Epsilon Energy Ltd (EPSN) 2023 Q1 法說會逐字稿

Good day, and welcome to the Epsilon Energy first quarter 2023 earnings conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Mr. Andrew Williamson, Chief Financial Officer. Please go ahead, sir.

美好的一天，歡迎來到 Epsilon Energy 2023 年第一季度收益電話會議。 （操作員說明）請注意正在記錄此事件。我現在想將會議轉交給首席財務官安德魯威廉姆森先生。請繼續，先生。

Thank you, operator. And on behalf of the management team, I'd like to welcome all of you to today's conference call to review Epsilon's first quarter 2023 financial and operational results. Before we begin, I'd 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.

謝謝你，運營商。我代表管理團隊歡迎大家參加今天的電話會議，回顧 Epsilon 2023 年第一季度的財務和運營業績。在我們開始之前，我想提醒您，我們的評論可能包含前瞻性陳述。應該注意的是，多種因素可能導致 Epsilon 的實際結果與這些前瞻性陳述中表達的預期結果或預期存在重大差異。

Today's call may also contain certain non-GAAP financial measures. Please refer to the earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP measures. With that, I'd like to turn the call over to Jason Stabell, our Chief Executive Officer.

今天的電話會議還可能包含某些非 GAAP 財務措施。請參閱我們昨天發布的收益報告，了解前瞻性報表的披露和非 GAAP 措施的對賬。有了這個，我想把電話轉給我們的首席執行官 Jason Stabell。

Thank you, Andrew. Good morning to everyone, and thank you for participating in our first quarter 2023 conference call. Joining me today are Andrew Williamson, our CFO; and Henry Clanton, our COO. We will be available to answer questions later in the call.

謝謝你，安德魯。大家早上好，感謝您參加我們 2023 年第一季度的電話會議。今天加入我的是我們的首席財務官 Andrew Williamson；和我們的首席運營官亨利·克蘭頓 (Henry Clanton)。我們將在稍後的通話中回答問題。

I am pleased to report that we delivered a good first quarter in a challenging natural gas market and the company remains in a very solid position. Unlike our recent earnings calls today, I will not rehash the information contained in our press release and 10-Q filing. Instead, I'd like to focus on what we see as the key elements of the company's value proposition and spend some time discussing the small investment announced in yesterday's release.

我很高興地報告，我們在充滿挑戰的天然氣市場中取得了良好的第一季度業績，公司仍然處於非常穩固的地位。與我們今天最近的財報電話會議不同，我不會重複我們的新聞稿和 10-Q 文件中包含的信息。相反，我想專注於我們認為是公司價值主張的關鍵要素，並花一些時間討論昨天新聞稿中宣布的小額投資。

At present, we see four key attributes to the Epsilon story. One, our strong legacy asset base; two, our robust balance sheet and liquidity position; three, our commitment to shareholder returns; and four, our ongoing business development activities focused to achieve accretive growth.

目前，我們看到了 Epsilon 故事的四個關鍵屬性。第一，我們強大的遺留資產基礎；第二，我們穩健的資產負債表和流動性狀況；三、我們對股東回報的承諾；第四，我們正在進行的業務發展活動專注於實現增值增長。

Let me go into each of these four attributes in more detail. One, our legacy asset base; our mix of assets provides a diversified revenue stream. The midstream assets provide fee-based, steady and predictable cash flow in a variety of commodity price environments. While our upstream position provides our shareholders exposure to low-cost natural gas, the power of this combination was on display in our 2022 results, where we saw explosive year-over-year growth and upstream cash flows in a rising natural gas price environment.

讓我更詳細地探討這四個屬性中的每一個。第一，我們的遺留資產基礎；我們的資產組合提供了多元化的收入來源。中游資產在各種商品價格環境中提供收費、穩定和可預測的現金流。雖然我們的上游地位為我們的股東提供了低成本天然氣的機會，但這種組合的力量在我們 2022 年的業績中得到了體現，在天然氣價格上漲的環境下，我們看到了爆炸性的同比增長和上游現金流。

The first quarter 2023 results demonstrate our resiliency in a depressed natural gas market as we were able to build cash and return money to our shareholders. In the first quarter, 28% of our revenue was generated by our midstream asset as compared to only 12% in full year 2022.

2023 年第一季度的業績表明我們在低迷的天然氣市場中具有彈性，因為我們能夠積累現金並將資金返還給股東。第一季度，我們 28% 的收入來自我們的中游資產，而 2022 年全年這一比例僅為 12%。

Number two, balance sheet and liquidity; our strong financial position and zero debt allow us to manage commodity exposure opportunistically as demonstrated by the hedge position we put on for 2023. It also allows for our flexible and opportunistic capital allocation approach including acquisitions.

第二，資產負債表和流動性；我們強大的財務狀況和零債務使我們能夠機會主義地管理商品風險，正如我們為 2023 年設置的對沖頭寸所證明的那樣。它還允許我們採用靈活和機會主義的資本配置方法，包括收購。

Number three, shareholder returns; we are committed to the return of capital to our shareholders. Our regular dividend offers an annual yield of 5% at the current stock price. Our Board reviews the policy quarterly, but remains very comfortable with the current payout, given it can be funded from the steady midstream cash flow.

第三，股東回報；我們致力於將資本返還給我們的股東。我們的定期股息按當前股價提供 5% 的年收益率。我們的董事會每季度審查一次政策，但仍然對當前的支出非常滿意，因為它可以從穩定的中游現金流中獲得資金。

Also, our liquidity position allows us to opportunistically repurchase shares. This is evidenced by our approved annual buyback program for up to 10% of shares outstanding. Over the last three years, shares outstanding have been reduced by 15%.

此外，我們的流動性狀況使我們能夠機會主義地回購股票。我們批准的高達 10% 已發行股票的年度回購計劃證明了這一點。在過去三年中，流通股減少了 15%。

And four, business development; yesterday, we announced a small investment in a new project area in Eddy County, New Mexico. This investment delivers immediate cash flow at attractive rates of return and establishes a relationship with a high-quality basin focused operator.

四、業務發展；昨天，我們宣佈在新墨西哥州埃迪縣的一個新項目區進行小額投資。這項投資以極具吸引力的回報率提供即時現金流，並與以流域為重點的優質運營商建立了關係。

This is a first step in our effort to diversify our commodity, basin, and operator mix. This deal can serve as a blueprint for our continued business development efforts, attractive unlevered rates of return, operator alignment, with an opportunity for expanded partnership, all without stressing our balance sheet and liquidity.

這是我們努力實現商品、流域和運營商組合多樣化的第一步。這筆交易可以作為我們持續的業務發展努力、有吸引力的無槓桿回報率、運營商調整以及擴大合作夥伴關係的機會的藍圖，所有這些都不會給我們的資產負債表和流動性帶來壓力。

We believe the combination of these attributes makes our equity an attractive investment at a compelling valuation. We currently have over $2 per share in cash, a diversified revenue stream, a commitment to shareholder returns, and an active, but disciplined business development effort across multiple basins. The company is well positioned to capitalize on attractive opportunities in a variety of environments. This all makes us excited about our future. Operator, we can now open the line for questions.

我們相信，這些屬性的結合使我們的股票成為具有吸引力的估值的有吸引力的投資。我們目前擁有每股超過 2 美元的現金、多元化的收入來源、對股東回報的承諾以及跨多個流域的積極但有紀律的業務發展努力。該公司處於有利地位，可以在各種環境中利用有吸引力的機會。這一切都讓我們對未來感到興奮。接線員，我們現在可以打開問題熱線了。

(Operator Instructions) Nat Stewart, NAS Capital.

（操作員說明）Nat Stewart，NAS Capital。

Hey, thanks for taking my question. Is there any more detail that you can give us about your our first investment? Is this an operator you could do follow-on investments down the road? Is there any detail you can provide on the kind of return you're expecting on this?

嘿，謝謝你提出我的問題。關於我們的第一筆投資，您能提供更多細節嗎？這是您可以在未來進行後續投資的運營商嗎？您是否可以提供任何有關您期望的回報類型的詳細信息？

Hey, Nat, this is Jason. Thanks for joining, and thanks for the question. Couple of developments that you had in there, so yes. We look at this relationship as a stepping stone to potential more investments alongside them. As we mentioned, they are basin focused operator, they've got a large project. So we believe there will be other opportunities for us to partner up. On the returns, not going to get into returns, but I might turn it to Henry Clanton. He can talk a little bit about the wells.

嘿，納特，這是傑森。感謝您的加入，也感謝您的提問。你在那裡有幾個發展，所以是的。我們將這種關係​​視為潛在的更多投資的墊腳石。正如我們提到的，他們是專注於盆地的運營商，他們有一個大項目。因此，我們相信我們還會有其他合作機會。關於退貨，我不會進入退貨，但我可能會把它交給亨利克蘭頓。他可以談談水井。

Great.

偉大的。

Thank you, Jason, and thank you, Nat. This is Henry Clanton. We're participating in this non-operated well bore only participation agreement in two wells completed in the Wolfcamp in different intervals. It's an opportunity for us to appraise the opportunity set in the area and get to know better this operator. So we're looking forward to --

謝謝你，傑森，謝謝你，納特。這是亨利·克蘭頓。我們參與了在 Wolfcamp 不同時間段完成的兩口井的非運營井眼參與協議。這是我們評估該地區設置的機會並更好地了解該運營商的機會。所以我們期待——

Great. I'll add, Nat, I mean, we like the opportunity of its immediate cash flow. So these wells are already on flowback. So in subsequent quarters, we're going to have some real information to put out there around the opportunity.

偉大的。我要補充一點，Nat，我的意思是，我們喜歡它立即產生現金流的機會。所以這些井已經在返排了。因此，在隨後的幾個季度中，我們將圍繞這個機會發布一些真實的信息。

And I'd also add, I think this as we mentioned in the opening remarks, we think this is a blueprint. You've asked in previous quarters, what the deal market looks like. I think right now for us, this is an interesting space to be chasing things, drill bit focused small to medium-sized operators with attractive projects where we think over time, the relationship can expand that give us the diversity away from just the Marcellus natural gas [asset that we have]. Although we feel like that, but clearly right now, natural gas investments are not where we're going to be likely deploying a lot of capital at this gas state.

我還要補充一點，我認為正如我們在開場白中提到的那樣，我們認為這是一個藍圖。你在前幾個季度問過，交易市場是什麼樣子的。我認為現在對我們來說，這是一個有趣的追逐事物的空間，鑽頭專注於擁有有吸引力的項目的中小型運營商，我們認為隨著時間的推移，這種關係可以擴展，讓我們擁有多樣性，而不僅僅是 Marcellus natural天然氣 [我們擁有的資產]。雖然我們有這種感覺，但很明顯，現在天然氣投資並不是我們可能在這個天然氣州部署大量資本的地方。

Sure that makes sense. Now is this basin or this area is an area that you particularly decide to focus in? Are you still looking broadly and thinking about further diversification?

當然這是有道理的。現在這個盆地或這個區域是你特別決定關注的區域嗎？您是否還在放眼未來，考慮進一步多元化？

The area, it's the Northern Delaware, quite attractive from a technical and resource standpoint, infrastructure standpoint. So we liked all the elements. But yes, we're looking at areas beyond just the small area for similar great deals.

該地區位於北特拉華州，從技術和資源的角度以及基礎設施的角度來看非常有吸引力。所以我們喜歡所有的元素。但是，是的，我們正在尋找小區域以外的區域來進行類似的大交易。

Great. Okay, that sounds good. I look forward to seeing how it goes. Thanks guys.

偉大的。好的，聽起來不錯。我期待看到它的進展。多謝你們。

All right, Nat, thanks for joining.

好的，Nat，感謝您的加入。

(Operator Instructions) This concludes our question and answer session. I would like to turn the conference back over to Mr. Jason Stabell, Chief Executive Officer, for any closing remarks. Please go ahead, sir.

（操作員說明）我們的問答環節到此結束。我想將會議轉回給首席執行官 Jason Stabell 先生，聽取任何閉幕詞。請繼續，先生。

Thank you, operator. I'll just close with saying thanks for tuning in today. Hopefully, we're going to have more to talk about as we move through the year. We're excited about where we sit and look forward to talking with you later this year. Thanks again for joining.

謝謝你，運營商。最後，我要說謝謝你今天收聽。希望我們在這一年中有更多的話題可以討論。我們很高興我們坐在哪裡，並期待在今年晚些時候與您交談。再次感謝您的加入。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。