Epsilon Energy Ltd.
For the period ended Mar 31, 2026. Filed May 13, 2026.
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Mar 31, 2026 · Filed May 13, 2026
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5. Revolving Line of Credit
The Company closed a new senior secured reserve based revolving credit facility on October 10, 2025 with Frost Bank as administrative agent and Frost Bank and Texas Capital Bank as lenders. As of March 31, 2026, the borrowing base was $80 million, supported by the Company’s producing reserves and is subject to semi-annual redeterminations with a maturity date of October 10, 2029. Interest will be charged at the 3-month Term SOFR rate plus a margin of 3-4% (depending on facility utilization), payable quarterly. The facility is secured by the assets of the Company’s Epsilon Energy USA subsidiary. During April 2026, the Company made a $5 million repayment on the outstanding credit facility.
Under the terms of the facility, the Company must adhere to the following financial covenants:
| ● | Current ratio of 1.0 to 1.0 (current assets / current liabilities) |
| ● | Leverage ratio of less than 2.5 to 1.0 (total debt / income adjusted for interest, taxes and noncash amounts) |
Additionally, the Company is required to hedge 50% of its forecasted Proved Developed Producing production over a rolling 18-month period. If the facility utilization drops below 50%, then the required hedging drops to 25% of Proved Developed Producing production for the last 6 months of the 18-month period.
We were in compliance with the financial covenants of the agreement as of March 31, 2026.
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| · · Balance at · · Balance at · · · · | |||||||||
| · · March 31, · · December 31, · · · · | |||||||||
| · · 2026 · · 2025 · · Borrowing Base · · Interest Rate | |||||||||
| Credit facility payable | | $45,500,000 | | $50,500,000 | | $80,000,000 | | | SOFR + 3.25% |
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