Epsilon Announces First Quarter 2026 Results

HOUSTON, May 13, 2026 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported first quarter 2026 financial and operating results.

Q1 2026 Highlights:

Epsilon - Q1 2026
		Q1 2026	Q4 2025	Q1 2025	QoQ%	YoY%
NRI Production
Gas	MMcf	2,482	2,373	2,740	5%	-9%
Oil	MBbl	136	94	46	45%	199%
NGL	MBbl	42	43	16	-2%	168%
Total	MMcfe	3,554	3,196	3,108	11%	14%
Daily Total	MMcfe/d	39.5	34.7	34.5
Daily Oil	Bbl/d	1,515	1,021	506
Revenues	$M
Gas		13,403	6,839	10,614	96%	26%
Oil		9,462	5,299	3,270	79%	189%
NGL		1,073	1,180	387	-9%	177%
Midstream1		1,658	1,501	1,892	10%	-12%
Total		25,596	14,818	16,163	73%	58%
Realized Prices2
Gas	$/Mcf	5.40	2.88	3.87	87%	39%
Oil	$/Bbl	69.39	56.44	71.76	23%	-3%
NGL	$/Bbl	25.32	27.17	24.52	-7%	3%
Adj. EBITDA	$M	13,395	7,553	10,609	77%	26%
Cash + STI3	$M	8,466	9,513	7,363	-11%	15%
Capex4	$M	4,885	1,641	8,035	198%	-39%
Total Debt	$M	45,500	50,500	0	-10%
Dividend	$M	1,884	1,868	1,376	1%	37%
Adj Net Income5	$M	801	11,103	4,023	-93%	-80%
p/share6	$	0.03	0.43	0.18	-94%	-85%
Excl. Q126 Hedge Loss	$M	8,683	11,103	4,023	-22%	116%
p/share6	$	0.29	0.43	0.18	-34%	58%
1) Net of elimination entry for fees paid by Epsilon
2) Excludes impact of hedge realizations
3) Includes restricted cash balance
4) Excludes acquisitions
5) Excludes one-time / non-recurring expenses for transaction costs, impairments, and loss on asset sale
6) Calculated on weighted average shares outstanding for the period

Jason Stabell, Epsilon’s Chief Executive Officer, commented, “So far in 2026, we are executing on the initial stages of our development program outlined in the 2025 year-end release and are expecting to bring meaningful production online starting in the second quarter. In the Permian, three gross 3-mile Barnett wells are expected to come online this year, with the first in the second quarter. In the Powder River Basin, two gross Niobrara DUCs are scheduled for completion and are expected to be online early in the third quarter. We have also begun facilities work on the three gross Parkman wells scheduled for development this summer. We are currently working to secure a rig and expect first production in the fourth quarter.

We have also made recent efforts to monetize non-core assets in the portfolio with the sale of a Marcellus override package and the pending sale of the office building we acquired in the Peak transaction. Together, these are expected to raise $6.7 million in the second quarter, without a material impact on results going forward.

Strong natural gas pricing in the Marcellus in the first few months of the year and a full quarter of contribution from the acquired PRB production drove quarter-over-quarter gains in revenue and cash flow. Importantly, a significant portion of our expected new volumes this year are oil-weighted and will come online into what is currently a strong oil price environment in the second half of the year. The planned development which is underway and attractive oil pricing should allow the Company to deliver strong operational and financial performance as the year progresses."

Quarter Details:

Epsilon’s capital expenditures were $4.9 million for the quarter ended March 31, 2026.

The Company participated in the drilling of 1 gross (0.25 net) well in Texas, the ninth well in the project and the first 3-mile Barnett well. Completion operations on that well are currently underway.

The Company also began constructing facilities in preparation for Parkman drilling activity this summer, where the plan is to a drill a three well Parkman pad in Campbell County, Wyoming, with production expected online in the fourth quarter.

The Company also repaired and cased the 2 gross (0.7 net) Niobrara DUCs acquired in the Peak acquisition. The completion of those wells is scheduled for June, with production expected online early in the third quarter.

The Auburn Gas Gathering System (Epsilon is a 35% owner) gathered and delivered 9.6 Bcf gross of natural gas volumes during the quarter, or 107 MMcf/d. As of January 2026, the gathering and compression rates increased contractually to $0.50 $ / MMBTU and $0.11 $ / MMBTU, respectively.

Unit operating costs were up meaningfully quarter over quarter, driven by a full quarter contribution from the PRB production ($4.4 million in total operating cost for the quarter, which is higher cost per unit than the other assets / basins, driven by a higher fixed component; unit operating costs will decline there as new development volumes are added in the basin), workover activity in the Marcellus ($0.2 million), and a one-time Ad Valorem tax expense in the Permian ($0.7 million, which will not impact the remainder of the year).

The quarter also included $0.5 million of G&A cost associated with former Peak employees who are on transition services contracts. The full year cost will be approximately $1.5 million. These costs will not be carried into 2027 and are thus not part of run-rate G&A.

Net income for the quarter was impacted materially by the unrealized loss on the hedge book of $7.9 million. The unrealized loss was driven by the sharp increase in crude prices during the quarter. Adjusting for the impact of the unrealized loss, net income per share for the quarter was $0.29. The positive revenue impact of higher oil prices will materialize primarily in subsequent quarters. Approximately 60% of the Company’s currently online oil production is hedged in the mid $60s for WTI for the remainder of the year. All incremental development volumes brought on will have full exposure to prevailing oil prices.

In March, the Company made a $5 million repayment on the outstanding balance on the credit facility.

Q2 2026 Update

The Company participated in the drilling of 5 gross (0.4 net) wells in the Marcellus during April. The completion of those wells is expected over the next 30 days, with production online in the fourth quarter. Four of these wells will be gathered by the Auburn system.

On May 4, 2026, the Company closed the sale of certain overriding royalty interests (ORRIs) in Susquehanna Co, Pennsylvania to an undisclosed private buyer for $3.9 million. The assets covered 940 gross acres and 90 producing Marcellus wells with an average net revenue interest of 0.25% per well. The effective date of the transaction was April 1, 2026, and the consideration represented approximately 6X expected cash flow from the assets over the next twelve months. The assets represented approximately 1.5% of the Company’s trailing twelve months upstream revenue and 2% of the Company’s year-end 2025 Proved Developed Producing (PDP) reserves.

The Company is expected to close the sale of its Durango, Colorado office building (acquired last year in the Peak acquisition) in June, for gross proceeds of $3 million.

In April, the Company made an additional $5 million repayment on the outstanding balance on the credit facility. The current balance is $40.5 million (down from $50.5 million at year-end 2025).

Current Hedge Book:

	Date	Natural Gas					Crude Oil
		Swaps		Costless Collars			Swaps		Costless Collars
		Volume (MMcf)	Price ($/MMBtu)	Volume (MMcf)	Bought Put ($/MMBtu)	Sold Call ($/MMBtu)	Volume (MBbl)	Price ($/Bbl)	Volume (MBbl)	Bought Put ($/Bbl)	Sold Call ($/Bbl)
	2Q 2026	302	3.88	387	3.34	4.94	79	62.83	3	59.78	70.01
	3Q 2026	451	3.93	551	3.35	4.95	80	65.16	0	60.00	70.10
	4Q 2026	178	3.87	783	3.35	5.10	39	62.71	28	59.00	69.00
	FY 2026	931	$3.91	1,722	$3.35	$5.01	198	$63.75	32	$59.10	$69.12
	1Q 2027	87	4.12	818	3.41	5.23	27	61.45	34	59.23	69.47
	2Q 2027	91	3.49	793	3.21	4.81	36	64.05	22	55.94	66.02
	3Q 2027	90	3.58	773	3.11	4.31	28	66.36	26	57.32	67.60
	4Q 2027	44	3.95	352	3.15	4.26	14	62.32	36	57.30	67.55
	FY 2027	312	$3.76	2,736	$3.23	$4.72	106	$63.76	118	$57.60	$67.82
	1Q 2028	28	4.46	28	3.65	4.70	8	62.97	8	57.58	67.96

Earnings Call:

The Company will host a conference call to discuss its results on Thursday, May 14, 2026, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time).

Interested parties in the United States and Canada may participate toll-free by dialing [phone]. International parties may participate by dialing [phone]. Participants should ask to be joined to the “Epsilon Energy First Quarter 2026 Earnings Conference Call.”

A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=vCctDJ0 .... A webcast replay will be available on the Company’s website (www.epsilonenergyltd.com) following the call.

About Epsilon

Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets across the Appalachian, Powder River, Permian, and Western Canadian Sedimentary basins.

Forward-Looking Statements

Certain statements contained in this news release constitute forward looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, ‘may”, “will”, “project”, “should”, ‘believe”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.

Contact Information:

281-670-0002

Jason Stabell
Chief Executive Officer
[e-mail]

Andrew Williamson
Chief Financial Officer
[e-mail]

        

EPSILON ENERGY LTD. Unaudited Consolidated Statements of Operations (All amounts stated in US$)
		Three months ended March 31,
		2026			2025
Revenues from contracts with customers:
Gas, oil, NGL, and condensate revenue		$	23,938,010		$	14,270,790
Gas gathering and compression revenue			1,657,777			1,892,350
Total revenue			25,595,787			16,163,140
Operating costs and expenses:
Lease operating expenses			7,195,313			2,755,898
Gathering system operating expenses			594,446			552,651
Depletion, depreciation, amortization, and accretion			3,002,339			3,475,857
Impairment expense			—			6,669
Transaction costs			71,420			—
General and administrative expenses:
Stock based compensation expense			547,527			385,838
Other general and administrative expenses			3,378,142			1,818,418
Total operating costs and expenses			14,789,187			8,995,331
Operating income			10,806,600			7,167,809
Other income (expense):
Interest income			45,543			15,299
Interest expense			(941,581)			(12,211)
Loss on derivative contracts, net			(8,929,829)			(1,462,170)
Other income (expense), net			16,428			(22,499)
Other expense, net			(9,809,439)			(1,481,581)
Net income before income tax expense			997,161			5,686,228
Income tax expense			267,736			1,670,194
NET INCOME		$	729,425		$	4,016,034
Currency translation adjustments			(2,319)			(50,116)
NET COMPREHENSIVE INCOME		$	727,106		$	3,965,918
Net income per share, basic		$	0.02		$	0.18
Net income per share, diluted		$	0.02		$	0.18
Weighted average number of shares outstanding, basic			30,239,980			22,008,766
Weighted average number of shares outstanding, diluted			30,262,466			22,109,819

EPSILON ENERGY LTD. Unaudited Consolidated Balance Sheets (All amounts stated in US$)
		March 31,			December 31,
		2026			2025
ASSETS
Current assets
Cash and cash equivalents		$	7,912,858		$	8,959,954
Accounts receivable			16,794,429			16,132,501
Short term investments			—			—
Fair value of derivatives			426,255			2,694,340
Prepaid income taxes			2,959,475			2,949,311
Other current assets			1,688,563			1,847,672
Total current assets			29,781,580			32,583,778
Non-current assets
Property and equipment:
Oil and gas properties, successful efforts method
Proved properties			237,783,115			233,334,212
Unproved properties			79,690,561			79,307,169
Accumulated depletion, depreciation, amortization and impairment			(134,196,469)			(131,636,141)
Total oil and gas properties, net			183,277,207			181,005,240
Gathering system			43,593,370			43,540,389
Accumulated depletion, depreciation, amortization and impairment			(37,680,704)			(37,472,139)
Total gathering system, net			5,912,666			6,068,250
Land			1,231,965			1,231,965
Buildings and other property and equipment, net			4,077,163			4,132,732
Total property and equipment, net			194,499,001			192,438,187
Other assets:
Operating lease right-of-use assets, long term			429,923			488,949
Restricted cash			553,000			553,000
Fair value of derivatives, long term			185,056			1,154,936
Deferred financing costs			724,263			774,347
Prepaid drilling costs			246,220			246,220
Total non-current assets			196,637,463			195,655,639
Total assets		$	226,419,043		$	228,239,417
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable trade		$	8,159,934		$	11,148,050
Gathering fees payable			1,047,841			1,076,143
Royalties payable			10,071,572			8,702,526
Income taxes payable			—			—
Accrued capital expenditures			577,154			24,888
Accrued compensation			739,649			1,056,304
Other accrued liabilities			2,927,196			2,682,090
Fair value of derivatives			3,833,399			—
Operating lease liabilities			271,790			271,494
Total current liabilities			27,628,535			24,961,495
Non-current liabilities
Credit facility payable			45,500,000			50,500,000
Ad valorem taxes, long term			7,411,971			7,411,971
Asset retirement obligations			7,553,458			7,437,960
Fair value of derivatives, long term			810,629			—
Deferred income taxes			13,120,790			12,855,585
Operating lease liabilities, long term			271,046			340,052
Total non-current liabilities			74,667,894			78,545,568
Total liabilities			102,296,429			103,507,063
Commitments and contingencies (Note 10)
Shareholders' equity
Preferred shares, no par value, unlimited shares authorized, none issued or outstanding			—			—
Common shares, no par value, unlimited shares authorized and 30,239,980 shares issued and outstanding at March 31, 2026 and  December 31, 2025			154,274,125			154,274,125
Treasury shares, at cost, 0 shares at March 31, 2026 and 0 shares at December 31, 2025			—			—
Additional paid-in capital			14,411,351			13,863,824
Accumulated deficit			(54,457,110)			(53,302,162)
Accumulated other comprehensive income			9,894,248			9,896,567
Total shareholders' equity			124,122,614			124,732,354
Total liabilities and shareholders' equity		$	226,419,043		$	228,239,417

EPSILON ENERGY LTD. Unaudited Consolidated Statements of Cash Flows  (All amounts stated in US$)
		Three months ended March 31,
		2026			2025
Cash flows from operating activities:
Net income		$	729,425		$	4,016,034
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion			3,002,339			3,475,857
Impairment expense			—			6,669
Amortization on deferred financing costs			50,084			—
Loss on derivative contracts			8,929,829			1,462,170
Settlement paid on derivative contracts			(1,047,836)			(415,043)
Settlement of asset retirement obligation			—			(1,600)
Stock-based compensation expense			547,527			385,838
Deferred income tax expense (benefit)			265,205			(321,452)
Changes in assets and liabilities:
Accounts receivable			(661,928)			(2,159,795)
Prepaid income taxes			(10,164)			978,542
Other assets and liabilities			112,036			141,640
Accounts payable, royalties payable, gathering fees payable, and other accrued liabilities			(1,813,998)			91,390
Income taxes payable			—			922,326
Net cash provided by operating activities			10,102,519			8,582,576
Cash flows from investing activities:
Additions to unproved oil and gas properties			(383,391)			(5,060,901)
Additions to proved oil and gas properties			(3,830,774)			(2,578,866)
Additions to gathering system properties			(50,583)			(104,275)
Deductions to land, buildings and property and equipment			1,825			—
Prepaid drilling costs			—			960,136
Net cash used in investing activities			(4,262,923)			(6,783,906)
Cash flows from financing activities:
Payment on credit facility			(5,000,000)			—
Dividends paid			(1,884,373)			(1,375,612)
Net cash used in financing activities			(6,884,373)			(1,375,612)
Effect of currency rates on cash, cash equivalents, and restricted cash			(2,319)			(50,116)
Increase (decrease) in cash, cash equivalents, and restricted cash			(1,047,096)			372,942
Cash, cash equivalents, and restricted cash, beginning of period			9,512,954			6,989,793
Cash, cash equivalents, and restricted cash, end of period		$	8,465,858		$	7,362,735
Supplemental cash flow disclosures:
Income tax paid - federal		$	—		$	80,000
Income tax paid - state (PA)		$	10,933		$	5,138
Income tax paid - state (other)		$	—		$	25
Interest paid		$	42,347		$	657
Non-cash investing activities:
Change in proved properties accrued in accounts payable		$	618,129		$	341,974
Change in gathering system accrued in accounts payable		$	2,398		$	(44,228)
Asset retirement obligation asset additions and adjustments		$	—		$	18,235

		Three months ended March 31,
		2026			2025
Net income		$	729,425		$	4,016,034
Add Back:
Interest expense (income), net			896,038			(3,088)
Income tax (benefit) expense			267,736			1,670,194
Depreciation, depletion, amortization, and accretion			3,002,339			3,475,857
Impairment expense			—			6,669
Stock based compensation expense			547,527			385,838
Transaction costs			71,420			—
Loss on derivative contracts net of cash received or paid on settlement			7,881,993			1,047,127
Foreign currency translation loss			(1,875)			10,289
Adjusted EBITDA		$	13,394,603		$	10,608,920

Epsilon defines Adjusted EBITDA as earnings before (1) net interest expense, (2) taxes, (3) depreciation, depletion, amortization and accretion expense, (4) impairments of natural gas and oil properties, (5) non-cash stock compensation expense, (6) transaction costs, (7) gain or loss on derivative contracts net of cash received or paid on settlement, (8) gain or loss on foreign currency translation. Adjusted EBITDA is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity.

Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Epsilon has included Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures. It further provides investors with a helpful measure for comparing operating performance on a "normalized" or recurring basis with the performance of other companies, without giving effect to certain non-cash expenses and other items. This provides management, investors and analysts with comparative information for evaluating the Company in relation to other natural gas and oil companies providing corresponding non-U.S. GAAP financial measures or that have different financing and capital structures or tax rates. These non-U.S. GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with U.S. GAAP.

$M	Q125		Q425		Q126
GAAP Net Income (Loss)	4,016		(12,439)		729
One-time adjustments
Transaction Costs			2,073		71
Impairment - NM			700
Impairment - Canada	7		559
Loss - Oklahoma Sale			19,257
Adj. Net Income	4,023		10,150		801
WA Shares O/S	22,110		25,966		30,262
P/Share	$	0.18	$	0.39	$	0.03

Epsilon defines Adjusted Net Income as reported U.S. GAAP Net Income adding back expenses related to (1) transaction expenses related to the Peak companies’ acquisition, (2) impairments of natural gas and oil properties, and (3) gain or loss on sale of assets. Adjusted Net Income is not a measure of financial performance as determined under U.S. GAAP and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity.

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