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, increased production, and the Peak acquisition.

• 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.

• 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); operating income was $10.8 million, up from $7.2 million a year ago.

• Adjusted EBITDA: $13.4 million (Q1 2025: $10.6 million); adjusted EBITDA margin was approximately 52% of total revenue.

• Cash and equivalents at March 31, 2026: $7.9 million; capital expenditures for the quarter were $4.9 million.

• Debt reduced to $45.5 million at quarter-end, with $10 million in repayments during Q1 and April; $40.5 million outstanding as of May 2026.

• Sale of overriding royalty interest in Pennsylvania for $3.9 million, about 6x expected next 12 months cash flow from those assets.

Outlook and guidance

• Oil-weighted production growth is expected to accelerate in the second half of 2026 and continue into 2027, supported by new wells in the Permian and Powder River Basins.

• Three gross 3-mile Barnett wells in the Permian expected online in 2026, with the first in Q2; two Niobrara DUCs and three Parkman wells in the Powder River Basin scheduled for completion and production in Q3 and Q4.

• Additional Marcellus wells drilled in April, with completions and production expected in Q4.

• CapEx will increase over the next three quarters to drive 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.