• Oil Production Increase: 180% year-on-year increase in oil production in the Permian.
• Permian Cash Flow Contribution: More than 60% of cash flows in 2024.
• Net Revenue Interest Production: Approximately 30 million cubic feet a day in PA, up 85% from 2024 daily average.
• Realized Gas Pricing: Over $3.90 per Mcf net to wellhead, up 100% over the same period last winter.
• Gathering System Throughput Increase: Up over 50% from the average in the third quarter of 2024.
• Permian Investment: $24 million invested in 2024 for acquisition and drilling.
• Proved Reserves Growth: Approximately 20% year-over-year increase in proved reserves.
• Marcellus Proved Undeveloped Reserves: Added approximately 10 Bcf with drilling set to commence in 2026.
• Permian Proved Reserves Addition: Added 11.5 Bcf equivalent to proved reserves.
• Liquidity: Over $50 million, including undrawn credit facility.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Epsilon Energy Ltd (NASDAQ:EPSN) achieved a 180% year-on-year increase in oil production in the Permian, contributing over 60% to the company's cash flows in 2024.
• The company established a new project area in Alberta, Canada, with a joint venture that adds multiyear economic inventory, enhancing future growth potential.
• Epsilon Energy Ltd (NASDAQ:EPSN) reported a significant improvement in the Marcellus with an 85% increase in daily average production and a 100% increase in realized pricing compared to the previous year.
• The company has over $50 million in liquidity, including an undrawn credit facility, positioning it well for continued investment and shareholder returns.
• Proved reserves grew approximately 20% year over year, with additional reserves added in both the Marcellus and Permian regions, indicating strong resource potential.

Negative Points

• Epsilon Energy Ltd (NASDAQ:EPSN) faced challenges in the Marcellus due to a sub $2 per Mcf net wellhead pricing environment, leading to production curtailments of 20% to 25%.
• The company experienced a commercially unsuccessful well in the Killam project, highlighting risks associated with exploration activities.
• There is no incremental activity planned in the Marcellus for 2025, with drilling expected to resume only in 2026, potentially impacting near-term growth.
• The hedge position for natural gas is currently out of the money, and the company has not added to its hedging strategy, which could expose it to market volatility.
• Epsilon Energy Ltd (NASDAQ:EPSN) has not been active in share repurchases year-to-date, despite announcing an expanded share repurchase program, which may disappoint some investors seeking immediate capital returns.

Q & A Highlights

Q: In 2024, regarding Alberta, how many wells were drilled and completed? A: We drilled two gross wells, one net, in the Killam project, with one commercially successful well. In the larger Garrington area, we drilled and completed two gross wells, and they are currently on flowback. We have a quarter interest in these wells.

Q: How many wells in the larger area will be drilled in 2025? A: We expect another two wells to be drilled in the larger area over the remainder of 2025, likely starting in early summer after the break-up period in Canada.

Q: Could you discuss the expectations with the Marcellus operator and what has been included in the proved reserves? A: We have clarity from the operator on their multiyear plan, which includes 2026, 2027, and 2028. This defined plan is included in our reserve report as proved undeveloped. There is no incremental activity expected in 2025, with drilling to start again in 2026.

Q: How do you feel about your hedge position for natural gas, and do you plan on being active on the hedge side given the strength in the forward curve? A: We are hedged through October of this year at roughly 30% of our gas production. We haven't added to that position as it is currently out of the money. We are contemplating adding more protection for the summer of next year but are being tactical about it. Our production rolls off in October of this year.

Q: Have you been active year-to-date on the share repurchase side? A: We have not been active to date. We view share repurchase as another option within our capital allocation framework and have been opportunistic in the past. We will consider block purchases if attractive opportunities arise.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.