Epsilon Energy Ltd. announced it has entered into definitive agreements to acquire Peak Exploration and Production LLC and Peak BLM Lease LLC, entities primarily owned by Yorktown Energy Partners LLC. The acquisition involves the issuance of 6 million Epsilon common shares and the assumption of an estimated $49 million in debt, with potential contingent consideration of up to 2.5 million additional shares. This transaction is expected to close in the fourth quarter of 2025, pending Epsilon shareholder approval.
The acquired Peak assets include 40,500 net acres in the core of the Powder River Basin, with second quarter 2025 production of 2.2 MBoepd, consisting of 56% oil and 44% gas. The acquisition is projected to increase Epsilon's Proved Reserves by approximately 150%, adding 21.5 MMBoe based on Peak's year-end 2024 reserves report. Epsilon estimates 111 net priority drilling locations on the acquired acreage.
Concurrently, Epsilon provided an operational update for the second quarter of 2025, reporting capital expenditures of $4 million. These expenditures were allocated to drilling one gross (0.25 net) well in Texas and completing one gross (0.25 net) well in the Garrington area of Alberta. The company recorded a $2.7 million impairment in the second quarter related to the Garrington wells, attributed to drilling and completion cost overruns, early well performance below expectations, and a lower forward oil price assumption.
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