Epsilon Energy Ltd (EPSN) 2023 Q4 法說會逐字稿

Good morning, everyone, and welcome to the Epsilon Energy fourth-quarter 2023 earnings conference call.

大家早安，歡迎參加 Epsilon Energy 2023 年第四季財報電話會議。

(Operator Instructions) Just a note, today's event is being recorded.

（操作員說明）請注意，今天的事件正在記錄中。

At this time, I'd like to turn the floor over to Andrew Williamson, Chief Financial Officer.

現在，我想請財務長安德魯威廉森 (Andrew Williamson) 發言。

Please go ahead.

請繼續。

Thank you, operator.

謝謝你，接線生。

And on behalf of the management team, I'd like to welcome all of you to today's conference call to review Epsilon's full-year and fourth-quarter 2023 financial and operational results.

我謹代表管理團隊歡迎大家參加今天的電話會議，回顧 Epsilon 2023 年全年和第四季的財務和營運表現。

Before we begin, I'd like to remind you that our comments may include forward-looking statements.

在開始之前，我想提醒您，我們的評論可能包含前瞻性陳述。

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.

應該指出的是，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期望有重大差異。

Today's call may also contain certain non-GAAP financial measures.

今天的電話會議也可能包含某些非公認會計準則財務指標。

Please refer to the earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP measures.

請參閱我們昨天發布的收益報告，以了解前瞻性陳述的揭露和非公認會計準則措施的調節。

With that, I'd like to turn the call over to Jason Stabell, our Chief Executive Officer.

說到這裡，我想將電話轉給我們的執行長傑森·斯塔貝爾 (Jason Stabell)。

Thank you, Andrew.

謝謝你，安德魯。

Good morning, and thank you for participating in our 2023 year-end conference call.

早安，感謝您參加我們的 2023 年年終電話會議。

Joining me today are Andrew Williamson, our CFO; and Henry Clanton, our COO.

今天加入我的是我們的財務長安德魯威廉森 (Andrew Williamson)；和我們的營運長亨利·克蘭頓 (Henry Clanton)。

We will be available to answer questions later in the call.

我們將在稍後的電話會議中回答問題。

2023 was a year of transition for Epsilon.

2023 年對 Epsilon 來說是轉型的一年。

Natural gas transition from the strongest market in recent memory in 2022 to an oversupplied market in 2023 that saw prices hit multi-year lows.

天然氣從 2022 年記憶中最強勁的市場轉變為 2023 年供應過剩的市場，價格跌至多年低點。

Despite these headwinds, our business is in a strong position.

儘管存在這些不利因素，我們的業務仍處於有利地位。

Through two transactions closed in 2023, we added a new core area in the Permian Basin, giving us a multi-year investment runway and oil exposure.

透過 2023 年完成的兩筆交易，我們在二疊紀盆地增加了一個新的核心區域，為我們提供了多年的投資跑道和石油敞口。

We also continued our track record of shareholder returns, all while maintaining a strong balance sheet.

我們也持續維持股東回報記錄，同時保持強勁的資產負債表。

The rewards of this strategy transition now sit largely in front of us.

現在，這項策略轉型的回報大部分就在我們面前。

So what do we like about our business?

那我們喜歡我們的業務什麼呢？

We own high-quality assets in two premier basins that produce strong operating cash flows and have runways for multi-year growth.

我們在兩個主要盆地擁有優質資產，這些資產產生強勁的營運現金流，並擁有多年成長的跑道。

Our forward revenues will be more diversified to provide our shareholders with exposure to both natural gas and oil alongside the fee-based income from our midstream position.

我們的遠期收入將更加多元化，為我們的股東提供天然氣和石油的投資，以及我們中游地位的收費收入。

The combination of these attributes is unique in the small-cap public energy space.

這些屬性的結合在小型公共能源領域是獨一無二的。

Now I'd like to offer some comments on a few key areas.

現在我想就幾個關鍵領域發表一些評論。

First, I would like to discuss our current view of the Marcellus assets.

首先，我想討論一下我們目前對 Marcellus 資產的看法。

The North American natural gas markets remain oversupplied.

北美天然氣市場仍供應過剩。

The short-term fundamentals of natural gas have concerned us for the last 18 months and similar to 2023, we have taken defensive action for 2024 with our hedging program.

過去 18 個月，我們一直擔心天然氣的短期基本面，與 2023 年類似，我們透過對沖計畫採取了 2024 年的防禦行動。

However, we are starting to see changes that set the stage for a recovery in the next 12 months.

然而，我們開始看到一些變化，為未來 12 個月的復甦奠定了基礎。

Recently announced production deferrals and reductions to 2024 CapEx by larger operators are positives.

大型營運商最近宣布的生產延期和 2024 年資本支出削減是積極的。

As I like to say, it is never the punch you see that knocks you out.

正如我想說的，擊倒你的永遠不是你看到的那一拳。

So we don't know what surprises the future holds, but we do know we have production and inventory in one of the lowest cost gas basins in the world.

因此，我們不知道未來會發生什麼，但我們確實知道我們在世界上成本最低的天然氣盆地之一擁有生產和庫存。

At current production levels, our remaining reserve life is over 25 years.

按照目前的生產水平，我們的剩餘儲備壽命超過 25 年。

We are also partnered with one of the premier natural gas operators in North America.

我們也與北美領先的天然氣營運商之一合作。

So we enjoy the benefits provided by their scale business.

所以我們享受他們規模業務帶來的好處。

Although I can't provide precise timing, our belief in the long-term fundamentals of natural gas makes us feel confident that our Marcellus asset will be a major contributor for many years at levels meaningfully above our 2023 performance.

儘管我無法提供準確的時間，但我們對天然氣長期基本面的信念使我們充滿信心，我們的 Marcellus 資產將在多年內成為主要貢獻者，其水平明顯高於我們 2023 年的業績。

If you are constructive on North American natural gas, these are phenomenal assets down.

如果您對北美天然氣持建設性態度，那麼這些資產的下跌是驚人的。

That said, we expect production and cash flow from Pennsylvania will be down in 2024 based on current pricing and discussions with our operator about the timing of first production for the seven recently drilled and completed wells.

也就是說，根據目前定價以及與營運商就最近鑽探和完工的 7 口井首次生產時間的討論，我們預計 2024 年賓州的產量和現金流將下降。

In the Permian, we have a 25% working interest in the Pradera Fuego Project in Ector County.

在二疊紀，我們擁有埃克託縣 Pradera Fuego 專案 25% 的工作權益。

The Mississippian play is beginning to receive a lot of industry attention based on our results and those of neighboring operators.

根據我們和鄰近營運商的結果，密西西比河區開始受到業界的廣泛關注。

Early performance on our wells drilled in the fourth quarter exceeds our pre-drill expectations by more than 25%.

我們在第四季度鑽探的油井的早期表現超出了我們鑽探前的預期 25% 以上。

Last month, we added additional production and acreage in the project.

上個月，我們增加了該項目的產量和麵積。

Our interest is now across approximately 16,000 gross acres with current net revenue production of 600 BOE per day, which is 90% liquids.

我們的權益目前覆蓋約 16,000 英畝總面積，目前淨收入產量為每天 600 桶油當量，其中 90% 為液體。

Later in the call.

後來在通話中。

Henry will provide more details on our results and forward plans.

亨利將提供有關我們的結果和未來計劃的更多詳細資訊。

Our third area of operation is the Anadarko in Oklahoma, which represents a relatively small piece of our net asset value.

我們的第三個營運區域是俄克拉荷馬州的阿納達科，它只占我們資產淨值的一小部分。

We like the cash flow these assets provide and our 7,000-net acre position that is held by production is attractive for additional investment in higher gas price environment.

我們喜歡這些資產提供的現金流，並且我們透過生產持有的 7,000 英畝淨土地對於在天然氣價格較高的環境中進行額外投資具有吸引力。

Oklahoma could also be a candidate for disposition under the right circumstances.

在適當的情況下，俄克拉荷馬州也可能成為處置的候選人。

Our business development efforts are ongoing.

我們的業務發展工作正在進行中。

Ideally, we would identify an additional one to two projects that are drill bit focused.

理想情況下，我們會再確定一到兩個以鑽頭為重點的項目。

Andrew can offer more details later in the call.

安德魯可以稍後在電話中提供更多詳細資訊。

Finally, our strong balance sheet and diversified cash flow stream leave us well positioned to continue our shareholder returns in the form of a regular dividend and opportunistic share purchases.

最後，我們強大的資產負債表和多元化的現金流使我們能夠以定期股息和機會性股票購買的形式繼續為股東帶來回報。

The current dividend payout rate remains well supported.

目前的股息支付率仍然得到良好支持。

As I mentioned in the press release yesterday, we believe the combination of these factors makes Epsilon an extremely compelling investment opportunity.

正如我在昨天的新聞稿中提到的，我們相信這些因素的結合使 Epsilon 成為一個極具吸引力的投資機會。

My recent personal share purchases should speak louder than words.

我最近個人買的股票應該勝於雄辯。

Now I would like to turn the call over to Andrew for some comments.

現在我想把電話轉給安德魯，徵求一些意見。

Thanks, Jason.

謝謝，傑森。

I'll elaborate on the Permian business, which will be a much bigger contributor to results in 2024.

我將詳細介紹二疊紀業務，該業務將對 2024 年的業績做出更大的貢獻。

We will have a full year from the wells brought on in the fourth quarter, contribution from our recently announced acquisition, which has a meaningful production component to it and multiple new wells developed and brought on through the year.

我們將從第四季度投產的油井中獲得一整年的收益，這是我們最近宣布的收購的貢獻，這對它來說是一個有意義的生產組成部分，並且全年開發和投產了多個新油井。

The first is underway.

第一個正在進行中。

At current prices, we expect the Permian to contribute more than 50% of our upstream cash flow this year.

以目前價格計算，我們預計二疊紀今年將貢獻我們上游現金流的 50% 以上。

Our capital investments are up meaningfully in 2023, driven by the Permian activity.

在二疊紀活動的推動下，我們的資本投資到 2023 年將大幅增加。

These were underwritten at attractive rates of return that set us up for multi-year growth in liquids production.

這些產品的承保回報率頗具吸引力，這為我們液體產量的多年增長奠定了基礎。

We expect almost all of our incremental development spend in Texas this year, which is estimated at over $10 million to be funded from the project's cash flows.

我們預計今年在德州的幾乎所有增量開發支出（估計超過 1000 萬美元）都將由該項目的現金流提供資金。

I would also like to say that the Permian assets are not yet included in our borrowing base under the revolver.

我還想說，二疊紀資產尚未納入我們的左輪手槍借款基礎中。

They will be added in the next redetermination this spring.

它們將在今年春天的下一次重新確定中添加。

So the reduction in liquidity from the deals will be partially offset.

因此，交易造成的流動性減少將部分抵銷。

We continued our track record of consistent shareholder returns in the last year.

去年我們繼續保持股東回報穩定的紀錄。

We repurchased 1.16 million shares during the year for just over $6 million at an average price per share of $5.20. Those shares represent roughly 5% of the shares outstanding at the beginning of the year.

年內，我們以略高於 600 萬美元的價格回購了 116 萬股股票，每股平均價格為 5.20 美元。這些股票約佔年初已發行股票的 5%。

We returned another $5.6 million through our regular dividend, which, as Jason mentioned, remains well supported by our fee-based midstream cash flows going forward.

我們透過定期股息又返還了 560 萬美元，正如傑森所提到的，我們未來的收費中游現金流仍然為我們提供了良好的支持。

We picked back up in January this year repurchasing another 250,000 shares at $4.82 per share.

今年 1 月，我們以每股 4.82 美元的價格回購了另外 25 萬股股票。

As we announced yesterday, we reloaded the buyback program with 2.19 million shares effective on March 27, that will run through March 26 of next year.

正如我們昨天宣布的那樣，我們重新啟動了 219 萬股回購計劃，並於 3 月 27 日生效，該計劃將持續到明年 3 月 26 日。

We are still busy looking for additional opportunities that will bring in at least one new project as an option to deploy capital going forward.

我們仍在忙於尋找更多機會，以引入至少一個新項目作為未來部署資本的選擇。

We look for drill bit development-focused opportunities, which offer higher return potential and the opportunity to compound with follow-on investment.

我們尋找以鑽頭開發為重點的機會，這些機會提供更高的回報潛力以及與後續投資相結合的機會。

The other major criterion for us is alignment with the operator on operating practices and the pace of development.

我們的另一個主要標準是與營運商在營運實踐和發展速度上保持一致。

Now I'll turn it over to Henry for commentary on the operations.

現在我將把它交給亨利來評論操作。

Thank you, Jason and Andrew.

謝謝你們，傑森和安德魯。

\I too would like to add some additional color on our Permian Basin Project.

\我也想為我們的二疊紀盆地計畫增添一些額外的色彩。

As Jason mentioned earlier, we're very pleased with the performance of the Pradera Fuego Project to date.

正如 Jason 之前提到的，我們對 Pradera Fuego 專案迄今為止的表現非常滿意。

The two initial wells, both two-mile laterals have demonstrated higher initial production rates and lower early life decline rates than our pre-drill estimates.

兩口最初的井，都是兩英里的橫向井，都表現出比我們鑽前估計更高的初始生產率和更低的早期壽命衰退率。

The most recent acquisition was a 25% acquisition and an additional 4,000 plus acres in the area that includes three producing wells, all two-mile laterals.

最近一次收購是該地區 25% 的股權和另外 4,000 多英畝的土地，其中包括三口生產井，所有井均長 2 英里。

This raises the total project acreage to over 16,000 gross acres and five producing wells currently producing approximately 600 barrels of oil equivalent per day net to Epsilon.

這使得該項目總面積超過 16,000 英畝，目前有 5 口生產井，每天淨產量約為 600 桶 Epsilon 油當量。

The current development plan for 2024 includes drilling at least three additional wells, the first of which has been drilled and is currently waiting on completion.

目前的 2024 年開發計畫包括至少再鑽三口井，其中第一口井已鑽完，目前正在等待完工。

A vertical pilot has been drilled and logged and a full core was taken over the target interval.

已經鑽探並記錄了垂直導孔，並在目標層段取得了完整的岩心。

This data capture will benefit the ongoing development as well as evaluate additional intervals within the acreage block for commercial viability.

此數據採集將有利於正在進行的開發，並評估該區塊內的其他間隔的商業可行性。

As mentioned previously, we think Pradera Fuego provides the company with a substantial runway of at least 20 additional gross locations, assuming two-mile laterals.

如前所述，我們認為 Pradera Fuego 為該公司提供了一條至少有 20 個額外總位置的大型跑道（假設橫向長度為 2 英里）。

In the Marcellus, Jason mentioned the company's participation in seven wells, 0.74 net to Epsilon, that are now being drilled and are in various stages of completion.

在 Marcellus 中，Jason 提到該公司參與了 7 口井的參與，其中 Epsilon 的淨份額為 0.74，這些井目前正在鑽探並處於不同的完井階段。

We remain in contact with the operator related to the timing of bringing these wells on and are aligned with deferred TILs, given the current pricing environment.

鑑於目前的定價環境，我們仍與營運商就這些油井的投產時間保持聯繫，並與延期的 TIL 保持一致。

We are confident that once on production, these wells will perform consistently with other wells in the area.

我們相信，一旦投產，這些油井將與該地區的其他油井表現一致。

And depending on timing, we expect them to roughly double our net gas production from the Marcellus.

根據時間安排，我們預計馬塞勒斯天然氣淨產量將增加一倍左右。

Now back to Jason.

現在回到傑森。

Thanks guys.

多謝你們。

Operator, we can now open the lines for questions.

接線員，我們現在可以打開提問線路了。

(Operator Instructions)

（操作員說明）

And at this time and showing no questions, I'd like to turn the floor back over to Jason Stabell for closing comments.

此時此刻，在沒有提出任何問題的情況下，我想將發言權交還給傑森·斯塔貝爾（Jason Stabell）以供結束評論。

Thank you, Jamie.

謝謝你，傑米。

I want to thank everyone for their interest in Epsilon and for joining us today.

我要感謝大家對 Epsilon 的興趣並感謝今天加入我們。

If you have any questions, please reach out to us at our Houston office and hope you have a great Thursday and rest of your week.

如果您有任何疑問，請聯絡我們休士頓辦事處，祝您週四和本週剩餘的時間過得愉快。

Thank you again.

再次感謝你。

And ladies and gentlemen, with that, we'll conclude today's conference call and presentation.

女士們、先生們，我們今天的電話會議和演示就到此結束。

We do thank you for joining.

我們非常感謝您的加入。

You may now disconnect your lines.

現在您可以斷開線路。