Epsilon Energy Ltd.
For the period ended Dec 31, 2024. Filed Mar 19, 2025.
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FY2024 · Filed Mar 19, 2025
Contents
Item 1. BUSINESS
Summary
Epsilon Energy Ltd. (the “Company” or “Epsilon” or “we”) was incorporated under the laws of the Province of Alberta, Canada on March 14, 2005, pursuant to the ABCA. The Company is extra-provincially registered in Ontario pursuant to theBusiness Corporations Act (Ontario). Epsilon is a North American on-shore focused independent natural gas and oil company engaged in the acquisition, development, gathering and production of natural gas and oil reserves. On February 14, 2019, Epsilon’s registration statement on Form 10 was declared effective by the United States Securities and Exchange Commission and on February 19, 2019, we began trading in the United States on the NASDAQ Global Market under the trading symbol “EPSN.”
At December 31, 2024, Epsilon’s total estimated net proved reserves were 69,401 million cubic feet of natural gas reserves, 876,808 barrels of NGL reserves, and 1,572,465 barrels of oil and other liquids. Epsilon holds leasehold rights to approximately 102,506 gross (23,602 net) acres. The Company has natural gas production in the Marcellus Shale in Pennsylvania; oil, natural gas liquids and natural gas production in the Permian Basin in Texas and New Mexico, the NW Anadarko Basin in Oklahoma; and oil production in the Western Canadian Sedimentary Basin in Alberta, Canada.
We conduct operations in the United States through our wholly owned subsidiaries Epsilon Energy USA Inc., an Ohio corporation, or Epsilon Energy USA; Epsilon Midstream, LLC, a Pennsylvania limited liability company, or Epsilon Midstream; Epsilon Operating, LLC, a Delaware limited liability company; Dewey Energy GP LLC, a Delaware limited liability company; Dewey Energy Holdings LLC, a Delaware limited liability company; and Altolisa Holdings, LLC, a Delaware limited liability company.
Substantially all the Pennsylvania acreage (4,807 net) is dedicated to the Auburn Gas Gathering System, or the Auburn GGS, located in Susquehanna County, Pennsylvania for a 10-year term expiring in 2033 under an operating agreement whereby the Auburn GGS owners charge a fixed gathering and compression rate which is adjusted annually by the CPI-U All Urban Consumer Price Index published by the US Bureau of Labor Statistics. We own a 35% interest in the Auburn GGS which is operated by a subsidiary of Williams Partners, LP. In 2024, we paid $2.4 million (after elimination) to the Auburn GGS to gather and treat our 5.7 Bcf of natural gas production in Pennsylvania ($2.5 million after elimination was paid to the Auburn GGS to gather and treat our 7.9 Bcf in 2023), including the fees paid to our subsidiary, Epsilon Midstream.
Our principal executive office is located at 500 Dallas Street, Suite 1250, Houston, Texas 77002, and our telephone number at that address is (281) 670-0002. Our registered office in Alberta, Canada is located at 14505 Bannister Road SE, Suite 300, Calgary, AB, Canada T2X 3J3.
Business highlights of 2024
Operational Highlights
Marcellus Shale—Pennsylvania
| ● | During the year ended December 31, 2024, Epsilon’s realized natural gas price was $1.80 per Mcf, excluding the impact of hedges, a 4% increase from $1.74 for the year ended December 31, 2023. |
| ● | Total natural gas sales for the year ended December 31, 2024 were 5.7 Bcf, a 28% decrease from the 7.9 Bcf for the year ended December 31, 2023, driven by curtailed production volumes. |
| ● | Gathered and delivered 36.9 Bcf gross (12.9 Bcf net to Epsilon’s interest) during the year, or 101 MMcf/d through the Auburn GGS. |
| ● | We participated in the drilling of 3 gross (0.04 net) and the completion of 10 gross (0.82 net) Marcellus wells in 2024. Three completed wells went into production in October 2024. |
| ● | At year end, the Company had 7 gross (0.27 net) wells waiting to turn on line. |
Permian Basin—Texas and New Mexico
| ● | During the year ended December 31, 2024, Epsilon’s realized price for all Permian Basin production was $53.52 per BOE, excluding the impact of hedges, a 2% increase from the $52.49 for the year ended December 31, 2023. |
| ● | Total sales for the year ended December 31, 2024, including oil, natural gas, and other liquids, were 259 MBOE, a 242% increase from the 75.7 MBOE for the year ended December 31, 2023. |
| ● | In 2024, the Company acquired a 25% working interest in three producing wells and 3,246 gross undeveloped acres in Ector County, Texas. |
| ● | In 2024, the Company participated in the drilling and completion of 2 gross (0.5 net) wells in Texas. These wells went into production in May 2024 and July 2024. |
Anadarko, NW STACK Trend—Oklahoma
| ● | During the year ended December 31, 2024, Epsilon’s realized price for all Oklahoma production was $4.34 per Mcfe, excluding the impact of hedges, a 19% decrease from $5.35 for the year ended December 31, 2023. |
| ● | Total sales for the year ended December 31, 2024, including natural gas, oil, and other liquids, were 0.41 Bcfe, a 32% decrease from 0.60 Bcfe for the year ended December 31, 2023. |
Western Canadian Sedimentary Basin—Alberta, Canada
| ● | During the year ended December 31, 2024, Epsilon’s realized price for Canada oil production was $46.04 per Bbl. |
| ● | Total oil sales for the year ended December 31, 2024 were 2.5 MBbl. |
| ● | In 2024, the Company participated in the drilling of 4 gross (1.5 net) wells in Canada. One well went into production in September 2024. As of December 31, 2024, one well was deemed non-commercial, one well was still being drilled, and one well was waiting on completion. |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.