Business Combination |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Business Combination [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination | 4. Business Combination During the year ended December 31, 2025, Epsilon acquired 100% of the ownership interest in Peak Exploration & Production LLC and Peak BLM Lease LLC and their subsidiaries (together, “Peak”) for total consideration of $88.5 million consisting of 1) issuance of 5,681,489 common shares valued at $27.6 million, 2) contingent consideration of up to 2,500,000 common shares valued at $10.6 million, and the settlement of $50.3 million of debt. The contingent consideration was settled on November 19, 2025, through the issuance of 2,234,847 common shares for $10.6 million. The acquired assets primarily include operated and non-operated production and leasehold interests in the core of the Powder River Basin in Wyoming. The following table summarizes the allocation of the total purchase price to the assets acquired and liabilities assumed based on the estimated fair value as of the closing date of the acquisition.
The Company funded the acquisition through the issuance of shares and borrowings under our credit facility. The results of operations attributable to Peak since the closing date of the acquisition have been included in the consolidated statements of operations and comprehensive income and include $4 million of total revenues and a $5,747 net loss for the year ended December 31, 2025. Pro Forma Operating Results (Unaudited) The following supplemental, unaudited pro forma combined financial information for the year ended December 31, 2025 reflects the consolidated results of operations of the Company as if the Peak acquisition had occurred on January 1, 2024. The information below reflects pro forma adjustments based on available information and certain assumptions that the Company believes are factual and supportable. The unaudited pro forma information includes adjustments for (i) leasehold expense (ii) depreciation, depletion, amortization, and accretion, (iii) loss on impairment of long term assets, (iv) interest expense related to long term debt, and (v) loss on sale of assets. In addition, for the year ended December 31, 2025 and 2024, the pro forma information has been effected for income taxes with an effective tax rate of 6.31% and 45.79%, respectively.
The unaudited pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the Peak acquisition been completed as of January 1, 2024, and should not be taken as indicative of the Company's future combined results of operations. The actual results may differ significantly from that reflected in the unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma combined financial information and actual results. |
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