right-of-use assets, long term 495,842 — Restricted cash 495,000 570,363 Total non-current assets 77,595,506 68,398,552 Total assets $121,153,904 $123,862,243 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $1,334,008 $1,695,353 Gathering fees payable 498,438 935,012 Royalties payable 1,511,168 2,223,043 Accrued capital expenditures 134,224 41,694 Accrued compensation 405,448 598,351 Other accrued liabilities 467,387 690,655 Operating lease liabilities 24,748 35,299 Total current liabilities 4,375,421 6,219,407 Non-current liabilities Asset retirement obligations 2,777,847 2,780,237 Deferred income taxes 10,847,721 10,617,394 Operating lease liabilities, long term 519,652 — Total non-current liabilities 14,145,220 13,397,631 Total liabilities 18,520,641 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 22,649,290 shares issued and 22,554,169 shares outstanding at June 30, 2023 and 23,117,144 issued and outstanding at December 31, 2022 121,348,004 123,904,965 Treasury shares, at cost, 95,121 at June 30, 2023 and 0 at December 31, 2022 (497,814) — Additional paid-in capital 10,215,725 9,856,229 Accumulated deficit (38,158,726) (39,290,540)Accumulated other comprehensive income 9,726,074 9,774,551 Total shareholders' equity 102,633,263 104,245,205 Total liabilities and shareholders' equity $121,153,904 $123,862,243 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows(All amounts stated in US$) Six months ended June 30, 2023 2022Cash flows from operating activities: Net income $3,960,416 $16,388,876 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 3,388,734 3,192,958 Accretion of discount on available for sale securities (343,328) — Gain on available for sale securities (47,659) — Loss (gain) on sale of oil and gas properties 1,449,871 (221,642)(Gain) loss on derivative contracts (1,696,838) 194,910 Settlement received (paid) on derivative contracts 1,632,858 (1,375,287)Settlement of asset retirement obligation — (118,259)Stock-based compensation expense 359,496 336,352 Deferred income tax expense (benefit) 230,327 319,326 Changes in assets and liabilities: Accounts receivable 2,846,310 (5,333,960)Prepaid income taxes and other assets and liabilities 332,214 328,872 Accounts payable, royalties payable and other accrued liabilities (1,910,674) 738,023 Income taxes payable — 1,312,365 Net cash provided by operating activities 10,201,727 15,762,534 Cash flows from investing activities: Additions to unproved oil and gas properties (7,821,248) (162,445)Additions to proved oil and gas properties (5,653,284) (4,935,370)Additions to gathering system properties (30,264) (82,855)Additions to land, buildings and property and equipment (47,933) (1,234)Purchases of short term investments (32,812,974) — Proceeds from short term investments 6,352,473 — Proceeds from sale of oil and gas properties 12,498 200,000 Net cash used in investing activities (40,000,732) (4,981,904)Cash flows from financing activities: Buyback of common shares (3,054,775) (3,956,403)Exercise of stock options — 608,787 Dividends paid (2,828,602) (2,969,677)Debt issuance costs (140,000) — Net cash used in financing activities (6,023,377) (6,317,293)Effect of currency rates on cash, cash equivalents, and restricted cash (1,471) (13,748)(Decrease) increase in cash, cash equivalents, and restricted cash (35,823,853) 4,449,589 Cash, cash equivalents, and restricted cash, beginning of period 45,806,947 27,065,423 Cash, cash equivalents, and restricted cash, end of period $9,983,094 $31,515,012 Supplemental cash flow disclosures: Income taxes paid $1,432,000 $4,566,000 Interest paid $80,075 $33,885 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $72,999 $(1,097,247)Change in gathering system accrued in accounts payable and accrued liabilities $4,240 $8,554 Change in share buybacks accrued in accounts payable and accrued liabilities $— $598,419 Asset retirement obligation asset additions and adjustments $4,640 $7,666 EPSILON ENERGY LTD.Adjusted EBITDA Reconciliation (All amounts stated in US$) Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022Net income $430,589 $10,582,988 $3,960,416 $16,388,876 Add Back: Interest (income) expense, net (398,779) (21,200) (861,104) (21,102)Income tax expense 246,142 4,019,576 1,573,064 6,201,474 Depreciation, depletion, amortization, and accretion 1,615,728 1,803,739 3,388,734 3,192,958 Stock based compensation expense 179,748 194,050 359,496 336,352 Loss (gain) on sale of assets 1,449,871 (221,642) 1,449,871 (221,642)Loss (gain) on derivative contracts net of cash received or paid on settlement 641,380 (940,553) (63,980) (1,180,377)Foreign currency translation loss (5) (1,071) (987) 4,331 Adjusted EBITDA $4,164,674 $15,415,887 $9,805,510 $24,700,870 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 Second Quarter 2023 Results By: Epsilon Energy Ltd. via GlobeNewswire August 10, 2023 at 22:11 PM EDT HOUSTON, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2023 financial and operating results. Second Quarter Financial Highlights: Reported net revenue interest (NRI) production of 2.3 Bcfe (24.9 MMcfe per day) for the quarter ended June 30, 2023. Realized average price of $2.45 per Mcfe including hedges ($1.89 per Mcfe excluding hedges) for the quarter ended June 30, 2023. Delivered total revenues of $6.5 million for the quarter ended June 30, 2023, a decrease of 31% compared to the prior quarter. $4.3 million from natural gas, oil, and NGL sales (including $0.7 million from the recently acquired New Mexico properties), a decrease of 38% compared to the prior quarter$2.2 million from gathering and compression fees through our ownership in the Auburn Gas Gathering System, after eliminating revenue earned from Epsilon production ($0.4 million), a decrease of 8% compared to the prior quarter Reported Adjusted EBITDA of $4.2 million for the quarter ended June 30, 2023. Cash, cash equivalents (including restricted cash), and short term investments totaled $36.8 million at June 30, 2023, a decrease of 26% compared to March 31, 2023, due to the Permian investments made during the quarter. Returned $3.1 million to shareholders during the quarter ended June 30, 2023. $1.7 million through the repurchase of 325,055 shares (average price of $5.17 per share), representing a 1% reduction of shares outstanding$1.4 million through the quarterly dividendAn additional 525,000 shares were repurchased after the quarter end in a block trade (at $5.00 per share)1.4 million shares remain under the approved buyback program (expires in March 2024) Realized gains of $0.6 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 455,000 MMBTU. The current unrealized gain on the remaining hedge book for 2023 is $1.3 million at June 30, 2023. Closed two liquids focused investments in the Permian Basin, as previously disclosed.Closed a new $35 million credit facility, as previously disclosed. Second Quarter Operating Results: Epsilon’s capital expenditures were $12.4 million for the quarter ended June 30, 2023. This capital was primarily related to leasehold acquisitions costs in Ector Co. Texas ($7.5 million), the drilling of one gross (0.25 net) well in Ector Co. Texas ($2.4 million), the drilling and completion of two gross (0.2 net) wells in Eddy Co. New Mexico ($2.1 million), and the completion of one gross (0.11 net) well in Dewey Co. Oklahoma ($0.2 million). At June 30, 2023, the Company has one gross (0.25 net) Ector Co. Texas well waiting on completion. Jason Stabell, Epsilon's Chief Executive Officer, commented, "We had a solid quarter in a difficult natural gas price environment. We made two liquids focused investments in the Permian, added liquidity with a new credit facility, and returned $3.1 million to our shareholders through a combination of dividends and share buybacks. Early results on our New Mexico investment are very encouraging and activity is continuing in Texas which we expect to add additional oil volumes in the 4th quarter of this year. Epsilon’s increasingly diversified asset based and strong balance sheet keep us well positioned to continue to create value for our shareholders. An example of this is our opportunistic purchase of 525,000 shares in early July at $5 per share.” Earning’s Call: The Company will host a conference call to discuss its results on Friday, August 11, 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 Second Quarter 2023 Earnings Conference Call”. A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=f2b93UmU. 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 June 30, Six months ended June 30, 2023 2022 2023 2022Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $4,298,072 $17,915,836 $11,267,653 $29,395,161 Gas gathering and compression revenue 2,202,064 1,987,168 4,588,759 4,107,941 Total revenue 6,500,136 19,903,004 15,856,412 33,503,102 Operating costs and expenses: Lease operating expenses 1,440,521 2,252,017 2,844,800 3,657,507 Gathering system operating expenses 570,934 541,228 1,222,275 1,065,603 Development geological and geophysical expenses — 2,386 — 4,772 Depletion, depreciation, amortization, and accretion 1,615,728 1,803,739 3,388,734 3,192,958 Loss (gain) on sale of oil and gas properties 1,449,871 (221,642) 1,449,871 (221,642)General and administrative expenses: Stock based compensation expense 179,748 194,050 359,496 336,352 Other general and administrative expenses 1,596,626 1,465,143 3,620,399 2,636,275 Total operating costs and expenses 6,853,428 6,036,921 12,885,575 10,671,825 Operating income (loss) (353,292) 13,866,083 2,970,837 22,831,277 Other income (expense): Interest income 433,201 21,945 923,963 37,166 Interest expense (34,422) (745) (62,859) (16,064)Gain (loss) on derivative contracts 628,178 776,994 1,696,838 (194,910)Other income (expense) 3,066 (61,713) 4,701 (67,119)Other income (expense), net 1,030,023 736,481 2,562,643 (240,927) Net income before income tax expense 676,731 14,602,564 5,533,480 22,590,350 Income tax expense 246,142 4,019,576 1,573,064 6,201,474 NET INCOME $430,589 $10,582,988 $3,960,416 $16,388,876 Currency translation adjustments 1,129 (19,150) (1,471) (13,748)Unrealized loss on securities (47,006) — (47,006) — NET COMPREHENSIVE INCOME $384,712 $10,563,838 $3,911,939 $16,375,128 Net income per share, basic $0.02 $0.45 $0.17 $0.69 Net income per share, diluted $0.02 $0.44 $0.17 $0.69 Weighted average number of shares outstanding, basic 22,749,322 23,576,746 22,869,440 23,627,015 Weighted average number of shares outstanding, diluted 22,783,987 23,822,123 22,904,922 23,796,166 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets(All amounts stated in US$) June 30, December 31, 2023 2022ASSETS Current assets Cash and cash equivalents $9,488,094 $45,236,584 Accounts receivable 4,355,076 7,201,386 Short term investments 26,804,482 — Fair value of derivatives 1,286,070 1,222,090 Prepaid income taxes 1,233,669 1,140,094 Other current assets 391,007 632,154 Operating lease right-of-use assets — 31,383 Total current assets 43,558,398 55,463,691 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 152,014,489 148,326,265 Unproved properties 25,989,679 18,169,157 Accumulated depletion, depreciation, amortization and impairment (109,996,874) (107,729,293)Total oil and gas properties, net 68,007,294 58,766,129 Gathering system 42,673,506 42,639,001 Accumulated depletion, depreciation, amortization and impairment (35,026,730) (34,500,740)Total gathering system, net 7,646,776 8,138,261 Land 637,764 637,764 Buildings and other property and equipment, net 312,830 286,035 Total property and equipment, net 76,604,664 67,828,189 Other assets: Operating lease right-of-use assets, long term 495,842 — Restricted cash 495,000 570,363 Total non-current assets 77,595,506 68,398,552 Total assets $121,153,904 $123,862,243 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $1,334,008 $1,695,353 Gathering fees payable 498,438 935,012 Royalties payable 1,511,168 2,223,043 Accrued capital expenditures 134,224 41,694 Accrued compensation 405,448 598,351 Other accrued liabilities 467,387 690,655 Operating lease liabilities 24,748 35,299 Total current liabilities 4,375,421 6,219,407 Non-current liabilities Asset retirement obligations 2,777,847 2,780,237 Deferred income taxes 10,847,721 10,617,394 Operating lease liabilities, long term 519,652 — Total non-current liabilities 14,145,220 13,397,631 Total liabilities 18,520,641 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 22,649,290 shares issued and 22,554,169 shares outstanding at June 30, 2023 and 23,117,144 issued and outstanding at December 31, 2022 121,348,004 123,904,965 Treasury shares, at cost, 95,121 at June 30, 2023 and 0 at December 31, 2022 (497,814) — Additional paid-in capital 10,215,725 9,856,229 Accumulated deficit (38,158,726) (39,290,540)Accumulated other comprehensive income 9,726,074 9,774,551 Total shareholders' equity 102,633,263 104,245,205 Total liabilities and shareholders' equity $121,153,904 $123,862,243 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows(All amounts stated in US$) Six months ended June 30, 2023 2022Cash flows from operating activities: Net income $3,960,416 $16,388,876 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 3,388,734 3,192,958 Accretion of discount on available for sale securities (343,328) — Gain on available for sale securities (47,659) — Loss (gain) on sale of oil and gas properties 1,449,871 (221,642)(Gain) loss on derivative contracts (1,696,838) 194,910 Settlement received (paid) on derivative contracts 1,632,858 (1,375,287)Settlement of asset retirement obligation — (118,259)Stock-based compensation expense 359,496 336,352 Deferred income tax expense (benefit) 230,327 319,326 Changes in assets and liabilities: Accounts receivable 2,846,310 (5,333,960)Prepaid income taxes and other assets and liabilities 332,214 328,872 Accounts payable, royalties payable and other accrued liabilities (1,910,674) 738,023 Income taxes payable — 1,312,365 Net cash provided by operating activities 10,201,727 15,762,534 Cash flows from investing activities: Additions to unproved oil and gas properties (7,821,248) (162,445)Additions to proved oil and gas properties (5,653,284) (4,935,370)Additions to gathering system properties (30,264) (82,855)Additions to land, buildings and property and equipment (47,933) (1,234)Purchases of short term investments (32,812,974) — Proceeds from short term investments 6,352,473 — Proceeds from sale of oil and gas properties 12,498 200,000 Net cash used in investing activities (40,000,732) (4,981,904)Cash flows from financing activities: Buyback of common shares (3,054,775) (3,956,403)Exercise of stock options — 608,787 Dividends paid (2,828,602) (2,969,677)Debt issuance costs (140,000) — Net cash used in financing activities (6,023,377) (6,317,293)Effect of currency rates on cash, cash equivalents, and restricted cash (1,471) (13,748)(Decrease) increase in cash, cash equivalents, and restricted cash (35,823,853) 4,449,589 Cash, cash equivalents, and restricted cash, beginning of period 45,806,947 27,065,423 Cash, cash equivalents, and restricted cash, end of period $9,983,094 $31,515,012 Supplemental cash flow disclosures: Income taxes paid $1,432,000 $4,566,000 Interest paid $80,075 $33,885 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $72,999 $(1,097,247)Change in gathering system accrued in accounts payable and accrued liabilities $4,240 $8,554 Change in share buybacks accrued in accounts payable and accrued liabilities $— $598,419 Asset retirement obligation asset additions and adjustments $4,640 $7,666 EPSILON ENERGY LTD.Adjusted EBITDA Reconciliation (All amounts stated in US$) Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022Net income $430,589 $10,582,988 $3,960,416 $16,388,876 Add Back: Interest (income) expense, net (398,779) (21,200) (861,104) (21,102)Income tax expense 246,142 4,019,576 1,573,064 6,201,474 Depreciation, depletion, amortization, and accretion 1,615,728 1,803,739 3,388,734 3,192,958 Stock based compensation expense 179,748 194,050 359,496 336,352 Loss (gain) on sale of assets 1,449,871 (221,642) 1,449,871 (221,642)Loss (gain) on derivative contracts net of cash received or paid on settlement 641,380 (940,553) (63,980) (1,180,377)Foreign currency translation loss (5) (1,071) (987) 4,331 Adjusted EBITDA $4,164,674 $15,415,887 $9,805,510 $24,700,870 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, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2023 financial and operating results. Second Quarter Financial Highlights: Reported net revenue interest (NRI) production of 2.3 Bcfe (24.9 MMcfe per day) for the quarter ended June 30, 2023. Realized average price of $2.45 per Mcfe including hedges ($1.89 per Mcfe excluding hedges) for the quarter ended June 30, 2023. Delivered total revenues of $6.5 million for the quarter ended June 30, 2023, a decrease of 31% compared to the prior quarter. $4.3 million from natural gas, oil, and NGL sales (including $0.7 million from the recently acquired New Mexico properties), a decrease of 38% compared to the prior quarter$2.2 million from gathering and compression fees through our ownership in the Auburn Gas Gathering System, after eliminating revenue earned from Epsilon production ($0.4 million), a decrease of 8% compared to the prior quarter Reported Adjusted EBITDA of $4.2 million for the quarter ended June 30, 2023. Cash, cash equivalents (including restricted cash), and short term investments totaled $36.8 million at June 30, 2023, a decrease of 26% compared to March 31, 2023, due to the Permian investments made during the quarter. Returned $3.1 million to shareholders during the quarter ended June 30, 2023. $1.7 million through the repurchase of 325,055 shares (average price of $5.17 per share), representing a 1% reduction of shares outstanding$1.4 million through the quarterly dividendAn additional 525,000 shares were repurchased after the quarter end in a block trade (at $5.00 per share)1.4 million shares remain under the approved buyback program (expires in March 2024) Realized gains of $0.6 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 455,000 MMBTU. The current unrealized gain on the remaining hedge book for 2023 is $1.3 million at June 30, 2023. Closed two liquids focused investments in the Permian Basin, as previously disclosed.Closed a new $35 million credit facility, as previously disclosed. Second Quarter Operating Results: Epsilon’s capital expenditures were $12.4 million for the quarter ended June 30, 2023. This capital was primarily related to leasehold acquisitions costs in Ector Co. Texas ($7.5 million), the drilling of one gross (0.25 net) well in Ector Co. Texas ($2.4 million), the drilling and completion of two gross (0.2 net) wells in Eddy Co. New Mexico ($2.1 million), and the completion of one gross (0.11 net) well in Dewey Co. Oklahoma ($0.2 million). At June 30, 2023, the Company has one gross (0.25 net) Ector Co. Texas well waiting on completion. Jason Stabell, Epsilon's Chief Executive Officer, commented, "We had a solid quarter in a difficult natural gas price environment. We made two liquids focused investments in the Permian, added liquidity with a new credit facility, and returned $3.1 million to our shareholders through a combination of dividends and share buybacks. Early results on our New Mexico investment are very encouraging and activity is continuing in Texas which we expect to add additional oil volumes in the 4th quarter of this year. Epsilon’s increasingly diversified asset based and strong balance sheet keep us well positioned to continue to create value for our shareholders. An example of this is our opportunistic purchase of 525,000 shares in early July at $5 per share.” Earning’s Call: The Company will host a conference call to discuss its results on Friday, August 11, 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 Second Quarter 2023 Earnings Conference Call”. A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=f2b93UmU. 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 June 30, Six months ended June 30, 2023 2022 2023 2022Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $4,298,072 $17,915,836 $11,267,653 $29,395,161 Gas gathering and compression revenue 2,202,064 1,987,168 4,588,759 4,107,941 Total revenue 6,500,136 19,903,004 15,856,412 33,503,102 Operating costs and expenses: Lease operating expenses 1,440,521 2,252,017 2,844,800 3,657,507 Gathering system operating expenses 570,934 541,228 1,222,275 1,065,603 Development geological and geophysical expenses — 2,386 — 4,772 Depletion, depreciation, amortization, and accretion 1,615,728 1,803,739 3,388,734 3,192,958 Loss (gain) on sale of oil and gas properties 1,449,871 (221,642) 1,449,871 (221,642)General and administrative expenses: Stock based compensation expense 179,748 194,050 359,496 336,352 Other general and administrative expenses 1,596,626 1,465,143 3,620,399 2,636,275 Total operating costs and expenses 6,853,428 6,036,921 12,885,575 10,671,825 Operating income (loss) (353,292) 13,866,083 2,970,837 22,831,277 Other income (expense): Interest income 433,201 21,945 923,963 37,166 Interest expense (34,422) (745) (62,859) (16,064)Gain (loss) on derivative contracts 628,178 776,994 1,696,838 (194,910)Other income (expense) 3,066 (61,713) 4,701 (67,119)Other income (expense), net 1,030,023 736,481 2,562,643 (240,927) Net income before income tax expense 676,731 14,602,564 5,533,480 22,590,350 Income tax expense 246,142 4,019,576 1,573,064 6,201,474 NET INCOME $430,589 $10,582,988 $3,960,416 $16,388,876 Currency translation adjustments 1,129 (19,150) (1,471) (13,748)Unrealized loss on securities (47,006) — (47,006) — NET COMPREHENSIVE INCOME $384,712 $10,563,838 $3,911,939 $16,375,128 Net income per share, basic $0.02 $0.45 $0.17 $0.69 Net income per share, diluted $0.02 $0.44 $0.17 $0.69 Weighted average number of shares outstanding, basic 22,749,322 23,576,746 22,869,440 23,627,015 Weighted average number of shares outstanding, diluted 22,783,987 23,822,123 22,904,922 23,796,166 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets(All amounts stated in US$) June 30, December 31, 2023 2022ASSETS Current assets Cash and cash equivalents $9,488,094 $45,236,584 Accounts receivable 4,355,076 7,201,386 Short term investments 26,804,482 — Fair value of derivatives 1,286,070 1,222,090 Prepaid income taxes 1,233,669 1,140,094 Other current assets 391,007 632,154 Operating lease right-of-use assets — 31,383 Total current assets 43,558,398 55,463,691 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 152,014,489 148,326,265 Unproved properties 25,989,679 18,169,157 Accumulated depletion, depreciation, amortization and impairment (109,996,874) (107,729,293)Total oil and gas properties, net 68,007,294 58,766,129 Gathering system 42,673,506 42,639,001 Accumulated depletion, depreciation, amortization and impairment (35,026,730) (34,500,740)Total gathering system, net 7,646,776 8,138,261 Land 637,764 637,764 Buildings and other property and equipment, net 312,830 286,035 Total property and equipment, net 76,604,664 67,828,189 Other assets: Operating lease right-of-use assets, long term 495,842 — Restricted cash 495,000 570,363 Total non-current assets 77,595,506 68,398,552 Total assets $121,153,904 $123,862,243 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $1,334,008 $1,695,353 Gathering fees payable 498,438 935,012 Royalties payable 1,511,168 2,223,043 Accrued capital expenditures 134,224 41,694 Accrued compensation 405,448 598,351 Other accrued liabilities 467,387 690,655 Operating lease liabilities 24,748 35,299 Total current liabilities 4,375,421 6,219,407 Non-current liabilities Asset retirement obligations 2,777,847 2,780,237 Deferred income taxes 10,847,721 10,617,394 Operating lease liabilities, long term 519,652 — Total non-current liabilities 14,145,220 13,397,631 Total liabilities 18,520,641 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 22,649,290 shares issued and 22,554,169 shares outstanding at June 30, 2023 and 23,117,144 issued and outstanding at December 31, 2022 121,348,004 123,904,965 Treasury shares, at cost, 95,121 at June 30, 2023 and 0 at December 31, 2022 (497,814) — Additional paid-in capital 10,215,725 9,856,229 Accumulated deficit (38,158,726) (39,290,540)Accumulated other comprehensive income 9,726,074 9,774,551 Total shareholders' equity 102,633,263 104,245,205 Total liabilities and shareholders' equity $121,153,904 $123,862,243 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows(All amounts stated in US$) Six months ended June 30, 2023 2022Cash flows from operating activities: Net income $3,960,416 $16,388,876 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 3,388,734 3,192,958 Accretion of discount on available for sale securities (343,328) — Gain on available for sale securities (47,659) — Loss (gain) on sale of oil and gas properties 1,449,871 (221,642)(Gain) loss on derivative contracts (1,696,838) 194,910 Settlement received (paid) on derivative contracts 1,632,858 (1,375,287)Settlement of asset retirement obligation — (118,259)Stock-based compensation expense 359,496 336,352 Deferred income tax expense (benefit) 230,327 319,326 Changes in assets and liabilities: Accounts receivable 2,846,310 (5,333,960)Prepaid income taxes and other assets and liabilities 332,214 328,872 Accounts payable, royalties payable and other accrued liabilities (1,910,674) 738,023 Income taxes payable — 1,312,365 Net cash provided by operating activities 10,201,727 15,762,534 Cash flows from investing activities: Additions to unproved oil and gas properties (7,821,248) (162,445)Additions to proved oil and gas properties (5,653,284) (4,935,370)Additions to gathering system properties (30,264) (82,855)Additions to land, buildings and property and equipment (47,933) (1,234)Purchases of short term investments (32,812,974) — Proceeds from short term investments 6,352,473 — Proceeds from sale of oil and gas properties 12,498 200,000 Net cash used in investing activities (40,000,732) (4,981,904)Cash flows from financing activities: Buyback of common shares (3,054,775) (3,956,403)Exercise of stock options — 608,787 Dividends paid (2,828,602) (2,969,677)Debt issuance costs (140,000) — Net cash used in financing activities (6,023,377) (6,317,293)Effect of currency rates on cash, cash equivalents, and restricted cash (1,471) (13,748)(Decrease) increase in cash, cash equivalents, and restricted cash (35,823,853) 4,449,589 Cash, cash equivalents, and restricted cash, beginning of period 45,806,947 27,065,423 Cash, cash equivalents, and restricted cash, end of period $9,983,094 $31,515,012 Supplemental cash flow disclosures: Income taxes paid $1,432,000 $4,566,000 Interest paid $80,075 $33,885 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $72,999 $(1,097,247)Change in gathering system accrued in accounts payable and accrued liabilities $4,240 $8,554 Change in share buybacks accrued in accounts payable and accrued liabilities $— $598,419 Asset retirement obligation asset additions and adjustments $4,640 $7,666 EPSILON ENERGY LTD.Adjusted EBITDA Reconciliation (All amounts stated in US$) Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022Net income $430,589 $10,582,988 $3,960,416 $16,388,876 Add Back: Interest (income) expense, net (398,779) (21,200) (861,104) (21,102)Income tax expense 246,142 4,019,576 1,573,064 6,201,474 Depreciation, depletion, amortization, and accretion 1,615,728 1,803,739 3,388,734 3,192,958 Stock based compensation expense 179,748 194,050 359,496 336,352 Loss (gain) on sale of assets 1,449,871 (221,642) 1,449,871 (221,642)Loss (gain) on derivative contracts net of cash received or paid on settlement 641,380 (940,553) (63,980) (1,180,377)Foreign currency translation loss (5) (1,071) (987) 4,331 Adjusted EBITDA $4,164,674 $15,415,887 $9,805,510 $24,700,870 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.