NASDAQ:EPSN Epsilon Energy Q3 2024 Earnings Report $7.28 +0.09 (+1.25%) Closing price 04/28/2025 04:00 PM EasternExtended Trading$7.27 -0.01 (-0.14%) As of 04/28/2025 06:57 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Epsilon Energy EPS ResultsActual EPS$0.02Consensus EPS $0.04Beat/MissMissed by -$0.02One Year Ago EPS$0.02Epsilon Energy Revenue ResultsActual Revenue$7.29 millionExpected Revenue$6.89 millionBeat/MissBeat by +$400.00 thousandYoY Revenue GrowthN/AEpsilon Energy Announcement DetailsQuarterQ3 2024Date11/6/2024TimeAfter Market ClosesConference Call DateThursday, November 7, 2024Conference Call Time3:00PM ETUpcoming EarningsEpsilon Energy's Q1 2025 earnings is scheduled for Tuesday, May 6, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptQuarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Epsilon Energy Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 7, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00would now like to turn the conference over to Andrew Williamson, Chief Financial Officer. Please go ahead. Speaker 100:00:05Thank you, operator. And on behalf of the management team, I would like to welcome all of you today's conference call to review Epsilon's Q3 2024 financial and operational results. Before we begin, I would like to remind you that our comments may include forward looking statements. It should be noted that a variety of factors could cause Epsilon's actual results to differ materially from the anticipated results or expectations expressed in these forward looking statements. Today's call may also contain certain non GAAP financial measures. Speaker 100:00:38Please refer to the earnings release that we issued yesterday for disclosures on forward looking statements and reconciliations of non GAAP measures. With that, I would like to turn the call over to Jason Stebel, our Chief Executive Officer. Speaker 200:00:52Thank you, Andrew. Good morning and thank you for participating in our Q3 2024 conference call. Joining me today are Andrew Williamson, our CFO and Henry Clanton, our COO. We will be available to answer questions later in the call. In the Permian, we brought the 7th Ector well online in the 3rd quarter, driving 19% quarter over quarter oil production growth. Speaker 200:01:17In the 4th quarter, we will see some quarter over quarter declines in liquids production until drilling resumes next year. Henry will discuss specific well performance later in the call. In Pennsylvania, wellhead prices have remained low heading into winter. In October, we have seen a small portion of our curtailed volumes come back online and 3 of the 7 previously announced deferred TILs were put on production last week. So we expect quarter over quarter growth in natural gas volumes in the 4th quarter with a further ramp expected into the Q1 of next year as curtailments are lifted and the remaining deferred till wells are brought on. Speaker 200:01:59Currently, we do not forecast incremental drilling in Pennsylvania in 2025, but we will keep you updated after discussions with our operator in the Q4. Late last month, we announced our entry into Alberta, Canada through 2 joint ventures with Calgary based private operators. In the larger deal, after approximately a $7,500,000 USD development carry is satisfied, we will earn 25% in approximately 160,000 acres. Our initial development focus will be the Garrington area, approximately 30,000 gross acres in the liquids rich, glauconitic and Ehlersley intervals. Initial plans call for 4 gross wells in 2025 with operations likely to commence in the Q4 of this year. Speaker 200:02:49Andrew can provide further details on the projected capital expenditures. Overall, the company remains well positioned to deliver volume and cash flow growth in 2025. We continue to evaluate opportunities and see the potential for additional investments, particularly in Canada. Meanwhile, we will continue to pay our dividend and monitor opportunities to reduce our share count at attractive prices. Now I would like to turn the call over to Andrew for additional comments. Speaker 100:03:20Thanks, Jason. This quarter was the trough for our PA business both on the midstream and upstream side. Production curtailments continued through the quarter and realized prices were $1.54 per Mcf. We were also impacted by plugging and abandonment activities in the Auburn area, increasing PA operating costs by approximately 40% for the quarter. The lifting of curtailments, volumes from the deferred wells that were developed in the Q1 starting to come back on at peak rates and better pricing will start to bring us back from here. Speaker 100:03:56As Jason mentioned, the Permian has picked up some of the slack contributing approximately $8,500,000 of adjusted EBITDA year to date, which is 70% of the total company figure. On a project level, we've invested approximately $40,000,000 starting in Q2 of 2023 with 20% of that in currently undeveloped leasehold. We received cash flows of approximately $12,000,000 back through the end of the Q3 with 2 gross 0.5 net of the 9 gross 2 net producing wells coming on in the last 4 months. We are still not clear on investment activity details for Texas year as the previously mentioned strategic alternatives review process of the operated interest plays out over the rest of the year. However, we do expect to be active there in 2025 and resume growth. Speaker 100:04:50As Jason mentioned, drilling activity is scheduled to start later this quarter in Alberta on our Garrington JV position. We expect to have approximately $10,000,000 of CapEx there in the 12 month period from this December. We are excited about this deal with our ability to earn into a large acreage position that is underwritten holds over 25 highly economic locations in the Garrington area, in partnership with a premier private operator in the basin. Relative to other opportunities we've seen, Canada stands out due to the cost structure, royalty regime and large opportunity set of liquids focused development. Also, as mentioned in the announcement of the joint venture, there are some corporate advantages to us conducting business north of the border. Speaker 100:05:36We have added incrementally to our hedge book for 2025 locking in prices above the current strip. We will continue to add opportunistically there if we see the opportunity to do so. On liquidity, our available revolver capacity currently stands at $45,000,000 leaving us well positioned to move on other opportunities while maintaining a strong balance sheet. Now, I will turn it over to Henry for operations. Speaker 300:06:01Thank you, Jason and Andrew. I'll begin with comments on our Permian Basin Mississippian Barnett project. We previously reported the 7th well in the project began production in July. The early life productivity is consistent with the initial 6 wells and continues to perform well. We'd like to highlight that this well is the southern most drilled in the project to date. Speaker 300:06:26It is providing confirmatory evidence of the prospectivity of the Interpol on the large acreage development position south of most of the existing production. As Andrew mentioned, a strategic alternatives review process for the operated interest continues. Accordingly, we do not anticipate any additional development to occur while the process is underway, and we'll provide updates on the development plans moving forward as they become available. Moving to Canada and our recently announced Garrington JV, we have begun the development planning phase with the operator and will identify the location and targeted intervals of the first group of wells to be drilled. Currently, 4 2 mile horizontal wells are anticipated over the next 12 months beginning in December. Speaker 300:07:18We will provide updates as well proposals are finalized including CapEx, target interval and timing. Under the smaller joint venture formed in Alberta in April of this year, the company participated in 2 multi leg horizontal wells, 1 net, in the Lower Manville formation in 2 separate oil pools in the Killam area. Results to date have been mixed and technical reviews of well performance are ongoing. Net drilling and completion cost incurred for the 2 wells is approximately $1,700,000 No additional capital investment is required. In Northeast PA, as Jason mentioned, last week the operator commenced initial flowback on 3 0.4 net deferred TIO wells, the Clamper pad. Speaker 300:08:13We expect these wells to add meaningfully to our net production in the basin, currently producing approximately 8,000,000 a day net. Now back to Jason. Speaker 200:08:26Thanks, guys. Operator, we can now open the lines for questions. Operator00:08:31We will now begin the question and answer session. Our first question today is from John White with ROTH Capital. Please go ahead. Speaker 400:09:08Good afternoon, gentlemen, and congratulations on a nice quarter. Thanks, John. Thanks, John. Thanks, John. You said in the press release, 3 of the 7 wells were put on flow back during the last week of October, producing 60,000,000 a day. Speaker 400:09:29What is the net production from that? Speaker 500:09:34That's the 8,000,000 a day that I reported in the call there. Speaker 400:09:43Go ahead. Speaker 500:09:46We have about a 13 a little over 13% net revenue interest in that pad. So it equates to about $8,000,000 a day. Speaker 400:09:55That's great. On the $3,000,000 to $4,000,000 a day that was offline during the quarter, you had in the Q3, you had a negative natural gas differential of $0.65 with your realized gas price at $1.46 Looking at 4Q, if we use Henry Hub at $2.75 and a negative differential of $0.91 you get $1.84 realized gas price. So that's a nice increase. Do you think that will spur the $3,000,000 to $4,000,000 a day coming back online? John, we Speaker 500:10:55yes, I think from what we understand from the operator, they're going to be bringing back that those curtailed volumes as price dictated. As you mentioned, the forward curve would suggest those volumes come on. We don't have a clear visibility actually if we look at it day to day, they're still turning some wells on certain days and some off. But the way that we think about it is that that will clear out by the beginning of Q1. So we're still not terribly clear on the schedule for those curtailed volumes to come back. Speaker 500:11:31But we do see some of them already coming back as we've indicated. Speaker 400:11:36Well, that's helpful. And congratulations on West Texas results. That's all I have for now. I'll turn the call back to the operator. Speaker 500:11:50Thanks, John. Operator00:12:10Showing no further questions. This concludes our question and answer session. I would like to turn the conference back over to Jason Stebel for any closing remarks. Speaker 500:12:20Thank you, operator. I want to thank everyone for their interest in Epsilon and for joining us today. And as always, if you have additional questions or comments, feel free to contact us here at the Houston office. Have a great day. Thank you. Operator00:12:34The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallEpsilon Energy Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsQuarterly report(10-Q) Epsilon Energy Earnings HeadlinesWhy Epsilon Energy Ltd (EPSN) Is Up the Most So Far in 2025April 26 at 6:05 PM | msn.comEpsilon Energy Ltd. Schedules First Quarter 2025 Earnings Release and Conference Call | EPSN ...April 25, 2025 | gurufocus.comReal Americans Don’t Wait on Wall Street’s Next MoveWhat's happening in the markets right now should concern every freedom-loving American who's worked hard and saved smart. Your 401(k) doesn't deserve to be dragged through the mud by tariffs, trade wars, reckless spending, and political standoffs. And you don't have to stand by while Wall Street plays roulette with your future.April 29, 2025 | Premier Gold Co (Ad)Epsilon Energy Ltd. Schedules First Quarter 2025 Earnings Release and Conference CallApril 25, 2025 | gurufocus.comEpsilon Energy Ltd. Schedules First Quarter 2025 Earnings Release and Conference CallApril 25, 2025 | financialpost.comEpsilon Energy Ltd. Schedules First Quarter 2025 Earnings Release and Conference CallApril 25, 2025 | globenewswire.comSee More Epsilon Energy Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Epsilon Energy? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Epsilon Energy and other key companies, straight to your email. Email Address About Epsilon EnergyEpsilon Energy (NASDAQ:EPSN), a North American onshore independent natural gas and oil company, engages in the acquisition, development, gathering, and production of natural oil and gas reserves in the United States. The company operates through Upstream and Gathering System segments. It has natural gas production in the Marcellus Shale in Pennsylvania; and oil, natural gas liquids, and natural gas production in the Permian Basin in Texas and New Mexico, and Anadarko Basin in Oklahoma. 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There are 6 speakers on the call. Operator00:00:00would now like to turn the conference over to Andrew Williamson, Chief Financial Officer. Please go ahead. Speaker 100:00:05Thank you, operator. And on behalf of the management team, I would like to welcome all of you today's conference call to review Epsilon's Q3 2024 financial and operational results. Before we begin, I would like to remind you that our comments may include forward looking statements. It should be noted that a variety of factors could cause Epsilon's actual results to differ materially from the anticipated results or expectations expressed in these forward looking statements. Today's call may also contain certain non GAAP financial measures. Speaker 100:00:38Please refer to the earnings release that we issued yesterday for disclosures on forward looking statements and reconciliations of non GAAP measures. With that, I would like to turn the call over to Jason Stebel, our Chief Executive Officer. Speaker 200:00:52Thank you, Andrew. Good morning and thank you for participating in our Q3 2024 conference call. Joining me today are Andrew Williamson, our CFO and Henry Clanton, our COO. We will be available to answer questions later in the call. In the Permian, we brought the 7th Ector well online in the 3rd quarter, driving 19% quarter over quarter oil production growth. Speaker 200:01:17In the 4th quarter, we will see some quarter over quarter declines in liquids production until drilling resumes next year. Henry will discuss specific well performance later in the call. In Pennsylvania, wellhead prices have remained low heading into winter. In October, we have seen a small portion of our curtailed volumes come back online and 3 of the 7 previously announced deferred TILs were put on production last week. So we expect quarter over quarter growth in natural gas volumes in the 4th quarter with a further ramp expected into the Q1 of next year as curtailments are lifted and the remaining deferred till wells are brought on. Speaker 200:01:59Currently, we do not forecast incremental drilling in Pennsylvania in 2025, but we will keep you updated after discussions with our operator in the Q4. Late last month, we announced our entry into Alberta, Canada through 2 joint ventures with Calgary based private operators. In the larger deal, after approximately a $7,500,000 USD development carry is satisfied, we will earn 25% in approximately 160,000 acres. Our initial development focus will be the Garrington area, approximately 30,000 gross acres in the liquids rich, glauconitic and Ehlersley intervals. Initial plans call for 4 gross wells in 2025 with operations likely to commence in the Q4 of this year. Speaker 200:02:49Andrew can provide further details on the projected capital expenditures. Overall, the company remains well positioned to deliver volume and cash flow growth in 2025. We continue to evaluate opportunities and see the potential for additional investments, particularly in Canada. Meanwhile, we will continue to pay our dividend and monitor opportunities to reduce our share count at attractive prices. Now I would like to turn the call over to Andrew for additional comments. Speaker 100:03:20Thanks, Jason. This quarter was the trough for our PA business both on the midstream and upstream side. Production curtailments continued through the quarter and realized prices were $1.54 per Mcf. We were also impacted by plugging and abandonment activities in the Auburn area, increasing PA operating costs by approximately 40% for the quarter. The lifting of curtailments, volumes from the deferred wells that were developed in the Q1 starting to come back on at peak rates and better pricing will start to bring us back from here. Speaker 100:03:56As Jason mentioned, the Permian has picked up some of the slack contributing approximately $8,500,000 of adjusted EBITDA year to date, which is 70% of the total company figure. On a project level, we've invested approximately $40,000,000 starting in Q2 of 2023 with 20% of that in currently undeveloped leasehold. We received cash flows of approximately $12,000,000 back through the end of the Q3 with 2 gross 0.5 net of the 9 gross 2 net producing wells coming on in the last 4 months. We are still not clear on investment activity details for Texas year as the previously mentioned strategic alternatives review process of the operated interest plays out over the rest of the year. However, we do expect to be active there in 2025 and resume growth. Speaker 100:04:50As Jason mentioned, drilling activity is scheduled to start later this quarter in Alberta on our Garrington JV position. We expect to have approximately $10,000,000 of CapEx there in the 12 month period from this December. We are excited about this deal with our ability to earn into a large acreage position that is underwritten holds over 25 highly economic locations in the Garrington area, in partnership with a premier private operator in the basin. Relative to other opportunities we've seen, Canada stands out due to the cost structure, royalty regime and large opportunity set of liquids focused development. Also, as mentioned in the announcement of the joint venture, there are some corporate advantages to us conducting business north of the border. Speaker 100:05:36We have added incrementally to our hedge book for 2025 locking in prices above the current strip. We will continue to add opportunistically there if we see the opportunity to do so. On liquidity, our available revolver capacity currently stands at $45,000,000 leaving us well positioned to move on other opportunities while maintaining a strong balance sheet. Now, I will turn it over to Henry for operations. Speaker 300:06:01Thank you, Jason and Andrew. I'll begin with comments on our Permian Basin Mississippian Barnett project. We previously reported the 7th well in the project began production in July. The early life productivity is consistent with the initial 6 wells and continues to perform well. We'd like to highlight that this well is the southern most drilled in the project to date. Speaker 300:06:26It is providing confirmatory evidence of the prospectivity of the Interpol on the large acreage development position south of most of the existing production. As Andrew mentioned, a strategic alternatives review process for the operated interest continues. Accordingly, we do not anticipate any additional development to occur while the process is underway, and we'll provide updates on the development plans moving forward as they become available. Moving to Canada and our recently announced Garrington JV, we have begun the development planning phase with the operator and will identify the location and targeted intervals of the first group of wells to be drilled. Currently, 4 2 mile horizontal wells are anticipated over the next 12 months beginning in December. Speaker 300:07:18We will provide updates as well proposals are finalized including CapEx, target interval and timing. Under the smaller joint venture formed in Alberta in April of this year, the company participated in 2 multi leg horizontal wells, 1 net, in the Lower Manville formation in 2 separate oil pools in the Killam area. Results to date have been mixed and technical reviews of well performance are ongoing. Net drilling and completion cost incurred for the 2 wells is approximately $1,700,000 No additional capital investment is required. In Northeast PA, as Jason mentioned, last week the operator commenced initial flowback on 3 0.4 net deferred TIO wells, the Clamper pad. Speaker 300:08:13We expect these wells to add meaningfully to our net production in the basin, currently producing approximately 8,000,000 a day net. Now back to Jason. Speaker 200:08:26Thanks, guys. Operator, we can now open the lines for questions. Operator00:08:31We will now begin the question and answer session. Our first question today is from John White with ROTH Capital. Please go ahead. Speaker 400:09:08Good afternoon, gentlemen, and congratulations on a nice quarter. Thanks, John. Thanks, John. Thanks, John. You said in the press release, 3 of the 7 wells were put on flow back during the last week of October, producing 60,000,000 a day. Speaker 400:09:29What is the net production from that? Speaker 500:09:34That's the 8,000,000 a day that I reported in the call there. Speaker 400:09:43Go ahead. Speaker 500:09:46We have about a 13 a little over 13% net revenue interest in that pad. So it equates to about $8,000,000 a day. Speaker 400:09:55That's great. On the $3,000,000 to $4,000,000 a day that was offline during the quarter, you had in the Q3, you had a negative natural gas differential of $0.65 with your realized gas price at $1.46 Looking at 4Q, if we use Henry Hub at $2.75 and a negative differential of $0.91 you get $1.84 realized gas price. So that's a nice increase. Do you think that will spur the $3,000,000 to $4,000,000 a day coming back online? John, we Speaker 500:10:55yes, I think from what we understand from the operator, they're going to be bringing back that those curtailed volumes as price dictated. As you mentioned, the forward curve would suggest those volumes come on. We don't have a clear visibility actually if we look at it day to day, they're still turning some wells on certain days and some off. But the way that we think about it is that that will clear out by the beginning of Q1. So we're still not terribly clear on the schedule for those curtailed volumes to come back. Speaker 500:11:31But we do see some of them already coming back as we've indicated. Speaker 400:11:36Well, that's helpful. And congratulations on West Texas results. That's all I have for now. I'll turn the call back to the operator. Speaker 500:11:50Thanks, John. Operator00:12:10Showing no further questions. This concludes our question and answer session. I would like to turn the conference back over to Jason Stebel for any closing remarks. Speaker 500:12:20Thank you, operator. I want to thank everyone for their interest in Epsilon and for joining us today. And as always, if you have additional questions or comments, feel free to contact us here at the Houston office. Have a great day. Thank you. Operator00:12:34The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by