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
$67.82
1Q 2028
28
4.46
28
3.65
4.70
8
62.97
8
57.58
67.96
Earnings Call:
The Company will host a conference call to discuss its results on Thursday, May 14, 2026, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time).
Interested parties in the United States and Canada may participate toll-free by dialing (833) 816-1385. International parties may participate by dialing (412) 317-0478. Participants should ask to be joined to the "Epsilon Energy First Quarter 2026 Earnings Conference Call."
A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=vCctDJ0X. A webcast replay will be available on the Company's website (www.epsilonenergyltd.com) following the call.
About Epsilon
Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets across the Appalachian, Powder River, Permian, and Western Canadian Sedimentary basins.
Forward-Looking Statements
Certain statements contained in this news release constitute forward looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", ‘may", "will", "project", "should", ‘believe", and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated. Forward-looking statements are based on reasonable assumptions, but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.
Contact Information:
281-670-0002
Jason StabellChief Executive Officer[email protected]
Andrew Williamson Chief Financial Officer [email protected]
EPSILON ENERGY LTD.Unaudited Consolidated Statements of Operations(All amounts stated in US$)
Three months ended March 31,
