XML 29 R19.htm IDEA: XBRL DOCUMENT v3.23.2
Operating Segments
 6 Months Ended
Jun. 30, 2023
Operating Segments.  
Operating Segments

13. 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 income (loss) as shown in the table below. Interest income and expense, and income taxes are managed separately on a group basis. As of June 30, 2023, general and administrative costs and interest income were moved to the Corporate segment because they are entirely comprised of corporate expenses and are not allocated to the Upstream and Gas Gathering segments. To be consistent with this current presentation, the general administrative costs and interest income for the three and six months ended June 30, 2022 has been reclassed as well.

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 general and administrative costs, interest income, and corporate listing and governance functions of the Company.

Segment activity as of, and for the six months ended June 30, 2023 and 2022 is as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Upstream

    

Gas Gathering

    

Corporate

    

Elimination

    

Consolidated

As of and for the six months ended June 30, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Natural gas

​

$

9,262,873

​

$

—

​

$

—

​

$

—

​

$

9,262,873

Natural gas liquids

​

​

441,283

​

​

—

​

​

—

​

​

—

​

​

441,283

Oil and condensate

​

​

1,563,497

​

​

—

​

​

—

​

​

—

​

​

1,563,497

Gathering and compression fees

​

​

—

​

​

5,328,617

​

​

—

​

​

(739,858)

​

​

4,588,759

Total operating revenue (1)

​

​

11,267,653

​

​

5,328,617

​

​

—

​

​

(739,858)

​

​

15,856,412

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

5,034,529

​

​

1,222,305

​

​

3,979,865

​

​

(739,858)

​

​

9,496,841

Depletion, depreciation, amortization and accretion

​

​

2,859,358

​

​

529,376

​

​

—

​

​

—

​

​

3,388,734

Operating income (loss)

​

​

3,373,766

​

​

3,576,936

​

​

(3,979,865)

​

​

—

​

​

2,970,837

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other income (expense)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

​

—

​

​

—

​

​

923,963

​

​

—

​

​

923,963

Interest expense

​

​

(62,859)

​

​

—

​

​

—

​

​

—

​

​

(62,859)

Gain (loss) on derivative contracts

​

​

1,696,838

​

​

—

​

​

—

​

​

—

​

​

1,696,838

Other (expense) income

​

​

3,714

​

​

—

​

​

987

​

​

—

​

​

4,701

Other income (expense), net

​

​

1,637,693

​

​

—

​

​

924,950

​

​

—

​

​

2,562,643

Net income (loss) before income tax expense

​

$

5,011,459

​

$

3,576,936

​

$

(3,054,915)

​

$

—

​

$

5,533,480

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Current assets, net

​

$

—

​

$

—

​

$

44,053,398

​

$

—

​

$

44,053,398

Proved properties

​

​

42,017,615

​

​

—

​

​

—

​

​

—

​

​

42,017,615

Unproved properties

​

​

25,989,679

​

​

—

​

​

—

​

​

—

​

​

25,989,679

Gathering system

​

​

—

​

​

7,646,776

​

​

—

​

​

—

​

​

7,646,776

Other property and equipment

​

​

950,594

​

​

—

​

​

—

​

​

—

​

​

950,594

Operating lease right-of-use asset

​

​

—

​

​

—

​

​

495,842

​

​

—

​

​

495,842

Total segment assets

​

$

68,957,888

​

$

7,646,776

​

$

44,549,240

​

$

—

​

$

121,153,904

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of and for the six months ended June 30, 2022

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Natural gas

​

$

26,687,432

​

$

—

​

$

—

​

$

—

​

$

26,687,432

Natural gas liquids

​

​

1,002,825

​

​

—

​

​

—

​

​

—

​

​

1,002,825

Oil and condensate

​

​

1,704,904

​

​

—

​

​

—

​

​

—

​

​

1,704,904

Gathering and compression fees

​

​

—

​

​

4,842,838

​

​

—

​

​

(734,897)

​

​

4,107,941

Total operating revenue (1)

​

​

29,395,161

​

​

4,842,838

​

​

—

​

​

(734,897)

​

​

33,503,102

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

4,175,534

​

​

1,065,603

​

​

2,972,627

​

​

(734,897)

​

​

7,478,867

Depletion, depreciation, amortization and accretion

​

​

2,638,413

​

​

554,545

​

​

—

​

​

—

​

​

3,192,958

Operating income (loss)

​

​

22,581,214

​

​

3,222,690

​

​

(2,972,627)

​

​

—

​

​

22,831,277

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other income (expense)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

​

—

​

​

—

​

​

37,166

​

​

—

​

​

37,166

Interest expense

​

​

(16,064)

​

​

—

​

​

—

​

​

—

​

​

(16,064)

Gain (loss) on derivative contracts

​

​

(194,910)

​

​

—

​

​

—

​

​

—

​

​

(194,910)

Other (expense) income

​

​

(62,788)

​

​

—

​

​

(4,331)

​

​

—

​

​

(67,119)

Other income (expense), net

​

​

(273,762)

​

​

—

​

​

32,835

​

​

—

​

​

(240,927)

Net income (loss) before income tax expense

​

$

22,307,452

​

$

3,222,690

​

$

(2,939,792)

​

$

—

​

$

22,590,350

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Current assets, net

​

$

—

​

$

—

​

$

42,627,454

​

$

—

​

$

42,627,454

Proved properties

​

​

40,649,783

​

​

—

​

​

—

​

​

—

​

​

40,649,783

Unproved properties

​

​

18,021,391

​

​

—

​

​

—

​

​

—

​

​

18,021,391

Gathering system

​

​

—

​

​

8,571,168

​

​

—

​

​

—

​

​

8,571,168

Other property and equipment

​

​

930,491

​

​

—

​

​

—

​

​

—

​

​

930,491

Total segment assets

​

$

59,601,665

​

​

8,571,168

​

​

42,627,454

​

​

—

​

​

110,800,287

(1)Segment operating revenue represents revenues generated from the operations of the segment. Inter-segment sales during the six months ended June 30, 2023 and 2022 have been eliminated upon consolidation. For the six months ended June 30, 2023, Epsilon sold natural gas to 30 unique customers. The two customers over 10% comprised 15%, and 10% of total revenue. For the six months ended June 30, 2022, Epsilon sold natural gas to 21 unique customers. The two customers over 10% comprised 23% and 19% of total revenue.

Segment activity for the three months ended June 30, 2023 and 2022 is as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Upstream

    

Gas Gathering

    

Corporate

    

Elimination

    

Consolidated

For the three months ended June 30, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Natural gas

​

$

3,006,695

​

$

—

​

$

—

​

$

—

​

$

3,006,695

Natural gas liquids

​

​

244,988

​

​

—

​

​

—

​

​

—

​

​

244,988

Oil and condensate

​

​

1,046,389

​

​

—

​

​

—

​

​

—

​

​

1,046,389

Gathering and compression fees

​

​

—

​

​

2,578,114

​

​

—

​

​

(376,050)

​

​

2,202,064

Total operating revenue (1)

​

​

4,298,072

​

​

2,578,114

​

​

—

​

​

(376,050)

​

​

6,500,136

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

3,266,442

​

​

570,934

​

​

1,776,374

​

​

(376,050)

​

​

5,237,700

Depletion, depreciation, amortization and accretion

​

​

1,365,603

​

​

250,125

​

​

—

​

​

—

​

​

1,615,728

Operating income (loss)

​

​

(333,973)

​

​

1,757,055

​

​

(1,776,374)

​

​

—

​

​

(353,292)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other income (expense)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

​

—

​

​

—

​

​

433,201

​

​

—

​

​

433,201

Interest expense

​

​

(34,422)

​

​

—

​

​

—

​

​

—

​

​

(34,422)

Gain (loss) on derivative contracts

​

​

628,178

​

​

—

​

​

—

​

​

—

​

​

628,178

Other (expense) income

​

​

3,062

​

​

—

​

​

4

​

​

—

​

​

3,066

Other income (expense), net

​

​

596,818

​

​

—

​

​

433,205

​

​

—

​

​

1,030,023

Net income (loss) before income tax expense

​

$

262,845

​

$

1,757,055

​

$

(1,343,169)

​

$

—

​

$

676,731

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Capital expenditures (2)

​

$

12,450,319

​

$

12,880

​

$

—

​

$

—

​

$

12,463,199

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended June 30, 2022

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Natural gas

​

$

15,984,348

​

$

—

​

$

—

​

$

—

​

$

15,984,348

Natural gas liquids

​

​

688,397

​

​

—

​

​

—

​

​

—

​

​

688,397

Oil and condensate

​

​

1,243,091

​

​

—

​

​

—

​

​

—

​

​

1,243,091

Gathering and compression fees

​

​

—

​

​

2,356,901

​

​

—

​

​

(369,733)

​

​

1,987,168

Total operating revenue (1)

​

​

17,915,836

​

​

2,356,901

​

​

—

​

​

(369,733)

​

​

19,903,004

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating costs

​

​

2,402,494

​

​

541,228

​

​

1,659,193

​

​

(369,733)

​

​

4,233,182

Depletion, depreciation, amortization and accretion

​

​

1,533,916

​

​

269,823

​

​

—

​

​

—

​

​

1,803,739

Operating income (loss)

​

​

13,979,426

​

​

1,545,850

​

​

(1,659,193)

​

​

—

​

​

13,866,083

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other income (expense)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

​

—

​

​

—

​

​

21,945

​

​

—

​

​

21,945

Interest expense

​

​

(745)

​

​

—

​

​

—

​

​

—

​

​

(745)

Gain (loss) on derivative contracts

​

​

776,994

​

​

—

​

​

—

​

​

—

​

​

776,994

Other (expense) income

​

​

(62,788)

​

​

—

​

​

1,075

​

​

—

​

​

(61,713)

Other income (expense), net

​

​

713,461

​

​

—

​

​

23,020

​

​

—

​

​

736,481

Net income (loss) before income tax expense

​

$

14,692,887

​

$

1,545,850

​

$

(1,636,173)

​

$

—

​

$

14,602,564

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Capital expenditures (2)

​

$

1,390,908

​

$

76,016

​

$

—

​

$

—

​

$

1,466,924

(1)Segment operating revenue represents revenues generated from the operations of the segment. Inter-segment sales during the three months ended June 30, 2023 and 2022 have been eliminated upon consolidation. For the three months ended June 30, 2023, Epsilon sold natural gas to 21 unique customers. The three customers over 10% comprised 25%, 14%, and 13% of total revenue. For the three months ended June 30, 2022, Epsilon sold natural gas to 19 unique customers. The four customers over 10% comprised 33%, 17%, 12% and 10% 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, completion, and maintenance of the gathering and compression facility.