Epsilon Energy Ltd

The primary source of cash for Epsilon during the three and nine months ended September 30, 2024 and 2023 was funds generated from operations. The primary uses of cash for the three and nine months ended September 30, 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 September 30, 2024, we had a working capital surplus of $7.5 million, a decrease of $25.7 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.

Nine months ended September 30, 2024 compared to 2023

During the nine months ended September 30, 2024, $11.8 million was provided by the Company’s operating activities, compared to $14.4 million during the same period in 2023, representing an 18% decrease.

The Company used $11.0 million and $37.1 million of cash for investing activities during the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, the Company had net investments of $30.1 million primarily on leasehold and well costs in Pennsylvania, Texas, and Canada offset by net proceeds of $19.1 million in U.S. Treasury Bills. During the nine months ended September 30, 2023, the Company had net investments of $18.3 million in U.S. Treasury Bills and $18.8 million in leasehold and development costs targeting increasing production in Pennsylvania, the Permian Basin, and Oklahoma.

The Company used $5.9 million and $10.1 million of cash for financing activities during the nine months ended September 30, 2024 and 2023, respectively. This was spent on dividend payments and the repurchase of shares of common stock.