Epsilon Energy Ltd.

The primary source of cash for Epsilon during the three months ended March 31, 2025 was funds generated from operations. The primary source of cash for Epsilon during the three months ended March 31, 2024 was funds generated from operations and proceeds from short term investments. The primary uses of cash for the three months ended March 31, 2025 were the development of upstream properties and the distribution of dividends. The primary uses of cash for the three months ended March 31, 2024 were the development of upstream properties, investment in U.S. Treasury Bills, the repurchase of shares of common stock, and the distribution of dividends.

At March 31, 2025, we had a working capital surplus of $6.2 million, a decrease of $0.9 million from the $7.1 million surplus at December 31, 2024. 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, 2025 compared to 2024

During the three months ended March 31, 2025, $8.6 million was provided by the Company’s operating activities, compared to $3.7 million during the same period in 2024, representing a 133% increase. The increase was primarily due to higher produced volumes and realized prices in Pennsylvania.

The Company used $6.8 million and $11.8 million of cash for investing activities during the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025, the Company had net investments of $6.8 million primarily in well costs and leasehold (drilling carry) in Pennsylvania, Texas, and Canada. During the three months ended March 31, 2024, the Company had net investments of $18.5 million in leasehold and well costs in Pennsylvania and Texas offset by net proceeds of $6.7 million in U.S. Treasury Bills.

The Company used $1.4 million and $2.6 million of cash for financing activities during the three months ended March 31, 2025 and 2024, respectively. This was spent on dividend payments and the repurchase of shares of common stock.