|Bid||3.9100 x 3200|
|Ask||4.0500 x 900|
|Day's Range||3.8400 - 4.0300|
|52 Week Range||2.3200 - 4.4400|
|Beta (5Y Monthly)||0.53|
|PE Ratio (TTM)||68.77|
|Earnings Date||Mar 16, 2021 - Mar 22, 2021|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
HOUSTON, Feb. 02, 2021 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (NASDAQ: EPSN) (“Epsilon” or the “Company”) announced today that its Board of Directors (the “Board”) has appointed Jason Stankowski (age 50) and David Winn (age 58) to the Board, effective January 29, 2021. Mr. Stankowski and Mr. Winn will serve an initial term expiring at Epsilon’s 2021 Annual General Meeting of Shareholders and will stand for reelection at that time. Epsilon also announced that Ryan Roebuck resigned from Epsilon’s Board, and corresponding committees of the Board, effective January 29, 2021. The Board has appointed Mr. Winn to serve as a member of the Audit Committee to replace Ryan Roebuck. The Board also appointed Mr. Stankowski to serve as a member of the Audit Committee, effective January 29, 2021. Mr. Stankowski was appointed to replace Mr. Finlayson who resigned from the Audit Committee, effective January 29, 2021. Mr. Finlayson was appointed to the Compensation Committee, effective January 29, 2021, to replace Mr. Roebuck. Michael Raleigh, the CEO of Epsilon, stated: “We very much appreciate Ryan’s service over the past 7 years as a Director of Epsilon. We welcome Jason and David to our Board. We are confident that both of them will provide a material contribution to the success of the Company.” Mr. Stankowski has been in the investment industry since 1992. He began his career at Prudential Securities in San Francisco and spent eight years in structured finance at CMA Capital Management, where he acted in a number of roles, including specializing in corporate retirement planning, structuring complex investment and financing structures for Fortune 1000 companies. Mr. Stankowski founded Clayton Partners LLC and The Clayton Capital Appreciation Fund, L.P. in 2003. He became designated as a Chartered Financial Analyst in 2003 and received a B.S. in Economics from the University of California, Santa Cruz in 1992. Mr. Winn recently retired from a 36 year career in public accounting that involved extensive board interaction. From 2003 until July 2020, Mr. Winn was an Audit Partner for Grant Thornton LLP, which is an independent audit, tax, and advisory firm and the U.S. member firm of Grant Thornton International Ltd. During his tenure, Mr. Winn served as audit department head, industry program leader, an engagement partner, quality control reviewer, and was a relationship partner to large clients. Mr. Winn has extensive Securities and Exchange Commission reporting experience with registration statements and annual and quarterly filings. Mr. Winn served as a Director for PricewaterhouseCoopers LLP during 2002-2003 and previously as a Partner with Arthur Andersen LLP from 1985-2002. Mr. Winn was awarded a B.B.A. from the University of Oklahoma in 1984 and is a Certified Public Accountant licensed in Texas and Oklahoma. He is also a member of AICPA. We believe that Mr. Stankowski and Mr. Winn are qualified to serve as members of our Board as a result of their extensive technical and business experience. About Epsilon Epsilon Energy Ltd. is a North American onshore natural gas production and midstream company with a focus on the Marcellus Shale of Pennsylvania. Epsilon’s Common Shares trade on NASDAQ under the symbol EPSN. For more information, please visit the Company’s website at www.epsilonenergyltd.com or contact: Michael RaleighChief Executive Officer281-670-0002Michael.Raleigh@EpsilonEnergyLTD.com Copies of financial data and other publicly filed documents are filed on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.shtml under “Epsilon Energy Ltd.” or on the Company's website. Cautionary Note Regarding Forward-Looking Statements Certain statements in this news release may constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws (collectively, "forward-looking statements"), which reflect the expectations of management regarding the future growth, results of operations, performance and business prospects and opportunities of the Company and its projects. These statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, can generally be identified by the use of the words "plans," "expects," "does not expect," "is expected," "budget," "estimates," "forecasts," "intends," "anticipates," or "does not anticipate," "believes," "outlook," "objective," or "continue," or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may," "could," "would," "should," "might," or "will," be taken, occur or be achieved. Examples of such statements in this press release include, but are not limited, to statements with respect to the number of Common Shares expected to be taken up under the Offer, and the purchase price for the Common Shares expected to be taken up under the Offer. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. Please refer to the factors discussed under "Risk Factors" and "Forward-Looking Information" in the Company's periodic reports as filed with the Securities and Exchange Commission from time to time for a detailed discussion of the risks and uncertainties affecting the Company. These risks and uncertainties include, but are not limited to, potential risks and uncertainties relating to the ultimate geographic spread of the novel coronavirus (COVID-19), the severity of the disease, the duration of the COVID-19 outbreak, actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact, the potential negative impacts of COVID-19 on the global economy and financial markets and any resulting impact on the satisfaction of the conditions of the Offer such that the Company may not be required to purchase the Common Shares and/or may terminate the Offer. Although the forward-looking statements contained in this news release are based upon what are believed to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or circumstances. For the avoidance of doubt, the above-mentioned Uniform Resource Locators (“URLs”) given in respect of web-site addresses are inactive textual references only and it is not intended to incorporate the contents of any such web sites into this news release nor should the contents of such web sites be deemed to be incorporated into this news release.
HOUSTON, Dec. 28, 2020 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today announced that the Board of Directors has authorized the repurchase of up to 1,193,000 of the outstanding common shares, representing 5% of the outstanding common shares of Epsilon, pursuant to a normal course issuer bid, during the one-year period commencing on January 1st, 2021. The program will end on December 31st, 2021 unless the maximum amount of common shares is purchased before then or Epsilon provides earlier notice of termination. Repurchases may be made at management’s discretion from time to time through the facilities of the NASDAQ Global Market. The price paid for the common shares will be, subject to applicable securities laws, the prevailing market price of such common shares on the NASDAQ Global Market at the time of such purchase. The Company intends to fund the purchase out of available cash and does not expect to incur debt to fund the share repurchase program.Epsilon believes that the market price of its common shares may not reflect their underlying value and the Board of Directors has authorized this initiative because, in the Board’s opinion, the proposed repurchase of common shares constitutes an appropriate use of Epsilon’s funds, and the repurchase of its common shares is one way of creating shareholder value.To the knowledge of Epsilon, no director, senior officer or other insider of Epsilon currently intends to sell any common shares under the normal course issuer bid. However, sales by such persons through the facilities of the NASDAQ Global Market may occur if the personal circumstances of any such person changes or any such person makes a decision unrelated to these repurchases. The benefits to any such person whose common shares are purchased would be the same as the benefits available to all other holders whose common shares are purchased.About EpsilonEpsilon Energy Ltd. is a North American onshore natural gas production and midstream company with a current focus on the Marcellus Shale of Pennsylvania and the Anadarko Basin in Oklahoma.Contact Information:281-670-0002Michael Raleigh Chief Executive Officer Michael.Raleigh@EpsilonEnergyLTD.comSpecial note for news distribution in the United States The securities described in the news release have not been registered under the United States 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.Forward-Looking InformationThis news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein are forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. In particular, this news release contains forward-looking information regarding: the normal course issuer bid, including the commencement and end date of the normal course issuer bid and the maximum amount of common shares that may be purchased pursuant to the normal course issuer bid. There can be no assurance that such forward-looking information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such forward-looking information. This forward-looking information reflects Epsilon’s current beliefs and is based on information currently available to Epsilon and on assumptions Epsilon believes are reasonable. These assumptions include, but are not limited to: the underlying value of Epsilon and its common shares; the ability of Epsilon to complete purchases under the normal course issuer bid. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Epsilon to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; geological, technical, drilling and processing problems; general business, economic, competitive, political and social uncertainties; general capital market conditions and market prices for securities; delay or failure to receive board or regulatory approvals; the actual results of future operations; competition; changes in legislation, including environmental legislation, affecting Epsilon; the timing and availability of external financing on acceptable terms; and lack of qualified, skilled labour or loss of key individuals. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in the Company’s filings on the SEDAR website at www.sedar.com and with the United States Securities and Exchange Commission, including its Registration Statement on Form 10, as filed on December 21, 2018 and any subsequently filed quarterly reports on Form 10-Q or current reports on Form 8-K. Although Epsilon has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Forward-looking information contained in this news release is expressly qualified by this cautionary statement. The forward-looking information contained in this news release represents the expectations of Epsilon as of the date of this news release and, accordingly, is subject to change after such date. However, Epsilon expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.
HOUSTON, Nov. 10, 2020 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported third quarter 2020 financial and operating results and material subsequent events following the end of the quarter through the date of this release. * Net cash provided by operations of $3.8 million and $12.1 million for the three and nine months ended September 30, 2020, respectively, with free cash flow (FCF) of $2.4 million and $6.6 million for the same periods. * Realized gas prices of $1.18/Mcf, (excluding hedges) and $1.72/Mcf (including hedges) for the three months ended September 30, 2020. * Following the June 30, 2020 deadline for the previously announced Tender Offer, $7.15 million was returned to shareholders in exchange for 2,337,034 shares which were properly tendered representing 8.9% of outstanding shares for $3.06/share. During the first nine months of 2020 the company returned a total of $9.1 million to shareholders through share repurchases representing a reduction of 11.2% of outstanding shares as at December 31, 2019. * Marcellus net revenue interest (NRI) gas production averaged 32.5 MMcf/d (Working Interest of 37.4 MMcf/d) for the third quarter. Due to the usual weak shoulder season demand the operator curtailed the third quarter NRI exit rate to 26.0 MMcf/d (Working Interest of 29.9 MMcf/d). * Auburn System gathered and delivered 15.3 Bcfe gross (5.4 Bcfe net to Epsilon’s interest) which represents approximately 83% of maximum throughput as currently configured. The September 30th exit gathering volume rate was 107.2 MMcf/d due to the aforementioned well curtailments and elevated pipeline pressures. * Total revenues of $5.8 million; net loss of $0.3 million; and EBITDA of $3.9 million for the quarter. * Cash at quarter end of $11.6 million. * Net loss before tax of $0.3 million for the quarter. * Operating expenses including SG&A was $1.22/Mcfe and $1.12/Mcfe excluding $0.3 million of non-recurring legal costs.Michael Raleigh, CEO, commented, “The impact of the oil and gas shale industry adopting capital spending discipline is becoming evident in restrained production volumes and higher forward price expectations for natural gas. The rig count in the US onshore oil basins remains 60-80% below the peak rig counts observed in March 2020. The resulting associated natural gas production from new wells is not expected to make up for natural declines from the existing onshore well inventory. Despite improving pricing for natural gas, Appalachia rig counts remain approximately 35% below the peak rig levels observed in March. During the third quarter, NYMEX Henry Hub natural gas futures prices for 2021 increased 10%. We expect the market environment to be positive for natural gas prices as LNG and heating related demand begin to ramp up as domestic natural gas supply is expected to be flat to declining.Epsilon remains focused on free cash flow generation. Given the current production rate and prices for natural gas, we continue to anticipate the company will generate $9.0 - $10.0 million of free cash flow for 2020. We are currently working through our development options for our 2021 capital program including discussions with the upstream operator on a regular basis. Our goal is to deploy capital to maintain yearly average production levels for the coming year and continue to generate free cash flow. We look forward to sharing our 2021 budget plans with our shareholders at the appropriate time.”Financial and Operating Results Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Revenues Natural gas revenue $ 3,573,908 $ 2,933,695 $ 11,470,012 $ 12,698,643 Volume (MMcf) 3,037 1,790 8,622 5,533 Avg. Price ($/Mcf) $ 1.18 $ 1.64 $ 1.33 $ 2.29 PA Exit Rate (MMcfpd) 29.9 16.7 29.9 16.7 Oil and other liquids revenue $ 16,798 $ 65,886 $ 246,885 $ 307,079 Volume (MBO) 3.4 2.8 11.3 10.6 Avg. Price ($/Bbl) $ 4.99 $ 23.69 $ 21.93 $ 28.99 Gathering system revenue $ 2,219,905 $ 2,219,613 $ 6,800,347 $ 6,923,058 Total Revenues $ 5,810,611 $ 5,219,194 $ 18,517,244 $ 19,928,780 Capital Expenditures Epsilon’s capital expenditures were $1.0 million for the three months ended September 30, 2020. This capital was mainly residual spending for the completion of the four wells drilled in Q2 2020, the drilling capital for the 3 gross (.03 net) wells spud in Q3 2020, lease acquisition capital as well as expenditures for the Auburn Gas Gathering system. We do not expect any significant capital expenditures for the remainder of 2020.Marcellus Operational GuidanceDuring the third quarter of 2020, the operator spud and completed 3 gross (0.03 net to EPSN) wells. It is expected that these wells will be turned in line in November.Third Quarter ResultsEpsilon generated revenues of $5.8 million for the three months ended September 30, 2020 compared to $5.2 million for the three months ended September 30, 2019.Realized natural gas prices averaged $1.18/Mcf (excluding hedges) for Marcellus Upstream operations in the third quarter of 2020. Operating expenses for Marcellus Upstream operations in the third quarter were $1.9 million.The Auburn Gas Gathering system delivered 15.3 Bcfe of natural gas during the quarter as compared to 15.6 Bcfe during the second quarter of 2020. Primary gathering volumes were flat quarter over quarter at 15.1 Bcfe. Imported cross-flow volumes increased 26% to 1.0 Bcfe.Epsilon reported net after tax loss of $0.3 million attributable to common shareholders or ($0.01) per basic and diluted common share outstanding for the three months ended September 30, 2020, compared to net income of $1.5 million, and $0.05 per basic and diluted common share outstanding for the three months ended September 30, 2019. For the three months ended September 30, 2020, Epsilon's Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization ("Adjusted EBITDA") was $3.9 million as compared to $3.9 million for the three months ended September 30, 2019.Recent DevelopmentsEpsilon is closely monitoring the current and potential impacts of the COVID-19 pandemic on all aspects of our business and geographies, including how it has impacted, and may in the future impact our employees, operations, financial results, liquidity, contractors, customers, and vendors. Epsilon has also taken, and is continuing to take, proactive steps to ensure a save working environment and manage any disruption in our business caused by COVID-19. For instance, the Company was an early adopter in employing a work-from-home system, even before any government mandate on non-essential businesses was enacted. Epsilon increased its technology platform, infrastructure and security to allow for a work-from-home environment ahead of the actual need, and therefore, we believe Epsilon was ahead of many companies in this respect. Epsilon has also deployed additional layered safety protocols at our office in order to keep our employees safe and to keep our operations running without material disruption.About EpsilonEpsilon Energy Ltd. is a North American onshore natural gas production and midstream company with a current focus on the Marcellus Shale of Pennsylvania.Forward-Looking StatementsCertain 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. Forward-looking statements are based on reasonable assumptions, 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.The reserves and associated future net revenue information set forth in this news release are estimates only. In general, estimates of oil and natural gas reserves and the future net revenue therefrom are based upon a number of variable factors and assumptions, such as production rates, ultimate reserves recovery, timing and amount of capital expenditures, ability to transport production, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially from actual results. For those reasons, estimates of the oil and natural gas reserves attributable to any particular group of properties, as well as the classification of such reserves and estimates of future net revenues associated with such reserves prepared by different engineers (or by the same engineers at different times) may vary. The actual reserves of the Company may be greater or less than those calculated. In addition, the Company's actual production, revenues, development and operating expenditures will vary from estimates thereof and such variations could be material.Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future. There is no assurance that forecast price and cost assumptions will be attained and variances could be material.Proved reserves are those reserves which are most certain to be recovered. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves. Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable) to which they are assigned. Proved undeveloped reserves are those reserves that can be estimated with a high degree of certainty and are expected to be recovered from known accumulations where a significant expenditure is required to render them capable of production.The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties due to the effects of aggregation. The estimated future net revenues contained in this news release do not necessarily represent the fair market value of the Company's reserves.Contact Information: 281-670-0002Michael Raleigh Chief Executive Officer Michael.Raleigh@EpsilonEnergyLTD.comSpecial 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.EPSILON ENERGY LTD. Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (All amounts stated in US$) Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Revenues from contracts with customers: Gas, oil, NGLs and condensate revenue $ 3,590,706 $ 2,999,581 $ 11,716,897 $ 13,005,722 Gas gathering and compression revenue 2,219,905 2,219,613 6,800,347 6,923,058 Total revenue 5,810,611 5,219,194 18,517,244 19,928,780 Operating costs and expenses: Lease operating expenses 2,147,795 1,548,902 6,229,682 4,851,090 Gathering system operating expenses 43,711 461,036 221,191 1,012,709 Development geological and geophysical expenses 2,693 — 7,595 83,748 Depletion, depreciation, amortization, and accretion 2,769,193 1,851,466 7,761,339 5,630,368 Impairment of proved properties — — 1,760,000 — Gain on sale of property — (445,173) — (1,375,000) Bad debt expense — — 819,000 — General and administrative expenses: Stock based compensation expense 239,134 133,720 585,105 401,161 Other general and administrative expenses 1,330,604 952,503 3,575,445 3,213,371 Total operating costs and expenses 6,533,130 4,502,454 20,959,357 13,817,447 Operating income (loss) (722,519) 716,740 (2,442,113) 6,111,333 Other income (expense): Interest income 4,724 38,618 39,294 127,906 Interest expense (28,629) (29,416) (84,952) (86,035) Gain on derivative contracts 419,879 1,270,494 2,055,548 3,494,727 Other income (expense) — 1 (2,228) 456 Other income, net 395,974 1,279,697 2,007,662 3,537,054 Income (loss) before income tax expense (326,545) 1,996,437 (434,451) 9,648,387 Income tax expense (benefit) (33,762) 543,139 114,067 2,983,555 NET INCOME (LOSS) $ (292,783) $ 1,453,298 $ (548,518) $ 6,664,832 Currency translation adjustments 2,273 (900) 8,291 10,944 NET COMPREHENSIVE INCOME (LOSS) $ (290,510) $ 1,452,398 $ (540,227) $ 6,675,776 Net income (loss) per share, basic $ (0.01) $ 0.05 $ (0.02) $ 0.24 Net income (loss) per share, diluted $ (0.01) $ 0.05 $ (0.02) $ 0.24 Weighted average number of shares outstanding, basic 23,955,619 27,060,387 25,550,194 27,218,162 Weighted average number of shares outstanding, diluted 23,955,619 27,094,391 25,550,194 27,240,117 EPSILON ENERGY LTD. Unaudited Condensed Consolidated Balance Sheets (All amounts stated in US$) September 30, December 31, 2020 2019 ASSETS Current assets Cash and cash equivalents $ 11,580,278 $ 14,052,417 Accounts receivable, net of allowance for doubtful accounts of $819,000 at September 30, 2020 and nil at December 31, 2019 3,652,036 4,296,917 Fair value of derivatives 20,258 1,999,802 Prepaid income taxes 2,091,399 1,641,501 Other current assets 511,483 433,687 Total current assets 17,855,454 22,424,324 Non-current assets Property and equipment: Oil and gas properties, successful efforts method Proved properties 133,138,412 130,819,256 Unproved properties 21,448,546 21,047,512 Accumulated depletion, depreciation, amortization and impairment (96,864,983) (89,255,035) Total oil and gas properties, net 57,721,975 62,611,733 Gathering system 41,912,242 41,445,225 Accumulated depletion, depreciation, amortization and impairment (31,697,749) (29,961,690) Total gathering system, net 10,214,493 11,483,535 Land 637,464 375,314 Buildings and other property and equipment, net 343,677 211,879 Total property and equipment, net 68,917,609 74,682,461 Other assets: Restricted cash 565,049 561,294 Prepaid drilling costs 1,341 1,124 Total non-current assets 69,483,999 75,244,879 Total assets $ 87,339,453 $ 97,669,203 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable trade $ 1,638,763 $ 2,828,495 Royalties payable 1,046,899 1,306,922 Accrued capital expenditures 95,237 627,356 Accrued gathering fees 529,722 373,929 Other accrued liabilities 1,427,489 858,188 Asset retirement obligation 1,581,561 1,503,978 Total current liabilities 6,319,671 7,498,868 Non-current liabilities Asset retirement obligation 1,489,386 1,405,877 Deferred income taxes 12,201,046 12,401,464 Total non-current liabilities 13,690,432 13,807,341 Total liabilities 20,010,103 21,306,209 Commitments and contingencies Shareholders' equity Common shares, no par value, unlimited shares authorized and 23,817,470 issued and outstanding at September 30, 2020 and 26,790,985 shares issued and outstanding at December 31, 2019. 131,730,401 140,808,923 Additional paid-in capital 7,614,593 7,029,488 Accumulated deficit (81,834,413) (81,285,895) Accumulated other comprehensive income 9,818,769 9,810,478 Total shareholders' equity 67,329,350 76,362,994 Total liabilities and shareholders' equity $ 87,339,453 $ 97,669,203 EPSILON ENERGY LTD. Unaudited Condensed Consolidated Statements of Cash Flows (All amounts stated in US$) Nine months ended September 30, 2020 2019 Cash flows from operating activities: Net income (loss) $ (548,518) $ 6,664,832 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depletion, depreciation, amortization, and accretion 7,761,339 5,630,368 Impairment of proved properties 1,760,000 — Bad debt expense 819,000 — Gain on sale/disposal of properties — (1,375,000) Gain on derivative contracts (2,055,548) (3,494,727) Cash received from settlements of derivative contracts 4,035,092 1,344,690 Stock-based compensation expense 585,105 401,161 Deferred income tax expense (benefit) (200,418) 853,116 Changes in assets and liabilities: Accounts receivable (174,119) 1,869,411 Prepaid income taxes and other current assets (527,694) 19,321 Accounts payable, royalties payable and other accrued liabilities 639,224 (1,422,238) Income taxes payable — 1,338,225 Net cash provided by operating activities 12,093,463 11,829,159 Cash flows from investing activities: Acquisition of unproved oil and gas properties — (596,500) Additions to unproved oil and gas properties (401,034) (919,873) Additions to proved oil and gas properties (4,238,580) (5,452,166) Additions to gathering system properties (436,111) (238,823) Additions to land, buildings and property and equipment (415,674) — Prepaid drilling costs (217) (1,739) Proceeds from sale of leases — 1,375,000 Net cash used in investing activities (5,491,616) (5,834,101) Cash flows from financing activities: Buyback of common shares (9,078,522) (1,714,291) Exercise of stock options — 54,250 Net cash used in financing activities (9,078,522) (1,660,041) Effect of currency rates on cash, cash equivalents and restricted cash 8,291 10,944 Increase (decrease) in cash, cash equivalents and restricted cash (2,468,384) 4,345,961 Cash, cash equivalents and restricted cash, beginning of period 14,613,711 14,959,518 Cash, cash equivalents and restricted cash, end of period $ 12,145,327 $ 19,305,479 Supplemental cash flow disclosures: Income taxes paid $ 760,000 $ 733,200 Interest paid $ 84,952 $ 89,817 Non-cash investing activities: Change in proved properties accrued in accounts payable and accrued liabilities $ (1,926,910) $ 1,129,972 Change in gathering system accrued in accounts payable and accrued liabilities $ 30,906 $ (1,142) Asset retirement obligation asset additions and adjustments $ 7,487 $ 9,997 EPSILON ENERGY LTD. Adjusted EBITDA Reconciliation (All amounts stated in US$) Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Net income (loss) $ (292,783) $ 1,453,298 $ (548,518) $ 6,664,832 Add Back: Net interest (income) expense 23,905 (9,202) 45,658 (41,871) Income tax expense (benefit) (33,762) 543,139 114,067 2,983,555 Depreciation, depletion, amortization, and accretion 2,769,193 1,851,466 7,761,339 5,630,368 Impairment expense — — 1,760,000 — Stock based compensation expense 239,134 133,720 585,105 401,161 (Gain) loss on derivative contracts net of cash received or paid on settlement 1,237,444 (113,223) 1,979,544 (2,150,037) Foreign currency translation (gain) loss — (1) 2,228 (456) Adjusted EBITDA $ 3,943,131 $ 3,859,197 $ 11,699,423 $ 13,487,552 Epsilon defines Adjusted EBITDA as earnings before (1) net interest expense, (2) taxes, (3) depreciation, depletion, amortization and accretion expense, (4) impairments of natural gas and oil properties, (5) non-cash stock compensation expense, (6) gain or loss on derivative contracts net of cash received or paid on settlement, and (7) other income. Adjusted EBITDA is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP 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 its ability to service debt and to fund capital expenditures. It further provides investors a helpful measure for comparing operating performance on a "normalized" or recurring basis with the performance of other companies, without giving effect to certain non-cash expenses and other items. This provides management, investors and analysts with comparative information for evaluating the Company in relation to other natural gas and oil companies providing corresponding non-U.S. GAAP financial measures or that have different financing and capital structures or tax rates. These non-U.S. GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with U.S. GAAP.EPSILON ENERGY LTD. Free Cash Flow Reconciliation (All amounts stated in US$) Three months ended September 30, Nine Months ended September 30, 2020 2019 2020 2019 Net cash provided by operating activities $ 3,791,378 $ 3,793,714 $ 12,093,463 $ 11,829,159 Less: Net cash used in investing activities (Capital Expenditures) (1,366,451) (1,234,796) (5,491,616) (5,834,101) Free cash flow $ 2,424,926 $ 2,558,918 $ 6,601,847 $ 5,995,058 Epsilon defines Free cash flow (“FCF”) as net cash provided by operating activities in the period minus payments for property and equipment made in the period. FCF is considered a non-GAAP financial measure under the SEC’s rules. Management believes, however, that FCF is an important financial measure for use in evaluating the Company’s financial performance, as it measures our ability to generate additional cash from our business operations. FCF should be considered in addition to, rather than as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of FCF is limited and does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations, payments made for business acquisitions, or amounts spent to buys back shares. Therefore, we believe it is important to view FCF as supplemental to our entire statement of cash flows.