Epsilon Energy Acquires 01 Energy for $10M Cash & Stock

TL;DR

EPSN just bought 01 Energy for $10M cash + 1M shares to boost midstream biz.

AI Summary

Epsilon Energy Ltd. announced on February 12, 2024, the completion of its acquisition of 100% of the outstanding equity interests in 01 Energy & Transportation, LLC. The transaction involved a cash payment of $10 million and the issuance of 1,000,000 shares of Epsilon Energy common stock. This acquisition is expected to enhance Epsilon's midstream infrastructure and services.

Why It Matters

This acquisition expands Epsilon Energy's operational footprint and midstream capabilities, potentially leading to increased revenue and market share in the energy transportation sector.

Risk Assessment

Risk Level: medium — The acquisition involves a significant cash outlay and stock issuance, which carries integration risks and potential dilution for existing shareholders.

Key Numbers

• $10.0M — Cash Consideration (Part of the purchase price for 01 Energy & Transportation, LLC.)
• 1.0M shares — Stock Consideration (Issued to acquire 01 Energy & Transportation, LLC.)
• 100% — Acquisition Stake (Epsilon Energy acquired full ownership of 01 Energy & Transportation, LLC.)

Key Players & Entities

• Epsilon Energy Ltd. (company) — Acquiring company
• 01 Energy & Transportation, LLC (company) — Acquired company
• $10 million (dollar_amount) — Cash consideration for acquisition
• 1,000,000 shares (dollar_amount) — Stock consideration for acquisition
• February 12, 2024 (date) — Effective date of acquisition

FAQ

Key Financial Figures

• $15 m — wells. The total consideration paid was $15 million, funded from cash on-hand. A cop
• $282,000 — ill" basis for an annual base salary of $282,000. In addition to his base salary, Mr. Cl
• $150,000 — e an annual incentive bonus targeted at $150,000 for achieving performance goals establi

Filing Documents

• epsn-20240212x8k.htm (8-K) — 40KB
• epsn-20240212xex10d1.htm (EX-10.1) — 89KB
• epsn-20240212xex10d2.htm (EX-10.2) — 136KB
• epsn-20240212xex99d1.htm (EX-99.1) — 13KB
• epsn-20240212xex99d1001.jpg (GRAPHIC) — 12KB
• 0001558370-24-003002.txt ( ) — 474KB
• epsn-20240212.xsd (EX-101.SCH) — 4KB
• epsn-20240212_def.xml (EX-101.DEF) — 3KB
• epsn-20240212_lab.xml (EX-101.LAB) — 17KB
• epsn-20240212_pre.xml (EX-101.PRE) — 12KB
• epsn-20240212x8k_htm.xml (XML) — 5KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. The response to Item 2.01 below is included and incorporated by reference in its entirety.

01 Completion of Acquisition or Disposition of Assets

Item 2.01 Completion of Acquisition or Disposition of Assets. On February 27, 2024, the Company closed on an acquisition of assets in the Permian Basin, Ector County, Texas. The assets, acquired from Pradera Fuego, LP, include a 25% working interest in 3 producing wells and 3,246 gross undeveloped acres. The effective date for the transaction was (i) February 1, 2024 with respect to the leases and (ii) March 1, 2024 with respect to the wells. The total consideration paid was $15 million, funded from cash on-hand. A copy of the letter agreement is filed herewith as Exhibit 10.1 and the terms are incorporated by reference into this Item 2.01 as if fully set forth herein. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. On February 12, 2024, the Company entered into an executive employment agreement with Mr. Henry Clanton, effective January 1, 2024. Pursuant to the employment agreement, the Company and Mr. Clanton have agreed that Mr. Clanton will continue to serve as Chief Operating Officer on an "at-will" basis for an annual base salary of $282,000. In addition to his base salary, Mr. Clanton will be eligible to receive an annual incentive bonus targeted at $150,000 for achieving performance goals established by the Compensation Committee of the Board in its sole discretion for the then current calendar year. Mr. Clanton will be entitled to participate in all applicable Company benefit plans, programs, or arrangements that the Company may offer to its executives generally, from time to time, and as may be amended from time to time. Participation will be subject to the terms of the applicable plan documents and generally applicable Company policies, as may be in effect from time to time, and any other restrictions or limitations imposed by law. If Mr. Clanton is terminated by the Company without cause or resigns for Good Reason (as defined in the employmen

01

Item 7.01 Regulation FD Disclosure On February 27, 2024, the Company issued a press release announcing the consummation of the transactions described in Item 2.01. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information contained in this Current Report on Form 8-K pursuant to this "Item 7.01 Regulation FD Disclosure" shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. The information in this section of this Current Report on Form 8-K shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit Number Description 10.1 Letter Agreement with Pradera Fuego, LP dated February 26, 2024 10.2 Employment Agreement with Henry Clanton dated February 12, 2024 99.1 Press Release dated February 27, 2024 2

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EPSILON ENERGY LTD. Date: March 12, 2024 By: /s/ J. Andrew Williamson J. Andrew Williamson Chief Financial Officer 3

View Full Filing

View this 8-K filing on SEC EDGAR