Epsilon Energy Secures New Credit Facility
Epsilon Energy Ltd. (NASDAQ: EPSN) has successfully closed a newly revised senior secured reserve-based revolving credit facility. This development marks a significant step forward for the Company, enhancing its financial capacity to support ongoing growth and operational commitments.
Details of the New Credit Facility
The new Credit Facility has been established in collaboration with Frost Bank, serving as the administrative agent, alongside Texas Capital Bank. Epsilon Energy USA Inc. and Epsilon Energy Ltd. are designated as co-borrowers.
The key features of this Credit Facility include a four-year term, maturing on October 8, 2029. It allows an initial borrowing base and commitments set at $47.5 million. This amount is specifically supported by the Company's existing upstream assets in the United States.
Future Prospects for Funding
Upon the completion of planned acquisitions, including the Peak companies, the borrowing base will undergo redetermination and is expected to increase correspondingly with the acquired assets. Furthermore, the facility incorporates semi-annual redeterminations.
Interest on any drawn funds will be calculated based on the 3-Month Term SOFR rate, inclusive of a margin that ranges from 3% to 4%, contingent on facility utilization. Payments will be made quarterly, thereby optimizing cash flow management.
Strategic Impact of the Credit Facility
This new facility is crucial as it is set to fund simultaneously with the acquisition of the Peak companies. Proceeds from this financing will be allocated towards repaying Peak’s existing term loan, which is estimated at closing to be $49.6 million.
Andrew Williamson, the Chief Financial Officer of Epsilon, noted that this new and revised credit facility enhances the Company’s commitment capacity and allows for flexibility in closing announced acquisitions while maintaining a robust balance sheet and operational liquidity.
About Epsilon Energy Ltd.
Epsilon Energy Ltd. is a prominent player in the North American energy sector, focusing on onshore natural gas and oil production, alongside gathering operations. The Company boasts a diversified asset portfolio, spread across several key regions known for their rich energy resources.
Commitment to Sustainable Growth
Epsilon continues to demonstrate its dedication to sustainable and responsible growth in the energy market. By bolstering its financial infrastructure through initiatives like the new credit facility, Epsilon Energy positions itself for future expansions and operational efficiency.
Frequently Asked Questions
What is the duration of the new credit facility?
The new credit facility features a four-year term, which will mature on October 8, 2029.
Who are the lenders involved in this credit facility?
The facility is administered by Frost Bank with Texas Capital Bank also participating as a lender.
What are the initial borrowing commitments?
The initial borrowing base and commitments stand at $47.5 million, supported by Epsilon's existing upstream assets.
How will the funds from the credit facility be utilized?
Proceeds from the facility will primarily be used for repaying existing loans associated with the Peak companies' acquisition.
What is Epsilon Energy's core business focus?
Epsilon Energy Ltd. specializes in onshore natural gas and oil production, emphasizing gathering and operational efficiencies across its various asset locations.
