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- **Strategic PRB Acquisition**: Epsilon to acquire Peak Companies, adding 111 net priority locations in PRB with >100% IRR at $65 WTI. 
- **Hedging Strength**: 60% oil and 50% gas hedged for 2026, providing downside protection. 
- **Operational Momentum**: Permian drilling resumes Q1 2026; PRB development to accelerate in 2027. 
- **Financial Flexibility**: New credit facility supports capital allocation and shareholder returns. 
- **Market Outlook**: PRB rig count poised to increase, driven by active operators and improving oil prices.

**【CEO Summary Section】**
- **Strategic Acquisition**: Announced definitive agreements to acquire Peak Companies in the Powder River Basin (PRB), subject to shareholder approval. The deal includes up to 8.5 million Epsilon shares and contingent consideration of 2.5 million shares, valued at $5 per share. The acquisition adds 111 net priority locations in the PRB, with a focus on the Parkman inventory, which is expected to yield attractive returns at $65 WTI. 
- **Operational Highlights**: 
  - Permian: Eighth well drilled, producing consistently; 2026 drilling to resume Q1. 
  - Marcellus: Seasonal curtailments due to low gas prices ($2.95/MBtu) in Q3, but colder weather in November lifted prices. 
  - PRB: Pro forma company expects to capitalize on oil price recovery; 2027 set for significant PRB development. 
- **Shareholder Returns**: Post-close, diversified drilling inventory and fee-based cash flows from midstream assets will support investment and returns. 

**【CFO Financial Commentary】**
- **Hedging**: 
  - Oil: 60% of 2026 PDP hedged at $63.30/WTI, with 75% coverage via swaps. 
  - Gas: 50% of 2026 PDP hedged via costless collars ($3.30 floor, $5.00 ceiling). 
- **Credit Facility**: New $250M revolver with term to Q4 2029, replacing Peak term loan on better terms. Pro forma leverage manageable. 
- **Financial Performance**: Year-to-date adjusted EPS of $0.45, driven by new Marcellus wells. 

**【COO Operational Details】**
- **PRB Assets**: 
  - Experienced team with 100+ wells drilled in PRB. 
  - 75% leasehold held by production; 1111 net priority locations identified. 
  - Parkman inventory: $7M-$7.5M/well cost, ~$300K/location valuation. 
- **Development Timeline**: 
  - 2026: Front-end infrastructure in Converse County (water sourcing/storage). 
  - 2027: Significant PRB activity, including multi-well pads. 
- **Midstream**: Exploring sale of non-core Oklahoma assets. 

**【Q&A Highlights】**
- **BLM Permits**: Recent approvals allow front-end planning in Converse County, with infrastructure work starting Q2 2026. 
- **Parkman IRR**: >100% at $65 WTI, with potential for higher density drilling. 
- **Marcellus Outlook**: Operator shifting focus to Auburn area, with ~15 gross locations. 
- **PRB Activity**: 8 rigs active, with potential for rig count increase over 18 months. 
- **Integration**: Smooth transition with Peak team; minimal disruption expected post-close.

Epsilon Energy Ltd. (EPSN) Q3 2025 Earnings Call Transcript

Revenue

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EPSN

EPSN fundamentals

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