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HOUSTON - Epsilon Energy Ltd. (NASDAQ:EPSN), currently trading at $6.44 with a market capitalization of $142.45 million, announced Wednesday it has entered into definitive agreements to acquire Peak Exploration and Production LLC and Peak BLM Lease LLC in a transaction valued at approximately $86 million, including stock issuance and debt assumption. According to InvestingPro analysis, the company maintains a strong financial health score of 2.52 (GOOD) and holds more cash than debt on its balance sheet.
The deal involves Epsilon issuing 6 million common shares and assuming approximately $49 million in debt, with potential additional consideration of up to 2.5 million shares contingent on accessing acreage affected by a drilling permit moratorium in Wyoming. The company’s solid financial position, with a current ratio of 1.66 and liquid assets exceeding short-term obligations, suggests capacity to manage this acquisition effectively.
The acquisition will provide Epsilon with 40,500 net acres in Wyoming’s Powder River Basin, with current production of 2.2 million barrels of oil equivalent per day (56% oil, 44% gas). The transaction is expected to close in the fourth quarter of 2025, subject to shareholder approval.
"This is a key step forward for the company. We are acquiring a large under exploited asset at an attractive price," said Jason Stabell, Epsilon’s Chief Executive Officer, in the press release.
The acquisition will expand Epsilon’s portfolio to four primary project areas: Northeast Pennsylvania Marcellus, Permian Barnett in Texas, Western Canadian Sedimentary Basin in Alberta, and now the Powder River Basin.
Upon completion, Epsilon’s production will increase to 47 million cubic feet equivalent per day (77% natural gas, 22% oil), while proved reserves will grow to 213 billion cubic feet equivalent (59% natural gas, 39% oil).
The company also reported second-quarter financial results, with revenue of $11.6 million and adjusted EBITDA of $7.4 million. Epsilon recorded a $2.7 million impairment related to recently drilled wells in Alberta.
Texas Capital Securities is serving as financial advisor to Epsilon on the transaction, which will add two Peak shareholder designees to Epsilon’s board of directors upon closing.
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