EPSN’s Oil Output Nearly Triples as Revenue Soars 73% in Q1 2026—What's Fueling Epsilon's Growth?
Oil Production and Revenue Surge Point to Upbeat Outlook
Epsilon Energy (NASDAQ: EPSN) just released its first quarter 2026 results, confirming a striking transformation in its production mix and financial performance. The company posted a 73% surge in total revenues year-over-year, driven by nearly tripled oil output and a significant leap in realized natural gas prices. Despite a small drop in the share price to $6.01 by mid-morning, Epsilon’s Q1 numbers point to meaningful growth—and an ambitious development pipeline for the rest of the year.
Production Volumes and Revenue: Oil-Led Growth Stands Out
| Metric | Q1 2026 | Q1 2025 | YoY % |
|---|---|---|---|
| Oil Production (MBbl) | 136 | 46 | +199% |
| NGL Production (MBbl) | 42 | 16 | +168% |
| Total Production (MMcfe) | 3,554 | 3,108 | +14% |
| Daily Oil (Bbl/d) | 1,515 | 506 | +199% |
| Revenue ($M) | 25.60 | 16.16 | +58% |
| Adjusted EBITDA ($M) | 13.40 | 10.61 | +26% |
| Realized Gas Price ($/Mcf) | 5.40 | 3.87 | +39% |
This table underscores a dramatic jump in oil output and revenue. Oil sales were up 189% year-over-year, transforming Epsilon’s financial profile just as the company prepares to bring new, oil-weighted wells online later in 2026.
Development Pipeline and Strategic Moves: Preparing for More Oil
CEO Jason Stabell highlighted that Epsilon is executing on its strategic pivot: three new Barnett oil wells in the Permian are expected online this year, and two Niobrara wells in the Powder River Basin should be completed by early Q3. The company is also prepping facilities for a Parkman pad in Wyoming, targeting fourth quarter first production. Importantly, a large share of 2026’s new output will be oil-leaning, set to benefit from today's robust oil price environment.
Recent asset sales support Epsilon’s streamlined focus. The $3.9 million sale of Pennsylvania Marcellus royalty interests and a pending $3 million office asset divestiture will raise $6.7 million, funding continued development without impacting near-term results.
Financial Health: Strong Cash Flow and Controlled Debt
| Financial Metric | Q1 2026 | Q4 2025 | YoY % |
|---|---|---|---|
| Adjusted EBITDA ($M) | 13.40 | 7.55 | +77% QoQ |
| Cash + Short-term Investments ($M) | 8.47 | 9.51 | +15% |
| Debt ($M) | 45.50 | 50.50 | -10% |
| Dividend Paid ($M) | 1.88 | 1.87 | +1% |
Epsilon’s strong EBITDA growth and disciplined capital spending ($4.9 million in Q1) are covering aggressive debt repayments—$10 million repaid since March—positioning the balance sheet to support further drilling.
Hedge Book and Commodity Exposure: Significant Upside for New Production
While 60% of currently producing oil is hedged in the mid $60s/bbl for WTI, all incremental output from new wells will be fully exposed to prevailing oil prices. This gives Epsilon meaningful upside participation if crude remains high into the second half of 2026. The company’s scheduled development should come online just as new market momentum builds.
| Quarter | Oil Swaps (MBbl @ $/Bbl) | Oil Collars (MBbl, Put/Call $/Bbl) |
|---|---|---|
| Q2 2026 | 79 @ $62.83 | 3 @ $59.78/$70.01 |
| Q3 2026 | 80 @ $65.16 | 0 @ $60.00/$70.10 |
| Q4 2026 | 39 @ $62.71 | 28 @ $59.00/$69.00 |
| FY 2026 | 198 @ $63.75 | 32 @ $59.10/$69.12 |
Net Income Impacted by Hedge Losses, But Underlying Business Remains Robust
Net income was significantly reduced by a $7.9 million unrealized hedge book loss (a result of rising crude prices). Stripping out hedge impacts, quarterly adjusted net income per share was $0.29, supporting dividend continuity and future capital investments.
Key Takeaways: Upbeat on Oil, Liquidity, and 2026 Development
- Operational Momentum: Nearly tripled oil production and rapid revenue growth set the stage for a more oil-weighted, higher margin earnings profile in 2026.
- Financial Strength: Solid cash generation, ongoing debt reduction, and continued dividend payments underpin Epsilon’s health.
- Upside Potential: Significant new well activity—with full crude price exposure—positions Epsilon to benefit directly from a strong oil market in the second half of the year.
With much of its growth still ahead and several catalysts on the near-term calendar, Epsilon Energy warrants a closer look for those following the evolution of smaller-cap U.S. oil and gas players.
Upcoming Catalysts: Earnings Call and Well Results
Investors will get more color when Epsilon hosts its Q1 2026 earnings call on May 14. Further production data from new wells coming online could offer the next clue in the company’s multi-basin transformation story.
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