Epsilon Energy Ltd. reported a modest increase in total revenues for the fiscal year ending December 31, 2024, reaching $31.5 million, up from $30.7 million in 2023. The company's net income, however, saw a significant decline, falling to $1.9 million compared to $6.9 million in the previous year. This decrease in profitability was attributed to lower production volumes and adverse market conditions affecting natural gas prices, particularly in Pennsylvania, where the company experienced a 27% drop in upstream natural gas revenue.
The company's operational performance reflected a decrease in natural gas production, with total production volumes declining to 7.68 million cubic feet equivalent (MMcfe) in 2024 from 8.97 MMcfe in 2023. The decline was primarily due to natural depletion of existing wells and operator-initiated shut-ins in response to unfavorable pricing conditions. In contrast, Epsilon's oil and condensate revenue surged by 170% to $12.8 million, driven by increased production from new wells in the Permian Basin.
Strategically, Epsilon Energy made several acquisitions during the year, including a 25% interest in three producing wells and 3,620 gross undeveloped acres in Texas, as well as a 50% working interest in 14,243 gross undeveloped acres in Alberta, Canada. These acquisitions are expected to enhance the company's production capabilities and reserve base. Additionally, Epsilon executed a new Anchor Shipper Gas Gathering Agreement, which is set to provide fixed gathering rates adjusted annually by the Consumer Price Index, thereby stabilizing revenue from its gathering system.
As of December 31, 2024, Epsilon's total estimated net proved reserves increased by 20% to 84.1 million cubic feet equivalent (MMcfe), bolstered by revisions in previous estimates and new acquisitions. The company reported a working capital surplus of $7 million, a decrease from $33.2 million in 2023, primarily due to lower cash and short-term investment balances. Looking ahead, Epsilon Energy aims to maintain a strong balance sheet while exploring opportunities across various North American basins to adapt to market conditions and enhance shareholder value through potential dividends and share buybacks.
About Epsilon Energy Ltd.
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