{"id":126899,"date":"2025-03-11T19:08:57","date_gmt":"2025-03-11T19:08:57","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/under-the-radar-the-real-impact-of-increased-drilling-on-oil-market-dynamics-epsilon-energy-nasdaqepsn-exxon-mobil-nysexom\/"},"modified":"2025-03-11T19:08:57","modified_gmt":"2025-03-11T19:08:57","slug":"under-the-radar-the-real-impact-of-increased-drilling-on-oil-market-dynamics-epsilon-energy-nasdaqepsn-exxon-mobil-nysexom","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=126899","title":{"rendered":"Under the Radar: The Real Impact of Increased Drilling on Oil Market Dynamics &#8211; Epsilon Energy (NASDAQ:EPSN), Exxon Mobil (NYSE:XOM)"},"content":{"rendered":"<p> <br \/>\n<br \/><img decoding=\"async\" src=\"https:\/\/cdn.benzinga.com\/files\/images\/story\/2025\/03\/11\/oil-prices-5079975.jpeg?optimize=medium&amp;dpr=1&amp;auto=webp&amp;height=675&amp;width=1200&amp;fit=crop\" \/><\/p>\n<div>\n<p>Donald Trump made this a centerpiece of his campaign for a second term, suggesting that he could get oil and gas producers to turn on the spigots and drive the prices of gasoline below $2.<\/p>\n<p>Judging by last week\u2019s address to Congress, it is not an idea the President seems likely to drop.<\/p>\n<p>A lot of oil and gas executives wish he would.<\/p>\n<p>\u201cDrill, Baby, Drill\u201d and cheap gas is a cool campaign theme. It is a disaster for profit margins at small to midsize oil and gas producers.<\/p>\n<p>Sustained high levels of production would destroy many of these companies.<\/p>\n<p>The industry has been down this road before and has no desire to go there again.<\/p>\n<p>As Pioneer Natural Resources CEO Scott Sheffield said last year when the topic first arose at a campaign rally, \u201cNo company wants to risk another price collapse. We are disciplined now because we\u2019ve learned from past cycles.\u201d<\/p>\n<p>The big companies are not fans of the idea either. During the period between the election and inauguration, the President of Exxon\u2019s <span class=\"ticker\" data-ticker=\"XOM\" data-exchange=\"TICKER\" style=\"display: inline-block;\">XOM<\/span> upstream division, Liam Mallon, told Bloomberg, \u201cI think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they\u2019re doing.\u201d<\/p>\n<p>He added, \u201cI don\u2019t think we\u2019re going to see anybody in the drill, baby, drill mode. I really don\u2019t.\u201d<\/p>\n<p>While the industry may resist, it is safe to say the President is going to push the point.<\/p>\n<p>What \u201cDrill, Baby, Drill\u201d is likely to accomplish is touching off a wave of oil patch merger and acquisition activity.<\/p>\n<p>If we do begin to see large production increases coupled with a slowdown in economic activity because of policy decisions, smaller companies are going to struggle.<\/p>\n<p>Just as we saw in the banking industry over the past 30 years, scale and size are going to be primary determinants of profits.<\/p>\n<p>The bigger you are, the more likely you will be to stay profitable in the era of \u201cDrill, Baby, Drill.\u201d<\/p>\n<p>The smart play is going to be for smaller companies to look for a larger partner.<\/p>\n<p>The smarter play is to look for companies that are attractive targets that would be good buys to add attractive assets and gain scale but are capable of growing on a standalone basis.<\/p>\n<p>Epsilon Energy <span class=\"ticker\" data-ticker=\"EPSN\" data-exchange=\"TICKER\" style=\"display: inline-block;\">EPSN<\/span> is a perfect example of a smaller energy company that will allow investors to have the best of both worlds.<\/p>\n<p>Epsilon Energy Ltd. is a debt-free independent energy company focused on natural gas and oil production, with core assets in the Northeast Pennsylvania Marcellus Shale, the Permian Basin, and Alberta, Canada. The company maintains a strong balance sheet with $8.8 million in cash and $45 million in undrawn revolver capacity, providing financial flexibility for growth and shareholder returns. With stable midstream revenues, low-cost natural gas production, and high-margin oil upside in the Permian and Alberta, EPSN presents a balanced mix of stability and growth potential.<\/p>\n<p>EPSN has a core position in the Marcellus, one of the lowest-cost natural gas basins in the U.S. The company holds 5,142 net acres with 139 producing wells and a 35% stake in the Auburn Gas Gathering System, which provides stable midstream revenues.<\/p>\n<p>The company also has 400,000-500,000 ft. of undeveloped inventory they can bring online as natural gas prices improve.<\/p>\n<p>A relaxation of regulations that allows for new pipeline capacity to be added in the region would be an enormous plus for Epsilon.<\/p>\n<p>Epsilon\u2019s expansion into the Permian Basin is a game-changer. The company has poured $38 million into its Ector County, TX position, shifting its production mix toward high-margin oil. It\u2019s already seeing strong results, with seven producing wells and a massive runway of 30-40 future drilling locations.<\/p>\n<p>More importantly, this move diversifies EPSN away from natural gas price volatility. Natural gas has been a rough ride lately, but oil demand remains resilient. If prices remain steady, Epsilon\u2019s forecasted 140%+ growth in liquids production could drive significant cash flow expansion.<\/p>\n<p>Epsilon has maintained a disciplined approach to capital allocation, balancing strategic growth investments with consistent shareholder returns.<\/p>\n<p>A significant portion of cash flow was directed toward the Permian Basin, where it is aggressively expanding its oil-weighted production.<\/p>\n<p>20% was allocated to its core Marcellus asset, supporting ongoing development in one of the lowest-cost natural gas basins in the country.<\/p>\n<p>The company also invested $2.6 million in its newly formed Alberta joint venture, a move designed to open long-term growth opportunities in a promising Canadian oil and gas play.<\/p>\n<p>Beyond growth initiatives, EPSN has remained committed to returning capital to shareholders. The company paid out $5.5 million in dividends.<\/p>\n<p>$2.2 million was allocated to stock buybacks, increasing the value of remaining shares.<\/p>\n<p>In March 2024, EPSN authorized a new buyback program for up to 2.2 million shares, demonstrating continued confidence in its own undervalued stock.<\/p>\n<p>Since mid-2022, it has already repurchased 1.82 million shares at an average price of $5.24 per share, signaling a strong commitment to enhancing shareholder value.<\/p>\n<p>The combination of attractive assets in two of the more attractive producing regions in the country could prove to be an enticing target for a potential buyer.<\/p>\n<p>At the same time, management has positioned the company to grow and made smart investments to increase scale organically.<\/p>\n<p>Either way, Epsilon Energy allows investors to \u201cWin, Baby, Win\u201d no matter how \u201cDrill, Baby, Drill\u201d plays out.<\/p>\n<\/div>\n<p>\u00a9 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.<\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>Donald Trump made this a centerpiece of his campaign for a second term, suggesting that he could get oil and gas producers to turn on the spigots and drive the prices of gasoline below $2. Judging by last week\u2019s address to Congress, it is not an idea the President seems likely to drop. A lot [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":126900,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[51702,11538,974,55478,42067,4197,26956,11209,20880,55479,55480,1640,18438,482],"dealstore":[],"offerexpiration":[],"class_list":["post-126899","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-drilling","tag-dynamics","tag-energy","tag-epsilon","tag-exxon","tag-impact","tag-increased","tag-market","tag-mobil","tag-nasdaqepsn","tag-nysexom","tag-oil","tag-radar","tag-real"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Under the Radar: The Real Impact of Increased Drilling on Oil Market Dynamics - Epsilon Energy (NASDAQ:EPSN), Exxon Mobil (NYSE:XOM) - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=126899\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Under the Radar: The Real Impact of Increased Drilling on Oil Market Dynamics - Epsilon Energy (NASDAQ:EPSN), Exxon Mobil (NYSE:XOM) - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Donald Trump made this a centerpiece of his campaign for a second term, suggesting that he could get oil and gas producers to turn on the spigots and drive the prices of gasoline below $2. Judging by last week\u2019s address to Congress, it is not an idea the President seems likely to drop. 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