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Operating Segments | 6 Months Ended
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Jun. 30, 2021
Operating Segments. |
Operating Segments | 11. Operating Segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as executive management. Segment performance is evaluated based on operating profit or loss as shown in the table below. Interest income and expense, and income taxes are managed separately on a group basis. The Company’s reportable segments are as follows:
| a. | The Upstream segment activities include acquisition, development and production of oil, natural gas, and other liquid reserves on properties within the United States;
| b. | The Gas Gathering segment partners with two other companies to operate a natural gas gathering system; and
| c. | The Corporate segment activities include corporate listing and governance functions of the Company.
Segment activity as of, and for the six months ended June 30, 2021 and 2020 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Upstream |  | Gas Gathering |  | Corporate |  | Elimination |  | Consolidated
As of and for the six months ended June 30, 2021 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Natural gas | ​ | $ | 11,439,021 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 11,439,021
Natural gas liquids | ​ | ​ | 98,150 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 98,150
Oil and condensate | ​ | ​ | 140,738 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 140,738
Gathering and compression fees | ​ | ​ | — | ​ | ​ | 4,623,548 | ​ | ​ | — | ​ | ​ | (770,296) | ​ | ​ | 3,853,252
Total operating revenue (1) | ​ | $ | 11,677,909 | ​ | $ | 4,623,548 | ​ | $ | — | ​ | $ | (770,296) | ​ | $ | 15,531,161
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net earnings (loss) for the period | ​ | $ | 5,684,536 | ​ | $ | 2,751,860 | ​ | $ | (6,185,854) | (3) | $ | — | ​ | $ | 2,250,542
Operating costs | ​ | ​ | 3,378,327 | ​ | ​ | 1,134,790 | ​ | ​ | — | ​ | ​ | (770,296) | ​ | ​ | 3,742,821
Development geological and geophysical expenses | ​ | ​ | 22,990 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 22,990
Depletion, deprec., amortization and accretion | ​ | ​ | 2,592,056 | ​ | ​ | 736,898 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 3,328,954
Impairment | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Segment assets | ​ | $ | 78,621,390 | ​ | $ | 11,941,329 | ​ | $ | 133,220 | ​ | $ | — | ​ | $ | 90,695,939
Capital expenditures (2) | ​ | ​ | 1,394,757 | ​ | ​ | 70,504 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,465,261
Proved properties (net) | ​ | ​ | 34,531,736 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 34,531,736
Unproved properties (net) | ​ | ​ | 21,557,121 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 21,557,121
Gathering system (net) | ​ | ​ | — | ​ | ​ | 9,437,587 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 9,437,587
Other property and equipment (net) | ​ | ​ | 964,435 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 964,435
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As of and for the six months ended June 30, 2020 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Natural gas | ​ | $ | 7,896,104 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 7,896,104
Natural gas liquids | ​ | ​ | 41,862 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 41,862
Oil and condensate | ​ | ​ | 188,225 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 188,225
Gathering and compression fees | ​ | ​ | — | ​ | ​ | 5,470,069 | ​ | ​ | — | ​ | ​ | (889,627) | ​ | ​ | 4,580,442
Total operating revenue (1) | ​ | $ | 8,126,191 | ​ | $ | 5,470,069 | ​ | $ | — | ​ | $ | (889,627) | ​ | $ | 12,706,633
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net earnings (loss) for the period | ​ | $ | (1,606,943) | ​ | $ | 2,478,161 | ​ | $ | (1,126,953) | (3) | $ | — | ​ | $ | (255,735)
Operating costs | ​ | ​ | 4,081,887 | ​ | ​ | 1,067,107 | ​ | ​ | — | ​ | ​ | (889,627) | ​ | ​ | 4,259,367
Development geological and geophysical expenses | ​ | ​ | 4,902 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 4,902
Depletion, deprec., amortization and accretion | ​ | ​ | 3,886,345 | ​ | ​ | 1,105,801 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 4,992,146
Impairment | ​ | ​ | 1,760,000 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,760,000
Bad Debt Expense | ​ | ​ | — | ​ | ​ | 819,000 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 819,000
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Segment assets | ​ | $ | 79,534,080 | ​ | $ | 14,177,400 | ​ | $ | 72,118 | ​ | $ | — | ​ | $ | 93,783,598
Capital expenditures (2) | ​ | ​ | 2,454,661 | ​ | ​ | 141,946 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 2,596,607
Proved properties (net) | ​ | ​ | 38,208,022 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 38,208,022
Unproved properties (net) | ​ | ​ | 21,175,910 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 21,175,910
Gathering system (net) | ​ | ​ | — | ​ | ​ | 10,522,464 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 10,522,464
Other property and equipment (net) | ​ | ​ | 725,584 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 725,584
| (1) | Segment operating revenue represents revenues generated from the operations of the segment. Inter-segment sales during the six months ended June 30, 2021 and 2020 have been eliminated upon consolidation. For the six months ended June 30, 2021, Epsilon sold natural gas to 25 unique customers. The two customers over 10% comprised 35% and 10% of total revenue. For the six months ended June 30, 2020, Epsilon sold natural gas to 18 unique customers. The three customers over 10% comprised 31%, 21%, and 21% of total revenue.
| (2) | Capital expenditures for the Upstream segment consist primarily of the acquisition of properties, and the drilling and completing of wells while Gas Gathering consists of expenditures relating to the expansion and completion of the gathering and compression facility.
| (3) | Segment reporting for net earnings for the period does not include non-monetary compensation, general and administrative expense, interest income, interest expense, both gains and (losses) on derivative contracts, or income tax amounts as they are managed on a group basis and are instead included in the corporate column for reconciliation purposes.
Segment activity for the three months ended June 30, 2021 and 2020 is as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Upstream |  | Gas Gathering |  | Corporate |  | Elimination |  | Consolidated
For the three months ended June 30, 2021 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Natural gas | ​ | $ | 5,106,922 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 5,106,922
Natural gas liquids | ​ | ​ | 52,529 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 52,529
Oil and condensate | ​ | ​ | 79,303 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 79,303
Gathering and compression fees | ​ | ​ | — | ​ | ​ | 2,236,960 | ​ | ​ | — | ​ | ​ | (385,865) | ​ | ​ | 1,851,095
Total operating revenue | ​ | $ | 5,238,754 | (1) | $ | 2,236,960 | ​ | $ | — | ​ | $ | (385,865) | ​ | ​ | 7,089,849
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net earnings (loss) for the period | ​ | $ | 2,153,394 | ​ | $ | 1,321,225 | ​ | $ | (3,959,644) | (3) | ​ | — | ​ | $ | (485,025)
Operating costs | ​ | ​ | 1,784,138 | ​ | ​ | 559,412 | ​ | ​ | — | ​ | ​ | (385,865) | ​ | ​ | 1,957,685
Development geological and geophysical expenses | ​ | ​ | 11,451 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 11,451
Depletion, deprec., amortization and accretion | ​ | ​ | 1,289,771 | ​ | ​ | 356,323 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,646,094
Bad debt expense | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Capital expenditures(2) | ​ | ​ | 480,317 | ​ | ​ | 57,220 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 537,537
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the three months ended June 30, 2020 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Natural gas | ​ | $ | 3,876,340 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 3,876,340
Natural gas liquids | ​ | ​ | 10,204 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 10,204
Oil and condensate | ​ | ​ | 128,503 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 128,503
Gathering and compression fees | ​ | ​ | — | ​ | ​ | 2,733,931 | ​ | ​ | — | ​ | ​ | (470,191) | ​ | ​ | 2,263,740
Total operating revenue | ​ | $ | 4,015,047 | (1) | $ | 2,733,931 | ​ | $ | — | ​ | $ | (470,191) | ​ | ​ | 6,278,787
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net earnings (loss) for the period | ​ | $ | (845,046) | ​ | $ | 1,610,968 | ​ | $ | (1,331,956) | (3) | $ | — | ​ | $ | (566,034)
Operating costs | ​ | ​ | 2,034,120 | ​ | ​ | 549,893 | ​ | ​ | — | ​ | ​ | (470,191) | ​ | ​ | 2,113,822
Development geological and geophysical expenses | ​ | ​ | 2,273 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 2,273
Depletion, deprec., amortization and accretion | ​ | ​ | 2,004,700 | ​ | ​ | 573,070 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 2,577,770
Bad Debt Expense | ​ | ​ | 819,000 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 819,000
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Capital expenditures(2) | ​ | ​ | 1,098,987 | ​ | ​ | 61,500 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,160,487
| (1) | Segment operating revenue represents revenues generated from the operations of the segment. Inter-segment sales during the three months ended June 30, 2021 and 2020 have been eliminated upon consolidation. For the three months ended June 30, 2021, Epsilon sold natural gas to 23 unique customers. The four customers over 10% comprised 15%, 14%, 13%, and 11% of total revenue. For the three months ended June 30, 2020, Epsilon sold natural gas to 17 unique customers. The three customers over 10% comprised 39%, 28%, and 13% of total revenue.
| (2) | Capital expenditures for the Upstream segment consist primarily of the acquisition of properties, and the drilling and completing of wells while Gas Gathering consists of expenditures relating to the expansion and completion of the gathering and compression facility.
| (3) | Segment reporting for net earnings for the period does not include non-monetary compensation, general and administrative expense, interest income, interest expense, both gains and (losses) on derivative contracts, or income tax amounts as they are managed on a group basis and are instead included in the corporate column for reconciliation purposes.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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