Operating Segments |
12. Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision‑maker. The chief operating decision‑maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as executive management. Segment performance is evaluated based on operating profit or loss as shown in the table below. Interest expense, interest income and income taxes are managed separately on a group basis.
The Company’s reportable segments are as follows:
|
a.
| |
The Upstream segment activities include acquisition, development and production of primarily natural gas reserves on properties within the United States; |
|
b.
| |
The Gas Gathering segment partners with two other companies to operate a natural gas gathering system; and |
|
c.
| |
The Corporate segment activities include corporate listing and governance functions of the Company. |
Segment activity as at, and for the years ended December 31, 2019 and 2018 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
Gas Gathering
|
|
Corporate
|
|
Elimination
|
|
Consolidated
|
As at and for the year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
|
|
$
|
16,945,302
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
16,945,302
|
Natural gas liquids
|
|
|
110,394
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110,394
|
Oil and condensate
|
|
|
314,267
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
314,267
|
Gathering and compression fees
|
|
|
—
|
|
|
10,517,439
|
|
|
—
|
|
|
(1,197,066)
|
|
|
9,320,373
|
Total operating revenue
|
|
$
|
17,369,963
|
(1)
|
$
|
10,517,439
|
|
$
|
—
|
|
$
|
(1,197,066)
|
|
|
26,690,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings for the period
|
|
$
|
5,151,434
|
|
$
|
6,158,670
|
|
$
|
(2,612,105)
|
(3)
|
|
—
|
|
$
|
8,697,999
|
Operating costs
|
|
|
6,571,394
|
|
|
2,534,475
|
|
|
—
|
|
|
(1,197,066)
|
|
|
7,908,803
|
Development geological and geophysical expenses
|
|
|
83,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,748
|
Depletion, deprec., amortization and accretion
|
|
|
5,563,387
|
|
|
1,824,294
|
|
|
—
|
|
|
—
|
|
|
7,387,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
$
|
83,056,034
|
|
$
|
14,430,680
|
|
$
|
182,489
|
|
|
—
|
|
$
|
97,669,203
|
Capital expenditures(2)
|
|
|
13,014,051
|
|
|
325,277
|
|
|
—
|
|
|
—
|
|
|
13,339,328
|
Proved properties
|
|
|
41,564,221
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,564,221
|
Unproved properties
|
|
|
21,047,512
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,047,512
|
Gathering system
|
|
|
—
|
|
|
11,483,535
|
|
|
—
|
|
|
—
|
|
|
11,483,535
|
Other property and equipment
|
|
|
587,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
587,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at and for the year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
|
|
$
|
19,031,422
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
19,031,422
|
Natural gas liquids
|
|
|
295,142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
295,142
|
Oil and condensate
|
|
|
376,079
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
376,079
|
Gathering and compression fees
|
|
|
—
|
|
|
11,087,507
|
|
|
—
|
|
|
(1,105,945)
|
|
|
9,981,562
|
Total operating revenue
|
|
$
|
19,702,643
|
(1)
|
$
|
11,087,507
|
|
$
|
—
|
|
$
|
(1,105,945)
|
|
|
29,684,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings for the period
|
|
$
|
7,742,587
|
|
$
|
6,814,188
|
|
$
|
(7,894,715)
|
(3)
|
$
|
—
|
|
$
|
6,662,060
|
Operating costs
|
|
|
6,665,856
|
|
|
2,385,766
|
|
|
—
|
|
|
(1,105,945)
|
|
|
7,945,677
|
Depletion, deprec., amortization and accretion
|
|
|
5,294,200
|
|
|
1,887,553
|
|
|
—
|
|
|
—
|
|
|
7,181,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
$
|
71,350,546
|
|
$
|
15,440,047
|
|
$
|
1,107,116
|
|
$
|
—
|
|
$
|
87,897,709
|
Capital expenditures(2)
|
|
|
2,472,919
|
|
|
197,321
|
|
|
—
|
|
|
—
|
|
|
2,670,240
|
Proved properties
|
|
|
35,044,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,044,173
|
Unproved properties
|
|
|
19,498,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,498,666
|
Gathering system
|
|
|
—
|
|
|
12,903,274
|
|
|
—
|
|
|
—
|
|
|
12,903,274
|
|
(1)
| |
Segment operating revenue represents revenues generated from the operations of the segment. Inter‑segment sales during the years ended December 31, 2019 and 2018 have been eliminated upon consolidation. For the year ended December 31, 2019, Epsilon sold natural gas to 29 unique customers. The two customers over 10% comprised 47% and 27% of total revenue. For the year ended December 31, 2018, Epsilon sold natural gas to 28 unique customers. The two customers over 10% comprised 46% and 21% of total revenue. |
|
(2)
| |
Capital expenditures for Upstream consist primarily of the drilling and completing of wells while Gas Gathering consists of expenditures relating to the installation of additional gathering facilities. |
|
(3)
| |
Segment reporting for net earnings for the period does not include non‑monetary compensation, general and administrative expense, interest income, interest expense or income tax amounts as they are managed on a group basis and are instead included in the corporate column for reconciliation purposes. Additionally, gains & (losses) from commodity hedging contracts are also included in the corporate column for reconciliation purposes. |
|