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 2024 Results By: Epsilon Energy Ltd. via GlobeNewswire August 13, 2024 at 16:05 PM EDT HOUSTON, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2024 financial and operating results. Second Quarter 2024 Highlights: Epsilon - Q2 2024 Q2 2024Q1 2024Q2 2023QoQ %YoY % NRI Production GasMMcf1,4071,6662,118-16%-34% OilMbbl45371422%223% NGLMbbl19161119%69% Revenues Gas$M1,9612,9633,007-34%-35% Oil$M3,5142,7151,04629%236% NGL$M3883732454%59% Midstream1$M1,4441,9362,202-25%-34% Total$M7,3087,9876,500-9%12% Realized Prices2 Gas$/Mcf1.391.781.42-22%-2% Oil$/Bbl78.4474.1375.386%4% NGL$/Bbl20.2123.1621.55-13%-6% Adj. EBITDA$M3,9044,5954,165-15%-6% Cash + STI3$M9,48115,44736,788-39%-74% Capex$M5,70921,46612,458-73%-54% 1) Net of gathering fee revenue paid by Epsilon 2) Excludes impact of hedge realizations 3) Includes restricted cash balance Returned $1.4 million to shareholders through the quarterly dividend during the quarter.Realized gains of $0.4 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 690,000 MMBTU, and losses of $0.1 million on WTI CMA swaps totaling 20 MBbls. Operations Update: Epsilon’s capital expenditures were $5.7 million for the quarter ended June 30, 2024. This was primarily related to the completion of one gross (0.25 net) well and drilling of one gross (0.25 net) well in Ector Co., Texas. The Marcellus wells (7 gross) completed in Q1 2024 are not yet turned in line, awaiting better realized natural gas prices. In addition, our operating partner in PA has maintained production curtailments. We estimate that 3.5-4 MMcf per day of NRI production was offline during the quarter. The Company has six gross (1.5 net) producing wells in Ector Co. Texas. The sixth well was put on production for the last month of the quarter. A seventh well was completed in July and is currently on flowback. Two of the producing wells were offline for 2 weeks during the quarter during completion operations on the sixth well. Jason Stabell, Epsilon's Chief Executive Officer, commented, “Our Permian assets continue to perform well with strong quarter over quarter increases in oil volumes and revenue, driven by a full quarter of contribution from our first quarter acquisition and one month of production from the sixth well in the Pradera Fuego project. We expect to see additional sequential oil growth in the third quarter with a full quarter of contribution from the sixth well and the seventh well now on flowback and producing over 700 bopd while still cleaning up. In PA, natural gas volumes and revenues were down quarter over quarter, as expected, due to continued curtailments and the deferred turn in line on the 7 gross (0.7 net) wells completed in the first quarter. Natural gas prices remain weak and the company has fixed price hedges on approximately 50% of current volumes through the end of the year. As previously disclosed, we executed an amended gathering agreement for the Auburn gas gathering system, further bolstering the asset’s long-term cash flow potential. Finally, we continue to pursue additional investments in drill bit focused opportunities that meet our return thresholds. Overall, our business remains well positioned for continued growth in the Permian coupled with material upside for our Marcellus assets next year in an improved natural gas environment. With our recently expanded and undrawn credit facility, cash-flows, and cash on hand we can comfortably continue to pay our dividend and pursue attractive new projects.” Current Hedge Book: Hedge Book - as of 8.7.24 Trade DateProductStructureRefContract StartContract EndPrice / StrikeOutstandingMetric06/07/24Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.70 225,000MMBtu06/07/24Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.80)225,000MMBtu04/30/24Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.75)225,000MMBtu04/30/24Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.54 225,000MMBtu03/28/24Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.15 152,500MMBtu03/05/24Natural GasSwapsTenn Z4 300L Basis11/01/202412/31/2024$(1.04)305,000MMBtu03/05/24Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.28 305,000MMBtu02/26/24Crude OilSwapsNYMEX WTI CMA03/01/202403/31/2025$74.34 39,168BBL10/18/23Natural GasSwapsNYMEX Henry Hub (LD)04/01/202410/31/2024$3.29 152,500MMBtu10/18/23Natural GasSwapsTenn Z4 300L Basis04/01/202410/31/2024$(1.20)152,500MMBtu09/29/23Natural GasSwapsNYMEX Henry Hub (LD)04/01/202410/31/2024$3.20 305,000MMBtu09/29/23Natural GasSwapsTenn Z4 300L Basis04/01/202410/31/2024$(1.15)305,000MMBtu Earning’s Call: The Company will host a conference call to discuss its results on Wednesday, August 14, 2024 at 9:30 a.m. Central Time (10:30 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 2024 Earnings Conference Call.” A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=wNyRpqMC. 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. 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, 2024 2023 2024 2023Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $5,863,370 $4,298,072 $11,914,415 $11,267,653 Gas gathering and compression revenue 1,444,448 2,202,064 3,380,146 4,588,759 Total revenue 7,307,818 6,500,136 15,294,561 15,856,412 Operating costs and expenses: Lease operating expenses 1,649,867 1,440,521 3,418,329 2,844,800 Gathering system operating expenses 649,967 570,934 1,202,537 1,222,275 Depletion, depreciation, amortization, and accretion 2,048,403 1,615,728 4,428,829 3,388,734 Loss (gain) on sale of oil and gas properties — 1,449,871 — 1,449,871 General and administrative expenses: Stock based compensation expense 313,589 179,748 635,158 359,496 Other general and administrative expenses 1,478,215 1,596,626 3,037,238 3,620,399 Total operating costs and expenses 6,140,041 6,853,428 12,722,091 12,885,575 Operating income (loss) 1,167,777 (353,292) 2,572,470 2,970,837 Other income (expense): Interest income 108,943 433,201 375,215 923,963 Interest expense (8,759) (34,422) (17,519) (62,859)(Loss) gain on derivative contracts (94,891) 628,178 (195,617) 1,696,838 Other income, net 101,606 3,066 101,073 4,701 Other income, net 106,899 1,030,023 263,152 2,562,643 Net income before income tax expense 1,274,676 676,731 2,835,622 5,533,480 Income tax expense 459,016 246,142 513,066 1,573,064 NET INCOME $815,660 $430,589 $2,322,556 $3,960,416 Currency translation adjustments 22,229 1,129 22,593 (1,471)Unrealized gain (loss) on securities 3,011 (47,006) (1,598) (47,006)NET COMPREHENSIVE INCOME $840,900 $384,712 $2,343,551 $3,911,939 Net income per share, basic $0.04 $0.02 $0.11 $0.17 Net income per share, diluted $0.04 $0.02 $0.11 $0.17 Weighted average number of shares outstanding, basic 21,921,752 22,749,322 21,957,980 22,869,440 Weighted average number of shares outstanding, diluted 22,029,475 22,783,987 21,987,142 22,904,922 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets(All amounts stated in US$) June 30, December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $8,581,484 $13,403,628 Accounts receivable 4,944,664 6,015,448 Short term investments — 18,775,106 Fair value of derivatives 403,992 1,219,025 Prepaid income taxes 632,531 952,301 Other current assets 414,736 763,288 Total current assets 14,977,407 41,128,796 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 185,238,373 160,263,511 Unproved properties 28,498,028 25,504,873 Accumulated depletion, depreciation, amortization and impairment (117,604,188) (113,708,210)Total oil and gas properties, net 96,132,213 72,060,174 Gathering system 42,854,372 42,738,273 Accumulated depletion, depreciation, amortization and impairment (35,957,863) (35,539,996)Total gathering system, net 6,896,509 7,198,277 Land 637,764 637,764 Buildings and other property and equipment, net 281,444 291,807 Total property and equipment, net 103,947,930 80,188,022 Other assets: Operating lease right-of-use assets, long term 392,792 441,987 Restricted cash 900,000 470,000 Prepaid drilling costs 926,827 1,813,808 Total non-current assets 106,167,549 82,913,817 Total assets $121,144,956 $124,042,613 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $2,386,055 $3,236,871 Gathering fees payable 971,599 1,136,237 Royalties payable 1,196,239 1,422,898 Accrued capital expenditures 108,216 696,761 Accrued compensation 416,037 636,295 Other accrued liabilities 614,231 561,537 Fair value of derivatives 259,896 118,770 Operating lease liabilities 103,846 86,473 Total current liabilities 6,056,119 7,895,842 Non-current liabilities Asset retirement obligations 3,528,208 3,502,952 Deferred income taxes 11,499,207 11,553,943 Operating lease liabilities, long term 415,805 476,911 Total non-current liabilities 15,443,220 15,533,806 Total liabilities 21,499,339 23,429,648 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 21,921,850 shares issued and outstanding at June 30, 2024 and 22,222,722 issued and 22,151,848 shares outstanding at December 31, 2023 116,708,531 118,272,565 Treasury shares, at cost, 0 at June 30, 2024 and 70,874 at December 31, 2023 — (360,326)Additional paid-in capital 11,509,649 10,874,491 Accumulated deficit (38,365,835) (37,946,042)Accumulated other comprehensive income 9,793,272 9,772,277 Total shareholders' equity 99,645,617 100,612,965 Total liabilities and shareholders' equity $121,144,956 $124,042,613 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) Six months ended June 30, 2024 2023 Cash flows from operating activities: Net income $2,322,556 $3,960,416 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 4,428,829 3,388,734 Accretion of discount on available for sale securities (297,637) (343,328) Gain on available for sale securities — (47,659) Loss on sale of oil and gas properties — 1,449,871 Loss (gain) on derivative contracts 195,617 (1,696,838) Settlement received on derivative contracts 760,542 1,632,858 Settlement of asset retirement obligation (87,284) — Stock-based compensation expense 635,158 359,496 Deferred income tax (benefit) expense (54,736) 230,327 Changes in assets and liabilities: Accounts receivable 1,070,784 2,846,310 Prepaid income taxes 319,770 — Other assets and liabilities 354,014 425,789 Accounts payable, royalties payable and other accrued liabilities (572,099) (1,910,674) Income taxes payable — (93,575) Net cash provided by operating activities 9,075,514 10,201,727 Cash flows from investing activities: Additions to unproved oil and gas properties (2,993,155) (7,821,248) Additions to proved oil and gas properties (26,425,017) (5,653,284) Additions to gathering system properties (70,236) (30,264) Additions to land, buildings and property and equipment (13,912) (47,933) Purchases of short term investments - held to maturity — (32,812,974) Purchases of short term investments - available for sale (4,045,785) — Proceeds from sales and maturities of short term investments 23,116,930 6,352,473 Proceeds from sale of oil and gas properties — 12,498 Prepaid drilling costs 886,981 — Net cash used in investing activities (9,544,194) (40,000,732) Cash flows from financing activities: Buyback of common shares (1,203,708) (3,054,775) Dividends paid (2,742,349) (2,828,602) Debt issuance costs — (140,000) Net cash used in financing activities (3,946,057) (6,023,377) Effect of currency rates on cash, cash equivalents, and restricted cash 22,593 (1,471) Decrease in cash, cash equivalents, and restricted cash (4,392,144) (35,823,853) Cash, cash equivalents, and restricted cash, beginning of period 13,873,628 45,806,947 Cash, cash equivalents, and restricted cash, end of period $9,481,484 $9,983,094 Supplemental cash flow disclosures: Income taxes paid $131,392 $1,432,000 Interest paid $— $80,075 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $(1,471,985) $72,999 Change in gathering system accrued in accounts payable and accrued liabilities $45,862 $4,240 Asset retirement obligation asset additions and adjustments $21,831 $4,640 Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income $815,660 $430,589 $2,322,556 $3,960,416 Add Back: Interest income, net (100,184) (398,779) (357,696) (861,104) Income tax expense 459,016 246,142 513,066 1,573,064 Depreciation, depletion, amortization, and accretion2,048,403 1,615,728 4,428,829 3,388,734 Stock based compensation expense 313,589 179,748 635,158 359,496 Gain on sale of assets — 1,449,871 — 1,449,871 Loss (gain) on derivative contracts net of cash received or paid on settlement 367,148 641,380 956,159 (63,980) Foreign currency translation loss — (5) 570 (987) Adjusted EBITDA $3,903,632 $4,164,674 $8,498,642 $9,805,510 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 2024 Results By: Epsilon Energy Ltd. via GlobeNewswire August 13, 2024 at 16:05 PM EDT HOUSTON, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2024 financial and operating results. Second Quarter 2024 Highlights: Epsilon - Q2 2024 Q2 2024Q1 2024Q2 2023QoQ %YoY % NRI Production GasMMcf1,4071,6662,118-16%-34% OilMbbl45371422%223% NGLMbbl19161119%69% Revenues Gas$M1,9612,9633,007-34%-35% Oil$M3,5142,7151,04629%236% NGL$M3883732454%59% Midstream1$M1,4441,9362,202-25%-34% Total$M7,3087,9876,500-9%12% Realized Prices2 Gas$/Mcf1.391.781.42-22%-2% Oil$/Bbl78.4474.1375.386%4% NGL$/Bbl20.2123.1621.55-13%-6% Adj. EBITDA$M3,9044,5954,165-15%-6% Cash + STI3$M9,48115,44736,788-39%-74% Capex$M5,70921,46612,458-73%-54% 1) Net of gathering fee revenue paid by Epsilon 2) Excludes impact of hedge realizations 3) Includes restricted cash balance Returned $1.4 million to shareholders through the quarterly dividend during the quarter.Realized gains of $0.4 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 690,000 MMBTU, and losses of $0.1 million on WTI CMA swaps totaling 20 MBbls. Operations Update: Epsilon’s capital expenditures were $5.7 million for the quarter ended June 30, 2024. This was primarily related to the completion of one gross (0.25 net) well and drilling of one gross (0.25 net) well in Ector Co., Texas. The Marcellus wells (7 gross) completed in Q1 2024 are not yet turned in line, awaiting better realized natural gas prices. In addition, our operating partner in PA has maintained production curtailments. We estimate that 3.5-4 MMcf per day of NRI production was offline during the quarter. The Company has six gross (1.5 net) producing wells in Ector Co. Texas. The sixth well was put on production for the last month of the quarter. A seventh well was completed in July and is currently on flowback. Two of the producing wells were offline for 2 weeks during the quarter during completion operations on the sixth well. Jason Stabell, Epsilon's Chief Executive Officer, commented, “Our Permian assets continue to perform well with strong quarter over quarter increases in oil volumes and revenue, driven by a full quarter of contribution from our first quarter acquisition and one month of production from the sixth well in the Pradera Fuego project. We expect to see additional sequential oil growth in the third quarter with a full quarter of contribution from the sixth well and the seventh well now on flowback and producing over 700 bopd while still cleaning up. In PA, natural gas volumes and revenues were down quarter over quarter, as expected, due to continued curtailments and the deferred turn in line on the 7 gross (0.7 net) wells completed in the first quarter. Natural gas prices remain weak and the company has fixed price hedges on approximately 50% of current volumes through the end of the year. As previously disclosed, we executed an amended gathering agreement for the Auburn gas gathering system, further bolstering the asset’s long-term cash flow potential. Finally, we continue to pursue additional investments in drill bit focused opportunities that meet our return thresholds. Overall, our business remains well positioned for continued growth in the Permian coupled with material upside for our Marcellus assets next year in an improved natural gas environment. With our recently expanded and undrawn credit facility, cash-flows, and cash on hand we can comfortably continue to pay our dividend and pursue attractive new projects.” Current Hedge Book: Hedge Book - as of 8.7.24 Trade DateProductStructureRefContract StartContract EndPrice / StrikeOutstandingMetric06/07/24Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.70 225,000MMBtu06/07/24Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.80)225,000MMBtu04/30/24Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.75)225,000MMBtu04/30/24Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.54 225,000MMBtu03/28/24Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.15 152,500MMBtu03/05/24Natural GasSwapsTenn Z4 300L Basis11/01/202412/31/2024$(1.04)305,000MMBtu03/05/24Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.28 305,000MMBtu02/26/24Crude OilSwapsNYMEX WTI CMA03/01/202403/31/2025$74.34 39,168BBL10/18/23Natural GasSwapsNYMEX Henry Hub (LD)04/01/202410/31/2024$3.29 152,500MMBtu10/18/23Natural GasSwapsTenn Z4 300L Basis04/01/202410/31/2024$(1.20)152,500MMBtu09/29/23Natural GasSwapsNYMEX Henry Hub (LD)04/01/202410/31/2024$3.20 305,000MMBtu09/29/23Natural GasSwapsTenn Z4 300L Basis04/01/202410/31/2024$(1.15)305,000MMBtu Earning’s Call: The Company will host a conference call to discuss its results on Wednesday, August 14, 2024 at 9:30 a.m. Central Time (10:30 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 2024 Earnings Conference Call.” A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=wNyRpqMC. 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. 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, 2024 2023 2024 2023Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $5,863,370 $4,298,072 $11,914,415 $11,267,653 Gas gathering and compression revenue 1,444,448 2,202,064 3,380,146 4,588,759 Total revenue 7,307,818 6,500,136 15,294,561 15,856,412 Operating costs and expenses: Lease operating expenses 1,649,867 1,440,521 3,418,329 2,844,800 Gathering system operating expenses 649,967 570,934 1,202,537 1,222,275 Depletion, depreciation, amortization, and accretion 2,048,403 1,615,728 4,428,829 3,388,734 Loss (gain) on sale of oil and gas properties — 1,449,871 — 1,449,871 General and administrative expenses: Stock based compensation expense 313,589 179,748 635,158 359,496 Other general and administrative expenses 1,478,215 1,596,626 3,037,238 3,620,399 Total operating costs and expenses 6,140,041 6,853,428 12,722,091 12,885,575 Operating income (loss) 1,167,777 (353,292) 2,572,470 2,970,837 Other income (expense): Interest income 108,943 433,201 375,215 923,963 Interest expense (8,759) (34,422) (17,519) (62,859)(Loss) gain on derivative contracts (94,891) 628,178 (195,617) 1,696,838 Other income, net 101,606 3,066 101,073 4,701 Other income, net 106,899 1,030,023 263,152 2,562,643 Net income before income tax expense 1,274,676 676,731 2,835,622 5,533,480 Income tax expense 459,016 246,142 513,066 1,573,064 NET INCOME $815,660 $430,589 $2,322,556 $3,960,416 Currency translation adjustments 22,229 1,129 22,593 (1,471)Unrealized gain (loss) on securities 3,011 (47,006) (1,598) (47,006)NET COMPREHENSIVE INCOME $840,900 $384,712 $2,343,551 $3,911,939 Net income per share, basic $0.04 $0.02 $0.11 $0.17 Net income per share, diluted $0.04 $0.02 $0.11 $0.17 Weighted average number of shares outstanding, basic 21,921,752 22,749,322 21,957,980 22,869,440 Weighted average number of shares outstanding, diluted 22,029,475 22,783,987 21,987,142 22,904,922 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets(All amounts stated in US$) June 30, December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $8,581,484 $13,403,628 Accounts receivable 4,944,664 6,015,448 Short term investments — 18,775,106 Fair value of derivatives 403,992 1,219,025 Prepaid income taxes 632,531 952,301 Other current assets 414,736 763,288 Total current assets 14,977,407 41,128,796 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 185,238,373 160,263,511 Unproved properties 28,498,028 25,504,873 Accumulated depletion, depreciation, amortization and impairment (117,604,188) (113,708,210)Total oil and gas properties, net 96,132,213 72,060,174 Gathering system 42,854,372 42,738,273 Accumulated depletion, depreciation, amortization and impairment (35,957,863) (35,539,996)Total gathering system, net 6,896,509 7,198,277 Land 637,764 637,764 Buildings and other property and equipment, net 281,444 291,807 Total property and equipment, net 103,947,930 80,188,022 Other assets: Operating lease right-of-use assets, long term 392,792 441,987 Restricted cash 900,000 470,000 Prepaid drilling costs 926,827 1,813,808 Total non-current assets 106,167,549 82,913,817 Total assets $121,144,956 $124,042,613 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $2,386,055 $3,236,871 Gathering fees payable 971,599 1,136,237 Royalties payable 1,196,239 1,422,898 Accrued capital expenditures 108,216 696,761 Accrued compensation 416,037 636,295 Other accrued liabilities 614,231 561,537 Fair value of derivatives 259,896 118,770 Operating lease liabilities 103,846 86,473 Total current liabilities 6,056,119 7,895,842 Non-current liabilities Asset retirement obligations 3,528,208 3,502,952 Deferred income taxes 11,499,207 11,553,943 Operating lease liabilities, long term 415,805 476,911 Total non-current liabilities 15,443,220 15,533,806 Total liabilities 21,499,339 23,429,648 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 21,921,850 shares issued and outstanding at June 30, 2024 and 22,222,722 issued and 22,151,848 shares outstanding at December 31, 2023 116,708,531 118,272,565 Treasury shares, at cost, 0 at June 30, 2024 and 70,874 at December 31, 2023 — (360,326)Additional paid-in capital 11,509,649 10,874,491 Accumulated deficit (38,365,835) (37,946,042)Accumulated other comprehensive income 9,793,272 9,772,277 Total shareholders' equity 99,645,617 100,612,965 Total liabilities and shareholders' equity $121,144,956 $124,042,613 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) Six months ended June 30, 2024 2023 Cash flows from operating activities: Net income $2,322,556 $3,960,416 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 4,428,829 3,388,734 Accretion of discount on available for sale securities (297,637) (343,328) Gain on available for sale securities — (47,659) Loss on sale of oil and gas properties — 1,449,871 Loss (gain) on derivative contracts 195,617 (1,696,838) Settlement received on derivative contracts 760,542 1,632,858 Settlement of asset retirement obligation (87,284) — Stock-based compensation expense 635,158 359,496 Deferred income tax (benefit) expense (54,736) 230,327 Changes in assets and liabilities: Accounts receivable 1,070,784 2,846,310 Prepaid income taxes 319,770 — Other assets and liabilities 354,014 425,789 Accounts payable, royalties payable and other accrued liabilities (572,099) (1,910,674) Income taxes payable — (93,575) Net cash provided by operating activities 9,075,514 10,201,727 Cash flows from investing activities: Additions to unproved oil and gas properties (2,993,155) (7,821,248) Additions to proved oil and gas properties (26,425,017) (5,653,284) Additions to gathering system properties (70,236) (30,264) Additions to land, buildings and property and equipment (13,912) (47,933) Purchases of short term investments - held to maturity — (32,812,974) Purchases of short term investments - available for sale (4,045,785) — Proceeds from sales and maturities of short term investments 23,116,930 6,352,473 Proceeds from sale of oil and gas properties — 12,498 Prepaid drilling costs 886,981 — Net cash used in investing activities (9,544,194) (40,000,732) Cash flows from financing activities: Buyback of common shares (1,203,708) (3,054,775) Dividends paid (2,742,349) (2,828,602) Debt issuance costs — (140,000) Net cash used in financing activities (3,946,057) (6,023,377) Effect of currency rates on cash, cash equivalents, and restricted cash 22,593 (1,471) Decrease in cash, cash equivalents, and restricted cash (4,392,144) (35,823,853) Cash, cash equivalents, and restricted cash, beginning of period 13,873,628 45,806,947 Cash, cash equivalents, and restricted cash, end of period $9,481,484 $9,983,094 Supplemental cash flow disclosures: Income taxes paid $131,392 $1,432,000 Interest paid $— $80,075 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $(1,471,985) $72,999 Change in gathering system accrued in accounts payable and accrued liabilities $45,862 $4,240 Asset retirement obligation asset additions and adjustments $21,831 $4,640 Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income $815,660 $430,589 $2,322,556 $3,960,416 Add Back: Interest income, net (100,184) (398,779) (357,696) (861,104) Income tax expense 459,016 246,142 513,066 1,573,064 Depreciation, depletion, amortization, and accretion2,048,403 1,615,728 4,428,829 3,388,734 Stock based compensation expense 313,589 179,748 635,158 359,496 Gain on sale of assets — 1,449,871 — 1,449,871 Loss (gain) on derivative contracts net of cash received or paid on settlement 367,148 641,380 956,159 (63,980) Foreign currency translation loss — (5) 570 (987) Adjusted EBITDA $3,903,632 $4,164,674 $8,498,642 $9,805,510 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. 13, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2024 financial and operating results. Second Quarter 2024 Highlights: Epsilon - Q2 2024 Q2 2024Q1 2024Q2 2023QoQ %YoY % NRI Production GasMMcf1,4071,6662,118-16%-34% OilMbbl45371422%223% NGLMbbl19161119%69% Revenues Gas$M1,9612,9633,007-34%-35% Oil$M3,5142,7151,04629%236% NGL$M3883732454%59% Midstream1$M1,4441,9362,202-25%-34% Total$M7,3087,9876,500-9%12% Realized Prices2 Gas$/Mcf1.391.781.42-22%-2% Oil$/Bbl78.4474.1375.386%4% NGL$/Bbl20.2123.1621.55-13%-6% Adj. EBITDA$M3,9044,5954,165-15%-6% Cash + STI3$M9,48115,44736,788-39%-74% Capex$M5,70921,46612,458-73%-54% 1) Net of gathering fee revenue paid by Epsilon 2) Excludes impact of hedge realizations 3) Includes restricted cash balance Returned $1.4 million to shareholders through the quarterly dividend during the quarter.Realized gains of $0.4 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 690,000 MMBTU, and losses of $0.1 million on WTI CMA swaps totaling 20 MBbls. Operations Update: Epsilon’s capital expenditures were $5.7 million for the quarter ended June 30, 2024. This was primarily related to the completion of one gross (0.25 net) well and drilling of one gross (0.25 net) well in Ector Co., Texas. The Marcellus wells (7 gross) completed in Q1 2024 are not yet turned in line, awaiting better realized natural gas prices. In addition, our operating partner in PA has maintained production curtailments. We estimate that 3.5-4 MMcf per day of NRI production was offline during the quarter. The Company has six gross (1.5 net) producing wells in Ector Co. Texas. The sixth well was put on production for the last month of the quarter. A seventh well was completed in July and is currently on flowback. Two of the producing wells were offline for 2 weeks during the quarter during completion operations on the sixth well. Jason Stabell, Epsilon's Chief Executive Officer, commented, “Our Permian assets continue to perform well with strong quarter over quarter increases in oil volumes and revenue, driven by a full quarter of contribution from our first quarter acquisition and one month of production from the sixth well in the Pradera Fuego project. We expect to see additional sequential oil growth in the third quarter with a full quarter of contribution from the sixth well and the seventh well now on flowback and producing over 700 bopd while still cleaning up. In PA, natural gas volumes and revenues were down quarter over quarter, as expected, due to continued curtailments and the deferred turn in line on the 7 gross (0.7 net) wells completed in the first quarter. Natural gas prices remain weak and the company has fixed price hedges on approximately 50% of current volumes through the end of the year. As previously disclosed, we executed an amended gathering agreement for the Auburn gas gathering system, further bolstering the asset’s long-term cash flow potential. Finally, we continue to pursue additional investments in drill bit focused opportunities that meet our return thresholds. Overall, our business remains well positioned for continued growth in the Permian coupled with material upside for our Marcellus assets next year in an improved natural gas environment. With our recently expanded and undrawn credit facility, cash-flows, and cash on hand we can comfortably continue to pay our dividend and pursue attractive new projects.” Current Hedge Book: Hedge Book - as of 8.7.24 Trade DateProductStructureRefContract StartContract EndPrice / StrikeOutstandingMetric06/07/24Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.70 225,000MMBtu06/07/24Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.80)225,000MMBtu04/30/24Natural GasSwapsTenn Z4 300L Basis01/01/202503/31/2025$(0.75)225,000MMBtu04/30/24Natural GasSwapsNYMEX Henry Hub (LD)01/01/202503/31/2025$3.54 225,000MMBtu03/28/24Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.15 152,500MMBtu03/05/24Natural GasSwapsTenn Z4 300L Basis11/01/202412/31/2024$(1.04)305,000MMBtu03/05/24Natural GasSwapsNYMEX Henry Hub (LD)11/01/202412/31/2024$3.28 305,000MMBtu02/26/24Crude OilSwapsNYMEX WTI CMA03/01/202403/31/2025$74.34 39,168BBL10/18/23Natural GasSwapsNYMEX Henry Hub (LD)04/01/202410/31/2024$3.29 152,500MMBtu10/18/23Natural GasSwapsTenn Z4 300L Basis04/01/202410/31/2024$(1.20)152,500MMBtu09/29/23Natural GasSwapsNYMEX Henry Hub (LD)04/01/202410/31/2024$3.20 305,000MMBtu09/29/23Natural GasSwapsTenn Z4 300L Basis04/01/202410/31/2024$(1.15)305,000MMBtu Earning’s Call: The Company will host a conference call to discuss its results on Wednesday, August 14, 2024 at 9:30 a.m. Central Time (10:30 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 2024 Earnings Conference Call.” A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=wNyRpqMC. 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. 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, 2024 2023 2024 2023Revenues from contracts with customers: Gas, oil, NGL, and condensate revenue $5,863,370 $4,298,072 $11,914,415 $11,267,653 Gas gathering and compression revenue 1,444,448 2,202,064 3,380,146 4,588,759 Total revenue 7,307,818 6,500,136 15,294,561 15,856,412 Operating costs and expenses: Lease operating expenses 1,649,867 1,440,521 3,418,329 2,844,800 Gathering system operating expenses 649,967 570,934 1,202,537 1,222,275 Depletion, depreciation, amortization, and accretion 2,048,403 1,615,728 4,428,829 3,388,734 Loss (gain) on sale of oil and gas properties — 1,449,871 — 1,449,871 General and administrative expenses: Stock based compensation expense 313,589 179,748 635,158 359,496 Other general and administrative expenses 1,478,215 1,596,626 3,037,238 3,620,399 Total operating costs and expenses 6,140,041 6,853,428 12,722,091 12,885,575 Operating income (loss) 1,167,777 (353,292) 2,572,470 2,970,837 Other income (expense): Interest income 108,943 433,201 375,215 923,963 Interest expense (8,759) (34,422) (17,519) (62,859)(Loss) gain on derivative contracts (94,891) 628,178 (195,617) 1,696,838 Other income, net 101,606 3,066 101,073 4,701 Other income, net 106,899 1,030,023 263,152 2,562,643 Net income before income tax expense 1,274,676 676,731 2,835,622 5,533,480 Income tax expense 459,016 246,142 513,066 1,573,064 NET INCOME $815,660 $430,589 $2,322,556 $3,960,416 Currency translation adjustments 22,229 1,129 22,593 (1,471)Unrealized gain (loss) on securities 3,011 (47,006) (1,598) (47,006)NET COMPREHENSIVE INCOME $840,900 $384,712 $2,343,551 $3,911,939 Net income per share, basic $0.04 $0.02 $0.11 $0.17 Net income per share, diluted $0.04 $0.02 $0.11 $0.17 Weighted average number of shares outstanding, basic 21,921,752 22,749,322 21,957,980 22,869,440 Weighted average number of shares outstanding, diluted 22,029,475 22,783,987 21,987,142 22,904,922 EPSILON ENERGY LTD.Unaudited Consolidated Balance Sheets(All amounts stated in US$) June 30, December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $8,581,484 $13,403,628 Accounts receivable 4,944,664 6,015,448 Short term investments — 18,775,106 Fair value of derivatives 403,992 1,219,025 Prepaid income taxes 632,531 952,301 Other current assets 414,736 763,288 Total current assets 14,977,407 41,128,796 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 185,238,373 160,263,511 Unproved properties 28,498,028 25,504,873 Accumulated depletion, depreciation, amortization and impairment (117,604,188) (113,708,210)Total oil and gas properties, net 96,132,213 72,060,174 Gathering system 42,854,372 42,738,273 Accumulated depletion, depreciation, amortization and impairment (35,957,863) (35,539,996)Total gathering system, net 6,896,509 7,198,277 Land 637,764 637,764 Buildings and other property and equipment, net 281,444 291,807 Total property and equipment, net 103,947,930 80,188,022 Other assets: Operating lease right-of-use assets, long term 392,792 441,987 Restricted cash 900,000 470,000 Prepaid drilling costs 926,827 1,813,808 Total non-current assets 106,167,549 82,913,817 Total assets $121,144,956 $124,042,613 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $2,386,055 $3,236,871 Gathering fees payable 971,599 1,136,237 Royalties payable 1,196,239 1,422,898 Accrued capital expenditures 108,216 696,761 Accrued compensation 416,037 636,295 Other accrued liabilities 614,231 561,537 Fair value of derivatives 259,896 118,770 Operating lease liabilities 103,846 86,473 Total current liabilities 6,056,119 7,895,842 Non-current liabilities Asset retirement obligations 3,528,208 3,502,952 Deferred income taxes 11,499,207 11,553,943 Operating lease liabilities, long term 415,805 476,911 Total non-current liabilities 15,443,220 15,533,806 Total liabilities 21,499,339 23,429,648 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 21,921,850 shares issued and outstanding at June 30, 2024 and 22,222,722 issued and 22,151,848 shares outstanding at December 31, 2023 116,708,531 118,272,565 Treasury shares, at cost, 0 at June 30, 2024 and 70,874 at December 31, 2023 — (360,326)Additional paid-in capital 11,509,649 10,874,491 Accumulated deficit (38,365,835) (37,946,042)Accumulated other comprehensive income 9,793,272 9,772,277 Total shareholders' equity 99,645,617 100,612,965 Total liabilities and shareholders' equity $121,144,956 $124,042,613 EPSILON ENERGY LTD.Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) Six months ended June 30, 2024 2023 Cash flows from operating activities: Net income $2,322,556 $3,960,416 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 4,428,829 3,388,734 Accretion of discount on available for sale securities (297,637) (343,328) Gain on available for sale securities — (47,659) Loss on sale of oil and gas properties — 1,449,871 Loss (gain) on derivative contracts 195,617 (1,696,838) Settlement received on derivative contracts 760,542 1,632,858 Settlement of asset retirement obligation (87,284) — Stock-based compensation expense 635,158 359,496 Deferred income tax (benefit) expense (54,736) 230,327 Changes in assets and liabilities: Accounts receivable 1,070,784 2,846,310 Prepaid income taxes 319,770 — Other assets and liabilities 354,014 425,789 Accounts payable, royalties payable and other accrued liabilities (572,099) (1,910,674) Income taxes payable — (93,575) Net cash provided by operating activities 9,075,514 10,201,727 Cash flows from investing activities: Additions to unproved oil and gas properties (2,993,155) (7,821,248) Additions to proved oil and gas properties (26,425,017) (5,653,284) Additions to gathering system properties (70,236) (30,264) Additions to land, buildings and property and equipment (13,912) (47,933) Purchases of short term investments - held to maturity — (32,812,974) Purchases of short term investments - available for sale (4,045,785) — Proceeds from sales and maturities of short term investments 23,116,930 6,352,473 Proceeds from sale of oil and gas properties — 12,498 Prepaid drilling costs 886,981 — Net cash used in investing activities (9,544,194) (40,000,732) Cash flows from financing activities: Buyback of common shares (1,203,708) (3,054,775) Dividends paid (2,742,349) (2,828,602) Debt issuance costs — (140,000) Net cash used in financing activities (3,946,057) (6,023,377) Effect of currency rates on cash, cash equivalents, and restricted cash 22,593 (1,471) Decrease in cash, cash equivalents, and restricted cash (4,392,144) (35,823,853) Cash, cash equivalents, and restricted cash, beginning of period 13,873,628 45,806,947 Cash, cash equivalents, and restricted cash, end of period $9,481,484 $9,983,094 Supplemental cash flow disclosures: Income taxes paid $131,392 $1,432,000 Interest paid $— $80,075 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $(1,471,985) $72,999 Change in gathering system accrued in accounts payable and accrued liabilities $45,862 $4,240 Asset retirement obligation asset additions and adjustments $21,831 $4,640 Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income $815,660 $430,589 $2,322,556 $3,960,416 Add Back: Interest income, net (100,184) (398,779) (357,696) (861,104) Income tax expense 459,016 246,142 513,066 1,573,064 Depreciation, depletion, amortization, and accretion2,048,403 1,615,728 4,428,829 3,388,734 Stock based compensation expense 313,589 179,748 635,158 359,496 Gain on sale of assets — 1,449,871 — 1,449,871 Loss (gain) on derivative contracts net of cash received or paid on settlement 367,148 641,380 956,159 (63,980) Foreign currency translation loss — (5) 570 (987) Adjusted EBITDA $3,903,632 $4,164,674 $8,498,642 $9,805,510 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.
