Q2 2026 Epsilon Energy Ltd Earnings Call Transcript
Key Points
- Epsilon Energy Ltd (EPSN) reported that its two Niobrara Duck completions in the Powder River Basin exceeded type curve expectations, with peak daily rates over 900 barrels of oil per day from each well.
- The company successfully accelerated its three-well Parkman drilling program in the Powder River Basin, completing drilling about one month ahead of plan, with production expected in Q4 2026.
- Epsilon Energy Ltd (EPSN) provided its first production guidance for the second half of 2026, anticipating meaningful quarter-over-quarter growth, with full-year oil volumes expected to increase nearly 200% year-over-year.
- The first three-mile Barnett well in the Permian Basin was placed on production and is performing in line with pre-drill type curve, with two additional wells scheduled to spud later this month.
- The company reduced operating expenses by $65,000 per month through compressor downsizing, with total savings expected to exceed $100,000 per month by year-end.
- Epsilon Energy Ltd (EPSN) paid down $10 million of debt in the first half of 2026 and maintains a strong balance sheet, with plans to stay within its target leverage of 1.5 times EBITDA.
- The company successfully sold down its working interest in the Parkman development at a premium, reducing risk while retaining over 70% interest in the project.
- Epsilon Energy Ltd (EPSN) experienced a production trough in Q2 2026, with Marcellus volumes impacted by planned temporary curtailments due to gathering system pressure adjustments.
- The company's capital spending is heavily weighted to the second half of 2026, with over half of full-year capital not contributing to results until Q4, and over a third not showing up until next year.
- The previously disclosed sale of the Durango office building did not close, and the company will need to reevaluate a potential sale later this year.
- Epsilon Energy Ltd (EPSN) expects to utilize its revolver to partially fund the investment ramp starting in Q3 2026, which could increase leverage.
- The company's gas production in Appalachia was curtailed due to sub-$2 pricing, and there is uncertainty around the operator's ability to bring new Marcellus wells online in Q4 as scheduled.
- The Woodford appraisal well, in which Epsilon Energy Ltd (EPSN) chose not to participate, has been drilled, and a successful result could expand inventory but also highlights missed opportunities if it performs well.
Good day and welcome to the Epsilon Energy second quarter 2026 earnings conference call.
(Operator Instructions) At this time, I would like to turn the conference over to your President and CEO, Jason Stabell. Please go ahead.
Good morning. Before we begin our prepared remarks, we would like to address the press release correction issued yesterday. The correction was limited to the presentation of adjusted net income and adjusted EPS in the summary table. The reconciliation later in the release reflected the correct treatment. After identifying the inconsistency, we promptly updated the release. There was no impact to our reported GAAP results, cash flows or the underlying economics of the business.
I will now turn the call over to Andrew Williamson, our CFO.
Thank you, operator, and on behalf of the management team, I would like to welcome all of you to today's
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