$EPSN

Epsilon Energy Ltd.

CIK:0001726126|SEC Filings

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2026	Jun. 30, 2025	Jun. 30, 2026	Jun. 30, 2025
Revenues from contracts with customers:
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	0	2,670,000	0	2,676,669
Gain on sale of oil and gas properties	(4,174,368)	0	(4,174,368)	0
Transaction costs	202,532	0	273,952	0
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 (loss) 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 income, net	(208,658)	(10,839)	(192,230)	(33,338)
Other income, net	1,184,330	2,560,365	(8,625,109)	1,078,784
Net (loss) income before income tax expense	9,562,706	3,389,148	10,559,867	9,075,376
Income tax (benefit) expense	2,429,235	1,837,687	2,696,971	3,507,881
NET (LOSS) 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 (LOSS) INCOME	$ 7,131,439	$ 1,475,965	$ 7,858,545	$ 5,441,883
Net (loss) income per share, basic (in dollars per share)	$ 0.24	$ 0.07	$ 0.26	$ 0.25
Net (loss) income per share, diluted (in dollars per share)	$ 0.23	$ 0.07	$ 0.26	$ 0.25
Weighted average number of shares outstanding, basic (in shares)	30,248,522	22,017,310	30,244,275	22,013,062
Weighted average number of shares outstanding, diluted (in shares)	30,414,909	22,202,315	30,369,810	22,155,629
Gas, oil, NGL, and condensate revenue
Revenues from contracts with customers:
Total revenue	$ 16,924,916	$ 9,779,728	$ 40,862,926	$ 24,050,518
Gas gathering and compression revenue
Revenues from contracts with customers:
Total revenue	$ 1,336,740	$ 1,845,005	$ 2,994,517	$ 3,737,355

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2026	Jun. 30, 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	0	2,676,669
Amortization on deferred financing costs	100,593	0
Gain on sale of oil and gas properties	(4,174,368)	0
(Gain) loss on derivative contracts	6,684,358	(1,111,693)
Settlement received on derivative contracts	(2,778,616)	(108,383)
Settlement of asset retirement obligation	0	(1,600)
Stock-based compensation expense	1,095,054	771,676
Deferred income tax (benefit) expense	2,672,093	(779,676)
Changes in assets and liabilities, net of assets and liabilities acquired in business combination:
Accounts receivable	(1,343,944)	346,839
Prepaid income taxes	(45,671)	0
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	0	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)
Additions to land, buildings and property and equipment	(11,446)	(12,102)
Proceeds from sale of oil and gas properties	4,174,368	0
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)	0
Dividends paid	(3,774,910)	(2,751,372)
Net cash provided by (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 (decrease) 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:
US Federal	0	1,325,000
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
Pennsylvania
Supplemental cash flow disclosures:
State	10,933	355,138
State, Other
Supplemental cash flow disclosures:
State	$ 50,025	$ 1,710

Unaudited Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2026	Dec. 31, 2025
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
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
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	0
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	0
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
Shareholders' equity
Preferred shares, no par value, unlimited shares authorized, none issued or outstanding	0	0
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