Epsilon Energy

Epsilon Energy concentrates most of its effort on the Marcellus in Susquehanna County, PA. Epsilon doesn’t typically do its own drilling. The company joint venture partners with (gives money to) other companies, like Chesapeake Energy, and the other company typically does the drilling. Epsilon issued its second quarter update last Thursday. The company’s Marcellus net gas production averaged 27.6 million cubic feet per day (MMcf/d) in 2Q21, compared to 30.6 MMcf/d of net gas production in 2Q20 (a 10% decrease). However, revenues were $7.1 million in 2Q21, compared to $6.3 million in 2Q20 (a 13% increase).
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Epsilon Energy concentrates most of its effort on the Marcellus in Susquehanna County, PA. Epsilon doesn’t actually do any of its own drilling. The company partners with (gives money to) other companies, like Chesapeake Energy, and the other companies do the actual drilling. Epsilon, according to its website, owns ~4,000 net acres in the PA Marcellus. They also own assets in Oklahoma’s Anadarko Basin. In May Epsilon offered to buy back up to 2 million shares of common stock from stockholders (see Epsilon Energy Offers to Buy Back 2M Shares of Common Stock). The company ended up buying back 2.3 million shares.
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MDN recently brought you Epislon Energy’s first-quarter 2020 update (see Epsilon Energy 1Q: Still Partners with Chesapeake in NEPA). The company concentrates most of its effort on the Marcellus in Susquehanna County, PA. The company is now offering to buy back up to 2 million shares of its own common stock. What’s that all about?
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One definition for the word “domestication” means to tame a wild animal, turning it into a farm animal. Another definition means “to bring into use in one’s own country : to bring into domestic use” (Merriam-Webster). It is that later definition Epsilon Energy had in mind when using the term “domestication” to describe a vote by the company’s shareholders to move Epsilon’s base of operations/HQ from Canada to the United States. From time to time we check in Epsilon, both a driller and midstream/pipeline company. Epsilon, largely focused on the Marcellus, had a shareholder rebellion in 2013 and threw out the sitting board of directors (see Shareholder Rebellion at Epsilon Energy – New Board as of Today). Epsilon CEO Michael Raleigh announced at the time that the company had embarked on a turnaround strategy of focusing on the Marcellus Shale–less than a year after saying they would scale back in the Marcellus (see Epsilon Energy Makes “About-Face” on Marcellus Drilling). Epsilon has been and remains a relatively small player in the Marcellus. Last year they bought leases in the Anadarko Basin in Oklahoma (see Epsilon Energy: “Focused” on Marcellus, Buying Land in Anadarko). In a recent vote, shareholders voted 99.99% in favor of moving the company from Canada to Houston, TX. Epsilon, in their own press release, called the move “domestication”–which we found amusing. The wild beast of Canada will be tamed and domiciled in Texas–in order to drill in the Marcellus and Oklahoma. Too bad Pittsburgh couldn’t tame this wild beast. There’s plenty of empty office space in Southpointe…
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From time to time we check in on Canadian driller and midstream company Epsilon Energy. Epsilon, you may recall, had a shareholder rebellion in 2013 and threw out the sitting board of directors (see Shareholder Rebellion at Epsilon Energy – New Board as of Today). Epsilon CEO Michael Raleigh announced at the time that the company had embarked on a turnaround strategy of focusing on the Marcellus Shale–less than a year after saying they would scale back in the Marcellus (see Epsilon Energy Makes “About-Face” on Marcellus Drilling). Epsilon was and remains a very small player in the Marcellus, but the Marcellus is the company’s entire focus. At least that’s what they say. Epsilon did not drill any new new Marcellus wells in 2016. They spent just $300,000 on capital expenditures for all of 2016, and that was money spent on the Auburn Gas Gathering system in northeast PA (they own a 35% interest in the system). What about 2017? Epsilon plans to spend $1 million in capex in the Marcellus–half of it “for the ongoing development of the midstream system” (i.e. the Auburn system) and the other half to complete four Marcellus wells previously drilled (see Epsilon Energy’s Marcellus Budget Inches Up to $1M in 2017). Epsilon recently issued its first quarter 2017 update. It shows the company spent just $100,000 on capital expenditures during 1Q17–most of it on the Auburn Gas Gathering system. Revenue was up for the quarter–from $5.6 million in 1Q16 to $8 million in 1Q17. One thing we found somewhat incongruous with their “focus on the Marcellus” statements: the company recently raised money in an “over-subscribed Rights Offering” to “continue building our land position in the Anadarko Basin.” The Anadako is located in Oklahoma and Texas, nowhere near the Marcellus…
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