Epsilon Energy Ltd. (EPSN)
NASDAQ:EPSN
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Epsilon Energy
(NASDAQ:EPSN)
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Rating:63Neutral
Price Target:
$6.50
▲(36.55% Upside)
Action:DowngradedDate:03/26/26
The score is primarily constrained by weaker financial performance in 2025 (net loss) and higher leverage, despite continued positive operating/free cash flow. Technicals are constructive with a strong trend but look overextended. The earnings call outlook is a net positive (clear development plans, reserve growth, capital returns, and leverage discipline), while valuation is mixed due to a negative P/E offset by a solid dividend yield.
Positive Factors
Reserve and Inventory Growth
Large, durable reserve additions from the Powder River Basin acquisition materially expand low-decline, high-return inventory. Bigger proved reserves lengthen development runway, support multi-year production growth and give the company flexibility for staged CAPEX, hedging and long-term cash generation.
Negative Factors
Rising Leverage
A sudden step-up in debt increases financial risk and reduces flexibility if commodity realizations deteriorate. Higher leverage magnifies earnings volatility, constrains ability to fund opportunistic buybacks or growth without further borrowing, and raises refinancing sensitivity over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Reserve and Inventory Growth
Large, durable reserve additions from the Powder River Basin acquisition materially expand low-decline, high-return inventory. Bigger proved reserves lengthen development runway, support multi-year production growth and give the company flexibility for staged CAPEX, hedging and long-term cash generation.
Read all positive factors
Epsilon Energy (EPSN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$185.67M
Dividend Yield5.24%
Average Volume (3M)286.60K
Price to Earnings (P/E)―
Beta (1Y)0.29
Revenue Growth46.76%
EPS Growth11.48%
CountryUS
Employees10
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.43
Shares Outstanding30,239,980
10 Day Avg. Volume282,032
30 Day Avg. Volume286,602
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)0.85
Price to Sales (P/S)2.07
P/FCF Ratio20.44
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue3.56
Enterprise Value/Gross Profit7.48
Enterprise Value/Ebitda6.73
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Epsilon Energy Business Overview & Revenue Model
Company Description
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 natura...
How the Company Makes Money
Epsilon Energy primarily makes money through (1) upstream oil and natural gas production and (2) midstream natural gas gathering services. Upstream revenues are generated by selling produced natural gas and crude oil (and associated natural gas li...
Epsilon Energy Earnings Call Summary
Earnings Call Date:Mar 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive outlook: the company reported substantial adjusted EBITDA (+75%) and production growth (+54%), meaningful reserve additions (PDP +69%, total proved +86%), a strategic acquisition that added high-return inventory, clear multi-year development plans, and active portfolio optimization (dividends, buyback, asset sales, debt paydown). Key near-term catalysts include strong realized gas pricing events and unhedged incremental oil volumes. Offsetting these positives are acquisition transaction costs, impairments and underperformance in certain non-core areas (notably Canada and small New Mexico interests), and accounting impacts from asset dispositions. On balance, the operational momentum, attractive project economics at current forward oil curves, and active capital allocation initiatives outweigh the disclosed challenges.Positive Updates
Strong Adjusted EBITDA and Production Growth
Adjusted EBITDA increased 75% year-over-year; production grew 54% year-over-year (company also cited volumes up 65% year-over-year driven by higher gas volumes and pricing in the Marcellus).
Negative Updates
Acquisition-Related Transaction Costs
Transaction costs associated with the Peak acquisition totaled $6,900,000 (about half were expenses assumed from Peak and adjusted in the share consideration, but the expense still impacted 2025 earnings).
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Adjusted EBITDA and Production Growth
Adjusted EBITDA increased 75% year-over-year; production grew 54% year-over-year (company also cited volumes up 65% year-over-year driven by higher gas volumes and pricing in the Marcellus).
Read all positive updates
Company Guidance
The call’s forward guidance and near-term targets were detailed and metric-rich: management said PDP production is ~60% hedged for the rest of 2026 while incremental oil from the drill bit will be unhedged, the company is maintaining a fixed dividend (17th consecutive quarter) and a share buyback program covering up to 10% of shares outstanding, and it is targeting an average annual leverage ratio below 1.5x; total proved reserves rose to 156 Bcfe (78 Bcfe from the Powder River Basin acquisition). 2026 activity and CapEx plans include two Niobrara completions (0.7 net) with net CapEx ≈ $6.0M (frac in Q2), three two-mile Parkman wells (2.8 net) with net CapEx ≈ $22.0M (drill in Q3, online Q4) and preparatory water/impoundment work for 12 gross Parkman wells in 2027–28, a Barnett three-mile well with net drill+completion CapEx ≈ $4.0M (online midyear) plus ~0.75 net additional wells later in 2026, and five Marcellus wells (0.4 net) with net CapEx ≈ $4.0M; LOE optimization is expected to save ~$50k–$100k gross per month. Financial and transaction metrics called out included adjusted EBITDA up 75% and production up 54% year‑over‑year in 2025, adjusted 2025 EPS of $92 per share (post adjustments), Peak/transaction costs of $6.9M, a Q1 debt paydown of $5.0M, the Oklahoma sale generating over 8x expected cash flow (post-tax), an Auburn Marcellus ORRI package under market test (≈ <1,000 Mscfd), and a Peak office under contract for $3.0M. Price-sensitivity economics cited yesterday’s forward at ≈ $77 WTI through YE‑2027 and type‑curve IRRs of note: Barnett three‑milers ~45% IRR at $65 (2‑year payout, ~3.0x MOIC) rising to ~60% at ~$70, Parkman (Converse) ~150% at $65 (10‑month payout, 2.5x) rising to >200% at $75 (8‑month payout, ~3.0x), Campbell Parkman 45–50% at $65 (20‑month payout) to ~80% at $75, and upper Niobrara ~25–30% at $65 (3‑year payout, 2.0x) to ~40–45% at $75 (2‑year payout, 2.5x).Epsilon Energy Financial Statement Overview
Summary
Income Statement
52
Neutral
Balance Sheet
61
Positive
Cash Flow
56
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 51.59M | 31.52M | 30.73M | 69.96M | 42.40M |
| Gross Profit | 24.54M | 11.81M | 14.18M | 54.11M | 27.15M |
| EBITDA | 27.79M | 13.79M | 17.91M | 54.00M | 22.80M |
| Net Income | -4.85M | 1.93M | 6.95M | 35.35M | 11.63M |
Balance Sheet | |||||
| Total Assets | 228.24M | 120.45M | 124.04M | 123.86M | 99.46M |
| Cash, Cash Equivalents and Short-Term Investments | 8.96M | 6.52M | 32.18M | 45.24M | 26.50M |
| Total Debt | 51.11M | 476.91K | 563.38K | 35.30K | 0.00 |
| Total Liabilities | 102.55M | 23.73M | 23.43M | 19.62M | 20.20M |
| Stockholders Equity | 125.68M | 96.73M | 100.61M | 104.25M | 79.26M |
Cash Flow | |||||
| Free Cash Flow | 5.22M | -19.73M | -457.78K | 29.94M | 15.12M |
| Operating Cash Flow | 20.62M | 16.83M | 18.19M | 38.01M | 20.01M |
| Investing Cash Flow | -61.64M | -16.66M | -38.38M | -7.87M | -4.44M |
| Financing Cash Flow | 43.68M | -7.32M | -11.73M | -11.35M | -2.34M |
Epsilon Energy Technical Analysis
Positive
4.76
Price Trends
5.39
Positive
5.00
Positive
5.31
Positive
Market Momentum
0.27
Positive
57.63
Neutral
65.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EPSN, the sentiment is Positive. The current price of 4.76 is below the 20-day moving average (MA) of 6.04, below the 50-day MA of 5.39, and below the 200-day MA of 5.31, indicating a bullish trend. The MACD of 0.27 indicates Positive momentum. The RSI at 57.63 is Neutral, neither overbought nor oversold. The STOCH value of 65.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EPSN.
Epsilon Energy Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $242.64M | 4.20 | 10.56% | ― | -9.46% | -144.89% | |
75 Outperform | $191.99M | 2.50 | 10.70% | ― | -9.98% | -19.48% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
65 Neutral | $155.42M | 28.10 | 4.46% | 13.52% | -2.23% | -104.00% | |
63 Neutral | $185.67M | -22.04 | -4.55% | 5.24% | 46.76% | 11.48% | |
56 Neutral | $267.21M | -0.78 | -56.05% | ― | -1.58% | -271.90% | |
43 Neutral | $105.74M | -1.44 | -177.26% | ― | -15.13% | 17.34% |
* Energy Sector Average
EPSN
Epsilon Energy
6.14
-0.17
-2.74%
EPM
Evolution Petroleum
4.44
0.40
9.77%
GTE
Gran Tierra Energy
7.57
3.57
89.25%
AMPY
Amplify Energy
5.88
3.00
104.17%
EP
Empire Petroleum
2.87
-3.35
-53.83%
IMPP
Imperial Petroleum
4.30
1.93
81.43%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.