Epsilon Announces Second Quarter 2026 Results and 2026 Production and Capital Guidance

Epsilon Energy (NASDAQ: EPSN) reported Q2 2026 results and issued Q3 and full-year 2026 production and capital guidance, alongside a correction to previously reported adjusted net income figures.

Rhea-AI Summary

Epsilon Energy (NASDAQ: EPSN) reported Q2 2026 results and issued Q3 and full-year 2026 production and capital guidance, alongside a correction to previously reported adjusted net income figures. Adjusted net income for Q2 2026 was revised to -$0.8 million (-$0.03/share), versus a previously stated $1.6 million ($0.05/share), due to recategorizing certain asset sale proceeds; GAAP earnings in the Form 10-Q are unchanged.

Q2 revenue was $18.3 million, up 57% year over year but down 29% quarter over quarter, with oil and NGL revenue offsetting weaker gas prices and volumes. Net income was $7.1 million ($0.23 diluted EPS), compared with $1.6 million a year earlier. Total production was 3,088 MMcfe (flat YoY, -13% QoQ) with strong liquids growth, while adjusted EBITDA was $5.8 million, down 21% YoY. Capital expenditures were $8.5 million, and total debt stood at $40.5 million.

For Q3 2026, Epsilon guides total production to 3,270–3,510 MMcfe and oil volumes to 155–165 MBbl, implying midpoints of 10% and 27% sequential growth, respectively. Full-year 2026 production is guided to 13,740–14,280 MMcfe (midpoint 18% YoY growth) and oil production to 640–670 MBbl (midpoint 194% YoY growth), on planned capital spending of $42–47 million.

Positive

• Revenue $18.3M, up 57% year over year in Q2 2026
• Net income $7.1M in Q2 2026 vs. $1.6M in Q2 2025
• Oil revenue $11.8M, up 332% YoY on 184% higher oil volumes
• Realized oil price $93.73/Bbl, up 52% YoY and 35% QoQ
• Total FY 2026 production guided up 18% YoY at midpoint
• FY 2026 oil volumes guided up 194% YoY at midpoint

Negative

• Adjusted net income -$0.8M in Q2 2026 vs. $2.0M in Q2 2025
• Adjusted EBITDA $5.8M, down 57% QoQ and 21% YoY
• Total production 3,088 MMcfe, down 13% QoQ and only 1% up YoY
• Gas production 2,082 MMcf, down 16% QoQ and 24% YoY
• Capex $8.5M in Q2 2026, up 74% QoQ and 214% YoY
• Realized gas price $1.81/Mcf, down 66% QoQ and 28% YoY

News Explained

Epsilon is converting portions of its asset base into cash, while 24% of 2026 capital spending is not expected to affect 2026 results.

The August 12 release adds two completed portfolio changes: a May 4, 2026 ORRI sale and a July interest sell-down, bringing cash while reducing retained interests in the assets or wells involved.

The ORRI transaction closed for $3.9 million and covered 90 producing Marcellus wells; the July transaction sold a 24% interest in three Parkman wells for a $1.1 million upfront payment, leaving Epsilon Energy with a 72% interest.

The company says approximately 35% of 2026 capital spending is expected to affect results for about 60 days in Q4 2026, while another 24% is not expected to affect 2026 results.

Specified milestones are the Parkman completions in Q3 with production online in Q4, Marcellus completions in Q4 with production online in December, and Barnett completions expected in Q1 2027.

Argus Aug 13 session 21 alerts

-10.44% close to close 8.1x rel. volume Open Argus

Details

News Market Reaction – EPSN

-7.5% Trough in 4 hr 37 min

$170.94M Market Cap

On Aug 13, the first trading day after this news, EPSN closed 10.44% below the previous close. Argus tracked a trough of -7.5% from its starting point during tracking. Our momentum scanner recorded 21 alerts for this stock that day. Relative volume reached 8.1x the daily average during tracking.

Data tracked by StockTitan Argus for the Aug 13 session.

Key Figures

Adjusted net income: -$815M Adjusted earnings per share: -$0.03 Revenue: $18,262M +5 more

Adjusted net income

-$815M

Q2 2026 corrected figure

Adjusted earnings per share

-$0.03

Q2 2026 corrected figure

Revenue

$18,262M

Q2 2026

Adjusted EBITDA

$5,818M

Q2 2026

Cash and short-term investments

$11,722M

Q2 2026

Total debt

$40,500M

Q2 2026

FY 2026 oil production guidance

640-670 MBbl

FY 2026 guidance range

FY 2026 capital guidance

$42.0-$47.0 million

FY 2026 guidance range

Previous Earnings Reports

5 past events · Latest: May 13

Same Type 5 events

1. May 13

   Q1 earnings

   24h Move

   +3.3%

   Higher revenue and production accompanied adjusted EBITDA growth and lower reported debt.

2. Mar 24

   FY 2025 earnings

   24h Move

   +0.0%

   Production and reserves increased despite significant one-time sale and impairment charges.

3. Nov 05

   Q3 earnings

   24h Move

   -3.3%

   Results included lower financial metrics alongside operational updates and a pending acquisition.

4. May 14

   Q1 earnings

   24h Move

   +1.8%

   Revenue, production, realized gas prices, and adjusted EBITDA increased year over year.

5. Mar 19

   FY 2024 earnings

   24h Move

   -2.1%

   Low natural-gas prices affected production while capital expenditures and proved reserves increased.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

mmcfe, overriding royalty interests, proved developed producing reserves, costless collars

4 terms

mmcfe technical

"NRI Production Gas | MMcf | 2,082 | 2,482 | 2,752"

mmcfe stands for million cubic feet equivalent, a unit that expresses quantities of natural gas and other hydrocarbon liquids as if they were all gas volumes. Investors use it to compare and sum different kinds of fuel production or reserves on a single scale—like converting dollars in different currencies to one common money—so it clarifies output, reserve size and revenue potential across mixed energy products.

overriding royalty interests financial

"the Company closed the sale of certain overriding royalty interests"

An overriding royalty interest (ORRI) is a percentage of production revenue from a specific oil, gas, or mineral lease that goes to a holder without requiring them to pay operating or development costs. Think of it as a slice of the sales proceeds from a single property, like receiving a share of ticket sales from a concert without helping run the show. For investors, ORRIs matter because they provide cash flow tied to production volumes and commodity prices while carrying limited operational liabilities.

proved developed producing reserves technical

"Company’s year-end 2025 Proved Developed Producing (PDP) reserves"

Proved developed producing reserves are quantities of oil or gas that have been confirmed by testing, are already brought into production through drilled and connected wells, and are currently flowing to market. For investors this is like counting cash in a company’s tills rather than promises on a ledger: these reserves represent near-term, revenue-generating assets that support earnings, borrowing capacity and valuation with lower uncertainty than undeveloped or unproven resources.

costless collars financial

"Natural Gas | Crude Oil ... Costless Collars"

A costless collar is a hedging strategy where an investor buys a protective option that limits losses and simultaneously sells an option that caps gains so the two premiums roughly cancel out. Think of it like buying insurance on a car while agreeing to share any big windfall from its sale with the insurer — it protects your downside without an upfront payment, but it also limits how much you can profit. Investors use it to reduce risk on a position while preserving capital and avoiding immediate cash outlay.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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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.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How did Epsilon Energy (NASDAQ: EPSN) perform financially in Q2 2026?

Epsilon reported Q2 2026 revenue of $18.3 million and net income of $7.1 million. According to Epsilon, revenue rose 57% year over year, driven by higher oil and NGL revenue, while diluted EPS reached $0.23 compared with $0.07 a year earlier.

Why was Epsilon Energy’s Q2 2026 adjusted net income restated to a loss?

Epsilon restated Q2 2026 adjusted net income to -$0.8 million (-$0.03 per share) from a previously reported profit. According to Epsilon, this reflects reclassifying certain asset sale proceeds from Other Income to Gain on Asset Sales to align with its adjusted net income definition.

What production and capital guidance did Epsilon Energy (EPSN) give for Q3 2026?

For Q3 2026, Epsilon guides total production to 3,270–3,510 MMcfe and oil volumes to 155–165 MBbl. According to Epsilon, midpoint assumptions imply about 10% sequential total production growth and 27% oil growth, on capital spending of $24.0–$28.5 million.

What are Epsilon Energy’s full-year 2026 production and capex targets (EPSN)?

For 2026, Epsilon targets total production of 13,740–14,280 MMcfe and oil volumes of 640–670 MBbl. According to Epsilon, the midpoints imply 18% total production growth and 194% oil growth year over year, with planned capital spending of $42.0–$47.0 million.

How did Epsilon Energy’s production mix change in Q2 2026 versus Q2 2025?

Total Q2 2026 production was 3,088 MMcfe, roughly flat year over year, but liquids increased significantly. According to Epsilon, oil volumes rose 184% and NGL volumes 437%, while gas volumes fell 24%, shifting the mix toward higher-priced liquids.

What is the status of Epsilon Energy’s debt and cash position as of June 30, 2026?

As of June 30, 2026, Epsilon reported $40.5 million of credit facility debt and cash plus short-term investments of $11.7 million. According to Epsilon, the credit facility balance was reduced by $10 million from year-end 2025 through repayments.

When is Epsilon Energy’s Q2 2026 earnings call and how can investors join?

Epsilon scheduled its Q2 2026 earnings call for August 13, 2026 at 10:00 a.m. Central Time. According to Epsilon, U.S. and Canadian investors can dial (833) 816-1385, while international participants can call (412) 317-0478 or access the webcast via the provided online link.