Core Viewpoint - Epsilon Energy Ltd. has completed the sale of its wholly owned subsidiary, Dewey Energy Holdings, LLC, which includes its Western Anadarko basin assets, to an undisclosed private buyer for $2.5 million in cash [1][2]. Group 1: Transaction Details - The assets sold included approximately 813 Mcfe/d of production, with 60% being natural gas, based on Q3 2025 figures [2]. - The sale encompassed approximately 6,400 net deep acres and 2,200 net shallow acres of leasehold, all located in Dewey County, Oklahoma [2]. - RedOaks Energy Advisors LLC assisted Epsilon in the sell-side process [2]. Group 2: Company Overview - Epsilon Energy Ltd. is a North American onshore natural gas and oil production and gathering company with assets across various basins, including Marcellus, Powder River, Permian, and Western Canadian Sedimentary basins [3].

Core Viewpoint - Epsilon Energy Ltd. is an onshore oil and gas company operating in multiple states including Oklahoma, Pennsylvania, New Mexico, and Texas, focusing on undervalued profitable stocks with strong balance sheets and minimal debt [1] Company Overview - Epsilon Energy Ltd. operates in the oil and gas sector, specifically onshore, with activities in Oklahoma, Pennsylvania, New Mexico, and Texas [1] Investment Strategy - The company aims to derive income from investment setups by purchasing undervalued stocks and writing calls against positions to generate additional income [1] - Risk management is emphasized through position sizing and the use of trailing stop losses over time [1]

Core Viewpoint - Epsilon Energy Ltd. has completed the acquisition of Peak BLM Lease LLC and issued common shares as part of the transaction [1][2]. Group 1: Acquisition Details - The acquisition of Peak BLM Lease LLC closed on November 14, 2025, and was executed under a membership interest purchase agreement [1][2]. - Epsilon will issue up to 2,500,000 common shares if certain regulatory thresholds are met by the Resolution Date, which the board has determined has occurred [2]. - Following purchase price adjustments, Epsilon issued 2,234,847 common shares to Yorktown Energy Partners XI, LP, with no further consideration due under the Purchase Agreement [3]. Group 2: Company Overview - Epsilon Energy Ltd. operates as a North American onshore natural gas and oil production and gathering company, with assets located in the Marcellus, Powder River, Permian, WCSB, and Anadarko basins [4].

Core Points - Epsilon Energy Ltd. has successfully completed the acquisition of Peak Exploration and Production LLC and Peak BLM Lease LLC, marking a significant milestone in the company's growth strategy [1][5] - The acquisition involved the issuance of 5,681,489 common shares to the shareholders of the Peak Companies, with potential additional shares or cash payments of up to 2,500,000 common shares or $6.5 million based on regulatory approvals [2] - The company's credit facility commitments were increased to $80 million, with $50.5 million drawn at closing to repay existing loans of the Peak Companies [3] Company Developments - Sixteen former employees from the Peak Companies have joined Epsilon Energy USA Inc., enhancing the company's workforce in Durango, Colorado, and Wright, Wyoming [4] - The board of directors has appointed Bryan H. Lawrence and Jack Vaughn, who are expected to provide valuable guidance as the company implements its strategic plans [3][5] Company Overview - Epsilon Energy Ltd. operates as a North American onshore natural gas and oil production and gathering company, with assets located in Wyoming, Pennsylvania, Texas, Alberta, New Mexico, and Oklahoma [6]

Financial Data and Key Metrics Changes - The company reported year-to-date adjusted earnings of $0.45 per share, which included adjustments for a Canadian impairment and transaction expenses related to the Peak acquisition [9][10] - The pro forma leverage is described as very manageable, allowing the company to execute on capital investment and shareholder return plans over the next few years [9] Business Line Data and Key Metrics Changes - In the Permian, the company participated in the drilling and completion of the eighth well, which commenced production late in the quarter, contributing to strong performance [3][4] - The Marcellus region experienced sub-$2 net gas pricing due to shoulder season inventory builds, leading to operator-elected production curtailments, but pricing improved with a colder start to November [4][6] Market Data and Key Metrics Changes - The company has hedged approximately 60% of PDP oil volumes for 2026 at a weighted average WTI strike price of $63.30 per barrel, and about 50% of gas volumes with a weighted average floor above $3.30 and ceiling above $5.00 [8] Company Strategy and Development Direction - The acquisition of Peak Companies in the Powder River Basin is seen as a major strategic milestone, expected to enhance the company's position for success and outperformance in the medium and long term [3][5] - The company plans to focus on production optimization and the highly economic conventional Parkman inventory post-acquisition [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the integration of the Peak team and the potential for transformational results in 2027 under favorable market conditions [7][32] - The company anticipates increased investment in the Marcellus position over the next several years as the operator shifts focus towards the Auburn area, which holds over 15 gross un-drilled locations [6][15] Other Important Information - The company has executed definitive agreements to acquire Peak Companies, which includes the issuance of up to 8.5 million shares, subject to shareholder approval [5] - The company is in the early stages of exploring a sale of non-core midstream assets in Oklahoma [16] Q&A Session Summary Question: Clarity on BLM permits and development timeline for Parkman wells - Management confirmed that BLM has started reissuing permits in Converse, allowing for initial infrastructure investments, with a focus on development expected to kick off in late 2026 or early 2027 [22][23] Question: Expected activity for 2026 - Preliminary plans indicate approximately $20 million of CapEx in Peak assets, with $6 million allocated for two wells in the Permian and $13 million for Marcellus, though some CapEx may slide into 2027 [27][28] Question: Integration of the Peak team and non-drilling investments - Management expressed confidence in a smooth integration process, having done significant front-end work to ensure the right team is in place post-close [32] Question: Activity of offset operators in Campbell County and Converse - Management noted that most offset operators have drilled up the Parkman due to its economic viability, with ongoing activity in Niobrara and Mowry, and an expectation of increased rig counts in the Powder River Basin [35][36]

Financial Performance - Total revenue for Q3 2025 reached $8,981,459, a 23.3% increase from $7,287,941 in Q3 2024[19] - Net income for Q3 2025 was $1,072,295, compared to $366,021 in Q3 2024, representing a 194.5% increase[19] - Operating income for the nine months ended September 30, 2025, was $8,602,597, significantly higher than $2,813,088 for the same period in 2024[19] - Net income for the nine months ended September 30, 2025, was $6,639,790, compared to $2,688,577 for the same period in 2024, representing a significant increase[24] - Total operating revenue for the nine months ended September 30, 2025, was $36,769,332, a 62.7% increase compared to $22,582,502 for the same period in 2024[72] - The net income for the three months ended September 30, 2025, was $1,072,295, compared to $366,021 for the same period in 2024, indicating a significant increase of 194%[92] - For the nine months ended September 30, 2025, net income reached $6,639,790, up from $2,688,577 in 2024, reflecting a growth of 147%[92] Cash and Assets - Cash and cash equivalents increased to $12,766,167 as of September 30, 2025, up from $6,519,793 at December 31, 2024[17] - Total assets grew to $126,293,005 as of September 30, 2025, compared to $120,454,785 at December 31, 2024[17] - Total cash, cash equivalents, and restricted cash at the end of the period was $13,236,167, up from $8,774,971 at the end of the same period in 2024[24] - The company had a working capital surplus of $9.2 million as of September 30, 2025, up from $7.2 million at the end of 2024[171] Liabilities and Equity - Total current liabilities increased to $9,924,626 as of September 30, 2025, compared to $6,980,007 at December 31, 2024[17] - The accumulated deficit decreased to $(38,995,173) as of September 30, 2025, from $(41,505,076) at December 31, 2024[21] - Operating lease liabilities totaled $387,062 as of September 30, 2025, down from $476,911 at the end of 2024, a reduction of approximately 18.8%[88] - The company had commitments of $0.2 million for capital expenditures as of September 30, 2025[86] Revenue Breakdown - Gas, oil, NGL, and condensate revenue for Q3 2025 was $7,536,248, up from $6,203,953 in Q3 2024, marking a 21.5% increase[19] - Natural gas revenue for the three months ended September 30, 2025, was $4,758,578, up 150.5% from $1,903,946 in the same period of 2024[72] - Upstream natural gas revenue for the nine months ended September 30, 2025, increased by $15.5 million, or 226%, compared to the same period in 2024[148] - Upstream oil and condensate revenue for the nine months ended September 30, 2025, decreased by $1.7 million, or 17%, compared to the same period in 2024[150] Expenses and Impairments - Stock-based compensation expense for the nine months ended September 30, 2025, was $1,148,289, compared to $944,267 in 2024, reflecting increased compensation costs[24] - The company experienced an impairment expense of $2,676,669 in 2025, which was not present in 2024, indicating potential challenges in asset valuation[24] - The company recorded an impairment of $2.7 million for two wells in Alberta, Canada, due to lower than expected production and cost overruns[48] - General and administrative expenses for the three months ended September 30, 2025, increased by $1.1 million, or 62%, compared to the same period in 2024, primarily due to transaction expenses related to the pending Peak acquisition[162] Acquisitions and Investments - The company plans to acquire Peak Exploration and Production LLC and Peak BLM Lease LLC for a total consideration of 6 million common shares and the assumption of approximately $51.2 million in debt, expected to close in Q4 2025[28] - The acquisition will include 40,500 net acres producing 2.2 MBoepd in the Powder River Basin, enhancing the company's asset base[28] - Epsilon acquired a 25% interest in three producing wells and 3,620 gross undeveloped acres in Ector County, Texas, with total capital expenditures of $42 million through September 30, 2025[131] Derivative Contracts and Risk Management - The company engaged in price risk management activities to mitigate exposure to fluctuations in commodity prices for natural gas and oil through derivative contracts[102] - Epsilon Energy Ltd. recognized gains on commodity derivative contracts of $964,307 and $2,076,000 for the three and nine months ended September 30, 2025, respectively, compared to $440,712 and $245,095 for the same periods in 2024[106] - The net fair value of derivatives at September 30, 2025, was $889,187, an increase from a net liability of $487,548 at December 31, 2024[108] Tax and Compliance - The Company reported total current income tax expense of $473,344 for the three months ended September 30, 2025, compared to a tax benefit of $(270,426) in 2024[81] - The effective tax rate for the nine months ended September 30, 2025, was higher than the statutory federal rate due to state income taxes and valuation allowances against Canadian net operating losses[84] - Epsilon Energy Ltd. filed certifications under Sarbanes-Oxley Section 302 for both the Principal Executive Officer and Principal Financial Officer[204] Future Outlook - The company has focused recent investments in the Permian Basin in Texas and the Western Canadian Sedimentary Basin in Alberta, Canada[130] - Epsilon's business strategy includes disciplined capital allocation and maintaining a strong balance sheet to invest in existing and potential new projects[129]

Core Insights - Epsilon Energy Ltd. reported its third quarter 2025 financial and operational results, highlighting a decrease in production and revenues compared to the previous quarter, but an increase year-over-year in certain metrics [1][2]. Financial Performance - NRI production for gas was 2,136 MMcf, down 22% quarter-over-quarter (QoQ) but up 64% year-over-year (YoY) [2]. - Oil production decreased to 39 Mbbl, an 11% decline QoQ and a 26% drop YoY [2]. - Total revenues for Q3 2025 were $8.98 million, a 23% decrease QoQ but a 23% increase YoY [2][12]. - Adjusted EBITDA was reported at $4.37 million, down 41% QoQ but up 17% YoY [2][19]. Production and Operational Updates - Capital expenditures for the quarter were $2.9 million, primarily for the completion of one well in Texas, which is performing as expected with a 30-day gross initial production rate of over 870 Boe/d [3][4]. - The company experienced shut-ins in the Marcellus region due to lower gas prices, impacting production by approximately 110 MMcf [4]. - Epsilon announced the acquisition of an operated business in the Powder River Basin, which is expected to close in November 2025, enhancing its operational scale and inventory [6]. Market and Pricing - Realized gas prices were $2.23 per Mcf, down 11% QoQ but up 53% YoY [2]. - Oil prices realized were $63.73 per Bbl, a 3% increase QoQ but a 14% decrease YoY [2]. - The company noted a strong increase in net wellhead pricing in the Marcellus as it exits the shoulder season, indicating potential for improved cash flows in upcoming quarters [5]. Shareholder Returns - The company maintained its dividend at $1.38 million for the quarter, consistent with the previous quarter [2]. - No share buybacks were reported during the quarter, contrasting with $628,000 in buybacks in Q3 2024 [2]. Cash Position - Cash and short-term investments totaled $13.24 million, a 28% increase from the previous quarter and a 51% increase YoY [2].

Core Viewpoint - Epsilon Energy Ltd. is set to release its third quarter 2025 earnings on November 5, 2025, and will host a conference call on November 6, 2025, to discuss the results [1] Company Information - Epsilon Energy Ltd. operates as a North American onshore natural gas and oil production and gathering company with assets located in Pennsylvania, Texas, New Mexico, Oklahoma, and Alberta, Canada [3]

Core Points - Epsilon Energy Ltd. has closed a new senior secured reserve-based revolving credit facility with Frost Bank and Texas Capital Bank, replacing the previous credit facility [1][2] - The new credit facility will initially fund alongside the acquisition of Peak companies, with proceeds allocated to repay Peak's existing term loan of approximately $49.6 million [1][2] - The credit facility has an initial borrowing base of $47.5 million, supported by existing US upstream assets, and will be redetermined after the acquisition [4] Financial Details - The new credit facility has a four-year term, maturing on October 8, 2029 [4] - Interest on drawdowns will be charged at the 3-Month Term SOFR rate plus a margin of 3-4%, depending on facility utilization, with payments due quarterly [4] - The facility allows for semi-annual redeterminations, enhancing the company's liquidity and balance sheet strength [2][4]

Financial Data and Key Metrics Changes - The company reported a cash flow decrease of approximately 30% quarter over quarter due to significantly lower realized pricing for gas and oil [13] - Proved reserves increased by over 150% based on third-party reports, with liquids production rising by over 200% and priority inventory count increasing by over 600% [12] Business Line Data and Key Metrics Changes - The acquisition of the Peak Companies adds approximately 2,200 net barrels of oil equivalent daily production, with 56% being oil [15] - The company plans to develop three high working interest Parkman wells in the first quarter of the following year, subject to the closing timeline of the transactions [15] Market Data and Key Metrics Changes - Approximately 30% of the identified priority inventory is currently affected by a drilling permit moratorium in Converse County, Wyoming, but the company is optimistic about the moratorium being lifted soon [7] Company Strategy and Development Direction - The acquisition of the Peak Companies is seen as a strategic move to enhance the company's asset base and operational control, providing opportunities for both organic and inorganic growth [5] - The company aims to maintain its existing per share dividend while having sufficient discretionary cash flow to drive growth through a development plan covering multiple regions starting next year [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the regulatory environment and the potential lifting of the drilling permit moratorium, which would allow access to additional inventory [7] - The company anticipates that the addition of the Peak asset base will enhance capabilities and control to add per share value [7] Other Important Information - The transaction consideration includes the issuance of 6,000,000 Epsilon common shares and the assumption of approximately $49 million of long-term debt [9] - The company plans to file a proxy statement in the fall with additional details on the transaction and financial position of the pro forma business [12] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating that the Q&A session was brief or not detailed in the records [20]