Q1 2026 Epsilon Energy Ltd Earnings Call Transcript
Key Points
- Epsilon Energy Ltd (EPSN) is on track with its development plan, expecting meaningful production growth year over year, particularly in the Permian and Powder River basins.
- The company has successfully completed its ninth well in the Permian project and is set to bring it online in the second quarter, indicating progress in its operations.
- Epsilon Energy Ltd (EPSN) has taken steps to strengthen its balance sheet, including debt reduction and monetizing non-core assets at attractive values.
- The company has a disciplined approach to maintaining a strong balance sheet, with a target leverage profile of 1 to 1.5 times net debt to adjusted EBITDA.
- Epsilon Energy Ltd (EPSN) is actively working on production enhancement and cost improvement initiatives, such as optimizing gas lift compressors and converting wells to rod pump to increase production rates and lower costs.
- Earnings for the quarter were materially impacted by unrealized or non-cash hedge losses due to dramatic moves in oil prices, causing a mismatch on the P&L.
- The company faces challenges with rig availability and increasing rig rates, which could impact the timing and cost of its drilling operations.
- Epsilon Energy Ltd (EPSN) has worked through much of the low-hanging fruit of non-core asset divestitures, potentially limiting future opportunities for easy capital generation.
- The Powder River Basin assets have not had new volumes come online for over two years, leading to higher unit operating expenses due to fixed costs.
- The company faces infrastructure needs in the Powder River Basin, including gas takeaway development, which could require additional funding and resources.
Good day and thank you for standing by. Welcome to the Epsilon Energy first quarter 2026 earnings conference call (Operator Instructions)
Please note that today's event is being recorded. I would now like to turn the conference over to Andrew Williamson, the company's CFO. Please go ahead.
Thank you, operator, and on behalf of the management team, I would like to welcome all of you to today's conference call to review Epsilon's first quarter 2026 financial and operational results. Before we begin, I would like to remind you that our comments may include forward-looking statements. It should be noted that a variety of factors could cause Epsilon's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements.
Today's call may also contain certain non-GAAP financial measures. Please refer to the press release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP
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