Epsilon Energy Reports Strong Q1 Results, Expects Continued Growth

Epsilon Energy reports strong Q1 2024 results, driven by its Permian assets, with plans to bring two additional wells online this summer. The company expects quarter-over-quarter liquids volume growth in Q2 despite operational challenges.

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Nitish Verma
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Epsilon Energy Reports Strong Q1 Results, Expects Continued Growth

Epsilon Energy Reports Strong Q1 Results, Expects Continued Growth

Epsilon Energy Ltd. (NASDAQ: EPSN) has reported its financial and operational results for the first quarter of 2024, highlighting strong performance from its Permian assets and expectations for continued liquids volume growth in the second quarter.

The company's Permian assets are performing well, with plans to bring two additional gross wells online over the summer in the Pradera Fuego project located in Ector County, Texas. Despite a several-week shut-in of two producing wells during frac operations in May, Epsilon expects to see quarter-over-quarter liquids volume growth in Q2.

Why this matters: The strong performance of Epsilon Energy's Permian assets and its plans for continued growth have significant implications for the energy sector as a whole, as it demonstrates the potential for increased oil production in the region. This, in turn, could have a ripple effect on global energy markets and influence energy policy decisions.

In Pennsylvania, Epsilon supports its operating partner's decision to delay turn-in-lines on wells completed last quarter and selectively curtail production. Seven completed wells (0.7 net) are expected to begin production in early 2025. CEO Jason Stabell commented, "Our Permian assets continue to perform well. We expect to bring two additional gross wells online over the summer in the Pradera Fuego project in Ector County."

Epsilon expects flat to slightly down cash flow in 2024 versus 2023 at current strip prices but anticipates a material uplift in cash flow in 2025. The company has spent over $42 million in the last 12 months, with over 80% invested in the Permian business and the remainder in the Marcellus. CFO Andrew Williamson stated, "We feel good about our ability to continue to invest in the portfolio and potential new opportunities despite the reduction in cash."

Epsilon Energy's Q1 2024 results demonstrate the company's strong position in the Permian Basin and its ability to generate growth despite operational challenges. With additional wells coming online and a material cash flow uplift expected in 2025, Epsilon appears well-positioned to continue executing its strategy and delivering value to shareholders.

Key Takeaways

  • Epsilon Energy reports strong Q1 2024 results, driven by Permian assets.
  • Two additional gross wells to come online in Pradera Fuego project this summer.
  • Q2 liquids volume growth expected despite brief shut-in of two producing wells.
  • Flat to slightly down cash flow expected in 2024, with material uplift in 2025.
  • Epsilon well-positioned to continue executing strategy and delivering value to shareholders.