Epsilon Energy Expands Powder River Basin Footprint with $49M Peak BLM Lease Acquisition

NEW YORK, NY – November 20, 2025

Epsilon Completes Peak BLM Lease Acquisition, Issues New Shares

Epsilon Energy Ltd. (NASDAQ: EPSN) has finalized its acquisition of Peak BLM Lease LLC, issuing 2,234,847 shares to Yorktown Energy Partners XI, LP as final consideration. The deal, initially announced in August 2025, significantly expands Epsilon's asset base in the Powder River Basin (PRB) of Wyoming. While the company hails the acquisition as a key component of its growth strategy, the transaction is occurring amidst market uncertainty and has triggered equity dilution, prompting questions about the sustainability of Epsilon’s aggressive expansion.

Strategic Expansion into the Powder River Basin

The acquisition provides Epsilon with 40,500 net acres in the core of the PRB, adding approximately 2.2 MBoepd (thousand barrels of oil equivalent per day) of production – 56% oil and 44% gas – to its portfolio. “This acquisition aligns perfectly with our strategy of focusing on high-return, oil-weighted assets,” a company spokesperson stated. The move positions Epsilon to capitalize on the growing demand for domestic energy production. The acquisition also includes the assumption of $49 million in debt and involved an increase in Epsilon’s credit facility to $80 million, with $50.5 million drawn at closing.

The geographically focused purchase, with operations concentrated in areas like Wright, Wyoming, demonstrates a strategic decision to consolidate and optimize its regional presence. Analysts suggest that the acquisition was partially predicated on the potential to access acreage previously impacted by a drilling permit moratorium in Converse County, Wyoming, indicating a calculated risk and a potential for future upside.

Balancing Growth with Equity Dilution

However, the acquisition has not been without its critics. The issuance of approximately 2.2 million shares to Yorktown Energy Partners, while completing the purchase, introduces a degree of equity dilution for existing shareholders. This dilution comes at a time when Epsilon’s stock price is hovering near its 52-week low, trading around $4.66 on November 20, 2025.

“The market is clearly skeptical,” noted one independent financial analyst. “While the acquisition itself appears strategically sound, the method of financing – through equity issuance – is raising concerns about the company’s ability to sustain this pace of growth without further diluting shareholder value.”

Recent analyst reports show a mixed outlook, with some firms maintaining a “hold” rating while others have downgraded the stock, citing technical weaknesses and a bearish trend. Despite a positive long-term price target from some analysts, the immediate market reaction suggests investors are wary of the company’s expansion strategy.

Yorktown’s Continued Investment in Oil & Gas

The involvement of Yorktown Energy Partners XI, LP, is also noteworthy. Yorktown, a private equity firm specializing in energy investments, previously held a majority stake in Peak BLM Lease LLC. Their continued investment in Epsilon suggests a strong belief in the long-term potential of the Powder River Basin and the company’s ability to unlock value from these assets.

“Yorktown’s decision to take equity in Epsilon rather than cash demonstrates their confidence in the deal,” explained an industry observer. “They clearly see an opportunity to participate in the upside as Epsilon develops these assets.” Yorktown’s portfolio includes other oil and gas exploration companies, indicating a continued commitment to the sector despite the broader shift towards renewable energy. The firm's investment strategy focuses on portfolio diversification and balance, suggesting a calculated approach to risk management.

Navigating Regulatory Hurdles and Future Prospects

The acquisition was contingent on meeting certain regulatory conditions, including the resolution of concerns related to acreage affected by the Converse County drilling moratorium. Epsilon’s ability to navigate these regulatory hurdles and secure access to these permits will be crucial to realizing the full potential of the acquired assets.

The company is also facing increasing pressure to demonstrate its commitment to environmental sustainability. The Powder River Basin is a sensitive ecosystem, and Epsilon will need to prioritize responsible development practices to mitigate the environmental impact of its operations. As Epsilon moves forward, it will need to strike a balance between maximizing shareholder value, managing risk, and operating in a sustainable and responsible manner. This will be key to ensuring the long-term success of the company and its ability to capitalize on the opportunities presented by the evolving energy landscape.