Epsilon Energy Ltd.

The primary source of cash for Epsilon during the three months ended March 31, 2026 and 2025 was funds generated from operations. The primary uses of cash for the three months ended March 31, 2026 were the development of upstream properties, the reduction of the outstanding credit facility, and the distribution of dividends. The primary uses of cash for the three months ended March 31, 2025 were the development of upstream properties and the distribution of dividends.

At March 31, 2026, we had a working capital surplus of $2.2 million, a decrease of $5.4 million from the $7.6 million surplus at December 31, 2025. The Company anticipates its current cash balance, available borrowings, and cash flows from operations to be sufficient to meet its cash requirements for at least the next twelve months.

Three months ended March 31, 2026 compared to 2025

During the three months ended March 31, 2026, $10.1 million was provided by the Company’s operating activities, compared to $8.6 million during the same period in 2025, representing an 18% increase. The increase was primarily due to produced oil volumes from the acquired Wyoming assets and higher realized gas prices in Pennsylvania.

The Company used $4.3 million and $6.8 million of cash for investing activities during the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, the Company had net investments primarily in well and facilities costs and leasehold in Pennsylvania, Texas, and Wyoming. During the three months ended March 31, 2025, the Company had net investments of $6.8 million primarily in well costs in Pennsylvania, Texas, and Canada.

The Company used $6.9 million and $1.4 million of cash for financing activities during the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, this was spent on the repayment of the outstanding balance on the credit facility and dividend payments. During the three months ended March 31, 2025, this was spent on dividend payments.