Epsilon Reports Third Quarter 2024 Results
Epsilon Energy reported Q3 2024 financial results showing mixed performance. Gas production decreased 7% QoQ and 29% YoY to 1,304 MMcf, while oil production increased 19% QoQ and 317% YoY to 53 Mbbl. The company returned $2.0 million to shareholders through dividends and share repurchases. Capital expenditures were $3.9 million, primarily for well completion in Texas and drilling in Alberta. Three Marcellus wells began production in October, yielding approximately 60 MMcf per day gross. The company maintains a strong balance sheet with $8.8 million in cash and short-term investments.
Epsilon Energy ha riportato i risultati finanziari del terzo trimestre 2024, evidenziando una performance mista. La produzione di gas è diminuita del 7% rispetto al trimestre precedente e del 29% rispetto allo stesso periodo dell'anno scorso, arrivando a 1.304 MMcf, mentre la produzione di petrolio è aumentata del 19% rispetto al trimestre precedente e del 317% su base annua, raggiungendo 53 Mbbl. L'azienda ha restituito $2,0 milioni agli azionisti attraverso dividendi e riacquisti di azioni. Le spese in conto capitale sono state di $3,9 milioni, principalmente per il completamento di pozzi in Texas e perforazioni in Alberta. Tre pozzi Marcellus hanno iniziato la produzione in ottobre, producendo circa 60 MMcf al giorno lordi. L'azienda mantiene un solido bilancio con $8,8 milioni in contante e investimenti a breve termine.
Epsilon Energy informó sobre los resultados financieros del tercer trimestre de 2024, mostrando un desempeño mixto. La producción de gas disminuyó un 7% respecto al trimestre anterior y un 29% interanual, alcanzando 1.304 MMcf, mientras que la producción de petróleo aumentó un 19% respecto al trimestre anterior y un 317% interanual, alcanzando 53 Mbbl. La empresa devolvió $2,0 millones a los accionistas a través de dividendos y recompra de acciones. Los gastos de capital fueron de $3,9 millones, principalmente para la finalización de pozos en Texas y perforaciones en Alberta. Tres pozos Marcellus comenzaron a producir en octubre, generando aproximadamente 60 MMcf por día en bruto. La empresa mantiene un balance sólido con $8,8 millones en efectivo e inversiones a corto plazo.
엡실론 에너지는 2024년 3분기 재무 결과를 발표하며 혼합된 성과를 보여주었습니다. 가스 생산량은 감소했습니다 전분기 대비 7%, 전년 대비 29% 감소하여 1,304 MMcf에 도달했고, 석유 생산량은 증가했습니다 전분기 대비 19%, 전년 대비 317% 증가하여 53 Mbbl에 달했습니다. 회사는 배당금과 자사주 매입을 통해 주주에게 $2.0 백만을 환원했습니다. 자본 지출은 주로 텍사스의 유정 완공과 앨버타의 시추를 위해 $3.9 백만이었습니다. 세 개의 마셀루스 유정이 10월에 생산을 시작하였으며, 하루 약 60 MMcf의 생산량을 기록했습니다. 회사는 $8.8 백만의 현금 및 단기 투자를 보유하고 있어 강한 재무 상태를 유지하고 있습니다.
Epsilon Energy a publié ses résultats financiers pour le troisième trimestre 2024, montrant des performances mitigées. La production de gaz a diminué de 7 % par rapport au trimestre précédent et de 29 % d'une année sur l'autre, atteignant 1 304 MMcf, tandis que la production de pétrole a augmenté de 19 % par rapport au trimestre précédent et de 317 % d'une année sur l'autre, atteignant 53 Mbbl. L'entreprise a restitué 2,0 millions de dollars aux actionnaires par le biais de dividendes et de rachats d’actions. Les dépenses d'investissement se sont élevées à 3,9 millions de dollars, principalement pour l'achèvement de forages au Texas et le forage en Alberta. Trois forages Marcellus ont commencé à produire en octobre, générant environ 60 MMcf par jour en brut. L'entreprise maintient un bilan solide avec 8,8 millions de dollars en liquidités et investissements à court terme.
Epsilon Energy hat die Finanzergebnisse für das dritte Quartal 2024 veröffentlicht und eine gemischte Leistung gezeigt. Die Gasproduktion ist zurückgegangen um 7% im Vergleich zum Vorquartal und um 29% im Vergleich zum Vorjahr auf 1.304 MMcf, während die Ölproduktion gestiegen ist um 19% im Vergleich zum Vorquartal und um 317% im Vergleich zum Vorjahr auf 53 Mbbl. Das Unternehmen hat $2,0 Millionen an die Aktionäre durch Dividenden und Aktienrückkäufe zurückgegeben. Die Investitionsausgaben betrugen $3,9 Millionen, hauptsächlich für den Abschluss von Bohrungen in Texas und Bohrarbeiten in Alberta. Drei Marcellus-Bohrungen haben im Oktober die Produktion aufgenommen und erzielen täglich etwa 60 MMcf brutto. Das Unternehmen hält eine starke Bilanz mit $8,8 Millionen in Bar- und kurzfristigen Anlagen.
- Oil production increased 317% year-over-year
- Oil revenue grew 329% year-over-year to $4.0M
- Realized gas prices improved 29% year-over-year to $1.46/Mcf
- Returned $2.0M to shareholders via dividends and share buybacks
- Three new Marcellus wells started production at 60 MMcf per day gross
- Gas production declined 29% year-over-year
- Midstream revenue decreased 65% year-over-year to $1.1M
- Adjusted EBITDA decreased 5% year-over-year to $3.7M
- Cash position decreased 72% year-over-year to $8.8M
- Production curtailments in Pennsylvania reduced output by 3-4 MMcf per day
Insights
Q3 2024 results show mixed performance with notable shifts in revenue composition. Natural gas production declined -29% YoY, while oil production surged +317% YoY, demonstrating successful portfolio diversification.
The company's financial position remains solid with
Operational highlights include expansion into Alberta and strategic production management in Pennsylvania, with new wells now producing 60 MMcf per day gross. The diversified asset approach and strong balance sheet position the company well for 2025 growth, particularly as natural gas fundamentals improve.
The strategic shift toward liquids production is proving timely amid weak natural gas prices. The company's hedging strategy for 2025 shows forward-thinking risk management, with natural gas hedges ranging from
The Pennsylvania assets' curtailed production (3-4 MMcf per day) represents tactical management during low price environments. The expansion into Alberta adds geographic diversification and new growth opportunities. The combination of Permian oil production growth and positioned natural gas assets creates a balanced portfolio capable of capitalizing on energy price cycles.
HOUSTON, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported third quarter 2024 financial and operating results.
Third Quarter 2024 Highlights:
| Epsilon - Q3 2024 | ||||||||
| Q3 2024 | Q2 2024 | Q3 2023 | QoQ % | YoY % | ||||
| NRI Production | ||||||||
| Gas | MMcf | 1,304 | 1,407 | 1,848 | -7 | % | -29 | % |
| Oil | Mbbl | 53 | 45 | 13 | 19 | % | 317 | % |
| NGL | Mbbl | 17 | 19 | 9 | -11 | % | 99 | % |
| Revenues | ||||||||
| Gas | $M | 1,904 | 1,961 | 2,089 | -3 | % | -9 | % |
| Oil | $M | 3,965 | 3,514 | 925 | 13 | % | 329 | % |
| NGL | $M | 335 | 388 | 228 | -14 | % | 47 | % |
| Midstream1 | $M | 1,084 | 1,444 | 3,069 | -25 | % | -65 | % |
| Realized Prices2 | ||||||||
| Gas | $/Mcf | 1.46 | 1.39 | 1.13 | 5 | % | 29 | % |
| Oil | $/Bbl | 74.27 | 78.44 | 72.27 | -5 | % | 3 | % |
| NGL | $/Bbl | 19.56 | 20.21 | 26.50 | -3 | % | -26 | % |
| Adj. EBITDA | $M | 3,744 | 3,904 | 3,925 | -4 | % | -5 | % |
| Cash + STI3 | $M | 8,775 | 9,481 | 31,864 | -7 | % | -72 | % |
| Capex | $M | 3,908 | 5,709 | 5,284 | -32 | % | -26 | % |
| 1) Does not include elimination entry for fees paid by Epsilon | ||||||||
| 2) Excludes impact of hedge realizations | ||||||||
| 3) Includes restricted cash balance | ||||||||
- Returned
$2.0 million to shareholders through the quarterly dividend and the repurchase of 125,000 shares during the quarter.
- Realized gains of
$0.5 million on Henry Hub (HH) and TGP Z4 basis swaps totaling 690,000 MMBTU, and losses of$0.02 million on WTI CMA swaps totaling 17 MBbls.
Operations Update:
Epsilon’s capital expenditures were
The Marcellus wells (7 gross) completed in Q1 2024 were not turned in line during the quarter. Three of the seven wells were put on flowback during the last week of October and are now producing approximately 60 MMcf per day gross. Our operating partner in PA has maintained production curtailments. We estimate that 3-4 MMcf per day of NRI production was offline during the quarter.
Jason Stabell, Epsilon's Chief Executive Officer, commented, “We delivered our fourth consecutive quarter of liquids volume, revenue and cash flow growth from our Permian assets continuing to fill the gap while we wait for an improved natural gas pricing environment. In Pennsylvania, we are expecting increased production and cash flow in the fourth quarter and next year aided by improving natural gas fundamentals. Our diversified and growing asset portfolio is well positioned to produce volume and cash flow growth in 2025.
The recently announced entry into Alberta, Canada provides an attractive new area to deploy capital starting in in the fourth quarter. We will provide an update on our 2025 Canadian investment plans once finalized with our operating partner.
Finally, our diversified assets, strong balance sheet and liquidity continue to differentiate us in the small cap energy space.”
Current Hedge Book:
| Hedge Book | ||||||||||
| Trade Date | Product | Structure | Ref | Contract Start | Contract End | Price / Strike | Outstanding | Metric | ||
| 10/07/2024 | Crude Oil | Swaps | NYMEX WTI CMA | 04/01/2025 | 06/30/2025 | $ | 72.00 | 7,500 | BBL | |
| 10/02/2024 | Natural Gas | Swaps | NYMEX Henry Hub (LD) | 04/01/2025 | 10/31/2025 | $ | 3.23 | 535,000 | MMBtu | |
| 10/02/2024 | Natural Gas | Swaps | Tenn Z4 300L Basis | 04/01/2025 | 10/31/2025 | $ | (1.04 | ) | 535,000 | MMBtu |
| 08/28/2024 | Natural Gas | Swaps | NYMEX Henry Hub (LD) | 01/01/2025 | 03/31/2025 | $ | 3.18 | 225,000 | MMBtu | |
| 08/28/2024 | Natural Gas | Swaps | Tenn Z4 300L Basis | 01/01/2025 | 03/31/2025 | $ | (0.68 | ) | 225,000 | MMBtu |
| 06/07/2024 | Natural Gas | Swaps | NYMEX Henry Hub (LD) | 01/01/2025 | 03/31/2025 | $ | 3.70 | 225,000 | MMBtu | |
| 06/07/2024 | Natural Gas | Swaps | Tenn Z4 300L Basis | 01/01/2025 | 03/31/2025 | $ | (0.80 | ) | 225,000 | MMBtu |
| 04/30/2024 | Natural Gas | Swaps | NYMEX Henry Hub (LD) | 01/01/2025 | 03/31/2025 | $ | 3.54 | 225,000 | MMBtu | |
| 04/30/2024 | Natural Gas | Swaps | Tenn Z4 300L Basis | 01/01/2025 | 03/31/2025 | $ | (0.75 | ) | 225,000 | MMBtu |
| 03/28/2024 | Natural Gas | Swaps | NYMEX Henry Hub (LD) | 11/01/2024 | 12/31/2024 | $ | 3.15 | 77,500 | MMBtu | |
| 03/05/2024 | Natural Gas | Swaps | NYMEX Henry Hub (LD) | 11/01/2024 | 12/31/2024 | $ | 3.28 | 155,000 | MMBtu | |
| 03/05/2024 | Natural Gas | Swaps | Tenn Z4 300L Basis | 11/01/2024 | 12/31/2024 | $ | (1.04 | ) | 155,000 | MMBtu |
| 02/26/2024 | Crude Oil | Swaps | NYMEX WTI CMA | 03/01/2024 | 03/31/2025 | $ | 74.34 | 22,898 | BBL | |
Earning’s Call:
The Company will host a conference call to discuss its results on Thursday, November 7, 2024 at 2:00 p.m. Central Time (3:00 p.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 Third Quarter 2024 Earnings Conference Call.”
A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=S0pmngFY. 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 September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues from contracts with customers: | ||||||||||||||||
| Gas, oil, NGL, and condensate revenue | $ | 6,203,953 | $ | 3,241,531 | $ | 18,118,368 | $ | 14,509,184 | ||||||||
| Gas gathering and compression revenue | 1,083,988 | 3,068,996 | 4,464,134 | 7,657,755 | ||||||||||||
| Total revenue | 7,287,941 | 6,310,527 | 22,582,502 | 22,166,939 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Lease operating expenses | 2,099,501 | 1,559,957 | 5,517,830 | 4,404,757 | ||||||||||||
| Gathering system operating expenses | 490,325 | 631,725 | 1,692,862 | 1,854,000 | ||||||||||||
| Depletion, depreciation, amortization, and accretion | 2,698,812 | 1,392,032 | 7,127,641 | 4,780,766 | ||||||||||||
| Loss on sale of oil and gas properties | — | — | — | 1,449,871 | ||||||||||||
| General and administrative expenses: | ||||||||||||||||
| Stock based compensation expense | 309,109 | 439,653 | 944,267 | 799,149 | ||||||||||||
| Other general and administrative expenses | 1,449,576 | 1,540,358 | 4,486,814 | 5,160,757 | ||||||||||||
| Total operating costs and expenses | 7,047,323 | 5,563,725 | 19,769,414 | 18,449,300 | ||||||||||||
| Operating income | 240,618 | 746,802 | 2,813,088 | 3,717,639 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 96,220 | 384,732 | 471,435 | 1,308,695 | ||||||||||||
| Interest expense | (53,125 | ) | (8,760 | ) | (70,644 | ) | (71,619 | ) | ||||||||
| Gain (loss) on derivative contracts | 440,712 | (24,303 | ) | 245,095 | 1,672,535 | |||||||||||
| Other income, net | 9,994 | 468 | 111,067 | 5,169 | ||||||||||||
| Other income, net | 493,801 | 352,137 | 756,953 | 2,914,780 | ||||||||||||
| Net income before income tax expense | 734,419 | 1,098,939 | 3,570,041 | 6,632,419 | ||||||||||||
| Income tax expense | 368,398 | 710,164 | 881,464 | 2,283,228 | ||||||||||||
| NET INCOME | $ | 366,021 | $ | 388,775 | $ | 2,688,577 | $ | 4,349,191 | ||||||||
| Currency translation adjustments | 39,845 | (846 | ) | 62,438 | (2,317 | ) | ||||||||||
| Unrealized gain (loss) on securities | — | 24,641 | (1,598 | ) | (22,365 | ) | ||||||||||
| NET COMPREHENSIVE INCOME | $ | 405,866 | $ | 412,570 | $ | 2,749,417 | $ | 4,324,509 | ||||||||
| Net income per share, basic | $ | 0.02 | $ | 0.02 | $ | 0.12 | $ | 0.19 | ||||||||
| Net income per share, diluted | $ | 0.02 | $ | 0.02 | $ | 0.12 | $ | 0.19 | ||||||||
| Weighted average number of shares outstanding, basic | 21,948,519 | 22,118,984 | 21,954,803 | 22,616,539 | ||||||||||||
| Weighted average number of shares outstanding, diluted | 22,155,292 | 22,178,686 | 22,000,881 | 22,631,550 | ||||||||||||
| EPSILON ENERGY LTD. Unaudited Consolidated Balance Sheets (All amounts stated in US$) | ||||||||
| September 30, | December31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 8,304,971 | $ | 13,403,628 | ||||
| Accounts receivable | 4,470,017 | 6,015,448 | ||||||
| Short term investments | — | 18,775,106 | ||||||
| Fair value of derivatives | 150,121 | 1,219,025 | ||||||
| Prepaid income taxes | 1,020,179 | 952,301 | ||||||
| Other current assets | 865,841 | 763,288 | ||||||
| Total current assets | 14,811,129 | 41,128,796 | ||||||
| Non-current assets | ||||||||
| Property and equipment: | ||||||||
| Oil and gas properties, successful efforts method | ||||||||
| Proved properties | 190,162,954 | 160,263,511 | ||||||
| Unproved properties | 28,292,321 | 25,504,873 | ||||||
| Accumulated depletion, depreciation, amortization and impairment | (119,981,434 | ) | (113,708,210 | ) | ||||
| Total oil and gas properties, net | 98,473,841 | 72,060,174 | ||||||
| Gathering system | 42,988,092 | 42,738,273 | ||||||
| Accumulated depletion, depreciation, amortization and impairment | (36,221,366 | ) | (35,539,996 | ) | ||||
| Total gathering system, net | 6,766,726 | 7,198,277 | ||||||
| Land | 637,764 | 637,764 | ||||||
| Buildings and other property and equipment, net | 269,133 | 291,807 | ||||||
| Total property and equipment, net | 106,147,464 | 80,188,022 | ||||||
| Other assets: | ||||||||
| Operating lease right-of-use assets, long term | 368,564 | 441,987 | ||||||
| Restricted cash | 470,000 | 470,000 | ||||||
| Prepaid drilling costs | — | 1,813,808 | ||||||
| Total non-current assets | 106,986,028 | 82,913,817 | ||||||
| Total assets | $ | 121,797,157 | $ | 124,042,613 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable trade | $ | 2,220,394 | $ | 3,236,871 | ||||
| Gathering fees payable | 844,163 | 1,136,237 | ||||||
| Royalties payable | 1,149,330 | 1,422,898 | ||||||
| Accrued capital expenditures | 1,758,133 | 696,761 | ||||||
| Accrued compensation | 589,620 | 636,295 | ||||||
| Other accrued liabilities | 599,949 | 561,537 | ||||||
| Fair value of derivatives | 50,702 | 118,770 | ||||||
| Operating lease liabilities | 112,502 | 86,473 | ||||||
| Total current liabilities | 7,324,793 | 7,895,842 | ||||||
| Non-current liabilities | ||||||||
| Asset retirement obligations | 3,590,017 | 3,502,952 | ||||||
| Deferred income taxes | 12,138,030 | 11,553,943 | ||||||
| Operating lease liabilities, long term | 385,653 | 476,911 | ||||||
| Total non-current liabilities | 16,113,700 | 15,533,806 | ||||||
| Total liabilities | 23,438,493 | 23,429,648 | ||||||
| Commitments and contingencies (Note 10) | ||||||||
| Shareholders' equity | ||||||||
| Preferred shares, no par value, unlimited shares authorized, none issued or outstanding | — | — | ||||||
| Common shares, no par value, unlimited shares authorized and 21,973,687 shares issued and 21,848,687 shares outstanding at September 30, 2024 and 22,222,722 issued and 22,151,848 shares outstanding at December 31, 2023 | 116,708,531 | 118,272,565 | ||||||
| Treasury shares, at cost, 125,000 at September 30, 2024 and 70,874 at December 31, 2023 | (627,500 | ) | (360,326 | ) | ||||
| Additional paid-in capital | 11,818,758 | 10,874,491 | ||||||
| Accumulated deficit | (39,374,242 | ) | (37,946,042 | ) | ||||
| Accumulated other comprehensive income | 9,833,117 | 9,772,277 | ||||||
| Total shareholders' equity | 98,358,664 | 100,612,965 | ||||||
| Total liabilities and shareholders' equity | $ | 121,797,157 | $ | 124,042,613 | ||||
| EPSILON ENERGY LTD. Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) | ||||||||
| Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 2,688,577 | $ | 4,349,191 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depletion, depreciation, amortization, and accretion | 7,127,641 | 4,780,766 | ||||||
| Accretion of discount on available for sale securities | (297,637 | ) | (574,341 | ) | ||||
| Gain on available for sale securities | — | (60,494 | ) | |||||
| Loss on sale of oil and gas properties | — | 1,449,871 | ||||||
| Gain on derivative contracts | (245,095 | ) | (1,672,535 | ) | ||||
| Settlement received on derivative contracts | 1,245,931 | 2,979,128 | ||||||
| Settlement of asset retirement obligation | (88,992 | ) | (3,482 | ) | ||||
| Stock-based compensation expense | 944,267 | 799,149 | ||||||
| Deferred income tax (benefit) expense | 584,088 | 1,188,059 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 1,545,431 | 3,195,108 | ||||||
| Prepaid income taxes | (67,878 | ) | (814,694 | ) | ||||
| Other assets and liabilities | (94,360 | ) | (67,008 | ) | ||||
| Accounts payable, royalties payable and other accrued liabilities | (1,520,707 | ) | (1,191,558 | ) | ||||
| Net cash provided by operating activities | 11,821,266 | 14,357,160 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to unproved oil and gas properties | (2,787,448 | ) | (8,017,412 | ) | ||||
| Additions to proved oil and gas properties | (29,041,344 | ) | (7,860,073 | ) | ||||
| Additions to gathering system properties | (76,625 | ) | (52,069 | ) | ||||
| Additions to land, buildings and property and equipment | (13,912 | ) | (49,689 | ) | ||||
| Purchases of short term investments - held to maturity | — | (32,812,974 | ) | |||||
| Purchases of short term investments - available for sale | (4,045,785 | ) | — | |||||
| Proceeds from sales and maturities of short term investments | 23,116,930 | 14,554,976 | ||||||
| Proceeds from sale of oil and gas properties | — | 12,498 | ||||||
| Prepaid drilling costs | 1,813,808 | (2,891,250 | ) | |||||
| Net cash used in investing activities | (11,034,376 | ) | (37,115,993 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Buyback of common shares | (1,831,208 | ) | (5,695,275 | ) | ||||
| Dividends paid | (4,116,777 | ) | (4,217,471 | ) | ||||
| Debt issuance costs | — | (140,000 | ) | |||||
| Net cash used in financing activities | (5,947,985 | ) | (10,052,746 | ) | ||||
| Effect of currency rates on cash, cash equivalents, and restricted cash | 62,438 | (2,317 | ) | |||||
| Decrease in cash, cash equivalents, and restricted cash | (5,098,657 | ) | (32,813,896 | ) | ||||
| Cash, cash equivalents, and restricted cash, beginning of period | 13,873,628 | 45,806,947 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 8,774,971 | $ | 12,993,051 | ||||
| Supplemental cash flow disclosures: | ||||||||
| Income taxes paid | $ | 4,000 | $ | 1,442,304 | ||||
| Interest paid | $ | 16,832 | $ | 88,835 | ||||
| Non-cash investing activities: | ||||||||
| Change in proved properties accrued in accounts payable and accrued liabilities | $ | 818,504 | $ | 41,947 | ||||
| Change in gathering system accrued in accounts payable and accrued liabilities | $ | 173,193 | $ | 3,441 | ||||
| Asset retirement obligation asset additions and adjustments | $ | 39,597 | $ | 4,640 | ||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net income | $ | 366,021 | $ | 388,775 | $ | 2,688,577 | $ | 4,349,191 | ||||||||
| Add Back: | ||||||||||||||||
| Interest income, net | (43,095 | ) | (375,972 | ) | (400,791 | ) | (1,237,076 | ) | ||||||||
| Income tax expense | 368,398 | 710,164 | 881,464 | 2,283,228 | ||||||||||||
| Depreciation, depletion, amortization, and accretion | 2,698,812 | 1,392,032 | 7,127,641 | 4,780,766 | ||||||||||||
| Stock based compensation expense | 309,109 | 439,653 | 944,267 | 799,149 | ||||||||||||
| Loss on sale of assets | — | — | — | 1,449,871 | ||||||||||||
| Loss on derivative contracts net of cash received or paid on settlement | 44,677 | 1,370,573 | 1,000,836 | 1,306,593 | ||||||||||||
| Foreign currency translation loss | — | (98 | ) | 570 | (1,086 | ) | ||||||||||
| Adjusted EBITDA | $ | 3,743,922 | $ | 3,925,127 | $ | 12,242,564 | $ | 13,730,636 | ||||||||
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.
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