 HOUSTON, Aug. 13, 2020 GLOBE NEWSWIRE -- Epsilon Energy Ltd. Epsilon or the Company NASDAQ: EPSN today reported second 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 3.1 million and 8.3 million for the three and six months ended June 30, 2020, respectively, with free cash flow FCF of 1.3 million and 4.2 million for the same periods. Realized gas prices of 1.36Mcfe, excluding hedges and 1.75Mcfe including hedges. Returned 0.4 million to shareholders through open market purchases of 169,285 shares through June 30, 2020 for an average price of 2.51share. 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 3.06share. Marcellus net revenue interest NRI gas production averaged 30.6 MMcfd Working Interest of 35.2 MMd for the second quarter. During the second quarter the Marcellus operator turned to sales 4 Gross wells 0.16 Net wells. In addition, during the quarter, at the request of the upstream producers including Epsilon, the operator of the Auburn System reduced the gathering pressure in a step-wise manner to 550 psi from the historical gathering pressure of 700 psi. This reduced pressure allowed all wells to increase production in varying degrees. The June 30th, 2020 NRI exit rate was 39.6 MMcfd Working Interest of 45.5 MMcfed. Auburn System gathered and delivered 15.6 Bcfe gross 5.5 Bcfe net to Epsilons interest which represents approximately 86 of maximum throughput as currently configured. The June 30th exit gathering volume rate was 183.6 MMcfd. Total revenues of 6.3 million; net loss of 0.6 million; and EBITDA of 3.1 million for the quarter. Cash at quarter end of 16.3 million. Net loss before tax of 0.74 million for the quarter included a bad debt allowance of 0.82 million. Operating expenses including SGA was 1.19Mcfe and 1.09Mcfe excluding 0.3 million of non-recurring legal costs.Michael Raleigh, CEO, commented, We are very pleased with the financial performance of the company as we continue to generate free cash flow even within a challenged price environment. At the current production rate and natural gas prices for the remainder of the year we anticipate the company should be able to generate 9.0 - 10.0 million of free cash flow for the full year. We anticipate exiting the year between 32-33 MMcfed of NRI production. Epsilon recorded a bad debt reserve of 0.8 million related to a receivable from a shipper on the Auburn Gas Gathering system who filed for bankruptcy protection during the quarter. Post-filing, the shipper continues to invest capital in both existing and new wells in the contract area. While we ultimately believe that it is possible that some, if not all, of this receivable may be collected, the timing is uncertain, and therefore we recognized this as an allowance for bad debt. As anticipated, the restraint in capital spending across the EP industry that began in the first quarter of 2020 is having a meaningful impact on natural gas supply. Although the natural gas supplydemand balance has been disappointing this past quarter due to exiting the mild winter with high storage levels and the curtailment of LNG exports, the market is beginning to discount a much tighter balance in 2021 as evidenced by higher prices for future delivery of natural gas.In June, Epsilon elected to participate in three new wells proposed by the operator. While Epsilons net interest is minor, these wells are all long reach horizontals, and two of the wells are targeting the Upper Marcellus zone which should provide more productivity data on the Upper Marcellus helping us to better understand how to efficiently develop the significant potential of our acreage.Financial and Operating Results Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Revenues Natural gas revenue 3,876,340 4,330,013 7,896,104 9,764,948 Volume MMcf 2,858 1,920 5,585 3,743 Avg. Price Mcf 1.36 2.26 1.41 2.61 PA Exit Rate MMcfpd 45.5 21.2 45.5 21.2 Oil and other liquids revenue 138,707 168,465 230,087 241,193 Volume MBO 4.8 4.8 7.9 7.8 Avg. Price Bbl 29.10 35.43 29.15 30.88 Gathering system revenue 2,263,740 2,265,094 4,580,442 4,703,445 Total Revenues 6,278,787 6,763,572 12,706,633 14,709,586 Capital Expenditures Epsilons capital expenditures were 1.2 million for the three months ended June 30, 2020. This capital was mainly residual spending for the completion of four wells drilled in Q1 2020 in Pennsylvania as well as expenditures for the Auburn Gas Gathering system.Marcellus Operational GuidanceDuring the second quarter of 2020, the operator completed, tested and turned to sales 4 gross 0.16 net to EPSN wells. In June, the operator proposed 3 gross .03 net to EPSN wells in which Epsilon elected to participate with a required capital commitment of less than 250,000.Second Quarter ResultsEpsilon generated revenues of 6.3 million for the three months ended June 30, 2020 compared to 6.8 million for the three months ended June 30, 2019.Realized natural gas prices averaged 1.36Mcf excluding hedges for Marcellus Upstream operations in the second quarter of 2020. Operating expenses for Marcellus Upstream operations in the second quarter were 1.4 million.The Auburn Gas Gathering system delivered 15.6 Bcfe of natural gas during the quarter as compared to 23.3 Bcfe during the first quarter of 2020. Primary gathering volumes were flat quarter over quarter at 15.1 Bcfe. Imported cross-flow volumes decreased 94 to 0.5 Bcfe.Epsilon reported net after tax loss of 0.6 million attributable to common shareholders or 0.02 per basic and diluted common share outstanding for the three months ended June 30, 2020, compared to net income of 3.8 million, and 0.14 per basic and diluted common share outstanding for the three months ended June 30, 2019. For the three months ended June 30, 2020, Epsilons Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization Adjusted EBITDA was 3.1 million as compared to 5.2 million for the three months ended June 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 operations, financial results, liquidity, contractors, customers, employees and vendors. Epsilon has also taken, and is continuing to take, proactive steps to 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, once the hypothetical became a reality, 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 and the Anadarko Basin in Oklahoma.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 Companys actual production, revenues, development and operating expenditures will vary from estimates thereof and such variations could be material. 