HOUSTON - Epsilon Energy Ltd. (NASDAQ: EPSN), an onshore natural gas and oil production company, announced that its borrowing base has been redetermined at $45 million by Frost Bank. This redetermination of the senior secured reserve-based revolving credit facility took effect on June 21, 2024, and includes the inclusion of newly acquired and developed properties in Ector County, Texas.
The borrowing base, which reflects the lender's total commitment, will remain in place until the next scheduled redetermination in the fourth quarter of 2024. The terms of the credit facility remain unchanged.
In Ector County, the company's Ava well, part of the Pradera Fuego project, has shown promise with an average production of 1,290 barrels of oil equivalent per day (BOEPD) over a recent 25-day period. This output, consisting of 79% oil, exceeds pre-drill estimates and marks the well as the project's top performer to date. The well benefits from a roughly 11,000-foot lateral.
Following the success of the Ava well, Epsilon is currently completing operations on the Katy well, which is expected to begin flow-back next month. This well extends into the Cowden leasehold, a significant undeveloped area where Epsilon obtained an interest in June 2023.
Epsilon holds a 25% working interest and an 18.75% net revenue interest in the Pradera Fuego project. The company's portfolio also includes assets in Pennsylvania, New Mexico, and Oklahoma.
This financial update is based on a press release statement issued by Epsilon Energy Ltd.
In other recent news, Epsilon Energy announced its Q1 2024 results, detailing its operational and financial outcomes. The company anticipates quarter-over-quarter liquids volume growth in Q2 2024, despite some production shutdowns. Two additional wells are expected to come online in the summer, with considerations for an extra well later in the year.
In Pennsylvania, Epsilon Energy has delayed production on completed wells until natural gas prices improve, which is projected to occur in early 2025. The company's defensive hedging program and robust financial health are anticipated to result in stable to slightly lower cash flow in 2024 compared to 2023, setting the stage for a potential significant cash flow increase in 2025.
Epsilon's Permian assets are expected to drive the majority of upstream cash flow in 2024. The company's increased investment in the Permian region is anticipated to yield a strong cash flow profile moving forward. These are recent developments that underscore Epsilon Energy's strategic responses to market challenges and its investments in projects expected to drive growth in the medium term.
InvestingPro Insights
Epsilon Energy Ltd. (NASDAQ: EPSN) has recently made headlines with the redetermination of its borrowing base and the promising production from its Ava well in Ector County. As investors consider the implications of these developments, certain financial metrics and InvestingPro Tips can provide a clearer picture of the company's current standing and future prospects.
InvestingPro Data for Epsilon Energy reveals a market capitalization of $120.13M, indicating the company's size and scale within the industry. The Price/Earnings (P/E) ratio, standing at 24.74, suggests that investors are willing to pay a higher price for EPSN's earnings, potentially due to expected growth or the company's stability.
Moreover, the Gross Profit Margin for the last twelve months as of Q1 2024 is a robust 68.9%, highlighting the company's ability to manage its cost of goods sold effectively and maintain profitability.
In terms of InvestingPro Tips, Epsilon Energy holds more cash than debt on its balance sheet, which is a positive sign of financial health and may provide the company with flexibility to pursue growth opportunities or weather economic downturns. The company has been profitable over the last twelve months, reassuring investors of its ability to generate earnings.
For those considering an investment in Epsilon Energy, these insights may be valuable in assessing the company's financial health and growth potential. Furthermore, for more detailed analysis and additional tips, investors can explore the full suite of InvestingPro Tips available at https://www.investing.com/pro/EPSN. There are 6 additional InvestingPro Tips for Epsilon Energy Ltd., which subscribers can access to gain a more comprehensive understanding of the company's financial position.
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