Epsilon Energy (EPSN) Q3 2024 earnings summary

Executive summary

• Achieved 19% quarter-over-quarter oil production growth in the Permian, offsetting lower natural gas prices and volumes.

• Entered Alberta, Canada, through two joint ventures, expanding the liquids-rich development portfolio and capital deployment opportunities.

• Pennsylvania operations faced low wellhead prices and production curtailments, with some deferred wells returning to production.

• Diversified asset base and strong liquidity position the company for future growth.

Financial highlights

• Permian contributed approximately $8.5 million of Adjusted EBITDA year to date, representing 70% of total company EBITDA.

• Total Q3 2024 revenue was $7.3M, up from $6.3M in Q2 2024 and Q3 2023.

• Net income for Q3 2024 was $366K, with nine-month net income at $2.7M.

• Cash and short-term investments at quarter-end totaled $8.8M.

• Returned $2.0M to shareholders via dividends and share repurchases in Q3 2024.

Outlook and guidance

• Expect quarter-over-quarter growth in natural gas volumes in Q4, with further ramp in Q1 2025 as curtailments are lifted.

• Initial Alberta development to focus on four gross wells in 2025, with operations starting in Q4 2024.

• No incremental drilling forecasted in Pennsylvania for 2025, pending operator discussions.

• Asset portfolio positioned for volume and cash flow growth in 2025.

• Company remains positioned for volume and cash flow growth in 2025, with ongoing evaluation of further investments.