Epsilon Energy Ltd.
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
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Jun 30, 2026 · Filed Aug 12, 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 June 30, 2026, the borrowing base was $90 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 the six months ended June 30, 2026, the Company made repayments of $10 million 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 + revolver availability / 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 June 30, 2026.
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| · · Balance at · · Balance at · · · · | |||||||||
| · · June 30, · · December 31, · · · · | |||||||||
| · · 2026 · · 2025 · · Borrowing Base · · Interest Rate | |||||||||
| Credit facility payable | | $40,500,000 | | $50,500,000 | | $90,000,000 | | | SOFR + 3.25% |
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