HOUSTON, Aug. 12, 2026 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“ Epsilon ” or the “ Company ”) (NASDAQ: EPSN) today reported second quarter 2026 financial and operating results.

Q2 2026 Highlights:

Epsilon - Q2 2026
Q2 2026 Q1 2026 Q2 2025 QoQ% YoY%
NRI Production
Gas MMcf 2,082 2,482 2,752 -16% -24%
Oil MBbl 126 136 44 -8% 184%
NGL MBbl 42 42 8 -1% 437%
Total MMcfe 3,088 3,554 3,064 -13% 1%
Daily Total MMcfe/d 33.9 39.5 33.7
Revenues $M
Gas 3,767 13,403 6,910 -72% -45%
Oil 11,771 9,462 2,725 24% 332%
NGL 1,387 1,073 145 29% 856%
Midstream 1 1,337 1,658 1,845 -19% -28%
Total 18,262 25,596 11,625 -29% 57%
Realized Prices 2
Gas $/Mcf 1.81 5.40 2.51 -66% -28%
Oil $/Bbl 93.73 69.39 61.73 35% 52%
NGL $/Bbl 32.94 25.32 18.51 30% 78%
Adj. EBITDA $M 5,818 13,395 7,396 -57% -21%
Cash + STI 3 $M 11,722 8,466 10,378 38% 13%
Capex 4 $M 8,484 4,885 2,698 74% 214%
Total Debt $M 40,500 45,500 0 -11%
Dividend $M 1,891 1,884 1,376 0% 37%
Adj Net Income 5 $M 1,578 8,683 1,954 -82% -19%
p/share 6 $ 0.05 0.29 0.09 -82% -41%
1) Net of elimination entry for fees paid by Epsilon
2) Excludes impact of hedge realizations
3) Includes restricted cash balance
4) Accrual basis, excludes acquisitions
5) Excludes the impact of transaction costs, impairments, gain / loss on asset sales, and unrealized hedge gain / loss
6) Calculated on weighted average diluted shares outstanding for the period

Jason Stabell, Epsilon’s Chief Executive Officer, commented, " Over the past eight months, Epsilon has undergone a significant transformation. We have expanded from a non-operator into a diversified operator/non-operator hybrid with development activities spanning multiple basins. Importantly, this transition has been executed successfully, with projects progressing ahead of schedule and on budget as our team continues to deliver against our objectives.

The operational momentum we have built gives us the confidence to provide production and capital expenditure guidance for the first time. At the midpoint of our guidance, we expect full-year oil production of approximately 1,800 barrels per day and third-quarter oil production growth of over 25% sequentially, reflecting the impact of recent investments as they begin to contribute meaningfully to production and cash flow.

Based on our planned development activities across our three core operating areas, and the flexibility to allocate capital between oil and gas opportunities, we believe Epsilon has established a foundation for sustained, multi-year production and cash flow growth while maintaining a conservative leverage profile. Supported by a high-quality inventory of development opportunities and disciplined capital allocation, we are well positioned to compound long-term shareholder value."

Quarter Details:

Epsilon’s capital expenditures were $8.5 million for the quarter ended June 30, 2026.

The Company successfully completed 2 gross (0.7 net) Niobrara DUCs in the Powder River Basin in early July. The wells were put on production in July and are performing above expectations.

The Company participated in the drilling of 5 gross (0.4 net) wells in the Marcellus in April. The wells are expected to be completed in the fourth quarter, with production online in December.

The Company participated in the completion of 1 gross (0.25 net) well in the Permian Basin, the ninth well in the Ector Co. project and the first 3-mile Barnett well. The well was put on production in June and is performing in line with expectations.

Production from Q2 2026 activity will have a larger contribution to results in the second half of the year, starting in the third quarter.

Marcellus production was down 16% quarter over quarter due to a planned suction pressure increase in the Auburn Gas Gathering System in May that caused a temporary drop in production during the quarter (in addition to natural well declines). The suction pressure uplift increases the throughput capacity on the system for future development.

Powder River Basin production was down 11% quarter over quarter, due to field optimization activities and offset completions (in addition to natural well declines).

Permian production was flat quarter over quarter, due to the new well volumes online in June.

The Auburn Gas Gathering System (Epsilon is a 35% owner) gathered and delivered 7.7 Bcf gross of natural gas volumes during the quarter, or 85 MMcf/d.

The quarter included $0.8 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, $1.3 million has been incurred in the first half of the year. These costs will not be carried into 2027.

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.

In April, the Company made a $5 million repayment on the outstanding balance on the credit facility, bringing the balance down $10 million from year-end 2025 to $40.5 million.

Q3 2026 Update

In July, the Company sold down a 24% interest in the 3 well Parkman development in the Powder River Basin, that began drilling in June, in exchange for a $1.1 million up front-payment to right-size the third quarter capital program. The Company now holds a 72% interest in the wells.

In July, the Company successfully drilled 3 gross (2.1 net) Parkman wells in the Powder River Basin. The completions are scheduled for the third quarter with production online in the fourth quarter.

Q3 2026 and FY 2026 Production and Capital Guidance Range

Q3 2026 Total Production (MMcfe): 3,270 – 3,510 (mid-point represents 10% QoQ growth)
Q3 2026 Oil Production (MBbl): 155 – 165 (mid-point represents 27% QoQ growth)
Q3 2026 Capital : $24.0 - $28.5 million

FY 2026 Production (MMcfe): 13,740 – 14,280 (mid-point represents 18% YoY growth)
FY 2026 Oil Production (MBbl): 640 – 670 (mid-point represents 194% YoY growth)
FY 2026 Capital: $42.0 – $47.0 million

The primary components of the capital program for the second half of 2026:

  • Drilling and completion of 3 gross (2.1 net) Parkman wells in the Powder River Basin (operated)
  • Facilities build-out in preparation for 2027 drilling plans in the Powder River Basin (operated)
  • Drilling of 2 gross (0.5 net) Barnett wells in the Permian Basin (non-operated), completions are expected in Q127
  • Completion of 5 gross (0.4 net) Marcellus wells (non-operated)

Due to the timing of these investments, approximately 35% of 2026 capital spending (2.1 net Parkman wells in the Powder River Basin) is expected to have an impact for ~60 days in Q4 2026. Another 24% of 2026 capital spending is not expected to have an impact on 2026 results (the initial impact will fall into 2027).

Hedge Book (8.11.26):

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)
Q3 2026 146 3.93 176 3.35 4.94 53 65.16 0 60.00 70.10
Q4 2026 178 3.87 783 3.35 5.10 41 63.24 35 61.18 70.88
FY 2026 325 $3.90 959 $3.35 $5.07 94 $64.32 35 $61.18 $70.88
Q1 2027 87 4.12 818 3.41 5.23 29 62.13 40 60.95 70.91
Q2 2027 91 3.49 793 3.21 4.81 37 64.31 27 58.21 68.04
Q3 2027 90 3.58 773 3.11 4.31 28 66.36 30 58.74 68.83
Q4 2027 44 3.95 535 3.20 4.44 14 62.32 38 58.20 68.32
FY 2027 312 $3.76 2,918 $3.24 $4.73 108 $64.00 135 $59.14 $69.15
Q1 2028
28
4.46
28
3.65
4.70
8
62.97
11
60.29
70.25
Q2 2028
1 70.00
78.48

Earning’s Call:

The Company will host a conference call to discuss its results on Thursday, August 13, 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 (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the “Epsilon Energy Second Quarter 2026 Earnings Conference Call.”

A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=6qJpqYfZ . 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
[email protected]

Andrew Williamson
Chief Financial Officer
[email protected]

EPSILON ENERGY LTD.
Unaudited Consolidated Statements of Operations
(All amounts stated in US$)
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Revenues from contracts with customers:
Gas, oil, NGL, and condensate revenue $ 16,924,916 $ 9,779,728 $ 40,862,926 $ 24,050,518
Gas gathering and compression revenue 1,336,740 1,845,005 2,994,517 3,737,355
Total revenue 18,261,656 11,624,733 43,857,443 27,787,873
Operating costs and expenses:
Lease operating expenses 6,330,193 2,462,785 13,525,506 5,218,683
Gathering system operating expenses 508,475 613,795 1,102,921 1,166,446
Depletion, depreciation, amortization, and accretion 2,804,107 3,201,654 5,806,446 6,677,511
Impairment expense — 2,670,000 — 2,676,669
Gain on sale of oil and gas properties (4,174,368 ) — (4,174,368 ) —
Transaction costs 202,532 — 273,952 —
General and administrative expenses:
Stock based compensation expense 547,527 385,838 1,095,054 771,676
Other general and administrative expenses 3,664,814 1,461,878 7,042,956 3,280,296
Total operating costs and expenses 9,883,280 10,795,950 24,672,467 19,791,281
Operating income 8,378,376 828,783 19,184,976 7,996,592
Other income (expense):
Interest income 24,785 17,247 70,327 32,546
Interest expense (877,267 ) (19,906 ) (1,818,848 ) (32,117 )
Gain (loss) on derivative contracts, net 2,245,470 2,573,863 (6,684,358 ) 1,111,693
Other expense, net (208,658 ) (10,839 ) (192,230 ) (33,338 )
Other income (expense), net 1,184,330 2,560,365 (8,625,109 ) 1,078,784
Net income before income tax expense 9,562,706 3,389,148 10,559,867 9,075,376
Income tax expense 2,429,235 1,837,687 2,696,971 3,507,881
NET INCOME $ 7,133,471 $ 1,551,461 $ 7,862,896 $ 5,567,495
Currency translation adjustments (2,032 ) (75,496 ) (4,351 ) (125,612 )
NET COMPREHENSIVE INCOME $ 7,131,439 $ 1,475,965 $ 7,858,545 $ 5,441,883
Net income per share, basic $ 0.24 $ 0.07 $ 0.26 $ 0.25
Net income per share, diluted $ 0.23 $ 0.07 $ 0.26 $ 0.25
Weighted average number of shares outstanding, basic 30,248,522 22,017,310 30,244,275 22,013,062
Weighted average number of shares outstanding, diluted 30,414,909 22,202,315 30,369,810 22,155,629

EPSILON ENERGY LTD.
Unaudited Consolidated Balance Sheets
(All amounts stated in US$)
June 30,
December 31,
2026
2025
ASSETS
Current assets
Cash and cash equivalents $ 11,169,421 $ 8,959,954
Accounts receivable 17,476,445 16,132,501
Fair value of derivatives 694,977 2,694,340
Prepaid income taxes 2,994,982 2,949,311
Other current assets 1,462,462 1,847,672
Total current assets 33,798,287 32,583,778
Non-current assets
Property and equipment:
Oil and gas properties, successful efforts method
Proved properties 245,787,578 233,334,212
Unproved properties 80,341,257 79,307,169
Accumulated depletion, depreciation, amortization and impairment (136,623,569 ) (131,636,141 )
Total oil and gas properties, net 189,505,266 181,005,240
Gathering system 43,428,789 43,540,389
Accumulated depletion, depreciation, amortization and impairment (37,849,676 ) (37,472,139 )
Total gathering system, net 5,579,113 6,068,250
Land 1,231,965 1,231,965
Buildings and other property and equipment, net 4,036,238 4,132,732
Total property and equipment, net 200,352,582 192,438,187
Other assets:
Operating lease right-of-use assets, long term 371,181 488,949
Restricted cash 553,000 553,000
Fair value of derivatives, long term 33,114 1,154,936
Deferred financing costs 673,754 774,347
Prepaid drilling costs 661,803 246,220
Total non-current assets 202,645,434 195,655,639
Total assets $ 236,443,721 $ 228,239,417
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable trade $ 19,129,836 $ 11,148,050
Gathering fees payable 938,041 1,076,143
Royalties payable 9,902,986 8,702,526
Accrued capital expenditures 486,548 24,888
Accrued compensation 1,081,171 1,056,304
Other accrued liabilities 2,618,815 2,682,090
Fair value of derivatives 686,882 —
Operating lease liabilities 272,063 271,494
Total current liabilities 35,116,342 24,961,495
Non-current liabilities
Credit facility payable 40,500,000 50,500,000
Ad valorem taxes, long term 7,411,971 7,411,971
Asset retirement obligations 7,676,996 7,437,960
Fair value of derivatives, long term 97,675 —
Deferred income taxes 15,527,679 12,855,585
Operating lease liabilities, long term 202,015 340,052
Total non-current liabilities 71,416,336 78,545,568
Total liabilities 106,532,678 103,507,063
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 30,248,617 shares issued and outstanding at June 30, 2026 and 30,239,980 shares issued and outstanding at December 31, 2025 154,274,125 154,274,125
Additional paid-in capital 14,958,878 13,863,824
Accumulated deficit (49,214,176 ) (53,302,162 )
Accumulated other comprehensive income 9,892,216 9,896,567
Total shareholders' equity 129,911,043 124,732,354
Total liabilities and shareholders' equity $ 236,443,721 $ 228,239,417


EPSILON ENERGY LTD.
Unaudited Consolidated Statements of Cash Flows
(All amounts stated in US$)
Six months ended June 30,
2026
2025
Cash flows from operating activities:
Net income $ 7,862,896 $ 5,567,495
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion 5,806,446 6,677,511
Impairment expense — 2,676,669
Amortization on deferred financing costs 100,593 —
Gain on sale of oil and gas properties (4,174,368 ) —
Loss (gain) on derivative contracts 6,684,358 (1,111,693 )
Settlement paid on derivative contracts (2,778,616 ) (108,383 )
Settlement of asset retirement obligation — (1,600 )
Stock-based compensation expense 1,095,054 771,676
Deferred income tax expense (benefit) 2,672,093 (779,676 )
Changes in assets and liabilities:
Accounts receivable (1,343,944 ) 346,839
Prepaid income taxes (45,671 ) —
Other assets and liabilities 292,394 385,445
Accounts payable, royalties payable, gathering fees payable, and other accrued liabilities 6,189,202 (66,454 )
Income taxes payable — 2,572,921
Net cash provided by operating activities 22,360,437 16,930,750
Cash flows from investing activities:
Additions to unproved oil and gas properties (1,416,572 ) (5,132,649 )
Additions to proved oil and gas properties (8,803,428 ) (5,997,993 )
Deductions (additions) to gathering system properties 100,952 (228,327 )
Deductions to land, buildings and property and equipment (11,446 ) (12,102 )
Proceeds from sale of oil and gas properties 4,174,368 —
Prepaid drilling costs (415,583 ) 705,165
Net cash used in investing activities (6,371,709 ) (10,665,906 )
Cash flows from financing activities:
Payment on credit facility (10,000,000 ) —
Dividends paid (3,774,910 ) (2,751,372 )
Net cash used in financing activities (13,774,910 ) (2,751,372 )
Effect of currency rates on cash, cash equivalents, and restricted cash (4,351 ) (125,612 )
Increase in cash, cash equivalents, and restricted cash 2,209,467 3,387,860
Cash, cash equivalents, and restricted cash, beginning of period 9,512,954 6,989,793
Cash, cash equivalents, and restricted cash, end of period $ 11,722,421 $ 10,377,653
Supplemental cash flow disclosures:
Income tax paid - federal $ — $ 1,325,000
Income tax paid - state (PA) $ 10,933 $ 355,138
Income tax paid - state (other) $ 50,025 $ 1,710
Interest paid $ 1,722,335 $ 9,552
Non-cash investing activities:
Change in proved properties accrued in accounts payable $ 3,260,493 $ (690,866 )
Change in gathering system accrued in accounts payable $ (10,648 ) $ 71,366
Asset retirement obligation asset additions and adjustments $ 6,961 $ 18,235


Three months ended June 30, Six months ended June 30,
2026
2025
2026
2025
Net income $ 7,133,471 $ 1,551,461 $ 7,862,896 $ 5,567,495
Add Back:
Interest expense (income), net 852,482 2,659 1,748,521 (429 )
Income tax expense 2,429,235 1,837,687 2,696,971 3,507,881
Depreciation, depletion, amortization, and accretion 2,804,107 3,201,654 5,806,446 6,677,511
Impairment expense — 2,670,000 — 2,676,669
Stock based compensation expense 547,527 385,838 1,095,054 771,676
Gain on sale of oil and gas properties (4,174,368 ) — (4,174,368 ) —
Transaction costs 202,532 — 273,952 —
(Gain)/loss on derivative contracts net of cash received or paid on settlement (3,976,251 ) (2,267,203 ) 3,905,742 (1,220,076 )
Foreign currency translation (gain) loss (1,201 ) 14,021 (3,076 ) 24,310
Adjusted EBITDA $ 5,817,534 $ 7,396,117 $ 19,212,138 $ 18,005,037

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 sale of assets, and (9) gain or loss on foreign currency translations. 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 Q225 Q126 Q226 YTD2026
GAAP Net Income (Loss) 1,551 729 7,133 7,863
Adjustments
Transaction Cost 71 203
Impairment 2,670
Asset Sale (Gain) / Loss -4,174
Unrealized Hedge (Gain) / Loss -2,267 7,882 -3,976
Adj. Net Income 1,954 8,683 -815 7,868
WA Shares O/S 22,202 30,262 30,415 30,370
P/Share $ 0.09 $ 0.29 $ (0.03 ) $ 0.26

Epsilon defines Adjusted Net Income as reported U.S. GAAP Net Income adjusting for items related to (1) transaction expenses, (2) impairments of natural gas and oil properties, (3) gain or loss on sale of assets, and (4) unrealized gain or loss on hedges. 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.