Epsilon Energy Ltd (EPSN) 2024 Q4 法說會逐字稿

Good day, and welcome to the Epsilon Energy full year and fourth-quarter 2024 earnings conference call. (Operator Instructions)

大家好，歡迎參加 Epsilon Energy 2024 年全年和第四季財報電話會議。（操作員指示）

Please note this event is being recorded. I would now like to turn the conference over to Andrew Williamson, Chief Financial Officer. Please go ahead.

請注意，此事件正在被記錄。現在，我想將會議交給財務長安德魯威廉森 (Andrew Williamson)。請繼續。

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 full year and fourth-quarter 2024 financial and operational results.

謝謝您，接線生。我謹代表管理團隊歡迎大家參加今天的電話會議，回顧 Epsilon 2024 年全年和第四季的財務和營運表現。

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.

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。值得注意的是，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期望有重大差異。

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.

今天的電話會議可能還包含某些非公認會計準則財務指標。請參閱我們昨天發布的收益報告，以了解前瞻性聲明和非公認會計準則指標的對帳資訊。

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

說到這裡，我想把電話轉給我們的執行長 Jason Stabell。

Thank you, Andrew. Good morning and thank you for participating in our 2024 year-end 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。早安，感謝您參加我們的 2024 年年終電話會議。今天與我一起出席的還有我們的財務長 Andrew Williamson；以及我們的營運長亨利·克蘭頓 (Henry Clanton)。我們將在稍後的電話會議中回答問題。

I am pleased to report that in 2024, we achieved our main strategic objectives to continue to develop our Permian business, add a new project area with meaningful upside potential and weather an oversupplied gas market.

我很高興地報告，2024 年，我們實現了主要戰略目標，即繼續發展二疊紀業務，增加一個具有重大上行潛力的新項目區域，並度過供應過剩的天然氣市場。

In the Permian, we added additional production and undeveloped acreage through a bolt-on acquisition in the first quarter. That deal, followed by incremental investment in two gross wells during the year led to our 180% year-on-year increase in oil production. The Permian contributed more than 60% to our cash flows in 2024.

在二疊紀盆地，我們在第一季透過附加收購增加了產量和未開發土地面積。這筆交易以及隨後年內對兩口總油井的增量投資使我們的石油產量年增了 180%。2024 年，二疊紀盆地為我們貢獻了 60% 以上的現金流。

We also established a new project area in Alberta, Canada, with the joint venture announced in October that we believe adds multiyear economic inventory for approximately a $7 million drilling carry. The operator has committed to five gross wells on the position before the end of first quarter 2026. The project is underway with two wells now on flowback.

我們也在加拿大阿爾伯塔省建立了一個新的專案區，並於 10 月宣布成立合資公司，我們相信這將為鑽井帶來約 700 萬美元的多年經濟庫存。營運商已承諾在 2026 年第一季末之前在該位置上鑽探五口總井。該工程正在進行中，目前有兩口井處於回流狀態。

In 2025, we will further delineate this position with two gross wells, 0.5 net, and expect to have four gross wells, one net on production in the Garrington area by year-end.

到 2025 年，我們將進一步確定這一地位，總產量為 2 口井，淨產量為 0.5 口井，預計到年底，加靈頓地區的總產量將達到 4 口井，淨產量為 1 口井。

Finally, in the Marcellus, we survived a challenging natural gas market with sub $2 per Mcf net wellhead pricing, production curtailments estimated at 20% to 25% of our net total in the basin and deferred turn-in lines. The environment started to change in the fourth quarter of last year, and we are off to a great start to 2025 in the basin. Andrew can elaborate further there.

最後，在馬塞勒斯，我們度過了充滿挑戰的天然氣市場，井口淨價低於每千立方英尺 2 美元，產量削減估計佔盆地淨總量的 20% 至 25%，上交管線也延期。去年第四季環境開始發生變化，我們在 2025 年取得了良好的開端。安德魯可以在那裡進一步闡述。

Today, our business is more diversified with multiple avenues available for capital allocation and organic growth across the commodity mix. We remain committed to our fixed dividend while keeping an eye out for attractive opportunities to reduce our share count.

如今，我們的業務更加多樣化，擁有多種途徑可用於資本配置和商品組合的有機成長。我們將繼續致力於固定股息，同時密切注意減少股票數量的誘人機會。

I'll now turn it over to Andrew and then Henry to provide further details on our plans and activities, including an early comment on the strength of our first-quarter 2025 performance.

現在我將把時間交給安德魯和亨利，讓他們提供有關我們的計劃和活動的更多細節，包括對我們 2025 年第一季業績表現的早期評論。

Thanks, Jason. As mentioned, the tides have shifted in the Marcellus, and we're off to a great start there in 2025. The remaining deferred TIL wells came on in the second week of January, we have now -- have essentially all of our previously curtailed production back online. To put some details to it through the first two months of the quarter, our net revenue interest production in PA is approximately 30 million cubic feet a day, up 85% from our daily average during 2024.

謝謝，傑森。如前文所述，馬塞勒斯的情況已經發生了變化，2025 年我們將在那裡迎來一個好的開始。剩餘的延期 TIL 井於 1 月第二週投入使用，現在我們基本上已經恢復了之前削減的所有生產。具體來說，在本季的前兩個月，我們在賓州的淨收入權益產量約為每天 3,000 萬立方英尺，比 2024 年的每日平均產量增加了 85%。

Over the same period, we realized over $3.90 per Mcf net to wellhead, which is up 100% over the same two-month period last winter. That pricing came in above the index as we market our own gas, and we're able to take advantage of a strong cash market during some of the winter weather we've seen in the Northeast.

在同一時期，我們實現了每千立方英尺井口淨利潤超過 3.90 美元，比去年冬季同期的兩個月增長了 100%。由於我們銷售自己的天然氣，該定價高於指數，並且我們能夠在東北地區經歷冬季天氣時利用強勁的現金市場。

The curtailment lifting also benefits the gathering system where current throughput is up over 50% from the average in the third quarter of '24. It's still early, but we expect 2025 upstream and midstream cash flows in the Marcellus to be up substantially year over year.

取消限產也使集輸系統受益，該系統目前的吞吐量比 2024 年第三季的平均吞吐量高出 50% 以上。雖然現在還為時過早，但我們預計 2025 年馬塞勒斯上游和中游的現金流將比去年同期大幅成長。

We built the Permian business up over 2024, investing $24 million between the February acquisition and the two wells drilled in the second and third quarter. As I mentioned last quarter, we expect development to pick back up in Ector County in the second half of the year. We've talked about this several times before, but I'll reiterate that the runway there is significant with 14,000 gross undeveloped acres and up to 40 remaining 2 mile Barnett locations.

我們在 2024 年建立了二疊紀業務，在 2 月的收購以及第二季和第三季鑽探的兩口井之間投資了 2,400 萬美元。正如我上個季度提到的，我們預計今年下半年埃克託縣的發展將回升。我們之前已經多次討論過這個問題，但我要重申的是，那裡的跑道意義重大，共有 14,000 英畝未開發土地和最多 40 個剩餘的 2 英里巴奈特位置。

Most of this is not included in our reserve report as there are no producing wells in the southern undeveloped portion of our leasehold, however, we have observed values for inventory leasehold in the immediate area, well above our entry costs, which speaks to the market's view of the potential.

其中大部分未包含在我們的儲量報告中，因為在我們租賃權的南部未開發部分沒有生產井，但是，我們觀察到附近區域的庫存租賃權的價值遠高於我們的進入成本，這說明了市場對潛力的看法。

We have a multiyear runway here and look forward to participating in that development, and we'll make sure we are in a position to do so. It's too early to speak to the initial results in our recent JV in Alberta. Our partner is a reputable US sponsor-backed operator, and we are excited about the runway in the 30,000 gross acre position in the Garrington area.

我們在這裡擁有多年的發展基礎，並期待參與這項發展，我們將確保我們有能力做到這一點。現在談論我們最近在阿爾伯塔省的合資企業的初步成果還為時過早。我們的合作夥伴是一家享有盛譽的美國贊助商支持的營運商，我們對位於加靈頓地區佔地 30,000 英畝的跑道感到非常興奮。

We expect to have roughly $10 million of CapEx there this year, including our drilling carry in favor of the operator. Our expectation is to open a third major project area here for an attractive entry cost, $7 million drilling carry, which will be part of our capital allocation matrix going forward.

我們預計今年該地的資本支出約為 1,000 萬美元，其中包括我們為營運商提供的鑽探費用。我們的預期是在這裡開闢第三個主要項目區，進入成本很有吸引力，即 700 萬美元的鑽井費用，這將成為我們未來資本配置矩陣的一部分。

Finally, we have over $50 million of liquidity, including our undrawn credit facility and strong free cash flows in our two primary project areas. That puts us in a strong position to continue to invest for growth while also returning cash to our shareholders.

最後，我們擁有超過 5000 萬美元的流動資金，包括未提取的信貸額度和兩個主要項目領域的強勁自由現金流。這使我們處於有利地位，可以繼續投資以實現成長，同時向股東返還現金。

Now to Henry.

現在輪到亨利了。

Thanks, Jason and Andrew. I would like to add some comments on our year-end reserves. Against pricing headwinds, the company grew proved reserves approximately 20% year over year. In the Marcellus, updated development scheduling provided by the operator has added approximately 10 Bcf proved undeveloped reserves with drilling set to commence in 2026.

謝謝，傑森和安德魯。我想對我們的年終儲備補充一些評論。儘管面臨價格逆風，該公司的探明儲量仍較去年同期成長約 20%。在馬塞勒斯，營運商提供的最新開發計畫已增加約100億立方英尺已探明未開發儲量，鑽探將於2026年開始。

We are also reporting that the Auburn gas gathering system operating pressure has been lowered to 450-psi from 550, while there was no impact to the end-of-year reserves, the company will benefit from improved production and throughput in 2025 from wells gathered on that system as a result. We estimate a 15% uplift to Auburn PDP relative to production under the higher suction pressure.

我們還報告稱，奧本天然氣收集系統的工作壓力已從 550 psi 降低至 450 psi，雖然對年底儲量沒有影響，但該公司將受益於 2025 年該系統收集井的產量和吞吐量的增加。我們估計，在更高的吸入壓力下，奧本 PDP 的產量將增加 15%。

In the Permian, the company added 11.5 Bcf equivalent to our proved reserves. Additional interests were acquired in the Pradera Fuego Barnett play, which added both proved producing and undeveloped reserves.

在二疊紀盆地，該公司新增了相當於115億立方英尺的已探明儲量。該公司還獲得了 Pradera Fuego Barnett 油田的額外權益，增加了已探明的生產儲量和未開發的儲量。

Additionally, seasoning of the existing production has supported higher recovery projections. The extensive development fairway in Barnett remains as previously reported. Worthy to highlight, the potential for multi-well pad drilling and infrastructure build-out offer scaled economies expected to drive future development costs down significantly.

此外，現有產量的提高也支持了更高的復甦預測。巴內特的大規模開發航道仍與先前報導的一樣。值得強調的是，多井平台鑽井和基礎設施建設的潛力提供了規模經濟，預計將大幅降低未來的開發成本。

Also, while current development identified is for 2 mile laterals, recent industry participants are extending lateral lengths to 3 miles and beyond, indicating further economies have been targeted. As previously reported, we believe the Woodford potential remains worthy of appraisal, coupled with core results on our currently held acreage position recent analogous wells in the play are exhibiting good early life results.

此外，雖然目前確定的開發目標是 2 英里長的水平井，但最近行業參與者正在將水平井長度延長至 3 英里甚至更長，這表明他們已瞄準了進一步的經濟目標。正如先前報導的那樣，我們認為伍德福德的潛力仍然值得評估，再加上我們目前持有的土地位置的核心結果，該區域中最近的類似油井都表現出良好的早期結果。

Regarding our recently announced JV in Canada, the activity to date was not included in the end-of-year reserves reporting due to timing. That aside, two horizontal blackened wells 0.5 net have been drilled and completed to date and flowback operations have commenced. Under the JV terms, at least three additional horizontal wells, 0.75 are scheduled to be developed over the next 12 months.

關於我們最近宣布的在加拿大的合資企業，由於時間原因，迄今為止的活動尚未納入年終儲備報告中。除此之外，迄今為止，已鑽完兩口 0.5 淨深的水平黑井，並已開始回流作業。根據合資條款，未來 12 個月內計劃開發至少三口額外的水平井，0.75。

Thank you. Now back to Jason.

謝謝。現在回到傑森。

Thanks, guys. Operator, we can now open the lines for questions.

謝謝大家。接線員，我們現在可以開始回答問題了。

(Operator Instructions) John White, Roth Capital.

（操作員指示）約翰懷特，羅斯資本。

Congratulations on the nice year. I think you covered this, but I missed it. In 2024, in regarding Alberta, in 2024, how many wells were drilled and completed?

祝賀美好的一年。我認為你已經涵蓋了這一點，但我錯過了。2024 年，就阿爾伯塔省而言，2024 年鑽探和完井了多少口？

Well, to remind you, we've got the small project we call Killam, which we drilled two gross wells one net. We announced in last quarter that we had one commercially successful well, these are small producers. Those wells cost about $700,000 per well. And we had one well that was that was commercially unsuccessful.

嗯，提醒一下，我們有一個名為 Killam 的小項目，我們鑽了兩口總井和一口網井。我們在上個季度宣布，我們有一口商業上成功的油井，這些都是小型生產商。每口井的成本約為 70 萬美元。我們有一口井在商業上沒有成功。

And then following that, we signed up the much larger project in Garrington area, and we've drilled and completed now two gross wells there and are on flowback on those two wells, and we have a quarter interest in those two wells.

隨後，我們在加靈頓地區簽署了一個更大的項目，目前我們已經在那裡鑽探並完成了兩口總井，並且這兩口井正在進行回流，我們對這兩口井擁有四分之一的權益。

And how many -- how many wells in the larger area will be drilled in 2025?

那麼，2025 年，大區域內將鑽探多少口井？

Right now, with our initial discussion, we've got some planning meetings in April with the operator. But what we understand is there'll likely be another two wells drilled in that larger area over the remainder of 2025. And that likely is a early this summer. We're going to go into break up soon in that area in Canada. So most of the drilling operations start to slow down and come back to life in the early part of summer.

目前，根據我們的初步討論，我們將於 4 月與營運商舉行一些計劃會議。但據我們了解，2025 年剩餘時間內，該較大區域可能會再鑽兩口井。這可能是今年夏天早些時候發生的事情。我們很快就會進入加拿大那個地區的分手階段。因此，大多數鑽井作業開始放緩，並在初夏恢復。

(Operator Instructions) Anthony Perala, Punch & Associates.

（操作員指示）Anthony Perala，Punch & Associates。

Could you give -- I think Henry had alluded to it a little bit, talking about the reserves. But could you just touch a little bit on discussions with the Marcellus operator maybe what expectations are there into 2026 that's been included in the proved reserves that he alluded to?

您能否給出——我認為亨利在談到儲備時已經稍微提到了這一點。但是，您能否稍微談談與 Marcellus 運營商的討論，也許對 2026 年的預期包括他提到的已探明儲量有哪些？

Sure. Henry, you want to take that?

當然。亨利，你想拿走那個嗎？

Yeah. Thank you for the question. We have clarity now from the operator on their multiyear plan, which includes 2026, 2027 and 2028. So that defined plan is what we have included in our reserve report and reflected as proved undeveloped.

是的。謝謝你的提問。現在，我們從營運商那裡了解了他們的多年計劃，其中包括 2026 年、2027 年和 2028 年。因此，我們已將這項既定計劃納入我們的儲備報告中，並反映為已證實未開發的計劃。

That is no activity -- no incremental activity in '25 from what we currently understand from the operator and drilling to start again in 2026.

從我們目前從營運商那裡了解到的情況來看，2025 年沒有任何增量活動，鑽探將於 2026 年重新開始。

Yeah. Correct.

是的。正確的。

Okay. Excellent. That's great. It seems like a great improvement in the relationship there versus a couple of years ago. And then could you give a sense of just how you feel about your hedge position for natural gas today, kind of what percentage roughly it is of expected '25 production. And if you plan on being active on the hedge side, kind of given the strength in the forward curve?

好的。出色的。那太棒了。與幾年前相比，兩國關係似乎有了很大改善。然後，您能否談談您對目前天然氣對沖頭寸的看法，大概佔預計 25 年產量的百分比是多少？如果您打算在對沖方面採取積極行動，那麼考慮到遠期曲線的強度呢？

Sure. Do you want to take that, Andrew?

當然。你想接受這個嗎，安德魯？

Yeah. Thanks, Anthony. We're hedged through October of this year at roughly 30% of our gas production that position is out of the money based on where the strip is now. So we haven't added to that position. I think we want to be aggressive in the winter months.

是的。謝謝，安東尼。截至今年 10 月份，我們對約 30% 的天然氣產量進行了避險，根據目前的情況來看，這些部位已經虧損。因此我們還沒有增加該職位。我認為我們希望在冬季採取積極主動的行動。

And we're contemplating putting on some more protection in summer of next year, but we're fairly tactical about it. Now with no debt and a CapEx program that's well covered by cash flows were fairly tactical. So you could see us add something marginal in '26, but right now, our production rolls off in October of this year.

我們正在考慮在明年夏天採取更多保護措施，但我們對此採取的是相當策略性的措施。現在沒有債務，而且資本支出計劃也完全由現金流覆蓋，這是相當有策略性的。因此，你可以看到我們在 26 年增加了一些邊際產量，但目前，我們的產量在今年 10 月就已經停止。

And then just last one, nice to see the press release a couple of weeks ago on expanded share repurchase program. I just -- you might not be able to disclose, but curious if you've been active year-to-date on the share repurchase side at all?

最後一點，很高興看到幾週前關於擴大股票回購計畫的新聞稿。我只是——您可能無法透露，但好奇您今年迄今為止是否一直在積極參與股票回購？

We have not been active to date. We look at it as another option for us on the capital allocation framework. As you kind of look at how we've handled that in the past, Anthony, we've been pretty opportunistic. Last year, we made two block purchases at what we thought were attractive prices for our shareholders, and we endeavor to do the same if an opportunity presented itself again.

到目前為止我們還沒有採取任何行動。我們將其視為資本配置框架的另一種選擇。安東尼，回顧我們過去處理這個問題的方式，我們一直都相當投機取巧。去年，我們以我們認為對股東有吸引力的價格進行了兩次大宗收購，如果再次出現機會，我們也會努力這樣做。

(Operator Instructions) There are no further questions at this time, which concludes our question-and-answer session. I would like to turn the conference back over to Jason Stabell for any closing remarks.

（操作員指示）目前沒有其他問題，我們的問答環節到此結束。我想將會議交還給 Jason Stabell 做最後演講。

Thank you, operator. Yes, I want to thank everyone for joining us today and appreciate your interest and support in Epsilon. And as I always say, if you have any questions, please reach out to us here via the phone or e-mail. But have a nice day. Thank you.

謝謝您，接線生。是的，我要感謝大家今天的加入我們，並感謝你們對 Epsilon 的關注和支持。正如我常說的，如果您有任何疑問，請透過電話或電子郵件與我們聯繫。但祝你有美好的一天。謝謝。

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。您現在可以斷開連線。