Epsilon Reports First Quarter 2025 Results

Rhea-AI Summary

Epsilon Energy (NASDAQ: EPSN) reported strong Q1 2025 results with significant growth in production and revenues. Total revenues doubled YoY to $16.16M, driven by a 57% increase in total production to 3,108 Mmcfe. Gas production surged 55% QoQ and 64% YoY, while realized gas prices improved 73% QoQ to $3.87/Mcf. The company's Adjusted EBITDA reached $10.61M, up 131% YoY. Capital expenditures were $8.0M, primarily for drilling in Alberta, Canada. The company maintained its dividend at $1.376M and holds $7.36M in cash and short-term investments. Management highlighted strong performance in Marcellus operations and ongoing development in Alberta JV, with plans for additional wells throughout 2025.

Positive

• Total revenues doubled year-over-year to $16.16M in Q1 2025
• Gas production increased 64% YoY and 55% QoQ to 2,740 MMcf
• Adjusted EBITDA grew 131% YoY to $10.61M
• Realized gas prices improved 73% QoQ to $3.87/Mcf
• Maintained quarterly dividend at $1.376M
• Strong cash position of $7.36M

Negative

• Capital expenditures increased 111% QoQ to $8.035M
• Cash position decreased 52% YoY from $15.45M to $7.36M
• No share buybacks conducted in Q1 2025 compared to $1.2M in Q1 2024
• Oil production declined 12% QoQ

Insights

Oil & Gas Financial Analyst

Epsilon's Q1 shows remarkable financial turnaround with 102% YoY revenue growth driven by Marcellus gas recovery and higher realized prices.

Epsilon's Q1 2025 results reveal a dramatic turnaround in operational performance. Total revenue doubled year-over-year to $16.2 million, with natural gas revenue surging an impressive 258% from Q1 2024. This exceptional growth stems from two key factors: a 64% increase in gas production volume and a 118% improvement in realized gas prices to $3.87/Mcf.

The company's adjusted EBITDA of $10.6 million represents a 131% year-over-year increase, demonstrating significant operational leverage to higher gas prices. This quarterly EBITDA nearly matches what the company generated in the entire second half of 2024, highlighting the dramatic shift in market conditions.

Capital expenditures of $8.0 million were primarily directed toward Canadian operations, with $4.9 million allocated to drilling carry costs that secured a 25% working interest in the Garrington area assets. This strategic investment diversifies Epsilon's portfolio beyond its core Marcellus position.

The company's natural gas hedge book shows prudent risk management with approximately 8,500 MMBTUs per day hedged through most of 2025 at around $3.21/MMBTU before basis adjustments. While these hedges provided negative settlements in Q1 (-$330,730 combined), they offer downside protection if gas prices retreat.

Despite the strong operational performance, Epsilon's cash position of $7.36 million represents a 52% year-over-year decrease, reflecting significant capital deployment over the past year. The company maintains its quarterly dividend of approximately $1.38 million, demonstrating commitment to shareholder returns despite significant capital investments.

The CEO's commentary highlights the outperformance of their Marcellus assets, with cash flows up 450% year-over-year. Management indicates no additional Marcellus development in 2025 despite strong economics, suggesting a disciplined approach to capital allocation. The overall strategy appears focused on maintaining operational momentum while evaluating "accretive opportunities" across their diversified portfolio.

HOUSTON, May 14, 2025 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported first quarter 2025 financial and operating results.

First Quarter 2025 Highlights:

Epsilon - Q1 2025
		Q1 2025	Q4 2024	Q1 2024	QoQ%		YoY%
NRI Production
Gas	MMcf	2,740	1,765	1,666	55	%	64	%
Oil	Mbbl	46	52	37	-12	%	24	%
NGL	Mbbl	16	17	16	-6	%	-2	%
Total	Mmcfe	3,108	2,176	1,982	43	%	57	%
Revenues	$M
Gas		10,614	3,958	2,963	168	%	258	%
Oil		3,270	3,537	2,715	-8	%	20	%
NGL		387	385	373	1	%	4	%
Midstream1		1,892	1,060	1,936	79	%	-2	%
Total		16,163	8,940	7,987	81	%	102	%
Realized Prices2
Gas	$/Mcf	3.87	2.24	1.78	73	%	118	%
Oil	$/Bbl	71.76	68.38	74.13	5	%	-3	%
NGL	$/Bbl	24.52	22.98	23.16	7	%	6	%
Adj. EBITDA	$M	10,609	5,335	4,595	99	%	131	%
Cash + STI3	$M	7,363	6,990	15,447	5	%	-52	%
Capex4	$M	8,035	3,804	21,466	111	%	-63	%
Dividend	$M	1,376	1,370	1,370	0	%	0	%
Share Buybacks	$M	0	0	1,199			-100	%
1) Net of elimination entry for fees paid by Epsilon
2) Excludes impact of hedge realizations
3) Includes restricted cash balance
4) Includes acquisitions

Operations Update:

Epsilon’s capital expenditures were $8.0 million for the quarter ended March 31, 2025. These were primarily related to the drilling and completion of 2 gross (0.5 net) Glauconitic wells in the Garrington area of Alberta, Canada (including $4.9 million in drilling carry in favor of the operator to earn a 25% working interest in the large leasehold position).

Jason Stabell, Epsilon's Chief Executive Officer, commented, “Our Marcellus business performed very well during the quarter with all delayed turn-in-line wells now on production and the lifting of the curtailments we sustained for most of last year. As a result, total gas volumes were up over 50% quarter over quarter. Realized gas prices also rebounded strongly, with Marcellus cash-flows (revenues less operating expenses) up over 200% quarter over quarter and up over 450% from the first quarter last year. This demonstrates the leverage we have in the basin to incremental development in a strong natural gas market. As mentioned previously, we have meaningful remaining undeveloped inventory there. However, we don’t expect any additional development this year.

In Texas, current plans call for 2 gross (0.5 net) new wells over the remainder of the year, in line with our development obligations on the leasehold. The Barnett wells are still economic at current oil prices, but any escalation in activity levels will require higher sustained prices.

Our first two wells in the Alberta JV we entered in October are now on production. Our operating partner is currently evaluating inflow performance and sizing artificial lift and facilities. The current plan is to drill 2 more wells there over the remainder of the year.

With our diversified assets, commodity mix and balance sheet, we remain in a strong position to take advantage of accretive opportunities.”

Current Hedge Book:

NG Hedge Book				Realized - Q125
2025		Jan-25		Feb-25		Mar-25		Apr-25		May-25		Jun-25		Jul-25		Aug-25		Sep-25		Oct-25		Nov-25		Dec-25
NYMEX Henry Hub (LD)
Fixed Swaps	MMBTUs	(232,500	)	(210,000	)	(387,500	)	(255,000	)	(418,500	)	(255,000	)	(263,500	)	(263,500	)	(255,000	)	(263,500	)	(120,000	)	(120,000	)
Hedges per Day	p/day	(7,500	)	(7,500	)	(12,500	)	(8,500	)	(13,500	)	(8,500	)	(8,500	)	(8,500	)	(8,500	)	(8,500	)	(4,000	)	(4,000	)
WA Strike Price	$ / MMBTU	3.47		3.47		3.68		3.21		3.12		3.21		3.21		3.21		3.21		3.21		4.66		4.66
Tenn Z4 300L Basis
Basis Swaps	MMBTUs	(232,500	)	(210,000	)	(232,500	)	(255,000	)	(263,500	)	(255,000	)	(263,500	)	(263,500	)	(255,000	)	(263,500	)
Hedges per Day	p/day	(7,500	)	(7,500	)	(7,500	)	(8,500	)	(8,500	)	(8,500	)	(8,500	)	(8,500	)	(8,500	)	(8,500	)
WA Strike Price	$ / MMBTU	(0.74	)	(0.74	)	(0.74	)	(0.95	)	(0.95	)	(0.95	)	(0.95	)	(0.95	)	(0.95	)	(0.95	)
Hedged Net Price	$ / MMBTU									2.17		2.26		2.26		2.26		2.26		2.26
Settlements	$M	(76.73	)	(94.50	)	(159.50	)	(198.40	)	(28.62	)
NG Hedge Book
2026		Jan-26		Feb-26		Mar-26		Apr-26		May-26		Jun-26		Jul-26		Aug-26		Sep-26		Oct-26		Nov-26		Dec-26
NYMEX Henry Hub (LD)
Fixed Swaps	MMBTUs	(124,000	)	(112,000	)	(124,000	)	(120,000	)	(124,000	)	(120,000	)	(124,000	)	(124,000	)	(120,000	)	(124,000	)
Hedges per Day	p/day	(4,000	)	(4,000	)	(4,000	)	(4,000	)	(4,000	)	(4,000	)	(4,000	)	(4,000	)	(4,000	)	(4,000	)
WA Strike Price	$ / MMBTU	4.66		4.66		4.66		4.09		4.09		4.09		4.09		4.09		4.09		4.09
Crude Hedge Book		Realized - Q125
2025		Jan-25		Feb-25		Mar-25		Apr-25		May-25		Jun-25		Jul-25		Aug-25		Sep-25		Oct-25		Nov-25		Dec-25
NYMEX WTI CMA
Fixed Swaps	Bbls	(4,682	)	(4,091	)	(4,389	)	(6,600	)	(6,600	)	(6,200	)	(6,200	)	(6,000	)	(5,600	)	(3,400	)	(3,200	)	(3,200	)
Hedges per Day	BOPD	(151	)	(146	)	(142	)	(220	)	(213	)	(207	)	(200	)	(194	)	(187	)	(110	)	(107	)	(103	)
WA Strike Price	$/Bbl	74.34		74.34		74.34		71.73		71.76		71.79		71.07		71.06		71.05		70.20		70.20		70.20
Settlements	$M	(3.55	)	12.81		28.09		57.86

Earning’s Call:

The Company will host a conference call to discuss its results on Thursday, May 15, 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 First Quarter 2025 Earnings Conference Call.”

A webcast can be viewed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Ehro2Pgc. 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 March 31,
		2025				2024
Revenues from contracts with customers:
Gas, oil, NGL, and condensate revenue		$	14,270,790			$	6,051,045
Gas gathering and compression revenue			1,892,350				1,935,698
Total revenue			16,163,140				7,986,743
Operating costs and expenses:
Lease operating expenses			2,755,898				1,768,462
Gathering system operating expenses			552,651				552,570
Depletion, depreciation, amortization, and accretion			3,475,857				2,380,426
Impairment expense			6,669				—
General and administrative expenses:
Stock based compensation expense			385,838				321,569
Other general and administrative expenses			1,818,418				1,559,023
Total operating costs and expenses			8,995,331				6,582,050
Operating income			7,167,809				1,404,693
Other income (expense):
Interest income			15,299				266,272
Interest expense			(12,211	)			(8,760	)
Loss on derivative contracts			(1,462,170	)			(100,726	)
Other expense			(22,499	)			(533	)
Other (expense) income, net			(1,481,581	)			156,253
Net income before income tax expense			5,686,228				1,560,946
Income tax expense			1,670,194				54,050
NET INCOME		$	4,016,034			$	1,506,896
Currency translation adjustments			(50,116	)			364
Unrealized loss on securities			—				(4,609	)
NET COMPREHENSIVE INCOME		$	3,965,918			$	1,502,651
Net income per share, basic		$	0.18			$	0.07
Net income per share, diluted		$	0.18			$	0.07
Weighted average number of shares outstanding, basic			22,008,766				21,994,207
Weighted average number of shares outstanding, diluted			22,109,819				21,994,207

EPSILON ENERGY LTD. Unaudited Consolidated Balance Sheets (All amounts stated in US$)
		March 31,				December 31,
		2025				2024
ASSETS
Current assets
Cash and cash equivalents		$	6,892,735			$	6,519,793
Accounts receivable			8,003,517				5,843,722
Prepaid income taxes			—				975,963
Other current assets			647,295				792,041
Total current assets			15,543,547				14,131,519
Non-current assets
Property and equipment:
Oil and gas properties, successful efforts method
Proved properties			194,811,616				191,879,210
Unproved properties			33,425,087				28,364,186
Accumulated depletion, depreciation, amortization and impairment			(126,370,072	)			(123,281,395	)
Total oil and gas properties, net			101,866,631				96,962,001
Gathering system			43,176,418				43,116,371
Accumulated depletion, depreciation, amortization and impairment			(36,777,152	)			(36,449,511	)
Total gathering system, net			6,399,266				6,666,860
Land			637,764				637,764
Buildings and other property and equipment, net			246,894				259,335
Total property and equipment, net			109,150,555				104,525,960
Other assets:
Operating lease right-of-use assets, long term			318,604				344,589
Restricted cash			470,000				470,000
Prepaid drilling costs			22,581				982,717
Total non-current assets			109,961,740				106,323,266
Total assets		$	125,505,287			$	120,454,785
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable trade		$	2,013,172			$	2,334,732
Gathering fees payable			1,651,164				997,016
Royalties payable			2,019,819				1,400,976
Income taxes payable			924,905				—
Accrued capital expenditures			309,630				572,079
Accrued compensation			284,905				695,018
Other accrued liabilities			481,770				371,503
Fair value of derivatives			1,534,675				487,548
Operating lease liabilities			121,293				121,135
Total current liabilities			9,341,333				6,980,007
Non-current liabilities
Asset retirement obligations			3,716,029				3,652,296
Deferred income taxes			12,417,125				12,738,577
Operating lease liabilities, long term			326,527				355,776
Total non-current liabilities			16,459,681				16,746,649
Total liabilities			25,801,014				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 22,008,766 shares issued and outstanding at March 31, 2025 and December 31, 2024			116,081,031				116,081,031
Additional paid-in capital			12,504,745				12,118,907
Accumulated deficit			(38,864,654	)			(41,505,076	)
Accumulated other comprehensive income			9,983,151				10,033,267
Total shareholders' equity			99,704,273				96,728,129
Total liabilities and shareholders' equity		$	125,505,287			$	120,454,785

EPSILON ENERGY LTD. Unaudited Consolidated Statements of Cash Flows (All amounts stated in US$)
		Three months ended March 31,
		2025				2024
Cash flows from operating activities:
Net income		$	4,016,034			$	1,506,896
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion			3,475,857				2,380,426
Impairment expense			6,669				—
Accretion of discount on available for sale securities			—				(216,180	)
Loss on derivative contracts			1,462,170				100,726
Settlement (paid) received on derivative contracts			(415,043	)			488,285
Settlement of asset retirement obligation			(1,600	)			(1,653	)
Stock-based compensation expense			385,838				321,569
Deferred income tax expense (benefit)			(321,452	)			(22,993	)
Changes in assets and liabilities:
Accounts receivable			(2,159,795	)			953,714
Prepaid income taxes			978,542				(68,401	)
Other assets and liabilities			141,640				146,477
Accounts payable, royalties payable, gathering fees payable, and other accrued liabilities			91,390				(1,897,438	)
Income taxes payable			922,326				—
Net cash provided by operating activities			8,582,576				3,691,428
Cash flows from investing activities:
Additions to unproved oil and gas properties			(5,060,901	)			(3,088,198	)
Additions to proved oil and gas properties			(2,578,866	)			(17,226,449	)
Additions to gathering system properties			(104,275	)			(22,650	)
Additions to land, buildings and property and equipment			—				(7,681	)
Purchases of short term investments - available for sale			—				(4,045,785	)
Proceeds from short term investments - held to maturity			—				10,794,285
Prepaid drilling costs			960,136				1,813,808
Net cash used in investing activities			(6,783,906	)			(11,782,670	)
Cash flows from financing activities:
Buyback of common shares			—				(1,203,708	)
Dividends paid			(1,375,612	)			(1,370,409	)
Net cash used in financing activities			(1,375,612	)			(2,574,117	)
Effect of currency rates on cash, cash equivalents, and restricted cash			(50,116	)			364
Decrease in cash, cash equivalents, and restricted cash			372,942				(10,664,995	)
Cash, cash equivalents, and restricted cash, beginning of period			6,989,793				13,873,628
Cash, cash equivalents, and restricted cash, end of period		$	7,362,735			$	3,208,633
Supplemental cash flow disclosures:
Income tax paid - federal		$	80,000			$	—
Income tax paid - state (PA)		$	5,138			$	—
Income tax paid - state (other)		$	25			$	—
Interest paid		$	657			$	—
Non-cash investing activities:
Change in proved properties accrued in accounts payable		$	341,974			$	2,946,528
Change in gathering system accrued in accounts payable		$	(44,228	)		$	(3,624	)
Asset retirement obligation asset additions and adjustments		$	18,235			$	16,372

		Three months ended March 31,
		2025				2024
Net income		$	4,016,034			$	1,506,896
Add Back:
Interest income, net			(3,088	)			(257,512	)
Income tax expense			1,670,194				54,050
Depreciation, depletion, amortization, and accretion			3,475,857				2,380,426
Impairment expense			6,669				—
Stock based compensation expense			385,838				321,569
Loss on derivative contracts net of cash received or paid on settlement			1,047,127				589,011
Foreign currency translation loss			10,289				570
Adjusted EBITDA		$	10,608,920			$	4,595,010

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 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.

FAQ

What were Epsilon Energy's (EPSN) key financial results for Q1 2025?

Epsilon reported total revenues of $16.16M (up 102% YoY), Adjusted EBITDA of $10.61M (up 131% YoY), and total production of 3,108 Mmcfe (up 57% YoY). Gas revenues were particularly strong at $10.61M, up 258% YoY.

How did EPSN's production metrics change in Q1 2025 compared to previous quarters?

Gas production increased 55% QoQ and 64% YoY to 2,740 MMcf. Oil production decreased 12% QoQ but increased 24% YoY to 46 Mbbl. NGL production decreased 6% QoQ and 2% YoY to 16 Mbbl.

What is Epsilon Energy's dividend payment for Q1 2025?

Epsilon maintained its quarterly dividend payment at $1.376M, unchanged from both Q4 2024 and Q1 2024.

What are EPSN's development plans for the remainder of 2025?

The company plans to drill 2 gross (0.5 net) new wells in Texas and 2 more wells in Alberta JV for the remainder of 2025. No additional development is expected in the Marcellus basin this year.

How much cash does Epsilon Energy (EPSN) have as of Q1 2025?

Epsilon reported $7.363M in cash and short-term investments, including restricted cash, representing a 5% increase QoQ but a 52% decrease YoY.