CONCORD, ONTARIO — (Marketwired) — 04/24/13 — Epsilon Energy Ltd. (“Epsilon”) (TSX: EPS) today reported its financial results for the quarter ended March 31, 2013. Highlights for the quarter include:
Commenting on the financial results, Zoran Arandjelovic, Epsilon–s CEO, Chairman and President, said, “Prices have improved dramatically in the first quarter of 2013 and continue to rise through this unseasonably cool spring. Looking to the second quarter we anticipate 9 wells to be put into production bolstering production levels to capitalize on stronger natural gas fundamentals. Our Marcellus midstream volumes remain strong and gas compression in our service area is expected to be initiated late second quarter, further expanding our midstream revenue base. In Canada we drilled and completed two wells in Alberta, and expanded our operational reach into Saskatchewan, drilling two wells which will be completed in the second quarter following the spring break up.”
In the first quarter of 2013, Epsilon generated revenues of $14 million, an 88% increase compared to the first quarter of 2012. The increase in revenues was driven by a 42% increase in natural gas production volumes in the Marcellus and associated revenues from Epsilon–s jointly owned gas gathering and compression system. The increase in production volume was coupled with a $0.94 or 36% increase in the realized price per Mcf of gas in first quarter of 2013 versus 2012.
The gas gathering system generated $2.6 million in revenue during the first quarter of 2013, a 90% increase compared to the first quarter of 2012. Based on declining field production pressures, it is anticipated that system wide compression will be started in the later part of the second quarter, expanding the midstream gas gathering and compression revenue base.
The Company remains active in oil exploration and development activities in Canada. In the Pembina area of Central Alberta targeting Basal Belly River zone Epsilon, acting as operator, successfully drilled and completed two wells February 2013. Epsilon expanded its operator role into Saskatchewan and drilled a well in Ceylon and a well in Torquay. These wells will be completed in the second quarter of 2013 following the spring break up.
The Company generated net income of $1.7 million during the first quarter of 2013, as compared to a net loss of $0.9 million in the first quarter of 2012. Adjusted EBITDA was $7.9 million in the first quarter 2013, a 56% increase from $5.0 million in the first quarter of 2012.
The term Adjusted EBITDA consists of net income plus interest, taxes, depreciation, amortization, impairments and stock based compensation. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Epsilon has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The following table sets forth a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles.
Forward-Looking Statements
Certain statements contained in this news release constitute forward looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, –may”, “will”, “project”, “should”, –believe”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements are based on reasonable assumption but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.
Special note for news distribution in the United States
The securities described in the news release have not been registered under the United Stated Securities Act of 1933, as amended, (the “1933 Act”) or state securities laws. Any holder of these securities, by purchasing such securities, agrees for the benefit of Epsilon Energy Ltd. (the “Corporation”) that such securities may not be offered, sold, or otherwise transferred only (A) to the Corporation or its affiliates; (B) outside the United States in accordance with applicable state laws and either (1) Rule 144(as) under the 1933 Act or (2) Rule 144 under the 1933 Act, if applicable.
Contacts:
Epsilon Energy Ltd.
Lisa Bromiley
Vice President of Business Development
(281) 670-0002