Discounted Cash Flow (DCF) Analysis Unlevered

Epsilon Energy Ltd. (EPSN)

$5.35

+0.02 (+0.38%)

All numbers are in Millions, Currency in USD

Stock DCF: 3,131.10 | 5.35 | undervalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	29.68	26.69	24.43	42.40	69.96	90.96	118.25	153.73	199.86	259.83
Revenue (%)
EBITDA	16.67	14.36	10.38	26.95	53.54	53.21	69.18	89.94	116.92	152.01
EBITDA (%)
EBIT	-7,165.09	12.59	1.57	16.17	47.11	-4,362.01	-5,670.89	-7,372.52	-9,584.75	-12,460.79
EBIT (%)
Depreciation	7,181.75	1.77	8.81	10.78	6.44	4,415.22	5,740.07	7,462.46	9,701.67	12,612.80
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	14.40	14.05	13.27	26.50	45.24	51.42	66.84	86.90	112.98	146.88
Total Cash (%)
Account Receivables	5.04	4.30	3.92	4.60	7.20	12.78	16.62	21.60	28.08	36.51
Account Receivables (%)
Inventories	0.21	3.64	0.09	2.08	3.43	4.46	5.79	7.53	9.79	12.73
Inventories (%)
Accounts Payable	2.59	2.83	1.59	1.19	1.70	5.65	7.34	9.55	12.41	16.14
Accounts Payable (%)
Capital Expenditure	-2.20	-11.92	-6.53	-4.89	-8.07	-18.52	-24.08	-31.31	-40.71	-52.92
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 5.35
Beta	0.390
Diluted Shares Outstanding	23.41
Cost of Debt
Tax Rate	25.59
After-tax Cost of Debt	107.05%
Risk-Free Rate
Market Risk Premium
Cost of Equity	5.997
Total Debt	0.04
Total Equity	125.22
Total Capital	125.26
Debt Weighting	0.03
Equity Weighting	99.97
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	29.68	26.69	24.43	42.40	69.96	90.96	118.25	153.73	199.86	259.83
EBITDA	16.67	14.36	10.38	26.95	53.54	53.21	69.18	89.94	116.92	152.01
EBIT	-7,165.09	12.59	1.57	16.17	47.11	-4,362.01	-5,670.89	-7,372.52	-9,584.75	-12,460.79
Tax Rate	10.03%	30.28%	39.67%	27.64%	25.59%	26.64%	26.64%	26.64%	26.64%	26.64%
EBIAT	-6,446.67	8.78	0.94	11.70	35.05	-3,199.99	-4,160.19	-5,408.51	-7,031.42	-9,141.29
Depreciation	7,181.75	1.77	8.81	10.78	6.44	4,415.22	5,740.07	7,462.46	9,701.67	12,612.80
Accounts Receivable	-	0.75	0.38	-0.68	-2.60	-5.58	-3.83	-4.99	-6.48	-8.43
Inventories	-	-3.44	3.55	-1.99	-1.35	-1.03	-1.34	-1.74	-2.26	-2.94
Accounts Payable	-	0.24	-1.24	-0.40	0.51	3.95	1.70	2.20	2.87	3.72
Capital Expenditure	-2.20	-11.92	-6.53	-4.89	-8.07	-18.52	-24.08	-31.31	-40.71	-52.92
UFCF	732.89	-3.82	5.93	14.52	29.97	1,194.05	1,552.32	2,018.11	2,623.68	3,410.95
WACC
PV UFCF						1,126.15	1,380.78	1,693.01	2,075.85	2,545.25
SUM PV UFCF										8,821.03

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.03
Free cash flow (t + 1)	3,479.17
Terminal Value	86,331.65
Present Value of Terminal Value	64,420.82

Intrinsic Value

Enterprise Value	73,241.85
Net Debt	-45.20
Equity Value	73,287.05
Shares Outstanding	23.41
Equity Value Per Share	3,131.10