SCHEDULE: Yorktown Partners Takes 9.57% Stake in Epsilon Energy

Yorktown Energy Partners XI, L.P. has acquired a 9.57% beneficial ownership in Epsilon Energy Ltd. as consideration for the sale of Peak E&P and Peak BLM interests, leading to a board appointment and a registration rights agreement.

Summary

• Yorktown Energy Partners XI, L.P., along with its general partners Yorktown XI Company LP and Yorktown XI Associates LLC (collectively, the 'Reporting Persons'), beneficially owns 2,869,560 Common Shares of Epsilon Energy Ltd.
• This ownership represents 9.57% of Epsilon Energy Ltd.'s issued and outstanding Common Shares, based on a total of 29,983,549 shares outstanding as of November 20, 2025.
• The shares were acquired as consideration for the sale of Peak Exploration & Production, LLC ('Peak E&P') and Peak BLM Lease LLC ('Peak BLM') interests to Epsilon Energy USA, Inc., a wholly-owned subsidiary of Epsilon Energy Ltd.
• The consideration included 634,713 Common Shares received on November 14, 2025, and an additional 2,500,000 Common Shares received on November 20, 2025.
• Bryan H. Lawrence, a Managing Member of Yorktown XI Associates, was appointed to Epsilon Energy Ltd.'s Board of Directors on November 14, 2025.
• Epsilon Energy Ltd. entered into a Registration Rights Agreement with the Reporting Persons, agreeing to file a Form S-3 registration statement to permit public resale of certain Common Shares by the selling shareholders.
• Yorktown XI also entered into a Lock-Up Agreement, restricting the sale or disposition of its Common Shares for a period of 180 days from the closing date of November 14, 2025.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While it's an ownership disclosure, the strategic investment by an energy-focused fund, coupled with a board seat and registration rights, suggests a constructive long-term view on Epsilon Energy Ltd. The lock-up period indicates commitment, despite restricting immediate liquidity.

Positives

• Yorktown Energy Partners XI, L.P. has secured a board seat for Bryan H. Lawrence, providing direct influence over Epsilon Energy Ltd.'s strategic direction.
• The Registration Rights Agreement facilitates future liquidity for Yorktown's investment, allowing for public resale of shares.
• The acquisition of Peak E&P and Peak BLM interests by Epsilon Energy Ltd. expands its asset base, with Yorktown becoming a significant shareholder in the combined entity.

Negatives

• Yorktown Energy Partners XI, L.P. is subject to a 180-day lock-up period, restricting its ability to sell or dispose of its Common Shares immediately after the closing date.

Risks

• The Reporting Persons may, at any time, review or reconsider their investment position, change their purpose, or formulate new plans or proposals regarding Epsilon Energy Ltd.
• There is a possibility that the Reporting Persons could acquire additional securities, dispose of all or a portion of their holdings, or propose extraordinary corporate transactions such as mergers, asset sales, or changes to capitalization or management.
• The lock-up agreement restricts Yorktown's ability to sell shares for 180 days, which could impact their investment strategy if market conditions change significantly during this period.

Future Outlook

The Reporting Persons acquired the securities for investment purposes and intend to continuously review their investment in Epsilon Energy Ltd. They reserve the right to acquire additional securities, dispose of holdings, or change their investment intentions. They may also engage in discussions with management, the board, and shareholders regarding potential extraordinary corporate transactions, including mergers, asset sales, changes to capitalization or dividend policy, or alterations to the company's business or corporate structure, including management or board composition.

Management Comments

• The Reporting Persons acquired the securities for investment purposes and intend to review their investments in the Issuer on a continuing basis.
• The Reporting Persons may, at any time and from time to time, review or reconsider their position, change their purpose or formulate plans or proposals with respect thereto.
• The Reporting Persons reserve the right to acquire additional securities, dispose of all or a portion of their holdings, or change their intention with respect to any or all matters referred to in Item 4.

Industry Context

This filing reflects a strategic investment by an energy-focused private equity firm, Yorktown Energy Partners, into Epsilon Energy Ltd., an energy company. Such transactions are common in the energy sector, where private equity often plays a role in consolidating assets or providing capital in exchange for equity and board representation.

Management Changes

Corporate Governance

Related Party Transactions

• Epsilon Energy Ltd. and its subsidiary acquired all issued and outstanding membership interests in Peak Exploration & Production, LLC and Peak BLM Lease LLC from Yorktown XI (among other sellers).
• The consideration for these acquisitions included 634,713 Common Shares on November 14, 2025, and 2,500,000 additional Common Shares on November 20, 2025, issued to Yorktown XI.
• Yorktown XI, as a result of this transaction, became a significant beneficial owner of Epsilon Energy Ltd. and gained a board seat.

Stakeholder Impact

• Shareholders: Introduction of a new significant institutional investor and board member, potentially leading to strategic shifts or increased oversight. The registration rights agreement could lead to future share sales, impacting market dynamics.
• Management: New board member from a significant investor may bring new perspectives and influence strategic decisions.
• Creditors: No direct impact mentioned, but strategic shifts influenced by the new investor could indirectly affect the company's financial health.

Next Steps

• Epsilon Energy Ltd. is obligated to file a registration statement on Form S-3 to permit the public resale of Common Shares by the selling shareholders.
• The Reporting Persons will continue to review their investment in Epsilon Energy Ltd. and may consider further actions, including acquiring or selling shares, or engaging in discussions about corporate transactions.

Key Dates

Keywords

Epsilon Energy Ltd., Yorktown Energy Partners XI, Schedule 13D, Beneficial Ownership, Energy Investment, Corporate Governance, Board Appointment, Registration Rights, Lock-Up Agreement, Peak E&P, Peak BLM, Oil & Gas