HOUSTON, Feb. 21, 2019 (GLOBE NEWSWIRE) — Epsilon Energy Ltd. (NASDAQ: EPSN; TSX: EPS) (“Epsilon” or the “Company”) today announced that its board of directors has approved a $20 to $25 million capital budget for 2019 which is expected to be fully funded from operational cash flow. The Company forecasts this capital program to generate 30% growth in production. The Company has liquidity of $35MM and does not anticipate utilizing funds from its undrawn credit facility.
In the Marcellus Shale, the operator expects to turn four gross wells (2,600 net lateral feet to Epsilon’s interests) to sales during Q1. The initial forecast of 4 to 6 MMcf/d net production from these wells is expected to increase Marcellus production to 26 Mcf/d at the end of Q1. The performance of the Upper Marcellus wells in this group of new producers will be carefully monitored as few wells to date have targeted this section of the Marcellus in our leasehold. The Company expects to participate in the drilling and completing of an additional 8,000 to 10,000 net lateral feet to its interests in the lower Marcellus during 2019. According to information from the operator, the wells are expected to be turned to sales in Q4.
In the NW Stack, an appraisal program of three single mile laterals (5,740 net lateral feet to Epsilon’s interests) is planned to test the Meramec interval during 2019. The first well is expected to spud during Q1. Following an assessment of the early performance of this group of wells, the Company will determine the feasibility of a continuous one rig drilling program throughout the remainder of 2019.
With the development plans referenced above, the Company anticipates production growth of 27 – 33% year over year to a range of 9.7 – 10.2 Bcfe. For 2019, natural gas is expected to comprise approximately 95% of total production. The Company has hedged 4.8 Bcf of its expected natural gas volumes for the year at an average NYMEX price of $2.83 and realized price of $2.30 net of basis.
The capital program is subject to quarterly review by the Company’s management and board of directors which provides flexibility to deploy additional capital. This program directs more than 60% of the current budget for development to the Marcellus Shale assets in Susquehanna Co., Pennsylvania. Epsilon’s technical team continues to evaluate additional leasehold interests in our existing area of interest as well as attractive projects in other areas.
Epsilon Energy Ltd. is a North American on-shore focused independent exploration and production company engaged in the acquisition, development, gathering and production of oil and gas reserves. Our primary areas of operation are the Marcellus basin in northeast Pennsylvania and the Anadarko basin in Oklahoma. Our assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. For more information, please visit www.epsilonenergyltd.com, where we routinely post announcements, updates, events, investor information, presentations and recent news releases.