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Epsilon Energy Ltd. (" Epsilon " or the " Company ") (NASDAQ: EPSN) today reported third quarter 2025 financial and operating results.
Third Quarter 2025 Highlights:
| Epsilon - Q3 2025 | |||||||||
| Q3 2025 | Q2 2025 | Q3 2024 | QoQ% | YoY% | YTD 2025 | ||||
| NRI Production | |||||||||
| Gas | MMcf | 2,136 | 2,752 | 1,304 | -22 | % | 64 | % | 7,628 |
| Oil | Mbbl | 39 | 44 | 53 | -11 | % | -26 | % | 129 |
| NGL | Mbbl | 14 | 8 | 17 | 78 | % | -18 | % | 38 |
| Total | Mmcfe | 2,456 | 3,064 | 1,727 | -20 | % | 42 | % | 8,629 |
| Daily | Mmcfe/d | 26.7 | 33.7 | 18.8 | 31.6 | ||||
| Revenues | $M | ||||||||
| Gas | 4,758 | 6,910 | 1,904 | -31 | % | 150 | % | 22,282 | |
| Oil | 2,511 | 2,725 | 3,965 | -8 | % | -37 | % | 8,505 | |
| NGL | 267 | 145 | 335 | 84 | % | -20 | % | 799 | |
| Midstream 1 | 1,445 | 1,845 | 1,084 | -22 | % | 33 | % | 5,183 | |
| Total | 8,981 | 11,625 | 7,288 | -23 | % | 23 | % | 36,769 | |
| Realized Prices 2 | |||||||||
| Gas | $/Mcf | 2.23 | 2.51 | 1.46 | -11 | % | 53 | % | 2.92 |
| Oil | $/Bbl | 63.73 | 61.72 | 74.27 | 3 | % | -14 | % | 65.87 |
| NGL | $/Bbl | 19.12 | 18.51 | 19.56 | 3 | % | -2 | % | 21.26 |
| Adj. EBITDA | $M | 4,365 | 7,396 | 3,744 | -41 | % | 17 | % | 22,370 |
| Cash + STI 3 | $M | 13,236 | 10,378 | 8,775 | 28 | % | 51 | % | |
| Capex 4 | $M | 2,885 | 2,698 | 3,908 | 7 | % | -26 | % | 13,618 |
| Dividend | $M | 1,379 | 1,376 | 1,374 | 0 | % | 0 | % | 4,130 |
| Share Buybacks | $M | 0 | 0 | 628 | 0 | % | -100 | % | 0 |
| Adj Net Income 5 | $M | 1,904 | 4,146 | 406 | 10,023 | ||||
| p/share | $ | 0.09 | 0.19 | 0.02 | 0.45 | ||||
| 1) Net of elimination entry for fees paid by Epsilon | |||||||||
| 2) Excludes impact of hedge realizations | |||||||||
| 3) Includes restricted cash balance | |||||||||
| 4) Includes acquisitions | |||||||||
| 5) Excludes one-time expenses for transaction costs and impairment | |||||||||
Operations Update:
Epsilon's capital expenditures were $2.9 million for the quarter ended September 30, 2025. These were primarily related to the completion of 1 gross (0.25 net) well in Texas. The well in Texas is the eighth Barnett well developed in the project and is performing in-line with pre-drill expectations with a 30-day gross IP rate of over 870 Boe/d (82% oil). Offset wells were shut-in for approximately 20 days during the quarter during the completion, with a net impact of approximately 3,000 net barrels.
In the Marcellus, operator elected shut-ins occurred in the second half of the quarter in response to lower gas prices during the shoulder season, with a net impact of approximately 110 MMcf.
Jason Stabell, Epsilon's Chief Executive Officer, commented, "Over the last several weeks, net wellhead pricing in the Marcellus has moved up strongly as we exit the shoulder season, providing a strong setup for enhanced cash flows in the coming quarters. In the Permian, we continue to deliver good results. The eighth well in the project was brought online in September and performance is consistent with other wells developed in the project area. The next well in Texas is planned for development in the first quarter next year.
The big news during the quarter was our announcement of the acquisition of the operated business in the Powder River Basin. This transaction represents a major milestone in our strategic objectives to add scale, capital control and highly economic inventory at an attractive valuation. The transaction complements our non-operated portfolio and delivers on all these objectives. Integration planning and due diligence have progressed on schedule. We are excited to welcome a capable operating team from Peak and a premier long term focused energy investor in Yorktown as an anchor shareholder. The transaction is expected to close in November."
Current Hedge Book:
| Date | Natural Gas | Crude Oil | ||||||||||||
| Swaps | Basis Swaps | Costless Collars | Swaps | |||||||||||
| Volume (MMcf) | Price ($/MMBtu) | Volume (MMcf) | Basis ($/MMBtu) | Volume (MMcf) | Bought Put ($/MMBtu) | Sold Call ($/MMBtu) | Volume (MBbl) | Price ($/Bbl) | ||||||
| 4Q 2025 | 597 | 3.69 | 414 | (0.96 | ) | 286 | 3.46 | 5.60 | 22 | 67.66 | ||||
| FY 2025 | 597 | $ 3.69 | 414 | ($0.96 | ) | 286 | $ 3.46 | $ 5.60 | 22 | $ 67.66 | ||||
| 1Q 2026 | 270 | 4.66 | - | - | 567 | 3.36 | 5.49 | 6 | 65.00 | |||||
| 2Q 2026 | 273 | 4.10 | - | - | 459 | 3.35 | 5.00 | 3 | 64.00 | |||||
| 3Q 2026 | 276 | 4.10 | - | - | 439 | 3.35 | 5.01 | - | - | |||||
| 4Q 2026 | 93 | 4.10 | - | - | 590 | 3.33 | 5.26 | - | - | |||||
| FY 2026 | 912 | $ 4.27 | - | - | 2,055 | $ 3.35 | $ 5.21 | 9 | $ 64.67 | |||||
| 1Q 2027 | - | - | - | - | 619 | 3.43 | 5.41 | - | - | |||||
| 2Q 2027 | - | - | - | - | 553 | 3.25 | 5.04 | - | - | |||||
| 3Q 2027 | - | - | - | - | 229 | 3.16 | 4.46 | - | - | |||||
| 4Q 2027 | - | - | - | - | 75 | 3.16 | 4.46 | - | - | |||||
| FY 2027 | - | - | - | - | 1,477 | $ 3.31 | $ 5.07 | - | - | |||||
Earning's Call:
The Company will host a conference call to discuss its results on Thursday, November 6, 2025, 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 Third Quarter 2025 Earnings Conference Call."
A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Z4tohzO8 . 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 in Pennsylvania, Texas, Alberta CA, New Mexico, and Oklahoma.
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 September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues from contracts with customers: | ||||||||||||||||
| Gas, oil, NGL, and condensate revenue | $ | 7,536,248 | $ | 6,203,953 | $ | 31,586,766 | $ | 18,118,368 | ||||||||
| Gas gathering and compression revenue | 1,445,211 | 1,083,988 | 5,182,566 | 4,464,134 | ||||||||||||
| Total revenue | 8,981,459 | 7,287,941 | 36,769,332 | 22,582,502 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Lease operating expenses | 2,397,052 | 2,099,501 | 7,615,735 | 5,517,830 | ||||||||||||
| Gathering system operating expenses | 563,542 | 490,325 | 1,729,988 | 1,692,862 | ||||||||||||
| Depletion, depreciation, amortization, and accretion | 2,570,462 | 2,698,812 | 9,247,973 | 7,127,641 | ||||||||||||
| Impairment expense | — | — | 2,676,669 | — | ||||||||||||
| General and administrative expenses: | ||||||||||||||||
| Stock based compensation expense | 376,613 | 309,109 | 1,148,289 | 944,267 | ||||||||||||
| Other general and administrative expenses | 2,467,785 | 1,449,576 | 5,748,081 | 4,486,814 | ||||||||||||
| Total operating costs and expenses | 8,375,454 | 7,047,323 | 28,166,735 | 19,769,414 | ||||||||||||
| Operating income | 606,005 | 240,618 | 8,602,597 | 2,813,088 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 84,894 | 60,693 | 117,440 | 435,908 | ||||||||||||
| Interest expense | (11,666 | ) | (17,598 | ) | (43,783 | ) | (35,117 | ) | ||||||||
| Gain on derivative contracts, net | 964,307 | 440,712 | 2,076,000 | 245,095 | ||||||||||||
| Other income (expense), net | 5,252 | 9,994 | (28,086 | ) | 111,067 | |||||||||||
| Other income, net | 1,042,787 | 493,801 | 2,121,571 | 756,953 | ||||||||||||
| Net income before income tax expense | 1,648,792 | 734,419 | 10,724,168 | 3,570,041 | ||||||||||||
| Income tax expense | 576,497 | 368,398 | 4,084,378 | 881,464 | ||||||||||||
| NET INCOME | $ | 1,072,295 | $ | 366,021 | $ | 6,639,790 | $ | 2,688,577 | ||||||||
| Currency translation adjustments | (42,676 | ) | 39,845 | (168,288 | ) | 62,438 | ||||||||||
| Unrealized loss on securities | — | — | — | (1,598 | ) | |||||||||||
| NET COMPREHENSIVE INCOME | $ | 1,029,619 | $ | 405,866 | $ | 6,471,502 | $ | 2,749,417 | ||||||||
| Net income per share, basic | $ | 0.05 | $ | 0.02 | $ | 0.30 | $ | 0.12 | ||||||||
| Net income per share, diluted | $ | 0.05 | $ | 0.02 | $ | 0.30 | $ | 0.12 | ||||||||
| Weighted average number of shares outstanding, basic | 22,017,310 | 21,948,519 | 22,028,248 | 21,954,803 | ||||||||||||
| Weighted average number of shares outstanding, diluted | 22,159,532 | 22,155,292 | 22,170,223 | 22,000,881 | ||||||||||||
| Epsilon Energy Ltd. Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) | |||||||||
| September 30 | December 31, | ||||||||
| 2025 | 2024 | ||||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 12,766,167 | $ | 6,519,793 | |||||
| Accounts receivable | 4,515,199 | 5,843,722 | |||||||
| Fair value of derivatives | 889,187 | — | |||||||
| Prepaid income taxes | — | 975,963 | |||||||
| Other current assets | 965,970 | 792,041 | |||||||
| Total current assets | 19,136,523 | 14,131,519 | |||||||
| Non-current assets | |||||||||
| Property and equipment: | |||||||||
| Oil and gas properties, successful efforts method | |||||||||
| Proved properties | 200,066,005 | 191,879,210 | |||||||
| Unproved properties | 33,396,744 | 28,364,186 | |||||||
| Accumulated depletion, depreciation, amortization and impairment | (134,181,378 | ) | (123,281,395 | ) | |||||
| Total oil and gas properties, net | 99,281,371 | 96,962,001 | |||||||
| Gathering system | 43,540,301 | 43,116,371 | |||||||
| Accumulated depletion, depreciation, amortization and impairment | (37,271,826 | ) | (36,449,511 | ) | |||||
| Total gathering system, net | 6,268,475 | 6,666,860 | |||||||
| Land | 637,764 | 637,764 | |||||||
| Buildings and other property and equipment, net | 221,901 | 259,335 | |||||||
| Total property and equipment, net | 106,409,511 | 104,525,960 | |||||||
| Other assets: | |||||||||
| Operating lease right-of-use assets, long term | 272,298 | 344,589 | |||||||
| Restricted cash | 470,000 | 470,000 | |||||||
| Prepaid drilling costs | 4,673 | 982,717 | |||||||
| Total non-current assets | 107,156,482 | 106,323,266 | |||||||
| Total assets | $ | 126,293,005 | $ | 120,454,785 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities | |||||||||
| Accounts payable trade | $ | 2,963,805 | $ | 2,334,732 | |||||
| Gathering fees payable | 978,890 | 997,016 | |||||||
| Royalties payable | 1,481,520 | 1,400,976 | |||||||
| Income taxes payable | 1,556,724 | — | |||||||
| Accrued capital expenditures | 1,605,705 | 572,079 | |||||||
| Accrued compensation | 726,213 | 695,018 | |||||||
| Other accrued liabilities | 490,970 | 371,503 | |||||||
| Fair value of derivatives | 487,548 | ||||||||
| Operating lease liabilities | 120,799 | 121,135 | |||||||
| Total current liabilities | 9,924,626 | 6,980,007 | |||||||
| Non-current liabilities | |||||||||
| Asset retirement obligations | 3,822,030 | 3,652,296 | |||||||
| Deferred income taxes | 12,062,053 | 12,738,577 | |||||||
| Operating lease liabilities, long term | 266,263 | 355,776 | |||||||
| Total non-current liabilities | 16,150,346 | 16,746,649 | |||||||
| Total liabilities | 26,074,972 | 23,726,656 | |||||||
| Commitments and contingencies (Note 11) | |||||||||
| Shareholders' equity | |||||||||
| Preferred shares, no par value, unlimited shares authorized, none issued or outstanding | — | — | |||||||
| Common shares, no par value, unlimited shares authorized and 22,058,574 shares issued and outstanding at September 30, 2025 and 22,008,766 issued and outstanding at December 31, 2024 | 116,081,031 | 116,081,031 | |||||||
| Additional paid-in capital | 13,267,196 | 12,118,907 | |||||||
| Accumulated deficit | (38,995,173 | ) | (41,505,076 | ) | |||||
| Accumulated other comprehensive income | 9,864,979 | 10,033,267 | |||||||
| Total shareholders' equity | 100,218,033 | 96,728,129 | |||||||
| Total liabilities and shareholders' equity | $ | 126,293,005 | $ | 120,454,785 | |||||
| Epsilon Energy Ltd. Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$) | |||||||||
| Nine months ended September 30, | |||||||||
| 2025 | 2024 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 6,639,790 | $ | 2,688,577 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depletion, depreciation, amortization, and accretion | 9,247,973 | 7,127,641 | |||||||
| Impairment expense | 2,676,669 | — | |||||||
| Accretion of discount on available for sale securities | — | (297,637 | ) | ||||||
| Gain on derivative contracts | (2,076,000 | ) | (245,095 | ) | |||||
| Settlement received on derivative contracts | 699,265 | 1,245,931 | |||||||
| Settlement of asset retirement obligation | (1,600 | ) | (88,992 | ) | |||||
| Stock-based compensation expense | 1,148,289 | 944,267 | |||||||
| Deferred income tax (benefit) expense | (676,523 | ) | 584,088 | ||||||
| Changes in assets and liabilities: | |||||||||
| Accounts receivable | 1,328,523 | 1,545,431 | |||||||
| Prepaid income taxes | — | (67,878 | ) | ||||||
| Other assets and liabilities | (191,487 | ) | (94,360 | ) | |||||
| Accounts payable, royalties payable, gathering fees payable, and other accrued liabilities | (430,885 | ) | (1,520,707 | ) | |||||
| Income taxes payable | 2,532,686 | — | |||||||
| Net cash provided by operating activities | 20,896,700 | 11,821,266 | |||||||
| Cash flows from investing activities: | |||||||||
| Additions to unproved oil and gas properties | (5,032,558 | ) | (3,100,294 | ) | |||||
| Additions to proved oil and gas properties | (5,901,411 | ) | (28,728,498 | ) | |||||
| Additions to gathering system properties | (384,124 | ) | (76,625 | ) | |||||
| Additions to land, buildings and property and equipment | (12,102 | ) | (13,912 | ) | |||||
| Purchases of short term investments - available for sale | — | (4,045,785 | ) | ||||||
| Proceeds from short term investments - held to maturity | — | 23,116,930 | |||||||
| Prepaid drilling costs | 978,044 | 1,813,808 | |||||||
| Net cash used in investing activities | (10,352,151 | ) | (11,034,376 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Buyback of common shares | — | (1,831,208 | ) | ||||||
| Dividends paid | (4,129,887 | ) | (4,116,777 | ) | |||||
| Net cash used in financing activities | (4,129,887 | ) | (5,947,985 | ) | |||||
| Effect of currency rates on cash, cash equivalents, and restricted cash | (168,288 | ) | 62,438 | ||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 6,246,374 | (5,098,657 | ) | ||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 6,989,793 | 13,873,628 | |||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 13,236,167 | $ | 8,774,971 | |||||
| Supplemental cash flow disclosures: | |||||||||
| Income tax paid - federal | $ | 1,417,860 | $ | — | |||||
| Income tax paid - state (PA) | $ | 755,138 | $ | — | |||||
| Income tax paid - state (other) | $ | 26,710 | $ | 4,000 | |||||
| Interest paid | $ | 9,935 | $ | 16,832 | |||||
| Non-cash investing activities: | |||||||||
| Change in proved properties accrued in accounts payable | $ | 2,266,859 | $ | 818,504 | |||||
| Change in gathering system accrued in accounts payable | $ | 39,805 | $ | 173,193 | |||||
| Asset retirement obligation asset additions and adjustments | $ | 25,196 | $ | 39,597 | |||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income | $ | 1,072,295 | $ | 366,021 | $ | 6,639,790 | $ | 2,688,577 | ||||||||
| Add Back: | ||||||||||||||||
| Interest income, net | (73,228 | ) | (43,095 | ) | (73,657 | ) | (400,791 | ) | ||||||||
| Income tax expense | 576,497 | 368,398 | 4,084,378 | 881,464 | ||||||||||||
| Depreciation, depletion, amortization, and accretion | 2,570,462 | 2,698,812 | 9,247,973 | 7,127,641 | ||||||||||||
| Impairment expense | — | — | 2,676,669 | — | ||||||||||||
| Stock based compensation expense | 376,613 | 309,109 | 1,148,289 | 944,267 | ||||||||||||
| (Gain) loss on derivative contracts net of cash received or paid on settlement | (156,659 | ) | 44,677 | (1,376,735 | ) | 1,000,836 | ||||||||||
| Foreign currency translation loss | (710 | ) | — | 23,601 | 570 | |||||||||||
| Adjusted EBITDA | $ | 4,365,270 | $ | 3,743,922 | $ | 22,370,308 | $ | 12,242,564 | ||||||||
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) gain or loss on derivative contracts net of cash received or paid on settlement, and (7) other income. 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.
| Q125 | Q225 | Q325 | YTD 2025 | |||||
| Net Income | 3,965,918 | 1,475,965 | 1,029,619 | 6,471,502 | ||||
| Adjustments | ||||||||
| Transaction Costs | 0 | 0 | 874,541 | 874,541 | ||||
| Impairment - Canada | 6,669 | 2,670,000 | 2,676,669 | |||||
| Adjusted Net Income | 3,972,587 | 4,145,965 | 1,904,160 | 10,022,712 | ||||
| WA Shares O/S - Diluted | 22,109,819 | 22,202,315 | 22,159,532 | 22,170,223 | ||||
| P/Share | $ | 0.18 | $ | 0.19 | $ | 0.09 | $ | 0.45 |
Epsilon defines Adjusted Net Income Per Share as reported U.S. GAAP Net Income Per Share adding back expenses related to (1) transaction expenses related to the Peak acquisitions and (2) impairments of natural gas and oil properties. Adjusted Net Income Per Share 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.
