Revolving Line of Credit

9 Months Ended

Sep. 30, 2025

Debt Disclosure [Abstract]

Revolving Line of Credit

6. Revolving Line of Credit

The Company closed a senior secured reserve based revolving credit facility on June 28, 2023, with Frost Bank as issuing bank and sole lender. The borrowing base at September 30, 2025 was $45 million (redetermined as of February 10, 2025), supported by the Company’s upstream assets in Pennsylvania and subject to semi-annual redeterminations with a maturity date of June 28, 2027. Interest will be charged at the Daily Simple SOFR rate plus a margin of 3.25%. The facility is secured by the assets of the Company’s Epsilon Energy USA subsidiary (Borrower). There are currently no borrowings under the facility.

Under the terms of the facility, the Company must adhere to the following financial covenants:

● Current ratio of 1.0 to 1.0 (current assets / current liabilities)

● Leverage ratio of less than 2.5 to 1.0 (total debt / income adjusted for interest, taxes and non-cash amounts)

Additionally, if the Leverage ratio is greater than 1.0 to 1.0, or the borrowing base utilization is greater than 50%, the Company is required to hedge 50% of the anticipated production from PDP reserves for a rolling 24-month period.

On October 8, 2025, the Company closed a new senior secured reserve based revolving credit facility with Frost Bank as administrative agent and Frost Bank and Texas Capital Bank as lenders (replacing the previous credit facility). The borrowing base was initially set at $45 million, supported by the Company’s upstream assets and subject to semi-annual redeterminations with a maturity date of October 8, 2029. Interest will be charged at the Daily Simple SOFR rate plus a margin of 3-4%. The facility is secured by the assets of the Company’s Epsilon Energy USA subsidiary (Borrower) and the Company was added as a co-borrower. There are currently no borrowings under the facility.

Under the terms of the facility, the Company must adhere to the following financial covenants:  

● Current ratio of 1.0 to 1.0 (current assets / current liabilities)

● Leverage ratio of less than 2.5 to 1.0 (total debt / income adjusted for interest, taxes and noncash amounts)

Additionally, once the facility is drawn, the Company is required to hedge 50% of the anticipated production from PDP reserves for a rolling 18-month period (reduces to 25% on the last 6 months if the facility utilization is <50% of the borrowing base).

We were in compliance with the financial covenants of the agreement as of September 30, 2025.

	Balance at		Balance at
	September 30,		December 31,		Current
	2025		2024		Borrowing Base		Interest Rate
Revolving line of credit	$	—	$	—	$	45,000,000		SOFR + 3.25%