Epsilon Energy Ltd. (EPSN) Market Cap
Epsilon Energy Ltd. has a market capitalization of $134M.
Financials based on reported quarter end 2025-12-31
Price: $5.82
▼ -0.17 (-2.84%)
Market Cap: 133.98M
NASDAQ · time unavailable
CEO: Jason Stabell
Sector: Energy
Industry: Oil & Gas Exploration & Production
IPO Date: 2007-11-15
Website: https://www.epsilonenergyltd.com
Epsilon Energy Ltd. (EPSN) - Company Information
Market Cap: 133.98M · Sector: Energy
Epsilon Energy Ltd., a natural gas and oil company, engages in the acquisition, development, gathering, and production of oil and gas reserves in the United States. It operates through Upstream and Gathering System segments. The Company has natural gas production in the Marcellus in Pennsylvania; and oil, natural gas liquids (NGL), and natural gas production in the Anadarko Basin in Oklahoma. As of December 31, 2021, it had total estimated net proved reserves of 110,969 million cubic feet of natural gas reserves, 819,726 barrels of NGL, and 305,052 barrels of oil and other liquids. Epsilon Energy Ltd. was incorporated in 2005 and is based in Houston, Texas.
Analyst Sentiment
Based on 1 ratings
Analyst 1Y Forecast: $0.00
Average target (based on 1 sources)
Consensus Price Target
Low
$8
Median
$8
High
$8
Average
$8
Potential Upside: 44.3%
Price & Moving Averages
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Fundamentals Overview
📊 AI Financial Analysis
Powered by StockMarketInfo"Enters the latest reporting period with revenue of $14.8M and EPS of -$0.51, alongside a net loss of -$11.5M (net margin: about -77.5%). Free cash flow was -$4.5M, driven by negative operating cash flow (-$0.6M) and substantial capex (-$3.9M). The company paid $1.8M in dividends during the period, indicating an ongoing cash return even while profitability and cash generation remain pressured. Balance sheet leverage is moderate-to-high, with total liabilities of $102.6M versus equity of $125.7M and net debt of $42.2M. From a fundamentals perspective, the key story is profitability and cash flow: losses and negative FCF suggest earnings are not yet translating into shareholder cash. However, revenue is positive and dividends have continued (quarterly $0.0625), which can provide some support to the shareholder yield. Valuation/expectations are difficult to fully benchmark without P/E or FCF yield data, but the stock at $6.20 is below the consensus analyst target of $8.40. Market performance shows positive momentum over 6 months (+16.5%) and YTD (+34.8%), but the 1-year trend remains negative (-12.2%), implying mixed total shareholder returns dominated by recent price appreciation."
Revenue Growth
Revenue is reported at $14.8M for the period, but there is no YoY growth rate provided, limiting the ability to judge trend or stability.
Profitability
Net income is -$11.5M and EPS is -$0.51, implying a net margin of roughly -77.5%; losses indicate weak profitability and limited operating efficiency.
Cash Flow Quality
Free cash flow is negative (-$4.5M) with operating cash flow of -$0.6M and capex of -$3.9M. Dividends of $1.8M were paid despite negative FCF.
Leverage & Balance Sheet
Net debt is $42.2M and liabilities are $102.6M versus equity of $125.7M, indicating leverage exists but equity is positive; resilience is less clear without liquidity ratios.
Shareholder Returns
No buyback data provided. Dividends are small ($0.0625 quarterly), while price performance is mixed: -12.2% over 1 year but +16.5% (6 months) and +34.8% (YTD), suggesting recent capital appreciation but weak longer-term total returns.
Analyst Sentiment & Valuation
Consensus price target is $8.40 versus a current price of $6.20, implying a positive upside expectation from analysts; however, valuation metrics like P/E and FCF yield are not provided and fundamentals remain loss-making.
Disclaimer:This analysis is AI-generated for informational purposes only. Accuracy is not guaranteed and this does not constitute financial advice.
So what: Management is loudly bullish on multiyear growth (adj. EBITDA +75%, production +54%, large reserve growth) and positions the portfolio for upside via unhedged incremental oil volumes in 2026. In the Q&A, analyst pressure focused on whether returns still work versus higher-than-$65 oil assumptions and how capital competes across plays. Management answered with explicit IRR/multiple math (e.g., Barnett 45% IRR at $65 → ~60% at $70; Parkman Converse 150% return/10-month payout at $65 → >200%/8-month at $75; Niobrara upper returns 25–30% at $65 → 40–45% at $75). However, the actual earnings narrative includes realized impairment headwinds in Canada/New Mexico tied to sub-$60 WTI assumptions and a New Mexico frac hit, plus prior BLM permitting risk that only resolved around closing. Net: confidence on economics and strategy is high, but execution/commodity-driven valuation risks are not theoretical—already hit.
Growth Catalysts
- Closed Peak acquisition (11/14/2025) adding Powder River Basin production plus 100+ net high-rate-of-return drilling locations (Parkman-focused) largely held-by-production undeveloped acreage
- 69% growth in proved developed producing reserves; 86% increase in total proved reserves (2025, driven by Peak + development drilling)
- 2025 adjusted EBITDA +75% YoY and production +54% YoY (drivers cited: higher volumes +65% and better Marcellus realized prices up >$1/MMBtu YoY)
- 2026/2027/2028 volume growth anticipated with Auburn Gathering System as the primary midstream conduit (capital-efficient cash flow growth)
Business Development
- Override mineral interest package in the Marcellus: company in the market to sell; bids expected next month; not guided on proceeds
- Sale/portfolio actions referenced: major loss on sale of Oklahoma assets (cash used to pay down debt)
- Colorado office building acquired with Peak: under contract for $3,000,000 (expected to close Q2 2026)
Financial Highlights
- Adjusted for one-off items, company earned $92 per share in 2025
- Transaction costs from Peak acquisition: $6,900,000 total (noted: about half were expenses assumed from Peak unrelated to the deal and adjusted for in share consideration at closing)
- 2025 impairments: wellbore impairments in Canada and New Mexico (drivers cited: sub-$60 WTI oil strip requirement at 12/31/20, downward reserve revisions due to a frac hit in New Mexico, and well underperformance in Canada)
- Peak/portfolio deal benefit: Oklahoma asset sale generated over 8x expected cash flow in 2026 when combining closing cash and cash tax savings; used proceeds to pay down debt by $5,000,000 in Q1
- Hedging: PDP production ~60% hedged for remainder of 2026; incremental oil volumes expected from drill bit starting Q2 are unhedged (upside exposure)
Capital Funding
- Share buyback program renewed for up to 10% of shares outstanding; 17th consecutive quarterly dividend declared
- Debt paydown: $5,000,000 in Q1 2026 using Oklahoma sale proceeds
- Liquidity actions in progress: marketing overriding royalty interest package; sale of Colorado office building under contract for $3,000,000; goal is to increase liquidity over next few months given 2026 capital program
Strategy & Ops
- 2026 PRB (Powder River Basin): completion operations of two two-mile Niobrara DUCs (0.7 net WI); net CapEx ~$6,000,000; frac scheduled for Q2
- 2026 PRB Parkman: drill three two-mile laterals (2.8 net) beginning Q3; production online in Q4; net capital for these three wells ~$22,000,000
- 2027–2028 PRB (Parkman in Converse County): building water supply and impoundment facility for 12 gross wells to drive development costs down
- Permian Barnett: project management/operatorship changed; transition to three-mile laterals with four wells per pad; planning underway for multi-well production battery and water recycling facility; first three-mile Barnett well drilled this month, expected online close to midyear
- Barnett 2026 CapEx: net ~$4,000,000 for drilling/completion of first three-mile well; additional three wells (0.75 net) planned H2 2026 (two offsetting to minimize parent-child impacts; third appraisal test in Woodford interval)
- Marcellus: restarting development; received proposals for five wells (0.4 net) beginning early Q2; completions scheduled second half; net CapEx ~$4,000,000
- Wyoming LOE optimization: downsizing 12 gas-lift compressors; reduce treating cost per barrel (chemical program); reduce/optimize power usage; estimated savings $50,000–$100,000 gross per month; stated as not impacting production
Market Outlook
- Price sensitivity / type curve input: forward averaged $77 through year-end 2027 (used for return sensitivities)
- WTI sensitivity: at $75 WTI, oil-weighted inventory returns increase meaningfully (type curves run in $5 increments)
- Parkman investment hurdle references: expected to focus on Parkman over next 18–24 months; returns improve materially if oil prices remain >$70
- Company expects Barnett first three-mile well online close to midyear; Marcellus well proposals beginning early Q2 with completions in second half
Risks & Headwinds
- Impairment risk already crystallized: Canada and New Mexico wellbore impairments driven by (1) sub-$60 WTI oil strip at 12/31/20, (2) downward reserve revisions due to a frac hit in New Mexico, and (3) well underperformance in Canada
- Tax/commodity sensitivity risk embedded in valuation assumptions (noted specifically via sub-$60 WTI oil strip requirement for impairment)
- Development execution hurdle: BLM permitting issues on acquired acreage in Converse County were resolved; permits resumed only around closing; remaining access depends on having approved drilling permits (7 approved permits cited)
Sentiment: MIXED
Note: This summary was synthesized by AI from the EPSN Q4 2025 earnings transcript. Financial data is complex; please verify all metrics against official SEC filings before making investment decisions.