Q1 Net Income Plummets 82% on Derivative Losses, Despite Strong Revenue Growth
EPSN sits 46% above its 52-week low of $4.2.
Summary
Epsilon Energy's Q1 2026 net income fell 82% to $0.73 million due to $8.93 million in derivative losses and higher interest expense, despite a 58% increase in revenue.
Key Events · Earnings and Guidance · EPSN
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Net Income and EPS Decline Sharply
Net income for Q1 2026 fell by 81.8% to $0.73 million ($0.02 EPS) from $4.02 million ($0.18 EPS) in Q1 2025.
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Significant Derivative Losses
The company reported an $8.93 million loss on derivative contracts, a substantial increase from $1.46 million in Q1 2025, primarily due to rising crude oil prices impacting the hedge book assumed in the Peak acquisition.
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Interest Expense Surges
Interest expense increased dramatically to $0.94 million in Q1 2026 from $0.01 million in Q1 2025, reflecting a higher credit facility balance.
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Strong Revenue Growth
Total revenue increased by 58% to $25.6 million, driven by the Peak acquisition and higher realized natural gas prices.
Analysis · EPSN · Energy & Transportation
Epsilon Energy reported a sharp decline in net income and EPS for Q1 2026, primarily driven by substantial losses on derivative contracts and a significant increase in interest expense. While the company achieved strong revenue growth and positive operating income, these operational positives were overshadowed by financial hedging losses and higher debt servicing costs. The ongoing material weakness in internal controls also remains a concern. This filing provides the detailed financial results following a news release that indicated a decline in profitability.
At the time of this filing, EPSN was trading at $6.15 on NASDAQ in the Energy & Transportation sector, with a market capitalization of approximately $186M. The 52-week trading range was $4.20 to $8.50. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.