Epsilon Energy .(EPSN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a quarter-over-quarter oil production growth of 19% in the Permian region, driven by the seventh Ector well coming online [4] - Realized prices in Pennsylvania were $1.54 per Mcf, with operating costs increasing by approximately 40$8.5 million year-to-date, accounting for 70% of the total company figure [10] Business Line Data and Key Metrics Changes - In Pennsylvania, three of the seven previously announced deferred TILs were put on production, with expectations for quarter-over-quarter growth in natural gas volumes in the fourth quarter [5][6] - The company invested approximately $40 million in the Permian starting in Q2 2023, with cash flows of approximately$12 million received by the end of Q3 [10] Market Data and Key Metrics Changes - Wellhead prices in Pennsylvania remained low heading into winter, impacting production and pricing [5] - The company has added to its hedge book for 2025, locking in prices above the current strip [13] Company Strategy and Development Direction - The company announced its entry into Alberta, Canada, through two joint ventures, focusing on the Garrington area for initial development [7][12] - The company plans to continue paying dividends and monitor opportunities to reduce share count at attractive prices [8] Management's Comments on Operating Environment and Future Outlook - Management indicated that the current quarter was the trough for the Pennsylvania business, with expectations for recovery as curtailments are lifted and better pricing is anticipated [9] - The company expects to be active in Texas in 2025 and resume growth, with drilling activity scheduled to start in Alberta [11] Other Important Information - The company is currently evaluating opportunities for additional investments, particularly in Canada, due to favorable cost structures and royalty regimes [12] - Liquidity remains strong with available revolver capacity at $45 million, positioning the company well for future opportunities [13] Q&A Session Summary Question: What is the net production from the three wells put on flowback? - The net production is approximately 8 million a day, reflecting a little over 13% net revenue interest in that pad [20] Question: Will the increase in realized gas price spur the 3 million to 4 million a day coming back online? - Management believes that curtailed volumes will come back online as prices dictate, although visibility on the exact schedule remains unclear [21]