In a strategic move, Epsilon Energy Ltd. (NASDAQ: EPSN) has announced the completion of a revised senior secured revolving credit facility. This financial arrangement involves Frost Bank acting as the administrative agent, alongside Texas Capital Bank as lenders. This new facility replaces the company’s earlier credit arrangement, positioning it for future growth.
With this new credit facility, Epsilon aims to enhance its financial capacity while ensuring operational flexibility. The terms of the facility are designed to support the company’s upcoming endeavors, particularly in light of the recent acquisitions.
Table of Contents:
Key features of the new credit facility
The updated credit facility comes with several noteworthy characteristics:
- Epsilon Energy USA Inc. and Epsilon Energy Ltd. will act as co-borrowers under this agreement.
- The facility has a four-year duration, set to mature on October 8.
- It initiates with a borrowing base and commitments totaling $47.5 million, which is backed by the company’s existing upstream assets in the U.S.
- Future adjustments to the borrowing base will occur semi-annually, especially following the anticipated acquisition of the Peak companies, which will include these new assets.
- Interest charges on the drawn amounts are pegged to the 3-Month Term SOFR rate with an additional margin ranging from 3% to 4%, depending on the usage of the facility. Payments will be made quarterly.
Acquisition funding and operational strategy
This new credit facility is set to be activated coinciding with the acquisition of the Peak companies. The funds generated from this loan will primarily be allocated towards settling an existing term loan associated with Peak, projected to have a balance of around $49.6 million at the time of closing.
According to Andrew Williamson, the Chief Financial Officer of Epsilon, “This revised credit facility not only increases our available capital but also extends our borrowing duration, allowing us to confidently proceed with the acquisitions we announced in August while preserving a robust balance sheet and liquidity for the future.”
About Epsilon Energy Ltd.
Epsilon Energy Ltd. is a prominent entity in the natural gas and oil sector, primarily focusing on onshore production and gathering in diverse locations across North America, including Pennsylvania, Texas, Alberta, New Mexico, and Oklahoma.
Looking ahead: Forward-looking statements
This announcement includes several forward-looking statements that reflect the company’s intentions and projections. Terms such as “anticipate,” “estimate,” “expect,” and “believe” signify these forward-looking assertions. However, they are subject to various risks and uncertainties that may lead to actual outcomes differing from current expectations. While these statements are based on reasonable assumptions, there is no guarantee that they will materialize as anticipated.
For further details regarding the new loan agreement, interested parties can find the complete document in the Form 8-K filed in conjunction with this announcement.
Contact information
For inquiries, please reach out to:
Jason Stabell
Chief Executive Officer
[email protected]
Andrew Williamson
Chief Financial Officer
[email protected]
