Epsilon Energy Ltd.

The primary source of cash for Epsilon during the three and six months ended June 30, 2025 and 2024 was funds generated from operations. The primary uses of cash for the three and six months ended June 30, 2025 were the development of upstream properties and the distribution of dividends. The primary uses of cash for the three months ended

June 30, 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 June 30, 2025, we had a working capital surplus of $9.1 million, an increase of $1.9 million from the $7.2 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.

Six months ended June 30, 2025 compared to 2024

During the six months ended June 30, 2025, $16.9 million was provided by the Company’s operating activities, compared to $9.1 million during the same period in 2024, representing an 87% increase. The increase was primarily due to higher produced volumes and realized prices in Pennsylvania.

The Company used $10.7 million and $9.5 million of cash for investing activities during the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, the Company had net investments of $10.7 million primarily in well costs and leasehold in Pennsylvania, Texas, and Canada. During the six months ended June 30, 2024, the Company had net investments of $28.6 million in leasehold and well costs in Pennsylvania and Texas offset by net proceeds of $19.1 million in U.S. Treasury Bills.

The Company used $2.8 million and $3.9 million of cash for financing activities during the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, this was spent on dividend payments. During the six months ended June 30, 2024, this was spent on dividend payments and the repurchase of shares of common stock.