EPSN

This article first appeared on GuruFocus. Production: Q2 2026 was a trough for production, with growth anticipated from Q3 onwards. Production Guidance: Full-year 2026 midpoint guidance indicates high-teens year-over-year growth in total production and nearly 200% year-over-year growth in oil volumes. Capital Spending: Over half of full-year capital spending will not contribute to results until Q4, with over a third impacting results starting next year. Debt: Paid down debt balance by $10 million over the first half of the year. Leverage: Plans to stay within target leverage level of 1.5 times EBITDA. Operating Expenses: Replaced 16 compression units, removing $65,000 a month in operating expenses, with total savings expected to exceed $100,000 a month by year-end. Marcellus Production: New wells forecasted to add 6.5 million cubic feet per day net, with initial production scheduled for December. Midstream Throughput: New drills are forecasted to increase throughput in the Auburn system by approximately 80 million to 90 million cubic feet per day. Warning! GuruFocus has detected 3 Warning Signs with EPSN. Is EPSN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Epsilon Energy Ltd (NASDAQ:EPSN) reported that its two Niobrara Duck completions in the Powder River Basin exceeded type curve expectations, with peak daily rates over 900 barrels of oil per day from each well. The company successfully accelerated its three-well Parkman drilling program in the Powder River Basin, completing drilling about one month ahead of plan, with production expected in Q4 2026. Epsilon Energy Ltd (NASDAQ:EPSN) provided its first production guidance for the second half of 2026, anticipating meaningful quarter-over-quarter growth, with full-year oil volumes expected to increase nearly 200% year-over-year. The first three-mile Barnett well in the Permian Basin was placed on production and is performing in line with pre-drill type curve, with two additional wells scheduled to spud later this month. The company reduced operating expenses by $65,000 per month through compressor downsizing, with total savings expected to exceed $100,000 per month by year-end. Epsilon Energy Ltd (NASDAQ:EPSN) paid down $10 million of debt in the first half of 2026 and maintains a strong balance sheet, with plans to stay within its target leverage of 1.5 times EBITDA. The company successfully sold down its working interest in the Parkman development at a premium, reducing risk while retaining over 70% interest in the project. Epsilon Energy Ltd (NASDAQ:EPSN) experienced a production trough in Q2 2026, with Marcellus volumes impacted by planned temporary curtailments due to gathering system pressure adjustments. The company's capital spending is heavily weighted to the second half of 2026, with over half of full-year capital not contributing to results until Q4, and over a third not showing up until next year. The previously disclosed sale of the Durango office building did not close, and the company will need to reevaluate a potential sale later this year. Epsilon Energy Ltd (NASDAQ:EPSN) expects to utilize its revolver to partially fund the investment ramp starting in Q3 2026, which could increase leverage. The company's gas production in Appalachia was curtailed due to sub-$2 pricing, and there is uncertainty around the operator's ability to bring new Marcellus wells online in Q4 as scheduled. The Woodford appraisal well, in which Epsilon Energy Ltd (NASDAQ:EPSN) chose not to participate, has been drilled, and a successful result could expand inventory but also highlights missed opportunities if it performs well. Q: What is the best way to think about the approach to guidance going forward into 2027 and beyond?A: Jason Stabell (CEO) stated that the next piece of guidance will be full-year 2027, targeted for release in the first quarter of next year before year-end 2026 results are posted. The company plans to provide annual guidance at the beginning of each year and refine it throughout the year with quarterly updates. Q: Can you provide more details on the maintenance activities in the Pennsylvania gas business and how much of the quarter-over-quarter production falloff was due to maintenance versus typical decline rates?A: Jason Stabell (CEO) explained that the operator has been curtailing production during shoulder seasons when Appalachian pricing netbacks are sub-$2, while maximizing production during high-demand periods (e.g., Q1 realized prices of almost $5.5 vs. $1.80 in Q2). The curtailments were implemented by increasing operating pressure on the gathering line, making it difficult to attribute an exact breakdown between natural depletion and pressure-related impacts. The company expects to remain in depletion mode until Q4 when incremental volumes come online. Q: Given the forecast for a warmer winter due to Super El Nino, are there any thoughts on the operator potentially pushing wells out of Q4, and any plans to add more hedges?A: Jason Stabell (CEO) noted that guidance includes an appropriate margin of error to adjust for any operator schedule slides. Andrew Williamson (CFO) added that the company targets 50% PDP hedged over the next 18 months, using collars for gas. For oil, they have strategically started adding hedges starting in Q4 of this year. There are no plans to put protection on in excess of the 50% coverage mandate, but they will add gas hedges once there is certainty on incremental Marcellus volumes coming on late this year. Q: What was the market like for the working interest sell-down in the Powder River Basin, and what is the net interest in the six wells? Could you look to tap that market again in 2027?A: Jason Stabell (CEO) stated that the AFE wellbore market is active, particularly in the Permian, Rockies, and Marcellus. The sell-down on the Parkman wells was driven by the ability to get a premium to the AFE, which juices cash-on-cash returns, and as a risk mitigant on their first operated drilling in the basin, reducing working interest from mid-90s to low 70s. Andrew Williamson (CFO) added that it is a tool to rightsize the capital program and stay within leverage targets while still driving growth. There are no definitive plans to sell down next year, but it is a quick-cycle action if needed. Q: It seems like first production from the Parkman wells was brought forward by about a month. Was it a timing thing or efficiency on the drill side?A: Henry Clanton (COO) explained that the acceleration of the three-well Parkman program was due to an opportunity to capture rig availability. All permits were in place, locations were built and personnel ready, so the company acted upon the opportunity to start drilling in July, about one month ahead of plan. Q: What is the rig availability market like in the Powder River Basin right now and looking into 2027?A: Henry Clanton (COO) reported that the rig count in Campbell and Converse counties remains stable at about 13 rigs running. Nine of those are focused on the shales (Niobrara and Mowry), while the other four are targeting the sandstones. Activity in the company's area of the Powder River Basin is stable at this point. Q: Can you provide more detail on the active conversations with other operators to pull forward development in a cost-effective nature?A: Jason Stabell (CEO) indicated that the company has a large acreage position in the Powder River Basin and has received a number of inbounds about swaps, trades, and partnerships. They are farther along in a couple of discussions and expect to have something more definitive to provide over the next quarter. These opportunities could involve swapping acreage to extend lateral lengths or participating alongside scaled operators in other resource plays with existing infrastructure, allowing participation at an enhanced cost structure. This is considered "gravy" beyond the base evaluation focused on the Parkman, with additional opportunities in the Niobrara shale. Q: Can you provide more details on the Niobrara Duck completions and their early production performance?A: Henry Clanton (COO) reported that both two-mile Niobrara laterals in Campbell County, Wyoming were successfully stimulated with all 100 stages completed as planned. The wells were flowed back under managed pressure procedures and are performing above expectations, with peak daily rates exceeding 900 barrels of oil per day from each well. Q: What is the status of the Permian Basin Barnett well and the Woodford appraisal well?A: Henry Clanton (COO) stated that the first three-mile Barnett lateral has been placed on production and is performing in line with pre-drill type curve expectations, exhibiting excellent productivity consistent with existing wells. The operator has provided proposals for two offset wells, which have been moved up in the drilling schedule with plans to spud later this month. The Woodford appraisal well, in which Epsilon elected not to participate, has been drilled and is scheduled for completion later this month. A successful result could meaningfully expand future drilling inventory. Q: What is the status of the Marcellus development and the Auburn gathering system?A: Henry Clanton (COO) reported that the operator completed drilling of five wells (0.4 net) with completion operations planned for the second half of this year. First production is scheduled for December and is forecasted to add 6.5 million cubic feet per day net. Four of the new drills will gather through the Auburn system, forecasted to increase throughput by approximately 80-90 million cubic feet per day upon initial completion. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Transitioned from a non-operated model to an active operator following the Peak acquisition, with major operational initiatives progressing on schedule and budget. Attributed the second quarter production trough to the timing of new development in the Powder River and Permian Basins, which only began contributing late in the period. Prioritized high-return oil projects in the Powder River Basin, specifically targeting the Niobrara and Parkman formations to drive meaningful production growth through year-end. Managed Marcellus gas production through strategic curtailments during periods of depressed pricing to preserve asset value for higher-demand seasons. Leveraged working interest sell-downs in the Parkman development to rightsize capital commitments and enhance cash-on-cash returns while maintaining a 70% interest. Completed the integration of Peak acquisition personnel and systems, allowing the team to pivot focus toward operational efficiencies and cost-saving measures. Anticipates high teens year-over-year growth in total production for 2026, driven by an approximately 200% increase in oil volumes. Expects the fourth quarter to be the primary growth driver as high-interest Parkman wells in the Powder River Basin commence production. Plans to utilize the credit revolver to fund a third-quarter investment ramp, targeting a leverage level of 1.5x EBITDA. Engaging in discussions with large basin operators to pull forward shale inventory through partnerships, swaps, or trades to improve cost efficiency. Scheduled completion of five Marcellus wells in the second half of 2026, with first production expected in December to add 6.5 million cubic feet per day net. Issued a press release correction regarding adjusted net income and EPS presentation; management confirmed no impact to GAAP results or cash flows. Implemented a compressor downsizing program expected to save over $100,000 per month in operating expenses by year-end without impacting production. Modified the design of the Converse County water impoundment facility to allow for future produced water recycling, aiming to reduce long-term sourcing costs. Reported that the potential sale of the Durango office building did not close, though a reevaluation is planned for later this year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management plans to provide full-year 2027 guidance in the first quarter of next year, prior to releasing year-end 2026 results. The company intends to maintain an annual guidance cycle with refinements provided on a quarterly basis. Management explained that exact breakdown between natural depletion and curtailment is difficult due to gathering system pressure adjustments. The strategy remains focused on maximizing production during high-demand seasons (realizing up to $5.50) and curtailing when netbacks are sub-$2. The company targets hedging 50% of PDP volumes over an 18-month horizon, primarily using collars for gas. Management does not plan to add gas protection beyond the 50% mandate despite potential weather-related price risks. Sell-downs are used as a tool to capture premiums to AFE costs and mitigate risk on initial drilling operations in new basins. The market for AFE wellbore interests remains active in the Rockies and Permian, providing a mechanism to rightsize capital programs while staying within leverage targets.

Interested in Epsilon Energy Ltd.? Here are five stocks we like better. Production is expected to accelerate in the second half of 2026, with the Powder River Basin providing the largest contribution. Parkman wells are scheduled to begin producing in the fourth quarter, while two acquired Niobrara wells already exceeded expectations with peak oil rates above 900 barrels per day each. Epsilon is ramping up development across its portfolio, including Barnett drilling in the Permian and five Marcellus wells expected to add 6.5 million cubic feet per day net beginning in December. Management anticipates higher development activity across all three regions in 2027. Capital spending will rise sharply in the third quarter to fund Parkman, Permian and infrastructure projects. Epsilon reduced debt by $10 million in the first half and plans to use its revolving credit facility while targeting leverage of 1.5 times EBITDA. Epsilon Energy (NASDAQ:EPSN) said its second-quarter production marked a low point for 2026 as new development activity began contributing late in the period, and management expects output to increase sequentially through the remainder of the year. President and CEO Jason Stabell said the company’s principal operational initiatives were progressing on schedule and within budget. Epsilon issued production guidance for the second half of 2026 for the first time, supported primarily by expected crude oil growth from its Powder River Basin operations. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be Stabell also addressed a correction to the company’s earnings release issued the previous day. He said the revision was limited to the presentation of adjusted net income and adjusted earnings per share in a summary table, while the reconciliation elsewhere in the release was correct. The change had no effect on reported GAAP results, cash flows or the underlying economics of the business, he said. Epsilon’s largest expected production contribution in the second half is set to come from its Parkman development in Wyoming’s Powder River Basin. The company completed drilling on a three-well Parkman pad about one month ahead of plan after securing available rig capacity, according to Chief Operating Officer Henry Clanton. The wells are scheduled for completion later in the third quarter and are expected to begin producing in the fourth quarter. → Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand The company also completed two acquired two-mile Niobrara drilled-but-uncompleted wells in Campbell County during the quarter and brought them online in July. Clanton said both wells exceeded expectations during early production, with each recording peak daily oil rates above 900 barrels per day. Chief Financial Officer Andrew Williamson said the midpoint of Epsilon’s full-year guidance implies high-teens year-over-year growth in total production and nearly 200% year-over-year growth in oil volumes. He said the fourth quarter is expected to provide the largest production impact this year as the first Parkman volumes begin contributing. → On Holding's Price Stumble May Be an Opening for a Company Built to Run In Converse County, Wyoming, Epsilon finalized plans for a 1 million-barrel water supply and impoundment facility and was evaluating contractor bids. Construction is expected to start during the third quarter. The pond design was modified to support future produced-water intake and recycling, which management said should lower water sourcing and processing costs over time. The company is also pursuing operating-cost reductions in the basin. Clanton said Epsilon had replaced 16 compression units, eliminating approximately $65,000 in monthly operating expenses. Additional compressor downsizing is planned before year-end, with expected monthly savings exceeding $100,000 and no anticipated reduction to existing production. In the Permian Basin, Epsilon’s first three-mile Barnett well entered flowback in June and was performing in line with its pre-drill type curve, Stabell said. Clanton added that early flowback from the ninth well drilled on the acreage exceeded normalized type-curve expectations and showed productivity consistent with existing wells. The operator has moved up plans for two offset Barnett wells, with drilling expected to begin later in August and completions planned in the first quarter of 2027. Meanwhile, a Woodford appraisal well in which Epsilon elected not to participate has been drilled and was scheduled for completion later in August. Stabell said a successful result could expand Epsilon’s future drilling inventory and opportunities beyond the Barnett formation. In Pennsylvania, second-quarter Marcellus production was affected by planned temporary curtailments tied to operating-pressure adjustments on the gathering system. Stabell said the company and its operator have sought to maximize output during periods of stronger Appalachian gas prices while curtailing production during weaker pricing periods. The gathering-system changes are intended to accommodate newly drilled wells expected to begin producing late in the fourth quarter. Clanton said completion operations on five previously drilled wells, representing 0.4 net wells to Epsilon, are planned for the second half of the year. First production is anticipated in December and is forecast to add 6.5 million cubic feet per day net. Four of the wells are expected to raise throughput on the Auburn system by roughly 80 million to 90 million cubic feet per day at initial completion. Williamson said Epsilon expects significantly higher capital spending in the third quarter, driven by the high-working-interest Parkman program, Permian drilling activity and facilities construction in Converse County. More than half of the company’s full-year capital spending is not expected to contribute to results until the fourth quarter, while more than one-third is expected to begin contributing next year. To prepare for the investment increase, Epsilon sold a non-core Marcellus overriding royalty interest and reduced its interest in the Parkman development, while retaining more than a 70% interest in the project. Williamson said the company could use future interest sell-downs as a tool to manage its capital program, though it has no definitive plans to do so in 2027. Epsilon reduced debt by $10 million during the first half of 2026. The company expects to use its revolving credit facility to partially fund the upcoming investment ramp but said it is comfortable maintaining its target leverage level of 1.5 times EBITDA. Looking toward 2027, management said it expects development activity to exceed 2026 levels across the Powder River Basin, Permian Basin and Marcellus portfolio, subject in part to final plans from operating partners. Stabell said Epsilon expects to provide full-year 2027 guidance in the first quarter of next year before reporting year-end 2026 results. Epsilon Energy (NASDAQ: EPSN) is an independent exploration and production company specializing in the acquisition, development and production of unconventional and conventional oil and natural gas properties. Originally founded as Brewster Energy in 2002 and rebranded to Epsilon Energy in 2011, the company pursues a disciplined approach to resource development, leveraging its technical expertise to optimize well performance and manage operational costs. The company's core asset base is concentrated in the Appalachian Basin, where it holds acreage in key shale formations across Pennsylvania, West Virginia and Ohio. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Epsilon Energy Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

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: 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): 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 StabellChief Executive [email protected] Andrew Williamson Chief Financial Officer [email protected] 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. 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.

HOUSTON, Aug. 12, 2026 (GLOBE NEWSWIRE) -- Epsilon Energy Ltd. (“Epsilon” or the “Company”) (NASDAQ: EPSN) today reported second quarter 2026 financial and operating results. Q2 2026 Highlights: 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): 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 StabellChief Executive [email protected] Andrew Williamson Chief Financial Officer [email protected] 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. 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.

Image source: The Motley Fool. Wednesday, March 25, 2026 at 11 a.m. ET Chief Executive Officer — Jason Stabell Chief Financial Officer — Andrew Williamson Chief Operating Officer — Henry Clanton Need a quote from a Motley Fool analyst? Email [email protected] Jason Stabell: Thank you, Andrew, and good morning, everyone. Joining me today are Andrew Williamson, our CFO; and Henry Clanton, COO. We'll be available for questions after our remarks. We're off to a solid start in 2026 and remain firmly on track with the development plan we outlined earlier this year. The key message today is simple. We are in execution mode, and we expect to deliver meaningful production growth year-over-year, with the oil-weighted ramp in the Permian and Powder River basins beginning in the second quarter and building through the back half of the year. Across the portfolio, activity is progressing as planned. In the Permian, our ninth well in the project and our first 3-plus mile Barnett well is expected online in the second quarter. In the Powder River Basin, 2 Niobrara DUCs, which we acquired in last year's acquisition will be completed in June and turn to sales in the third quarter, followed by a 3-well Parkman development in the fourth quarter. This activity sets up material oil-weighted production growth in both basins starting in the second half of the year and carrying into 2027. These new volumes will have full exposure to higher oil prices. From a financial standpoint, the first quarter reflects a combination of strong gas pricing and a full quarter of contribution from our Powder River Basin assets. We have also recently taken steps during the second quarter to strengthen the balance sheet, including further debt reduction and monetizing noncore assets at attractive values. Looking ahead, the path forward is clear, a focus on production growth in our oily assets while maintaining a strong balance sheet. We believe we are well positioned to deliver a strong year. I'll now turn it over to Andrew and Henry for additional comments. J. Williamson: Thanks, Jason. I'll provide more commentary on the quarter, starting with CapEx. We spent just under $5 million through March, primarily through our participation in the drilling of the 3-mile Barnett well in Ector County and some facilities work preparing for Parkman drilling this summer on our Campbell County position in the PRB. We plan to invest at a higher clip over the next 3 quarters of the year, driving the oil-weighted growth Jason mentioned. Those full year investment plans are rightsized to maintain our target leverage profile of 1 to 1.5x net debt to adjusted EBITDA. We expect unit operating costs and G&A to trend down over the remainder of the year as we add incremental volumes and roll off some of the integration costs associated with last year's Peak acquisition. I provided some additional color there in the press release issued yesterday. Earnings for the quarter were materially impacted by unrealized or noncash hedge losses driven by the dramatic move in oil prices during the quarter. The revenue impact of higher pricing will primarily fall in subsequent quarters, so a bit of a mismatch on the P&L. Adjusting for that item, we earned $0.29 per share for the quarter. Since closing the acquisition in November of last year, we've paid down the outstanding debt balance by $10 million to $40.5 million currently. As mentioned, we have a disciplined approach to the balance sheet. We've made several moves to help fund our investment plans by selling noncore assets. Earlier this month, we sold an overriding royalty interest package in PA for $3.9 million to a private buyer, which was approximately 6x expected next 12 months cash flow coming from those assets. The overrides accounted for just 1.5% of the company's upstream revenue over the last 4 quarters. We also have the office building we acquired from Peak under contract for $3 million with closing expected in the next 30 days. Now to Henry to provide more detail on the operations side. Henry Clanton: Thank you, Andrew, and good morning to everyone. Exciting times for Epsilon as we continue the integration of our newly acquired operating assets in the Powder River Basin in Wyoming. We have several initiatives underway, including both capital projects and optimization programs. Completion of 2-mile Niobrara laterals are underway with pressure pumping services scheduled for the first week of next month. The facility construction has been completed and ready for service following flowback operations. The company has a combined 0.7 net revenue interest in the 2 wells with a type curve-based pre-completion peak net production rate estimated to be 475 BOE per day in July. Total net CapEx for the completion of the 2 wells is $6.8 million. Drilling-wise, first up in our development of the Parkman formation inventory is a 3-well development program in Campbell County with high working interest. Well planning has been completed with drilling rig and service providers being engaged in anticipation of an August spud. Gross CapEx is estimated to be $23 million. Similar to the 2 Niobrara wells mentioned above, preconstruction of the production facilities has been completed and ready for service. Completion operations are planned for October with forecasted peak rates of 1,060 BOE per day in December. In preparation for our 2027 development of the highly attractive Parkman inventory in the Inot unit in Converse County, we are finalizing the facility design and beginning construction planning for a multi-well water supply facility in the unit. This $3.5 million CapEx facility will include water supply with surface impoundment sized to handle the planned 6-well development in the unit next year. This facility will ensure cost-efficient and timely development of our near-term plans in the unit, then serve multiple well programs thereafter. Also in Wyoming, the operating team has been diligently working on several production enhancement and cost improvement initiatives worthy of highlighting. First, a review of the 40-plus rental gas lift compressors in use today have identified multiple wells greater than 10 that are candidates for downsizing the compressors, capturing significant monthly savings, approximately 35%. They will be replaced with brand-new units that are fit for purpose in this application. Current productivity of these wells will not be impacted. Second, several remaining gas-lifted wells have been identified for conversion to rod pump. Based upon results of the first pilot test earlier this year, conversion to rod pump will increase daily production rates on average greater than 10% per well and also lower lifting cost. And lastly, building from a detailed review of the production chemical program for every operated well, optimization of the program is underway with reductions to per unit treatment costs expected to begin next month. As previously reported in our Permian Basin project in the Barnett play, discussions with the new operator confirm transition from 2-mile to 3-mile laterals, including 4 wells per pad development. These locations will be along the development corridor, including the design and predrilling build-out of a multi-well source and production facility. We are fully aligned with these program changes and expect significant capital efficiencies as a result. 2026 activity to date includes the recently drilled and completed 3-plus mile Barnett lateral. Drillout operations will commence in a few days with flowback to follow. Net forecasted production from this new well is 226 BOE per day. Two additional 3-mile laterals offsetting this well are planned for later this year. Similar initial production rates are forecasted for these 2 wells. Additionally, appraisal of a second interval in the Woodford Shale has been proposed by the new operator. This Woodford test is set to spud this month. While the company has elected to sell the wellbore-only interest in this well proposal, we remain ready to invest in future wells after the formation has been better delineated. A successful result would increase our inventory meaningfully. The company has a 25% working interest across the project. In the Marcellus, the operator has completed drilling of the scheduled 5 wells, 0.4 net epsilon. Completion operations are planned for the second half of this year. First production from this development is scheduled in December and forecasted to add 6.5 million cubic foot a day rate. $3.8 million of CapEx was preapproved for this program with drilling costs below AFE. 4 of the new drills will gather through the Auburn system and are forecasted to increase throughput of the midstream system by approximately 86 million cubic foot a day upon initial completion. Thank you. And now I'll turn it back over to Jason. Jason Stabell: Thanks, guys. Operator, we can now open the lines for questions. Operator: [Operator Instructions] And today's first question comes from Anthony Perala with Punch & Associates. Anthony Perala: First question, I'd be curious some of the discussions among you guys and at the Board level. You've seen some operators respond to the higher oil prices that we've seen persist and as the back half end of the curve has raised a little bit here since the Q4 call. Your guys' development schedule definitely is already busy as is. But just curious if there are any discussions in kind of what the tenor of them are like about potentially stepping on the gas a little bit more. And besides capital and leverage, maybe what other impediments there might be to that if the opportunity did arise? Jason Stabell: Great. Thanks for the question, Anthony. Before I dive into that, I think there's one point we'd like to clarify on the prepared remarks and it relates to the Parkman CapEx that we had. I think Henry quoted $23 million of gross CapEx, and then he quoted a rate of close to 1,100 BOE per day on the rate. We're actually looking, as we always do, at the possibility of selling down some of that 95% working interest. And so Henry, do you want to talk about the rate, what it assumes now. Henry Clanton: Right. So the $23 million is our current ownership and what would be the capital expectations for that 3-well development. Should we keep all of that interest, the peak rates are estimated to be 1,600 barrels a day equivalent, not the lower 1,060 as was recorded in our comments. Jason Stabell: Yes, that 1,060 assumes about a 33% sell-down. We're looking at that option, something in the 20% to 30% sell-down. If it's attractive, we might do it. If not, I think we'd also be happy to keep the higher figure there, but I thought that was worthwhile to clarify. All right. Now to your question, yes, the Powder seems to be coming alive, maybe like a number of basins with the oil price move that we've seen. We've now been active there for 6 months roughly since the closing of the transaction. So we've had a number of conversations with offset operators. There are roughly 13 -- at any given time, there have been 12 to 14 rigs running in the basin, and we think there is probably room to add 1 or 2 more based on some conversations that we've had. One of the ways that, yes, the gas pedal could be hit a little bit harder for us would be to partner on some of the acreage in -- particularly in the shales in Nio and Mowry interest that we have in offset leasehold. We've had some preliminary discussions with a number of operators about ways, things that we might not be getting to in our 5-year development plan until 3, 4, 5, even beyond that window. So I think kind of stay tuned, Anthony, going forward, there could be some opportunities either for us to do drill-to-earn deals and/or partner with some other operators on some opportunities. I don't see anything on the imminent horizon, but we're working all of those options. And we think there's a number of ways we could potentially provide incremental upside to the base CapEx plan that we have. So hopefully, that answers your question. Anthony Perala: Yes. Yes, it absolutely does. And I guess one follow-on to that, it's more probably from naive to on my side. But is there kind of when you're looking at securing rig availability for the 3-well pad in the Parkman this year, is that -- is it tougher and kind of are the rates higher given increased activity? Or is it pretty kind of run-of-the-mill transaction right now? Jason Stabell: Henry, do you want to? Henry Clanton: Yes. So the rig availability is tightening up. We've seen that in our conversations with probably 3 different providers. We do have access to a couple of rigs that are workable for us that we're working now to fit with the timing of the development. But rig rates are creeping up. And so that's to be expected, yes. Jason Stabell: But we feel confident we're going to find a rig that can do the job and do it cost efficiently and deliver those wellbores on time. So right now, as we said, we're targeting that August spud date and don't see an issue with that. Anthony Perala: Okay. And then kind of on the flip side of that on funding some of these capital projects, it seems like you've maybe worked through more of the low-hanging fruit of noncore assets to divest. Just curious how you look at the broader portfolio and other areas you might explore similar to the Marcellus overriding royalty interest that you sold in May? Jason Stabell: Yes. We're always looking at ways to optimize. I think that override we thought had the potential for some pretty strong interest based on conversations that we had. So we market tested it and got a good result on that deal. As you know, we also sold the Anadarko position at the end of last year. So I think the portfolio is in a pretty good place. The trimming would probably be, yes, do we -- there is a pretty active AFE market. So do we find an attractive opportunity where we might sell down a small piece of some of our working interest in some of the program going forward. I think that will be opportunistic kind of depending on the appetite that we see, but that is a possibility. So I think it would be consistent kind of with what we've been doing, little small things around the edges. Anthony Perala: Okay. And then you highlighted in the PR and in the prepared commentary just about getting some scale on the fixed cost on the operating side. I think if you do back of the envelope math before this was roughly $12 per BOE on the LOE expense. And as you get greater scale heading into '27 and maybe beyond, just what expectations do you guys have on the cost side? J. Williamson: Yes, Anthony, this is Andrew. The big driver for the higher unit OpEx in the first quarter was full contribution of the PRB assets. That's all PDP production. They've not had new volumes come online there for over 2 years. So that fixed cost element is overrepresented in that production. As we bring on incremental volumes in the Powder, we expect that to go from where we are now in the high teens to low 20s per BOE in the Powder for that to come into the mid-teens. And so where that washes out total company on a BOE basis, we should see several dollars of drop there and concentrated in the fourth quarter this year when we bring on the volumes in the Powder pad. Operator: And the next question is from Jeff Robertson with Water Tower Research. Jeffrey Robertson: A question on the Powder River Basin. Are there any other infrastructure issues or needs that you foresee Epsilon needing to be involved with and fund other than the water facilities that you outlined? Henry Clanton: In Converse County, which is where we are describing this Inot unit for development next year, there is some gas takeaway development that will be required beyond what's there. We'll have the option to participate in that should we want to or just have the gatherers come to us. So yes, there'll be some gas takeaway. But the majority of the cost for us will be related to supplying these completions and the frac water is necessary to do that. And that's what's our focus of that design of that facility was for. Jeffrey Robertson: In the Permian Basin on the Woodford test that you talked about, how much production -- assuming that well is a success, how much production history would you like to see before Epsilon would elect to participate in a follow-up well. Jason Stabell: Yes. I think it's not just -- it's around can they land in the Woodford, what's the cost there? Have they worked out well design? And then obviously, what kind of rate it delivers over time. Hard to say exactly, Jeff, but it's probably at least 180 days of production to get a real good sense of what the productivity looks like there. Operator: And this does conclude our question-and-answer session for today. I would now like to turn the conference back over to Jason Stabell, CEO, for any closing remarks. Jason Stabell: Yes. Thank you, Chris. I appreciate everybody taking the time to join us today. Thanks for your interest and support of the company. And as always, please reach out to us in Houston if you have additional comments or questions. If not, have a great day. Thank you for joining. Operator: And the conference has now concluded. Thank you for attending today's presentation, and you may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Epsilon Energy (EPSN) Q1 2026 Earnings Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. CapEx: Just under $5 million spent through March, primarily for drilling and facilities work. Adjusted Earnings Per Share: $0.29 per share for the quarter, adjusting for non-cash hedge losses. Debt Reduction: Paid down $10 million, reducing outstanding debt to $40.5 million. Asset Sales: Sold overriding royalty interest for $3.9 million and office building under contract for $3 million. Net CapEx for Niobrara Wells: $6.8 million for completion of two wells. Gross CapEx for Parkman Development: Estimated at $23 million for a three-well program. Production Forecast: 475 BOE per day for Niobrara wells in July; 1,060 BOE per day for Parkman wells in December. Marcellus Development: $3.8 million CapEx pre-approved, with expected production of 6.5 million cubic feet per day in December. Warning! GuruFocus has detected 3 Warning Signs with EPSN. Is EPSN fairly valued? Test your thesis with our free DCF calculator. Release Date: May 14, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Epsilon Energy Ltd (NASDAQ:EPSN) is on track with its development plan, expecting meaningful production growth year over year, particularly in the Permian and Powder River basins. The company has successfully completed its ninth well in the Permian project and is set to bring it online in the second quarter, indicating progress in its operations. Epsilon Energy Ltd (NASDAQ:EPSN) has taken steps to strengthen its balance sheet, including debt reduction and monetizing non-core assets at attractive values. The company has a disciplined approach to maintaining a strong balance sheet, with a target leverage profile of 1 to 1.5 times net debt to adjusted EBITDA. Epsilon Energy Ltd (NASDAQ:EPSN) is actively working on production enhancement and cost improvement initiatives, such as optimizing gas lift compressors and converting wells to rod pump to increase production rates and lower costs. Earnings for the quarter were materially impacted by unrealized or non-cash hedge losses due to dramatic moves in oil prices, causing a mismatch on the P&L. The company faces challenges with rig availability and increasing rig rates, which could impact the timing and cost of its drilling operations. Epsilon Energy Ltd (NASDAQ:EPSN) has worked through much of the low-hanging fruit of non-core asset divestitures, potentially limiting future opportunities for easy capital generation. The Powder River Basin assets have not had new volumes come online for over two years, leading to higher unit operating expenses due to fixed costs. The company faces infrastructure needs in the Powder River Basin, including gas takeaway development, which could require additional funding and resources. Q: With the rise in oil prices, are there any discussions at the board level about accelerating development plans or increasing capital expenditure? A: James Andrew Williamson, CFO: We are considering selling down some of our working interest in the Parkman development, which could adjust our capital expectations. Jason Stabell, CEO: The Powder River Basin is seeing increased activity, and we are exploring partnerships for future opportunities. While nothing is imminent, we are evaluating options to potentially accelerate development. Q: Is securing rig availability for the Parkman three-well pad challenging due to increased activity, and are rig rates rising? A: Henry Clanton, COO: Rig availability is tightening, and rates are creeping up. However, we have access to rigs that fit our development timeline, and we are confident in securing a rig cost-efficiently for the August spud date. Q: Are there any plans to divest more non-core assets to fund capital projects? A: Jason Stabell, CEO: We are always looking to optimize our portfolio. While we have sold some non-core assets, future divestitures will be opportunistic, potentially involving small sell-downs of working interests. Q: What are the expectations for operating costs as production scales up? A: James Andrew Williamson, CFO: As we bring on new volumes, particularly in the Powder River Basin, we expect unit operating costs to decrease from the high $10s to low $20s per BOE to the mid $10s, with a significant drop anticipated in the fourth quarter. Q: Are there any infrastructure needs in the Powder River Basin beyond the water facilities? A: Jason Stabell, CEO: In Converse County, there will be some gas takeaway development required. We have the option to participate in this or have gatherers manage it. Our main focus is on supplying frac water for completions. For the complete transcript of the earnings call, please refer to the full earnings call transcript.