Epsilon Energy has entered into definitive agreements to acquire two entities (Peak Exploration and Production LLC and Peak BLM Lease LLC, together "Peak") majority owned by funds of Yorktown Energy Partners LLC.

Combined consideration due at closing is the issuance of 6 million Epsilon common shares and the assumption of an estimated $49 million of debt. Additional contingent consideration of up to 2.5 million Epsilon common shares could be due subject to the ability to access acreage currently affected by a drilling permit moratorium in Converse County, Wyoming.

The transactions are expected to close in Q4 2025, subject to obtaining the requisite Epsilon shareholder approval.

Transaction Highlights:

Attractively Priced

• Assuming $6.21/shr (10-day VWAP from 8/11/25) for Epsilon stock, consideration equates to PDP PV15 + PUD PV25 on Peak's third-party year-end 2024 reserves.
• Assuming $6.21/shr (10-day VWAP from 8/11/25) for Epsilon stock, consideration equates to $1,100 per undeveloped acre (or $340,000 per priority location)

Accretive to forecasted 2025 Adjusted EBITDA, YE 2024 Reserves, and Inventory per share

• Accretive to forecasted 2026 Adjusted EBITDA per share and CFPS

Adds Control of Operations with Experienced In-Basin Team

• Provides a platform for future growth opportunities and the ability to execute

Expands Scope of Asset Base and Optionality for Growth

• Adds under-invested core Powder River Basin (PRB) position with substantial depth of undeveloped inventory on a mostly held by production position

Maintains Strong Balance Sheet and Dividend Per Share

• Pro-forma business is conservatively capitalized
• Transaction allows consistent dividend payout and provides future dividend support

The acquired Peak assets include 40,500 net acres in the core of the PRB, with Q2 2025 production of 2.2 MBoepd (56% oil, 44% gas).

Acquired Proved Reserves are 21.5 MMBoe (per Peak's third-party year-end 2024 reserves report) reflecting an approximately 150% increase to Proved Reserves to Epsilon (note consolidated third-party reserves report volumes are subject to change based on development plans and SEC pricing).

Epsilon estimates there are 111 net priority locations on the acquired PRB position, defined as those with at least 45% working interest, 10,000 ft. of completed lateral length (CLL), and type curve indicative half-cycle economics above 25% at $65 WTI / $4 HHUB commodity prices.

Pro-Forma Epsilon will have four primary project areas to deploy capital - NEPA core Marcellus, Permian Barnett in Texas, the WCSB in Alberta, and now core Power River Basin. The portfolio offers oil and gas directed development opportunities going forward. Pro-forma Q2 2025 production is 47 MMcfe (77% natural gas, 22% oil). Pro-forma YE 2024 Proved reserves are 213 Bcfe (59% natural gas, 39% oil).

Jason Stabell, Epsilon's Chief Executive Officer, commented:
"This is a key step forward for the company. We are acquiring a large under exploited asset at an attractive price. The acquisition brings additional balance to our portfolio and importantly, provides both control of the investment cadence and increased optionality to deploy capital for our shareholders as conditions warrant. We are excited to add Yorktown as a large shareholder. I personally have long history with the firm going back over 20 years. We want to thank the Peak team, led by Jack Vaughn, for their help putting this together and we're excited to work with them going forward."

At closing, 2 Peak shareholder designees will join the Epsilon board of directors. Epsilon's management team will lead the combined company.

Texas Capital Securities is serving as financial advisor, and Gray Reed is serving as legal advisor to Epsilon.

Operations Update:

Epsilon's capital expenditures were $4 million for the quarter ended June 30, 2025. These were related to the drilling of 1 gross (0.25 net) well in Texas, and the completion of 1 gross (0.25 net) well in the Garrington area of Alberta. The well in Texas is the eighth Barnett well developed in the project and has been completed with flowback operations beginning this week. The Canada capital expenditure was a carry-over on the wells drilled and completed in the first quarter.

The Company is taking a $2.7 million impairment in the second quarter related to the recently drilled wells in the Garrington area of Alberta. The impairment is driven by a combination of drilling and completion cost overruns, early well performance below expectations, and due to first half realizations, the forward impairment test assumption using a lower oil price.

Jason Stabell, Epsilon's Chief Executive Officer, commented:
"These early learnings are not unusual in a project area of this size. We learned valuable lessons that will improve our drilling and completion approach, and we still feel the asset has great potential with approximately 30,000 gross acres in the Garrington area and another 130,000 gross acres in the Harmattan area. We continue to work with our operating partner on a prudent plan for further investments."

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