Epsilon Reports First Quarter 2025 Results
HOUSTON, May 14, 2025 - Epsilon Energy Ltd. ("Epsilon" or the "Company") (NASDAQ: EPSN) today reported first quarter 2025 financial and operating results.
First Quarter 2025 Highlights:
| Epsilon - Q1 2025 | ||||||||
| Q1 2025 | Q4 2024 | Q1 2024 | QoQ% | YoY% | ||||
| NRI Production | ||||||||
| Gas | MMcf | 2,740 | 1,765 | 1,666 | 55 | % | 64 | % |
| Oil | Mbbl | 46 | 52 | 37 | -12 | % | 24 | % |
| NGL | Mbbl | 16 | 17 | 16 | -6 | % | -2 | % |
| Total | Mmcfe | 3,108 | 2,176 | 1,982 | 43 | % | 57 | % |
| Revenues | $M | |||||||
| Gas | 10,614 | 3,958 | 2,963 | 168 | % | 258 | % | |
| Oil | 3,270 | 3,537 | 2,715 | -8 | % | 20 | % | |
| NGL | 387 | 385 | 373 | 1 | % | 4 | % | |
| Midstream1 | 1,892 | 1,060 | 1,936 | 79 | % | -2 | % | |
| Total | 16,163 | 8,940 | 7,987 | 81 | % | 102 | % | |
| Realized Prices2 | ||||||||
| Gas | $/Mcf | 3.87 | 2.24 | 1.78 | 73 | % | 118 | % |
| Oil | $/Bbl | 71.76 | 68.38 | 74.13 | 5 | % | -3 | % |
| NGL | $/Bbl | 24.52 | 22.98 | 23.16 | 7 | % | 6 | % |
| Adj. EBITDA | $M | 10,609 | 5,335 | 4,595 | 99 | % | 131 | % |
| Cash + STI3 | $M | 7,363 | 6,990 | 15,447 | 5 | % | -52 | % |
| Capex4 | $M | 8,035 | 3,804 | 21,466 | 111 | % | -63 | % |
| Dividend | $M | 1,376 | 1,370 | 1,370 | 0 | % | 0 | % |
| Share Buybacks | $M | 0 | 0 | 1,199 | -100 | % | ||
| 1) Net of elimination entry for fees paid by Epsilon | ||||||||
| 2) Excludes impact of hedge realizations | ||||||||
| 3) Includes restricted cash balance | ||||||||
| 4) Includes acquisitions | ||||||||
Operations Update:
Epsilon's capital expenditures were $8.0 million for the quarter ended March 31, 2025. These were primarily related to the drilling and completion of 2 gross (0.5 net) Glauconitic wells in the Garrington area of Alberta, Canada (including $4.9 million in drilling carry in favor of the operator to earn a 25% working interest in the large leasehold position).
Jason Stabell, Epsilon's Chief Executive Officer, commented, "Our Marcellus business performed very well during the quarter with all delayed turn-in-line wells now on production and the lifting of the curtailments we sustained for most of last year. As a result, total gas volumes were up over 50% quarter over quarter. Realized gas prices also rebounded strongly, with Marcellus cash-flows (revenues less operating expenses) up over 200% quarter over quarter and up over 450% from the first quarter last year. This demonstrates the leverage we have in the basin to incremental development in a strong natural gas market. As mentioned previously, we have meaningful remaining undeveloped inventory there. However, we don't expect any additional development this year.
In Texas, current plans call for 2 gross (0.5 net) new wells over the remainder of the year, in line with our development obligations on the leasehold. The Barnett wells are still economic at current oil prices, but any escalation in activity levels will require higher sustained prices.
Our first two wells in the Alberta JV we entered in October are now on production. Our operating partner is currently evaluating inflow performance and sizing artificial lift and facilities. The current plan is to drill 2 more wells there over the remainder of the year.
With our diversified assets, commodity mix and balance sheet, we remain in a strong position to take advantage of accretive opportunities."
Current Hedge Book:
| NG Hedge Book | Realized - Q125 | ||||||||||||||||||||||||
| 2025 | Jan-25 | Feb-25 | Mar-25 | Apr-25 | May-25 | Jun-25 | Jul-25 | Aug-25 | Sep-25 | Oct-25 | Nov-25 | Dec-25 | |||||||||||||
| NYMEX Henry Hub (LD) | |||||||||||||||||||||||||
| Fixed Swaps | MMBTUs | (232,500 | ) | (210,000 | ) | (387,500 | ) | (255,000 | ) | (418,500 | ) | (255,000 | ) | (263,500 | ) | (263,500 | ) | (255,000 | ) | (263,500 | ) | (120,000 | ) | (120,000 | ) |
| Hedges per Day | p/day | (7,500 | ) | (7,500 | ) | (12,500 | ) | (8,500 | ) | (13,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (4,000 | ) | (4,000 | ) |
| WA Strike Price | $ / MMBTU | 3.47 | 3.47 | 3.68 | 3.21 | 3.12 | 3.21 | 3.21 | 3.21 | 3.21 | 3.21 | 4.66 | 4.66 | ||||||||||||
| Tenn Z4 300L Basis | |||||||||||||||||||||||||
| Basis Swaps | MMBTUs | (232,500 | ) | (210,000 | ) | (232,500 | ) | (255,000 | ) | (263,500 | ) | (255,000 | ) | (263,500 | ) | (263,500 | ) | (255,000 | ) | (263,500 | ) | ||||
| Hedges per Day | p/day | (7,500 | ) | (7,500 | ) | (7,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | (8,500 | ) | ||||
| WA Strike Price | $ / MMBTU | (0.74 | ) | (0.74 | ) | (0.74 | ) | (0.95 | ) | (0.95 | ) | (0.95 | ) | (0.95 | ) | (0.95 | ) | (0.95 | ) | (0.95 | ) | ||||
| Hedged Net Price | $ / MMBTU | 2.17 | 2.26 | 2.26 | 2.26 | 2.26 | 2.26 | ||||||||||||||||||
| Settlements | $M | (76.73 | ) | (94.50 | ) | (159.50 | ) | (198.40 | ) | (28.62 | ) | ||||||||||||||
| NG Hedge Book | |||||||||||||||||||||||||
| 2026 | Jan-26 | Feb-26 | Mar-26 | Apr-26 | May-26 | Jun-26 | Jul-26 | Aug-26 | Sep-26 | Oct-26 | Nov-26 | Dec-26 | |||||||||||||
| NYMEX Henry Hub (LD) | |||||||||||||||||||||||||
| Fixed Swaps | MMBTUs | (124,000 | ) | (112,000 | ) | (124,000 | ) | (120,000 | ) | (124,000 | ) | (120,000 | ) | (124,000 | ) | (124,000 | ) | (120,000 | ) | (124,000 | ) | ||||
| Hedges per Day | p/day | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | ||||
| WA Strike Price | $ / MMBTU | 4.66 | 4.66 | 4.66 | 4.09 | 4.09 | 4.09 | 4.09 | 4.09 | 4.09 | 4.09 | ||||||||||||||
| Crude Hedge Book | Realized - Q125 | ||||||||||||||||||||||||
| 2025 | Jan-25 | Feb-25 | Mar-25 | Apr-25 | May-25 | Jun-25 | Jul-25 | Aug-25 | Sep-25 | Oct-25 | Nov-25 | Dec-25 | |||||||||||||
| NYMEX WTI CMA | |||||||||||||||||||||||||
| Fixed Swaps | Bbls | (4,682 | ) | (4,091 | ) | (4,389 | ) | (6,600 | ) | (6,600 | ) | (6,200 | ) | (6,200 | ) | (6,000 | ) | (5,600 | ) | (3,400 | ) | (3,200 | ) | (3,200 | ) |
| Hedges per Day | BOPD | (151 | ) | (146 | ) | (142 | ) | (220 | ) | (213 | ) | (207 | ) | (200 | ) | (194 | ) | (187 | ) | (110 | ) | (107 | ) | (103 | ) |
| WA Strike Price | $/Bbl | 74.34 | 74.34 | 74.34 | 71.73 | 71.76 | 71.79 | 71.07 | 71.06 | 71.05 | 70.20 | 70.20 | 70.20 | ||||||||||||
| Settlements | $M | (3.55 | ) | 12.81 | 28.09 | 57.86 | |||||||||||||||||||
Earning's Call:
The Company will host a conference call to discuss its results on Thursday, May 15, 2025 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time).
Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the "Epsilon Energy First Quarter 2025 Earnings Conference Call."
A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Ehro2Pgc. A webcast replay will be available on the Company's website (www.epsilonenergyltd.com) following the call.
About Epsilon
Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets in Pennsylvania, Texas, Alberta CA, New Mexico, and Oklahoma.
Forward-Looking Statements
Certain statements contained in this news release constitute forward looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", 'may", "will", "project", "should", 'believe", and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.
Contact Information:
281-670-0002
Jason Stabell
Chief Executive Officer
Jason.Stabell@EpsilonEnergyLTD.com
Andrew Williamson
Chief Financial Officer
Andrew.Williamson@EpsilonEnergyLTD.com
| EPSILON ENERGY LTD. Unaudited Consolidated Statements of Operations (All amounts stated in US$) | ||||||||
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues from contracts with customers: | ||||||||
| Gas, oil, NGL, and condensate revenue | $ | 14,270,790 | $ | 6,051,045 | ||||
| Gas gathering and compression revenue | 1,892,350 | 1,935,698 | ||||||
| Total revenue | 16,163,140 | 7,986,743 | ||||||
| Operating costs and expenses: | ||||||||
| Lease operating expenses | 2,755,898 | 1,768,462 | ||||||
| Gathering system operating expenses | 552,651 | 552,570 | ||||||
| Depletion, depreciation, amortization, and accretion | 3,475,857 | 2,380,426 | ||||||
| Impairment expense | 6,669 | - | ||||||
| General and administrative expenses: | ||||||||
| Stock based compensation expense | 385,838 | 321,569 | ||||||
| Other general and administrative expenses | 1,818,418 | 1,559,023 | ||||||
| Total operating costs and expenses | 8,995,331 | 6,582,050 | ||||||
| Operating income | 7,167,809 | 1,404,693 | ||||||
| Other income (expense): | ||||||||
| Interest income | 15,299 | 266,272 | ||||||
| Interest expense | (12,211 | ) | (8,760 | ) | ||||
| Loss on derivative contracts | (1,462,170 | ) | (100,726 | ) | ||||
| Other expense | (22,499 | ) | (533 | ) | ||||
| Other (expense) income, net | (1,481,581 | ) | 156,253 | |||||
| Net income before income tax expense | 5,686,228 | 1,560,946 | ||||||
| Income tax expense | 1,670,194 | 54,050 | ||||||
| NET INCOME | $ | 4,016,034 | $ | 1,506,896 | ||||
| Currency translation adjustments | (50,116 | ) | 364 | |||||
| Unrealized loss on securities | - | (4,609 | ) | |||||
| NET COMPREHENSIVE INCOME | $ | 3,965,918 | $ | 1,502,651 | ||||
| Net income per share, basic | $ | 0.18 | $ | 0.07 | ||||
| Net income per share, diluted | $ | 0.18 | $ | 0.07 | ||||
| Weighted average number of shares outstanding, basic | 22,008,766 | 21,994,207 | ||||||
| Weighted average number of shares outstanding, diluted | 22,109,819 | 21,994,207 | ||||||
| EPSILON ENERGY LTD. Unaudited Consolidated Balance Sheets (All amounts stated in US$) | ||||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 6,892,735 | $ | 6,519,793 | ||||
| Accounts receivable | 8,003,517 | 5,843,722 | ||||||
| Prepaid income taxes | - | 975,963 | ||||||
| Other current assets | 647,295 | 792,041 | ||||||
| Total current assets | 15,543,547 | 14,131,519 | ||||||
| Non-current assets | ||||||||
| Property and equipment: | ||||||||
| Oil and gas properties, successful efforts method | ||||||||
| Proved properties | 194,811,616 | 191,879,210 | ||||||
| Unproved properties | 33,425,087 | 28,364,186 | ||||||
| Accumulated depletion, depreciation, amortization and impairment | (126,370,072 | ) | (123,281,395 | ) | ||||
| Total oil and gas properties, net | 101,866,631 | 96,962,001 | ||||||
| Gathering system | 43,176,418 | 43,116,371 | ||||||
| Accumulated depletion, depreciation, amortization and impairment | (36,777,152 | ) | (36,449,511 | ) | ||||
| Total gathering system, net | 6,399,266 | 6,666,860 | ||||||
| Land | 637,764 | 637,764 | ||||||
| Buildings and other property and equipment, net | 246,894 | 259,335 | ||||||
| Total property and equipment, net | 109,150,555 | 104,525,960 | ||||||
| Other assets: | ||||||||
| Operating lease right-of-use assets, long term | 318,604 | 344,589 | ||||||
| Restricted cash | 470,000 | 470,000 | ||||||
| Prepaid drilling costs | 22,581 | 982,717 | ||||||
| Total non-current assets | 109,961,740 | 106,323,266 | ||||||
| Total assets | $ | 125,505,287 | $ | 120,454,785 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable trade | $ | 2,013,172 | $ | 2,334,732 | ||||
| Gathering fees payable | 1,651,164 | 997,016 | ||||||
| Royalties payable | 2,019,819 | 1,400,976 | ||||||
| Income taxes payable | 924,905 | - | ||||||
| Accrued capital expenditures | 309,630 | 572,079 | ||||||
| Accrued compensation | 284,905 | 695,018 | ||||||
| Other accrued liabilities | 481,770 | 371,503 | ||||||
| Fair value of derivatives | 1,534,675 | 487,548 | ||||||
| Operating lease liabilities | 121,293 | 121,135 | ||||||
| Total current liabilities | 9,341,333 | 6,980,007 | ||||||
| Non-current liabilities | ||||||||
| Asset retirement obligations | 3,716,029 | 3,652,296 | ||||||
| Deferred income taxes | 12,417,125 | 12,738,577 | ||||||
| Operating lease liabilities, long term | 326,527 | 355,776 | ||||||
| Total non-current liabilities | 16,459,681 | 16,746,649 | ||||||
| Total liabilities | 25,801,014 | 23,726,656 | ||||||
| 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 March 31, 2025 and December 31, 2024 | 116,081,031 | 116,081,031 | ||||||
| Additional paid-in capital | 12,504,745 | 12,118,907 | ||||||
| Accumulated deficit | (38,864,654 | ) | (41,505,076 | ) | ||||
| Accumulated other comprehensive income | 9,983,151 | 10,033,267 | ||||||
| Total shareholders' equity | 99,704,273 | 96,728,129 | ||||||
| Total liabilities and shareholders' equity | $ | 125,505,287 | $ | 120,454,785 | ||||
| EPSILON ENERGY LTD. Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) | ||||||||
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 4,016,034 | $ | 1,506,896 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depletion, depreciation, amortization, and accretion | 3,475,857 | 2,380,426 | ||||||
| Impairment expense | 6,669 | - | ||||||
| Accretion of discount on available for sale securities | - | (216,180 | ) | |||||
| Loss on derivative contracts | 1,462,170 | 100,726 | ||||||
| Settlement (paid) received on derivative contracts | (415,043 | ) | 488,285 | |||||
| Settlement of asset retirement obligation | (1,600 | ) | (1,653 | ) | ||||
| Stock-based compensation expense | 385,838 | 321,569 | ||||||
| Deferred income tax expense (benefit) | (321,452 | ) | (22,993 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (2,159,795 | ) | 953,714 | |||||
| Prepaid income taxes | 978,542 | (68,401 | ) | |||||
| Other assets and liabilities | 141,640 | 146,477 | ||||||
| Accounts payable, royalties payable, gathering fees payable, and other accrued liabilities | 91,390 | (1,897,438 | ) | |||||
| Income taxes payable | 922,326 | - | ||||||
| Net cash provided by operating activities | 8,582,576 | 3,691,428 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to unproved oil and gas properties | (5,060,901 | ) | (3,088,198 | ) | ||||
| Additions to proved oil and gas properties | (2,578,866 | ) | (17,226,449 | ) | ||||
| Additions to gathering system properties | (104,275 | ) | (22,650 | ) | ||||
| Additions to land, buildings and property and equipment | - | (7,681 | ) | |||||
| Purchases of short term investments - available for sale | - | (4,045,785 | ) | |||||
| Proceeds from short term investments - held to maturity | - | 10,794,285 | ||||||
| Prepaid drilling costs | 960,136 | 1,813,808 | ||||||
| Net cash used in investing activities | (6,783,906 | ) | (11,782,670 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Buyback of common shares | - | (1,203,708 | ) | |||||
| Dividends paid | (1,375,612 | ) | (1,370,409 | ) | ||||
| Net cash used in financing activities | (1,375,612 | ) | (2,574,117 | ) | ||||
| Effect of currency rates on cash, cash equivalents, and restricted cash | (50,116 | ) | 364 | |||||
| Decrease in cash, cash equivalents, and restricted cash | 372,942 | (10,664,995 | ) | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 6,989,793 | 13,873,628 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 7,362,735 | $ | 3,208,633 | ||||
| Supplemental cash flow disclosures: | ||||||||
| Income tax paid - federal | $ | 80,000 | $ | - | ||||
| Income tax paid - state (PA) | $ | 5,138 | $ | - | ||||
| Income tax paid - state (other) | $ | 25 | $ | - | ||||
| Interest paid | $ | 657 | $ | - | ||||
| Non-cash investing activities: | ||||||||
| Change in proved properties accrued in accounts payable | $ | 341,974 | $ | 2,946,528 | ||||
| Change in gathering system accrued in accounts payable | $ | (44,228 | ) | $ | (3,624 | ) | ||
| Asset retirement obligation asset additions and adjustments | $ | 18,235 | $ | 16,372 | ||||
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net income | $ | 4,016,034 | $ | 1,506,896 | ||||
| Add Back: | ||||||||
| Interest income, net | (3,088 | ) | (257,512 | ) | ||||
| Income tax expense | 1,670,194 | 54,050 | ||||||
| Depreciation, depletion, amortization, and accretion | 3,475,857 | 2,380,426 | ||||||
| Impairment expense | 6,669 | - | ||||||
| Stock based compensation expense | 385,838 | 321,569 | ||||||
| Loss on derivative contracts net of cash received or paid on settlement | 1,047,127 | 589,011 | ||||||
| Foreign currency translation loss | 10,289 | 570 | ||||||
| Adjusted EBITDA | $ | 10,608,920 | $ | 4,595,010 | ||||
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.
