Epsilon Energy Ltd (EPSN) 2025 Q2 法說會逐字稿

Good day, and welcome to the Epsilon Energy second quarter 2025 earnings conference call. (Operator Instructions)

大家好，歡迎參加 Epsilon Energy 2025 年第二季財報電話會議。（操作員指示）

I would now like to turn the conference over to Andrew Williamson, Chief Financial Officer. Please go ahead.

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 would like to welcome all of you to today's conference call to review Epsilon's acquisition of Peak Companies and our second quarter 2025 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 對 Peak Companies 的收購以及我們 2025 年第二季的財務和營運業績。

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 2025 second quarter conference call. Joining me today are Andrew Williamson, our CFO; and Henry Clanton, our COO, who 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 2025 年第二季電話會議。今天與我一起參加會議的還有我們的財務長 Andrew Williamson 和我們的營運長 Henry Clanton，他們將在稍後的電話會議上回答問題。

Today, along with our earnings release, we announced the acquisition of the Peak Companies with assets in the Powder River Basin, PRB. The deal adds a new core area to the company at an attractive price. The acquisition includes key members of the Peak team that bring over 15 years of in-basin operating experience. It adds oil-weighted production and a massive operated inventory of locations across multiple benches.

今天，我們在發布收益報告的同時，也宣布收購在 Powder River Basin (PRB) 擁有資產的 Peak Companies。這筆交易以極具吸引力的價格為公司增加了一個新的核心領域。此次收購包括 Peak 團隊的關鍵成員，他們擁有超過 15 年的盆地營運經驗。它增加了石油加權產量和跨多個產區位置的大量營運庫存。

Importantly, the position is approximately 75% held by production, allowing for returns-driven capital allocation over time as commodity prices dictate. We think this PRB platform provides the opportunity for both organic and inorganic growth.

重要的是，該頭寸約 75% 由生產持有，從而允許根據商品價格隨時間推移進行以回報為導向的資本配置。我們認為這個 PRB 平台為有機和無機成長提供了機會。

Our near-term activities post-closing will focus on the Parkman formation, a semi-conventional reservoir with half-cycle economics that rival anything in our existing portfolio, at a significantly lower implied acquisition cost per location compared to available acreage in the Marcellus or the Permian. We estimate 14 net Parkman 2-mile laterals on the position with opportunities to add incremental interest via pooling and leasing.

交易完成後，我們的近期活動將集中在帕克曼地層上，這是一個半常規油藏，其半週期經濟效益可與我們現有投資組合中的任何油藏相媲美，而且與馬塞勒斯或二疊紀的可用面積相比，其每個地點的隱含收購成本要低得多。我們估計該位置有 14 條 Parkman 2 英里淨水平井，有機會透過合併和租賃來增加增量利益。

In addition, the assets add attractive inventory estimated at 90 net 2-mile locations in the Niobrara and Mowry, which offset operators, including EOG and Devon are currently developing on adjacent acreage. Over time, we expect these intervals to develop into a meaningful percentage of our capital expenditures. They offer a nice balance of oil and gas potential.

此外，這些資產還增加了相當吸引人的庫存，估計在尼奧布拉勒和莫里地區有 90 個淨 2 英里的位置，這些位置抵消了包括 EOG 和 Devon 在內的運營商目前正在相鄰土地上進行的開發。隨著時間的推移，我們預計這些間隔將發展成為我們資本支出中一個有意義的百分比。它們提供了石油和天然氣潛力的良好平衡。

Approximately 30% of the identified priority inventory is currently affected by a drilling permit moratorium in Converse County, Wyoming. We addressed this issue by making a portion of the consideration contingent on our ability to access this inventory. We are optimistic that given the current regulatory environment, the moratorium will be lifted in the near to medium term.

目前，懷俄明州康弗斯縣約有 30% 的已確定優先庫存受到鑽探許可證禁令的影響。我們透過將部分對價取決於我們存取該庫存的能力來解決此問題。我們樂觀地認為，鑑於當前的監管環境，這項禁令將在中短期內解除。

Post close, we think our high-quality asset mix across the Marcellus, Permian, Barnett and PRB is truly unique in the small-cap space. The addition of this operated asset base gives us enhanced capabilities and control to add per share value.

收盤後，我們認為我們在 Marcellus、Permian、Barnett 和 PRB 的高品質資產組合在小型股領域確實是獨一無二的。增加這項營運資產基礎使我們增強了增加每股價值的能力和控制力。

We are also excited to add Yorktown as a large shareholder. I've known and worked with the principles of the firm for over 20 years. They are experienced and successful energy investors that will bring tremendous value as we continue to grow the company. I want to thank them and the Peak team led by Jack Vaughn for their partnership.

我們也很高興約克鎮成為我們的大股東。我了解並遵循該公司的原則已有 20 多年。他們是經驗豐富且成功的能源投資者，將在我們公司不斷發展的過程中帶來巨大的價值。我要感謝他們以及傑克沃恩所領導的 Peak 團隊的合作。

I'll now turn the call over to Andrew and Henry for some comments on the deal and our second quarter results.

現在我將把電話轉給安德魯和亨利，請他們就這筆交易和我們的第二季業績發表一些評論。

Thanks, Jason. I'll start by talking through the mechanics of the transactions. Consideration at closing will be the issuance of 6 million Epsilon common shares and the assumption of approximately $49 million of long-term debt. As Jason mentioned, additional contingent consideration of up to 2.5 million Epsilon common shares is payable when we can access the affected acreage in Converse County. The contingent shares consideration will decrease over time if access is delayed beyond year-end '26.

謝謝，傑森。我將首先討論交易機制。交易完成時的對價將是發行 600 萬股 Epsilon 普通股並承擔約 4,900 萬美元的長期債務。正如 Jason 所提到的，當我們能夠進入康弗斯縣受影響的土地時，需支付高達 250 萬股 Epsilon 普通股的額外或有對價。如果訪問時間延遲至 26 年底之後，則或有股份對價將隨著時間的推移而減少。

Further details regarding the step down and consideration to be found in the presentation we released today. We will refinance Peak's term loan with an expanded revolving credit facility at closing, led by our existing lender. The process is underway to add a second bank to the facility with an indicative borrowing base of $95 million in closing.

有關下台和考慮的更多細節請參閱我們今天發布的簡報。在交易結束時，我們將以現有貸款機構為主導，透過擴大循環信貸額度為 Peak 的定期貸款進行再融資。目前正在進行中，將第二家銀行納入該機構，最終借款基數為 9,500 萬美元。

We will be approximately 50% drawn with a forecasted net debt to adjusted EBITDA ratio of approximately 1x, which we believe is conservatively leveraged pro forma business. Importantly, the transaction and associated leverage profile allows us to comfortably maintain our existing per share dividend and have sufficient discretionary cash flow to drive growth through a development plan that covers the Marcellus, Permian and PRB starting next year.

我們的淨債務與調整後 EBITDA 比率將約為 1 倍，我們認為這是保守的槓桿備考業務。重要的是，交易和相關的槓桿狀況使我們能夠輕鬆維持現有的每股股息，並擁有足夠的可自由支配的現金流，以通過從明年開始涵蓋 Marcellus、Permian 和 PRB 的發展計劃來推動增長。

At closing, the Peak shareholders will represent approximately 21% of the equity, which can increase to as much as 28% if the maximum contingent shares are issued. In exchange, our year-end '24 proved reserves increased by over 150% based on Epsilon and Peaks third-party reports, which are subject to change at year-end '25 based on development assumptions in SEC pricing.

交易完成後，Peak 股東將持有約 21% 的股權，如果發行最大限額股份，則股權比例最高可增加至 28%。作為交換，根據 Epsilon 和 Peaks 第三方報告，我們 24 年底的探明儲量增加了 150% 以上，但根據 SEC 定價中的發展假設，這些儲量在 25 年底可能會發生變化。

Liquids production increased by over 200%, and our priority or premium inventory count increases by over 600%. We defined priority inventory as 2-mile net locations that underwrite returns over 25% at $65 WTI and $4 Henry Hub flat price assumptions.

液體產量增加了 200% 以上，我們的優先或優質庫存數量增加了 600% 以上。我們將優先庫存定義為 2 英里淨位置，在 65 美元 WTI 和 4 美元 Henry Hub 固定價格假設下承保超過 25% 的回報。

Our underwriting has 40% of the acquired PRB inventory here exceeding that threshold. This includes the Parkman and some of the Niobrara. Given we plan to issue over 20% of our pre-deal shares outstanding, closing will be subject to a shareholder vote planned for the fourth quarter.

我們的承保有 40% 的收購 PRB 庫存超過了該門檻。其中包括帕克曼 (Parkman) 和部分尼奧布拉勒 (Niobrara)。鑑於我們計劃發行超過 20% 的交易前流通股，因此交易完成情況將取決於計劃於第四季進行的股東投票。

We will file a proxy statement this fall with additional detail on the Peak Companies and assets, transaction background and rationale and the financial position of the pro forma business. Now to the second quarter, production was roughly flat, driven by the new production in the Marcellus, we started to see in the first quarter. Realized pricing was down meaningfully quarter-over-quarter for gas and oil. So cash flows were down roughly 30% quarter-over-quarter.

我們將在今年秋天提交一份代理聲明，其中包含有關 Peak 公司和資產、交易背景和理由以及準備業務的財務狀況的更多詳細資訊。現在到第二季度，產量基本上持平，這受到馬塞勒斯新產量的推動，我們在第一季就開始看到這種情況。天然氣和石油的實際價格較上季大幅下降。因此現金流環比下降約 30%。

Now, to Henry, to discuss the PRB assets, the addition of operational control and our preliminary near-term development plans on our legacy assets and the acquired assets for the remainder of this year and next.

現在，請亨利討論 PRB 資產、增加營運控制權以及我們對今年剩餘時間和明年的遺留資產和收購資產的初步近期發展計劃。

Thank you, Jason and Andrew. As mentioned by Jason and Andrew, the acquisition of the Peak Companies is a significant addition to our undeveloped inventory. And not only will it have a meaningful impact on our near-term development, but it also adds a highly experienced operating staff who has drilled 100-plus wells in the Powder River Basin.

謝謝你，傑森和安德魯。正如 Jason 和 Andrew 所提到的，收購 Peak Companies 對我們未開發的庫存來說是一個重大補充。它不僅會對我們的近期發展產生重大影響，而且還會增加一支在 Powder River Basin 鑽探了 100 多口井的經驗豐富的操作人員。

Currently, the company has 2 2-mile Niobrara DUCs, 0.7 net in inventory that are scheduled for completion in Q4. Initial plans for next year call for the development of three high-working interest Parkman wells, approximately 96% working interest in the first quarter subject to the closing time line of the transactions.

目前，該公司擁有 2 個 2 英里的 Niobrara DUC，淨庫存為 0.7，計劃於第四季度完工。明年的初步計劃是開發三個高工作權益的 Parkman 井，第一季的工作權益約為 96%，具體取決於交易的結束時間。

This acquisition adds approximately 2,200 net barrels of oil equivalent of daily production, 56% oil with greater than 90% of the PDP value held within the operated wells. This production base has good value diversity spread across 168 wellbores and five intervals.

此次收購將使日產量增加約 2,200 桶淨油當量，其中 56% 的石油占 PDP 價值的 90% 以上，這些石油都蘊藏在營運油井中。此生產基地具有良好的價值多樣性，分佈在 168 個井眼和 5 個層段。

The producing wells are relatively early life with majority of them less than 10 years old and a forecasted base annual decline rate of approximately 15%. Our Marcellus asset, we are pleased to report that based on communications with the operator, we expect drilling activity to start up again in 2026.

這些生產井開採時間相對較早，大部分井齡不到 10 年，預測基準年下降率約 15%。對於我們的 Marcellus 資產，我們很高興地報告，根據與營運商的溝通，我們預計鑽井活動將於 2026 年再次開始。

The operators' plans, which, of course, are subject to change based on market conditions and other factors, include the drilling of 7 gross, 1.2 net wells on 2 pads. Production from both pads is scheduled to come online in Q4 2026.

營運商的計劃當然會根據市場情況和其他因素而發生變化，包括在 2 個平台鑽探 7 口總井和 1.2 口淨井。這兩個發射台預計將於 2026 年第四季投產。

All of these wells will be gathered through the Auburn Gas Gathering System. On our Permian Barnett project, our operating partner has successfully drilled, completed and placed on production the eighth well in the project, the Irma Unit 1H. The well has a completed lateral length of 10,966 feet. Preliminary development plans for next year includes the drilling of at least two additional gross wells, 0.5 net.

所有這些油井的天然氣都將透過奧本天然氣收集系統進行收集。在我們的 Permian Barnett 專案中，我們的營運合作夥伴已成功鑽探、完井並投入生產該專案的第八口井，即 Irma Unit 1H。該井已完成的水平段長度為 10,966 英尺。明年的初步開發計畫包括鑽探至少兩口額外的總井和 0.5 口淨井。

I would also like to briefly comment on the impairment taken this quarter on our recent investments in our joint venture in the Garrington area of Alberta. The impairment was driven by a combination of drilling and completion cost overruns and early well inflow performance below expectations. We have had ongoing technical collaboration with the operating partner and we feel confident this robust review effort will lead to improved location selection and better drilling and completion planning moving forward. The JV covers a large acreage position that we believe remains valuable.

我還想簡單評論一下本季我們最近在阿爾伯塔省加靈頓地區合資企業的投資減損情況。減值是由於鑽井和完井成本超支以及早期井流入表現低於預期所造成的。我們一直與營運夥伴保持持續的技術合作，我們相信，這項強有力的審查工作將有助於改善選址，並改善未來的鑽井和完井規劃。我們認為，合資公司佔據了大片土地，仍然很有價值。

Now, back to Jason.

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)

（操作員指示）

That concludes the question-and-answer session. I'd like to turn the conference back over to Jason Stabell for any closing remarks.

問答環節到此結束。我想將會議交還給 Jason Stabell 來做結束語。

Thank you, operator. I want to thank everybody for joining today. I look forward to talking to you guys about our base business and the exciting new acquisition that we have. Teed up. I think it's a really, really exciting future for the company and appreciate your support, and we'll talk to you soon. Everybody, have a great day. Thank you.

謝謝您，接線生。我要感謝大家今天的參加。我期待與你們談論我們的基礎業務以及我們令人興奮的新收購。做好準備。我認為這對公司來說是一個非常令人興奮的未來，感謝您的支持，我們很快就會與您聯繫。祝大家有個愉快的一天。謝謝。

This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

今天的電話會議到此結束。感謝大家參加今天的演講。現在您可以斷開線路，享受美好的一天。