HOUSTON, Aug. 12, 2026 (GLOBE NEWSWIRE) — In a release issued under the same headline earlier today by Epsilon Energy Ltd. (NASDAQ: EPSN), please note the following changes to the first table, titled “Q2 2026 Highlights”: The reason for the correction in adjusted net income and adjusted net income per share is the recategorization of sale proceeds from asset sales (in which the company had no basis) during the quarter from Other Income to Gain on Asset Sales, to be consistent with the Company’s definition of adjusted net income. Reported earnings in the Company’s Form 10-Q are unaffected by this correction.

The Adjusted Net Income Q2 2026 should be -815, not 1,578 as previously stated. The p/share Q2 2026 should be -0.03, not 0.05 as previously stated. Both the Adjusted Net Income and the p/share for QoQ% should be -109%, not -82%, as previously stated. The Adjusted Net Income YoY% should be -142%, not -19%, as previously stated. The p/share YoY% should be -130%, not -41%, as previously stated. The corrected release follows:

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 -815 8,683 1,954 -109% -142%
p/share 6 $ -0.03 0.29 0.09 -109% -130%
             
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
Jason.Stabell@EpsilonEnergyLTD.com

Andrew Williamson
Chief Financial Officer
Andrew.Williamson@EpsilonEnergyLTD.com    

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.


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Epsilon Energy Ltd.