Epsilon Energy Reports 75% EBITDA Growth and $4.8M January Sales, Parkman IRR >200%
Epsilon Energy posted 75% adjusted EBITDA growth and 54% production increase in 2025, driven by Peak acquisition adding over 100 drilling locations and $4.8 million January net sales. At a $77 forward curve, Parkman projects >200% IRR (8-month payout) and Permian Barnett ~60% IRR (18-month payout), offsetting sub-$60 WTI impairments.
1. Strong Q4 Financials
Epsilon Energy reported 75% adjusted EBITDA growth and a 54% production increase in 2025, supported by favorable pricing and operational efficiency. The company also generated $4.8 million in net sales during January 2026 due to Pennsylvania gas price spikes.
2. Peak Acquisition Adds High-Return Inventory
The Peak acquisition in the Powder River Basin added over 100 net high-rate drilling locations, enhancing the company's long-term inventory and production profile. Management highlighted these locations as key drivers of future organic growth and returns.
3. IRR Projections under $77 Forward Curve
With a forward curve averaging $77 per barrel through 2027, Epsilon Energy projects Parkman IRRs exceeding 200% with eight-month payouts and Permian Barnett returns around 60% with 18-month payouts. These projections underpin the company’s multiyear visibility into EPS and EBITDA growth.
4. Capital Allocation and Impairments
The company recorded impairments on wellbores in Canada and New Mexico due to sub-$60 WTI strips and reduced reserves. Capital allocation will prioritize the Powder River Basin (50% of spend), with the remainder allocated between Marcellus and Barnett assets.