Epsilon Announces Full Year 2024 Results
HOUSTON, March 19, 2025 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. ("Epsilon" or the "Company") (NASDAQ: EPSN) today reported financial results for the fourth quarter and full-year ended December 31, 2024.
Full Year and Q4 2024 Highlights:
Epsilon - Full Year 2024 & Q4 2024
2024 2023 Q4 2024 Q3 2024 YoY% QoQ%
NRI Production
Gas MMcf 6,142 8,340 1,765 1,304 -26% 35%
Oil Mbbl 187 65 52 53 186% -3%
NGL Mbbl 69 39 17 17 78% -2%
Total Mmcfe 7,676 8,965 2,176 1,727 -14% 26%
Revenues $M
Gas 10,786 14,864 3,958 1,904 -27% 108%
Oil 13,731 5,091 3,537 3,965 170% -11%
NGL 1,482 984 385 335 51% 15%
Midstream(1) 5,524 9,791 1,060 1,084 -44% -2%
Total 31,523 30,730 8,940 7,288 3% 23%
Realized Prices(2)
Gas $/Mcf 1.76 1.78 2.24 1.46 -1% 54%
Oil $/Bbl 73.61 77.96 68.38 74.27 -6% -8%
NGL $/Bbl 21.41 25.29 22.98 19.56 -15% 17%
Adj. EBITDA $M 17,578 18,828 5,335 3,744 -7% 43%
Cash + STI(3) $M 6,990 32,649 6,990 8,775 -79% -20%
Capex(4) $M 34,887 22,038 3,804 3,908 58% -3%
1) Net of elimination entry for fees paid by Epsilon
2) Excludes impact of hedge realizations
3) Includes restricted cash balance
4) Includes acquisitions
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The Company returned $7.3 million to shareholders during the year ended December 31, 2024.
-- $5.5 million through the quarterly dividends
-- $1.8 million through the repurchase of 373,700 shares at an average price
of $4.88 per share
Jason Stabell, Epsilon's Chief Executive Officer, commented, "As we expected, the challenging natural gas environment continued in 2024, Marcellus net wellhead prices were below $2 per Mcf for the year and a meaningful portion (est. 20-25%) of our production for the year was curtailed. This also impacted our midstream business and led to lower throughput volumes for the Auburn Gas Gathering System. We were fully aligned with the operator to hold these reserves back for a better pricing environment, and we are now seeing curtailed volumes, alongside delayed volumes from new wells, back online in the first quarter of 2025. These volumes started to ramp in the fourth quarter, but we are now producing 75% more natural gas in the Marcellus than our 2024 average net daily volumes, into a much improved gas price environment.
We continued to invest in our Texas assets during the year, where we now have 7 gross producing wells, all performing better than or as expected, and approximately 14,000 gross undeveloped acres holding up to 40 gross undeveloped 2-mile locations, in the heart of the ascendant Barnett play. We expect development activity to resume there in the second half of 2025. As mentioned last year, this project successfully diversified our commodity mix and provides optionality for multi-year capital allocation.
In the fourth quarter, we entered into a JV in Alberta with a reputable US sponsor-backed operator. This met our criteria of low entry cost, drill-bit focused, large inventory runway, capable operator and attractive well economics. We are excited about the opportunity as it covers over 30,000 gross acres where the well returns screen attractive on productivity, drilling and completion cost structure, and royalty regime. We have drilled and completed the first two wells and expect to discuss those initial results soon.
During the year we continued our track record of shareholder returns with the fixed quarterly dividend and opportunistic share repurchases.
With growing cash flows and over $50 million in available liquidity, the Company is in a strong position to continue to execute on drilling activity and opportunistic deal-making while still returning cash to shareholders.
We are setup for a strong year in 2025, and we expect material growth in production and cash flows."
2024 Operations:
Epsilon's capital expenditures were $34.9 million for the year ended December 31, 2024, a 58% increase year over year. Texas accounted for approximately 70% of the total, related to the acquisition of 3 gross (0.75 net) wells and 3,246 undeveloped acres in Q1 2024, and the development of 2 gross (0.5 net) wells in Q2 & Q3 2024. Pennsylvania accounted for 15% of the total, primarily related to the completion of 10 gross (0.8 net) wells during the year. The remainder was primarily related to the drilling of 4 gross (1.5 net) wells in Alberta.
The Auburn Gas Gathering System (Epsilon is a 35% owner) gathered and delivered 36.9 Bcf gross natural gas volumes during the year, or 101 MMcf/d.
Reserves:
The Company has received the year-end 2024 third party reserves report completed by the engineering firm DeGolyer & MacNaughton. The table below summarizes the report.
Epsilon Net Year End Reserves
---------------------------------------------------------------------------------------------------------------------
12/31/2023 12/31/2024 YoY Change
---------------------------- ------------------------------ ----------------------------------------
Oil NGL Gas Total Oil NGL Gas Total Oil NGL Gas Total Total
---- ---- ------- ------- ----- ----- ------- ------- ----- ---- -------- -------- -------
Mbbl Mbbl MMcf Mmcfe Mbbl Mbbl MMcf Mmcfe Mbbl Mbbl MMcf Mmcfe %
---- ---- ------- ------- ----- ----- ------- ------- ----- ---- -------- -------- -------
Proved
Developed 272 249 47,555 50,681 847 490 56,851 64,872 575 241 9,296 14,191 28%
Proved
Undeveloped 69 134 18,361 19,581 725 387 12,550 19,225 656 253 (5,811) (356) -2%
---- ---- ------- ------- ----- ----- ------- ------- ----- --- ------- -------
Total Proved 341 383 65,916 70,262 1,572 877 69,401 84,097 1,231 494 3,485 13,835 20%
Total
Probable 354 437 156,730 161,474 380 384 137,906 142,487 26 (53) (18,824) (18,987) -12%
Total Proved
+ Probable 695 820 222,646 231,736 1,952 1,261 207,307 226,584 1,257 441 (15,339) (5,152) -2%
As shown in the table above, Company Proved reserves increased 20% year over year. Produced volumes accounted for an 11% decrease, offset by revisions to prior estimates (+14%) and acquisitions and development activity during the year (+16%). Company Probable reserves decreased 12% year over year.
The primary drivers for the positive revisions were (1) changes to the development plan in PA (as provided by the operator), moving Probable reserves to Proved, (2) Proved reserves acquisitions in Texas, and (3) development activity in Texas adding Proved undeveloped reserves.
The majority of the Company's inventory in Texas is not included in the reserve report, due to no offset producing wells. The Company believes the unaccounted-for inventory is comparable to the existing wells in the project and expects to add meaningful reserves in Texas with incremental development.
Current Hedge Book:
Hedge Book
Price /
Trade Date Product Structure Ref Contract Start Contract End Strike Outstanding Metric
NYMEX
Crude WTI
01/14/2025 Oil Swap CMA 04/01/2025 09/30/2025 $72.35 (14,900.00) BBL
NYMEX
Crude WTI
01/07/2025 Oil Swap CMA 04/01/2025 12/31/2025 $70.20 (24,600.00) BBL
NYMEX
Henry
Natural Hub
12/30/2024 Gas Swap $(LD)$ 04/01/2025 10/31/2025 $3.49 (214,000.00) MMBTU
Tenn
Z4
Natural 300L
12/30/2024 Gas Swap Basis 04/01/2025 10/31/2025 -$0.94 (214,000.00) MMBTU
NYMEX
Henry
Natural Hub
11/21/2024 Gas Swap (LD) 04/01/2025 10/31/2025 $3.23 (321,000.00) MMBTU
Tenn
Z4
Natural 300L
11/21/2024 Gas Swap Basis 04/01/2025 10/31/2025 -$0.93 (321,000.00) MMBTU
NYMEX
Henry
Natural Hub
11/20/2024 Gas Swap (LD) 04/01/2025 10/31/2025 $3.16 (214,000.00) MMBTU
Tenn
Z4
Natural 300L
11/20/2024 Gas Swap Basis 04/01/2025 10/31/2025 -$0.89 (214,000.00) MMBTU
NYMEX
Henry
Natural Hub
11/13/2024 Gas Swap (LD) 04/01/2025 10/31/2025 $3.08 (535,000.00) MMBTU
Tenn
Z4
Natural 300L
11/13/2024 Gas Swap Basis 04/01/2025 10/31/2025 -$0.89 (535,000.00) MMBTU
NYMEX
Crude WTI
10/07/2024 Oil Swap CMA 04/01/2025 06/30/2025 $72.00 (7,500.00) BBL
NYMEX
Henry
Natural Hub
10/02/2024 Gas Swap (LD) 04/01/2025 10/31/2025 $3.23 (535,000.00) MMBTU
Tenn
Z4
Natural 300L
10/02/2024 Gas Swap Basis 04/01/2025 10/31/2025 -$1.04 (535,000.00) MMBTU
NYMEX
Crude WTI
02/26/2024 Oil Swap CMA 03/01/2025 03/01/2025 $74.34 (4,389.00) BBL
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Earning's Call:
The Company will host a conference call to discuss its results on Thursday, March 20, 2025, at 10:30 a.m. Central Time (11:30 a.m. Eastern Time).
Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the "Epsilon Energy 2024 Year End Earnings Conference Call."
A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=lEJXH1I5. A webcast replay will be available on the Company's website (www.epsilonenergyltd.com) following the call.
About Epsilon
Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets in Pennsylvania, Texas, Alberta CA, New Mexico, and Oklahoma.
Forward-Looking Statements
Certain statements contained in this news release constitute forward looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", 'may", "will", "project", "should", 'believe", and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.
Contact Information:
281-670-0002
Jason Stabell
Chief Executive Officer
Jason.Stabell@EpsilonEnergyLTD.com
Andrew Williamson
Chief Financial Officer
Andrew.Williamson@EpsilonEnergyLTD.com
EPSILON ENERGY LTD.
Unaudited Consolidated Statements of Operations
(All amounts stated in US$)
Year ended December 31,
----------------------------
2024 2023
------------ --------------
Revenues from contracts with
customers:
Gas, oil, NGL, and condensate
revenue $25,998,712 $20,939,221
Gas gathering and compression
revenue 5,524,063 9,790,531
Total revenue 31,522,775 30,729,752
---------- ----------
Operating costs and expenses:
Lease operating expenses 7,264,824 6,405,281
Gathering system operating expenses 2,265,190 2,459,694
Depletion, depreciation,
amortization, and accretion 10,185,119 7,685,084
Impairment expense 1,450,076 --
Loss on sale of oil and gas
properties -- 1,449,871
General and administrative
expenses:
Stock based compensation expense 1,244,416 1,018,262
Other general and administrative
expenses 5,688,714 6,293,234
Total operating costs and
expenses 28,098,339 25,311,426
---------- ----------
Operating income 3,424,436 5,418,326
---------- ----------
Other income (expense):
Interest income 493,277 1,673,241
Interest expense (46,400) (80,379)
(Loss) gain on derivative contracts (391,147) 3,130,055
Other income 76,727 4,357
Other income, net 132,457 4,727,274
---------- ----------
Net income before income tax expense 3,556,893 10,145,600
Income tax expense 1,629,093 3,200,447
NET INCOME $ 1,927,800 $ 6,945,153
Currency translation adjustments 262,588 (3,872)
Unrealized (loss) gain on securities (1,598) 1,598
NET COMPREHENSIVE INCOME $ 2,188,790 $ 6,942,879
========== ==========
Net income per share, basic $ 0.09 $ 0.31
Net income per share, diluted $ 0.09 $ 0.31
Weighted average number of shares
outstanding, basic 21,930,277 22,496,772
Weighted average number of shares
outstanding, diluted 21,930,277 22,511,647
EPSILON ENERGY LTD.
Unaudited Consolidated Balance Sheets
(All amounts stated in US$)
December 31, December 31,
2024 2023
-------------- ----------------
ASSETS
Current assets
Cash and cash equivalents $ 6,519,793 $ 13,403,628
Accounts receivable 5,843,722 6,015,448
Short term investments -- 18,775,106
Fair value of derivatives -- 1,219,025
Prepaid income taxes 975,963 952,301
Other current assets 792,041 763,288
Total current assets 14,131,519 41,128,796
------------ ------------
Non-current assets
Property and equipment:
Oil and gas properties,
successful efforts method
Proved properties 191,349,210 160,263,511
Unproved properties 28,364,186 25,504,873
Accumulated depletion,
depreciation, amortization
and impairment (122,751,395) (113,708,210)
Total oil and gas
properties, net 96,962,001 72,060,174
------------ ------------
Gathering system 43,116,371 42,738,273
Accumulated depletion,
depreciation, amortization
and impairment (36,449,511) (35,539,996)
Total gathering system, net 6,666,860 7,198,277
------------ ------------
Land 637,764 637,764
Buildings and other property
and equipment, net 259,335 291,807
Total property and
equipment, net 104,525,960 80,188,022
------------ ------------
Other assets:
Operating lease right-of-use
assets, long term 344,589 441,987
Restricted cash 470,000 470,000
Prepaid drilling costs 982,717 1,813,808
Total non-current assets 106,323,266 82,913,817
------------ ------------
Total assets $ 120,454,785 $ 124,042,613
============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable trade $ 2,334,732 $ 3,149,371
Gathering fees payable 997,016 1,136,237
Royalties payable 1,400,976 1,422,898
Accrued capital expenditures 572,079 696,761
Accrued compensation 695,018 636,295
Other accrued liabilities 371,503 649,037
Fair value of derivatives 487,548 118,770
Operating lease liabilities 121,135 86,473
Total current liabilities 6,980,007 7,895,842
------------ ------------
Non-current liabilities
Asset retirement obligations 3,652,296 3,502,952
Deferred income taxes 12,738,577 11,553,943
Operating lease liabilities,
long term 355,776 476,911
Total non-current
liabilities 16,746,649 15,533,806
------------ ------------
Total liabilities 23,726,656 23,429,648
------------ ------------
Commitments and contingencies
(Note 11)
Shareholders' equity
Preferred shares, no par
value, unlimited shares
authorized, none issued or
outstanding -- --
Common shares, no par value,
unlimited shares authorized
and 22,008,766 shares issued
and outstanding at December
31, 2024 and 22,222,722
issued and 22,151,848 shares
outstanding at December 31,
2023 116,081,031 118,272,565
Treasury shares, at cost, 0 at
December 31, 2024 and 70,874
at December 31, 2023 -- (360,326)
Additional paid-in capital 12,118,907 10,874,491
Accumulated deficit (41,505,076) (37,946,042)
Accumulated other
comprehensive income 10,033,267 9,772,277
Total shareholders' equity 96,728,129 100,612,965
------------ ------------
Total liabilities and
shareholders' equity $ 120,454,785 $ 124,042,613
============ ============
EPSILON ENERGY LTD.
Unaudited Consolidated Statements of Cash Flows
(All amounts stated in US$)
Year ended December 31,
------------------------------
2024 2023
------------- ---------------
Cash flows from operating
activities:
Net income $ 1,927,800 $ 6,945,153
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depletion, depreciation,
amortization, and accretion 10,185,119 7,685,084
Impairment expense 1,450,076 --
Accretion of discount on
available for sale securities (297,637) (836,528)
Loss on sale of oil and gas
properties -- 1,449,871
Gain (loss) on derivative
contracts 391,147 (3,130,055)
Settlement received on
derivative contracts 1,196,656 3,251,890
Settlement of asset retirement
obligation (88,992) (509,802)
Stock-based compensation expense 1,244,416 1,018,262
Deferred income tax expense 1,184,634 936,549
Changes in assets and
liabilities:
Accounts receivable 171,726 1,185,938
Prepaid income taxes (23,662) 187,793
Other assets and liabilities (17,828) 126,347
Accounts payable, royalties
payable and other accrued
liabilities (493,176) (122,203)
----------- -----------
Net cash provided by operating
activities 16,830,279 18,188,299
----------- -----------
Cash flows from investing
activities:
Additions to unproved oil and gas
properties (4,507,280) (8,136,442)
Additions to proved oil and gas
properties (31,695,651) (10,377,642)
Additions to gathering system
properties (341,452) (82,302)
Additions to land, buildings and
property and equipment (16,513) (49,689)
Purchases of short term
investments - held to maturity -- (32,812,974)
Purchases of short term
investments - available for sale (4,045,785) (11,988,982)
Proceeds from short term
investments - held to maturity 6,743,178 26,864,976
Proceeds from short term
investments - available for sale 16,373,752 --
Proceeds from sale of oil and gas
properties -- 12,498
Prepaid drilling costs 831,091 (1,813,808)
----------- -----------
Net cash used in investing
activities (16,658,660) (38,384,365)
----------- -----------
Cash flows from financing
activities:
Buyback of common shares (1,831,208) (6,055,601)
Exercise of stock options -- 62,875
Dividends paid (5,486,834) (5,600,655)
Debt issuance costs -- (140,000)
----------- -----------
Net cash used in financing
activities (7,318,042) (11,733,381)
----------- -----------
Effect of currency rates on cash,
cash equivalents, and restricted
cash 262,588 (3,872)
----------- -----------
Decrease in cash, cash
equivalents, and restricted cash (6,883,835) (31,933,319)
Cash, cash equivalents, and
restricted cash, beginning of
period 13,873,628 45,806,947
Cash, cash equivalents, and
restricted cash, end of period $ 6,989,793 $ 13,873,628
=========== ===========
Supplemental cash flow disclosures:
Income tax paid - federal $ 414,250 $ 1,250,000
Income tax paid - state (PA) $ -- $ 182,000
Income tax (refund) paid - state
(other) $ (2,071) $ 7,583
Interest paid $ 16,832 $ 97,595
Non-cash investing activities:
Change in proved properties accrued
in accounts payable and accrued
liabilities $ (862,744) $ 1,611,724
Change in gathering system accrued
in accounts payable and accrued
liabilities $ 36,645 $ 16,969
Asset retirement obligation asset
additions and adjustments $ 54,902 $ 1,190,579
Year ended December 31,
----------------------------
2024 2023
------------ --------------
Net income $ 1,927,800 $ 6,945,153
Add Back:
Interest income, net (446,877) (1,592,862)
Income tax expense 1,629,093 3,200,447
Depreciation, depletion,
amortization, and accretion 10,185,119 7,685,084
Impairment expense 1,450,076 --
Stock based compensation expense 1,244,416 1,018,262
Loss on sale of assets -- 1,449,871
Loss on derivative contracts net
of cash received or paid on
settlement 1,587,803 121,835
Foreign currency translation loss 570 (278)
Adjusted EBITDA $17,578,000 $18,827,512
========== ==========
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, (7) gain or loss on derivative contracts net of cash received or paid on settlement, and (8) 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.
(END) Dow Jones Newswires
March 19, 2025 16:50 ET (20:50 GMT)
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