The first-ever guidance is the key catalyst — FY 2026 oil production growth of 194% YoY and Q3 oil growth of 27% QoQ signal a material shift to oil-weighted cash flow. Monitor Q3 production actuals and whether the elevated capex ($42-47M) translates to free cash flow generation. The $40.5M debt balance and negative adjusted net income per share ($0.03) in Q2 warrant caution despite the growth narrative.
Price Chart
Executive Summary
Epsilon Energy reported Q2 2026 results with total revenue of $18.3M, up 57% YoY driven by a 332% surge in oil revenue and 856% jump in NGL revenue, though gas revenue fell 72% on lower prices. The company issued first-ever production and capital guidance, forecasting FY 2026 total production growth of 18% YoY and oil production growth of 194% YoY, signaling a strategic shift toward oil-weighted development. However, adjusted EBITDA declined 21% YoY to $5.8M, and the company carries $40.5M in debt with elevated capex of $8.5M in the quarter.
Key Financial Metrics
Key Facts
- Q2 2026 total revenue $18.3M, +57% YoY ($11.6M in Q2 2025)
- Oil revenue $11.8M, +332% YoY; NGL revenue $1.4M, +856% YoY; Gas revenue $3.8M, -45% YoY
- Adjusted EBITDA $5.8M, -21% YoY from $7.4M
- First-ever guidance: FY 2026 total production 13,740-14,280 MMcfe (+18% YoY at midpoint), oil production 640-670 MBbl (+194% YoY)
- Q3 2026 production guidance 3,270-3,510 MMcfe (+10% QoQ), oil 155-165 MBbl (+27% QoQ)
- Capex $8.5M in Q2, FY 2026 guidance $42-47M
- Credit facility balance $40.5M, down $10M from year-end 2025
- GAAP net income $7.1M vs $1.6M in Q2 2025, boosted by $4.2M gain on sale of ORRIs
- Adjusted net income per share $0.05 vs $0.09 in Q2 2025
- Dividend $1.9M, +37% YoY
Financial Impact
Revenue up 57% YoY but adjusted EBITDA down 21%; first-ever guidance implies 18% total production growth and 194% oil production growth in FY 2026
Risk Factors
- Natural gas price exposure: gas revenue fell 72% YoY despite only 24% production decline, with realized gas price down 66% to $1.81/Mcf
- Elevated capex: FY 2026 capex of $42-47M vs $8.5M in Q2 implies heavy H2 spending, with 35% of capex impacting only ~60 days in Q4
- Debt load: $40.5M credit facility balance with $877K interest expense in Q2 vs $20K in Q2 2025
- Execution risk: company transitioning from non-operator to operator/hybrid, with multiple basin development activities
- Hedge book: only 325 MMcf of gas hedged for FY 2026 at $3.90/MMBtu, leaving significant exposure to spot prices
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 1 press release from GlobeNewswire.
| Document | Accession Number |
|---|---|
| PRESS-RELEASE Data (Synthetic) | press-3344118 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 21, 2026 5w ago | Insider Buy | $6.06 $6.10 | ▲ +0.66% | ▲ +1.22% | $6.33 (+4.46%) |
Sep 14, 2026 6w ago | 144 | $6.16 $6.00 | ▼ −2.60% | ▼ −5.58% | $6.33 (+2.76%) |
Sep 4, 2026 7w ago | Press Release | $6.18 $6.06 | ▼ −1.94% | ▼ −2.54% | $6.33 (+2.43%) |
Aug 18, 2026 10w ago | 8-K | $5.68 $5.90 | ▲ +3.87% | ▲ +5.62% | $6.33 (+11.44%) |
Aug 13, 2026 10w ago | 8-K | $5.32 $6.34 | ▲ +19.17% | ▲ +20.92% | $6.33 (+18.98%) |
Aug 12, 2026 10w ago | Press Release | $5.32 $6.34 | ▲ +19.17% | ▲ +20.92% | $6.33 (+18.98%) |
Aug 12, 2026 10w ago | Press Release | $5.32 $6.34 | ▲ +19.17% | ▲ +20.92% | $6.33 (+18.98%) |
Jun 18, 2026 18w ago | 424B5 | $5.21 $5.52 | ▼ −5.95% | ▼ −6.10% | $6.33 (−21.50%) |
Jun 1, 2026 21w ago | 8-K | $5.81 $5.45 | ▼ −6.20% | ▼ −4.63% | $6.33 (+8.95%) |
May 29, 2026 21w ago | 144 | $5.83 $5.41 | ▼ −7.20% | ▼ −5.91% | $6.33 (+8.58%) |
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