Epsilon Energy (EPSN) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue increased 58% year-over-year to $25.6 million, driven by higher realized gas prices, oil prices, and the Peak acquisition, with production volumes up 14% year-over-year and oil volumes up 199% year-over-year.

• Net income for Q1 2026 was $0.7 million, significantly impacted by a $7.9 million unrealized hedge loss and higher operating costs; adjusted net income excluding this was $8.7 million.

• Adjusted EBITDA for Q1 2026 was $13.4 million, up 26% year-over-year and 77% sequentially.

• The Peak Exploration and Production LLC acquisition in November 2025 added significant Wyoming assets, while Dewey Energy Holdings, LLC was divested in December 2025, reducing Oklahoma exposure.

• Recent asset sales and ongoing development in the Permian and Powder River Basins are expected to further boost production and financial performance in 2026.

Financial highlights

• Q1 2026 total revenue: $25.6 million (Q1 2025: $16.2 million), with gas revenues nearly doubling sequentially to $13.4 million and oil revenues rising 79% to $9.5 million.

• Adjusted EPS was $0.29 for the quarter; adjusted net income per share (excluding hedge loss) was $0.29, reported net income per share was $0.02–$0.03.

• Operating income was $10.8 million, up from $7.2 million a year ago.

• Cash and equivalents at March 31, 2026, were $7.9–$8.5 million, with a working capital surplus of $2.2 million.

• Paid down $10 million in debt since November, with current outstanding debt at $40.5–$45.5 million.

Outlook and guidance

• Oil-weighted production growth is expected to accelerate in the second half of 2026 and continue into 2027, with new volumes exposed to higher oil prices.

• CapEx to increase over the next three quarters, supporting growth while maintaining a target leverage profile of 1x-1.5x net debt to adjusted EBITDA.

• Management expects current cash, available borrowings, and operating cash flow to meet requirements for at least the next 12 months.

• Capital commitments of $10.9 million as of March 31, 2026, focused on drilling and completions in Texas, Pennsylvania, and Wyoming.

• Unit operating costs and G&A expected to trend down as new volumes come online and integration costs roll off.