Epsilon Energy (EPSN) Q2 2026 earnings summary

Executive summary

• Major operational initiatives progressed on schedule and on budget, with development plans executed as expected and meaningful quarter-over-quarter production growth anticipated for the remainder of 2026, primarily from crude volumes in the Powder River Basin.

• Revenue for the six months ended June 30, 2026 increased 58% year-over-year to $43.9 million, driven by the Peak acquisition and higher realized gas prices in Pennsylvania.

• Transitioned from a non-operator to a diversified operator/non-operator hybrid, expanding development across multiple basins and executing projects ahead of schedule and on budget.

• Integration of the Peak Exploration and Production acquisition is largely complete, enabling continued focus on operational performance and efficiency improvements.

• For the first time, production guidance for the second half of 2026 was provided, reflecting increased confidence in operational execution and asset integration.

Financial highlights

• Second quarter 2026 marked a production trough, with new development in the Powder River Basin and Permian contributing late in the quarter.

• Adjusted EBITDA for the six months ended June 30, 2026 was $19.2 million, up from $18.0 million year-over-year.

• Q2 2026 total revenue was $18.3M, down 29% sequentially but up 57% year-over-year.

• Full year 2026 guidance indicates high teens year-over-year growth in total production and nearly 200% year-over-year growth in oil volumes.

• Debt was reduced by $10 million in the first half of the year, with revolver usage planned to partially fund upcoming investments.

Outlook and guidance

• Anticipates meaningful quarter-over-quarter production growth through 2026, with the largest impact in Q4 from Parkman volumes in the Powder River Basin.

• FY 2026 production guidance: 13,740–14,280 MMcfe (midpoint: 18% YoY growth); oil production: 640–670 MBbl (midpoint: 194% YoY growth).

• Plans to provide full year 2027 guidance in the first quarter of next year, with annual updates and quarterly refinements.

• Development activity in 2027 expected to exceed 2026 levels, especially in the Powder River Basin, with continued growth in the Permian and Marcellus Shale.

• Management expects current cash, available borrowings, and operating cash flows to be sufficient for at least the next twelve months.