Epsilon Energy Ltd

The primary source of cash for Epsilon during the three months ended March 31, 2024 and 2023 was funds generated from operations. The primary uses of cash for the three months ended March 31, 2024 and 2023 were the development of upstream properties, investment in U.S. Treasury Bills, the repurchase of shares of common stock, and the distribution of dividends.

At March 31, 2024, we had a working capital surplus of $12.9 million, a decrease of $20.3 million from the $33.2 million surplus at December 31, 2023. The Company anticipates its current cash balance, short term investments, available borrowings, and cash flows from operations to be sufficient to meet its cash requirements for at least the next twelve months.

Three months ended March 31, 2024 compared to 2023

During the three months ended March 31, 2024, $3.7 million was provided by the Company’s operating activities, compared to $7.6 million during the same period in 2023, representing a 51% decrease.

The Company used $11.8 million and $30.9 million of cash for investing activities during the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, the Company had net investments of $18.5 million on leasehold and well costs in Pennsylvania and Texas offset by net proceeds of $6.7 million in U.S. Treasury Bills. During the three months ended March 31, 2023, the Company has investments of $30.1 million in U.S. Treasury Bills and $0.8 million in leasehold and well costs. This was spent primarily on leasehold and well costs in Pennsylvania.

The Company used $2.6 million and $2.8 million of cash for financing activities during the three months ended March 31, 2024 and 2023, respectively. This was spent primarily on dividend payments and the repurchase of shares of common stock.