EPSILON ENERGY LTD._November 12, 2025

Exhibit 99.1

Peak Exploration & Production, LLC and Subsidiaries

Condensed Consolidated Financial Statements

September 30, 2025 and 2024

PEAK EXPLORATION & PRODUCTION, LLC AND SUBSIDIARIES

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	PAGE
Condensed Consolidated Balance Sheets – September 30, 2025 and December 31, 2024	2
Unaudited Condensed Consolidated Statements of Operations – For the Nine Months Ended September 30, 2025 and 2024	3
Unaudited Condensed Consolidated Statements of Members’ Equity – For the Nine Months Ended September 30, 2025 and 2024	4
Unaudited Condensed Consolidated Statements of Cash Flows – For the Nine Months Ended September 30, 2025 and 2024	5
Notes to Unaudited Condensed Consolidated Financial Statements	6

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)


		September 30,			December 31,
		2025			2024
ASSETS
Current assets:
Cash and cash equivalents		$	5,172		$	10,288
Accounts receivable, net			9,005			14,325
Prepaid expenses and other current assets			722			805
Commodity derivatives assets, current			712			89
Inventories			105			98
Total current assets			15,716			25,605
Oil and natural gas property and equipment, based on successful efforts method of accounting, net			105,741			131,116
Other property, plant and equipment, net			1,334			1,739
Right-of-use assets			276			333
Commodity derivatives assets, non-current			538			—
Other assets, net			940			1,550
Total assets		$	124,545		$	160,343
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	10,260		$	14,312
Production and ad valorem taxes payable			2,169			2,737
Oil and natural gas revenue payable			9,565			12,663
Commodity derivatives liability, current			104			1,156
Right-of-use liabilities			150			149
Current portion of long-term debt			48,262			6,200
Total current liabilities			70,510			37,217
Long - term debt, net			—			45,981
Other noncurrent liabilities:
Asset retirement obligation			3,066			2,900
Ad valorem taxes			8,284			8,321
Commodity derivatives liability, non-current			261			1,339
Right-of-use liabilities			142			204
Total other noncurrent liabilities			11,753			12,764
Total liabilities			82,263			95,962
Commitments and contingencies (Note 13)
Members' equity:
Preferred equity			95,886			95,886
Common equity			242,518			242,518
Accumulated deficit			(296,122)			(274,023)
Total members' equity			42,282			64,381
Total liabilities and members' equity		$	124,545		$	160,343

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands)


		Nine Months Ended September 30,
		2025			2024
REVENUES:
Oil and natural gas sales, net		$	23,153		$	32,672
Total revenues, net			23,153			32,672

OPERATING EXPENSES:
Lease operating			7,497			8,993
Production and ad valorem taxes			2,973			4,299
Depletion, depreciation and amortization			7,923			9,729
Accretion			166			171
Abandonment			1,716			1,921
Impairment of long lived properties			18,333			—
General and administrative			4,589			5,225
Total operating expenses			43,197			30,338
Income (loss) from operations			(20,044)			2,334

OTHER INCOME (EXPENSE):
Gain (loss) on commodity derivatives			3,173			(2,825)
Interest expense, net			(5,549)			(6,367)
(Loss) on sale of assets			(3)			(23)
Other gain (loss)			324			233
Total other (expense)			(2,055)			(8,982)
NET LOSS		$	(22,099)		$	(6,648)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands)


		Preferred			Common			Accumulated
		Equity			Equity			Deficit			Total
BALANCE, JANUARY 1, 2025		$	95,886		$	242,518		$	(274,023)		$	64,381
Net loss			—			—			(22,099)			(22,099)
BALANCE, SEPTEMBER 30, 2025		$	95,886		$	242,518		$	(296,122)		$	42,282


		Preferred			Common			Accumulated
		Equity			Equity			Deficit			Total
BALANCE, JANUARY 1, 2024		$	95,886		$	242,518		$	(262,502)		$	75,902
Net loss			—			—			(6,648)			(6,648)
BALANCE, SEPTEMBER 30, 2024		$	95,886		$	242,518		$	(269,150)		$	69,254

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


		Nine Months Ended September 30,
		2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(22,099)		$	(6,648)
Adjustments to reconcile net loss to net cash provided by operating activities
Depletion, depreciation and amortization			7,923			9,729
Net loss on sale of assets			3			23
Impairment of long lived properties			18,333			—
Amortization of debt issuance costs			914			713
Abandonment			1,716			1,921
Accretion expense			166			171
Commodity derivatives (gain) loss			(3,290)			2,426
Changes in operating assets and liabilities:
Accounts receivable, net			5,320			4,752
Inventories			(7)			(1)
Prepaid expenses and other current assets			83			(684)
Accounts payable and accrued expenses			(1,429)			(4,813)
Production and ad valorem taxes payable			(568)			(466)
Oil and natural gas revenue payable			(3,098)			(3,908)
Other payables			(153)			(114)
Net cash provided by operating activities			3,814			3,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties			(4,139)			(3,543)
Additions to other property, plant and equipment			(38)			(18)
Proceeds from sales of other assets			79			3,243
Net cash used in investing activities			(4,098)			(318)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on debt			(4,650)			(3,100)
Debt issuance costs			(182)			(86)
Net cash used in financing activities			(4,832)			(3,186)
Net decrease in cash and cash equivalents			(5,116)			(403)
Cash and cash equivalents at beginning of period			10,288			11,762
Cash and cash equivalents at end of period		$	5,172		$	11,359

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business — The accompanying condensed consolidated financial statements include the accounts of Peak Exploration & Production, LLC, Peak Energy Operating #2, LLC, Peak Powder River Resources, LLC, Willow Springs Development, LLC, and Peak Exploration & Production, Inc. (collectively, the “Company”). The Company is an independent oil and gas company engaged in exploration and development of oil and natural gas assets. The Company, at this time, conducts its activities in Wyoming. As a Limited Liability Company (“LLC”), the amount of loss at risk for each individual member is limited to the amount of capital contributed to the LLC, and unless otherwise noted, the individual member’s liability for indebtedness of an LLC is limited to the member’s actual capital contribution. The Company will have LLC status until perpetual existence unless it is terminated.

Basis of Presentation — The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of Peak Exploration & Production, LLC, Peak Energy Operating #2, LLC, Peak Powder River Resources, LLC, Willow Springs Development, LLC, and Peak Exploration & Production, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024. Results for the interim periods are not necessarily indicative of results to be expected for the full year ended December 31, 2025. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the result for the periods indicated.

Going Concern — The accompanying condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In accordance with the accounting guidance related to the presentation of financial statements, when preparing financial statements for each annual and interim reporting period, management evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. In making its assessment, management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and conditional and unconditional obligations due over the next twelve months.

The Company is not in compliance, and may not be able to be in compliance in the future, with a financial covenant requirement of its Credit Agreement as outlined in Note 10 during the next twelve months, which would lead to an acceleration of the maturity of the Company’s debt obligations. The Company does not have sufficient cash on hand or available liquidity that can be utilized to repay such debt obligations, which raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In response to these conditions, the Company has taken various steps to preserve its liquidity including (1) deferring drilling and completion activity for the foreseeable future, (2) continuing to focus on reducing its operating and overhead costs, and (3) continuing to manage its hedge portfolio. In addition, the Company has signed a non-binding term sheet with a third-party purchaser, where the Company will be acquired by the third-party purchaser. The Membership Interest Purchase Agreement (“MIPA”) related to the term sheet was executed on August 11, 2025, with a target close date of November 14, 2025. However, this contemplated transaction may not be completed or that any completion of it cannot be guaranteed.

Use of Estimates — The preparation of the condensed consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ significantly from these estimates, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

timing and costs associated with asset retirement obligations, and oil and gas reserve quantities, which are the basis for the calculation of depreciation, depletion and impairment of oil and natural gas properties.

Recent Accounting Pronouncements — In November 2024, FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE). The ASU primarily requires companies to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The new guidance will be effective for the Company’s year ending December 31, 2027 and interim periods during the year ending December 31, 2028. The Company does not believe the new guidance will have a material impact on its consolidated financial statements and related disclosures.

NOTE 2. ACCOUNTS RECEIVABLE

The following table reflects the components of accounts receivable of the Company (in thousands):


		As of			As of
		September 30,			December 31,
		2025			2024
Oil and natural gas sales		$	6,094		$	8,495
Joint interest billings			2,808			5,821
Other			103			9
Gross accounts receivable			9,005			14,325
Allowance for credit losses			—			—
Net accounts receivable		$	9,005		$	14,325

Amounts billed and due are recorded as trade accounts receivable and included in accounts receivable in the Company’s consolidated balance sheets. The Company has no allowance at September 30, 2025 or December 31, 2024.

NOTE 3. OIL AND NATURAL GAS PROPERTIES

The following table reflects the aggregate capitalized costs associated with the Company (in thousands):


		As of			As of
		September 30,			December 31,
		2025			2024
Oil and natural gas properties:
Unproved properties		$	24,010		$	25,622
Proved properties			511,965			512,531
Work in process			13,272			11,479
Total oil and natural gas properties			549,247			549,632
Less: Accumulated depreciation, depletion, amortization and impairment			(443,506)			(418,516)
Oil and natural gas properties, net		$	105,741		$	131,116

Depletion expense was $7.3 million and $9.1 million for the nine months ended September 30, 2025 and 2024, respectively. Abandonment expense in the amount of $1.7 million for the nine months ended September 30, 2025 consists of abandoned leases associated with unproved property that were allowed to expire. Abandonment expense in the amount of $2.0 million for the nine months ended September 30, 2024 consists of abandonment of a drilled well that will not be completed and certain leases associated with unproved property were allowed to expire. The Company had no exploratory wells costs during the nine months ended September 30, 2025 or for the year ended December 31, 2024.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

For the nine months ended September 30, 2025, the Company recorded an impairment related to its oil and gas properties in the amount of $17.8 million based on terms outlined in the executed term sheet dated June 13, 2025. The calculation of the impairment is a Fair Value Level 3 non-recurring measurement.

NOTE 4. REVENUE

The following table presents the disaggregation of oil and natural gas revenue of the Company (in thousands):


	Nine Months Ended September 30,
	2025		2024
Oil sales	$	19,634	$	29,403
Natural gas sales		3,519		3,269
Total oil and natural gas sales, net	$	23,153	$	32,672

NOTE 5. OTHER PROPERTY, PLANT AND EQUIPMENT

The following table presents the other property, plant and equipment of the Company (in thousands):


		As of			As of
		September 30,			December 31,
		2025			2024
Building and improvements		$	3,175		$	3,175
Office furniture and equipment			1,145			1,107
Land			594			594
Transportation equipment			274			379
Other			29			29
Total property and equipment			5,217			5,284
Less: accumulated depreciation and impairment			(3,883)			(3,545)
Total property and equipment, net		$	1,334		$	1,739

Depreciation expense for other property, plant and equipment was $0.1 million for both the nine months ended September 30, 2025 and 2024.

For the nine months ended September 30, 2025, the Company recorded an impairment related to its other property, plant and equipment in the amount of $0.3 million based on terms outlined in the executed term sheet dated June 13, 2025. The calculation of the impairment is a Fair Value Level 3 non-recurring measurement.

NOTE 6. OTHER ASSETS

The following table presents the other assets of the Company (in thousands):


		As of			As of
		September 30,			December 31,
		2025			2024
Water production facilities		$	4,308		$	4,308
Operating bonds			100			100
Yard equipment			260			260
Total property and equipment			4,668			4,668
Less: accumulated depreciation and amortization			(3,728)			(3,118)
Total other assets, net		$	940		$	1,550

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

Depreciation expense for other assets was $0.3 million for both the nine months ended September 30, 2025 and 2024.

NOTE 7. ASSET RETIREMENT OBLIGATIONS

The following table presents changes in asset retirement obligations of the Company (in thousands):


		As of			As of
		September 30,			December 31,
		2025			2024
Asset retirement obligations at beginning of period		$	2,900		$	2,678
Liabilities incurred			—			17
Liabilities settled and divested			—			(18)
Accretion expense on discounted obligation			166			223
Asset retirement obligations at end of period		$	3,066		$	2,900

NOTE 8. COMMODITY DERIVATIVES

Derivative Financial Instruments — The Company’s primary market exposure is to adverse fluctuations in the prices of crude oil and natural gas. The primary objective of the Company’s risk management policy is to preserve and enhance the value of the Company’s production. The Company uses derivative instruments, primarily swap and collar contracts, to manage the price risk associated with oil production and the resulting impact on cash flow and revenues. The Company’s management is responsible for approving risk management policies and for establishing the Company’s overall risk mitigation. Management is responsible for proposing hedge recommendations, execution of the approved hedging plan, and oversight of the risk management process including methodologies used for valuation and risk measurement.

Derivative instruments expose the Company to counterparty credit risk. The Company enters these contracts with a major financial institution that it considers creditworthy. In addition, the Company’s agreements reduce credit risk by permitting the Company to net settle for transactions with the same counterparty.

As with most derivative instruments, the Company’s derivative contracts contain provisions that may allow another party to require security from the counterparty to ensure performance under the contract. The security may be in the form of, but not limited to, a letter of credit, security interest or a performance bond.

The terms of the Company’s agreements provide for the offsetting of amounts owed or owing between it and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency. The Company’s agreements also provide that in the event of an early termination, the counterparty has the right to offset amounts owed or owing under that and any other agreement between the parties. The Company’s accounting policy is to offset these positions in its accompanying condensed consolidated balance sheets.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

The Company had the following outstanding commodity derivative financial instruments outstanding at September 30, 2025:


		2025			2026			2027			2028
Natural gas swaps:
Notional volume (MMBtu)			179,547			557,326			297,634			13,842
Weighted average swap price ($/MMBtu)		$	3.63		$	3.67		$	3.83		$	4.45
Natural gas collars:
Notional volume (MMBtu)			108,731			365,700			416,723			13,842
Weighted average ceiling price ($/MMBtu)		$	4.20		$	4.26		$	4.25		$	5.10
Weighted average floor price ($/MMBtu)		$	3.20		$	3.26		$	3.23		$	4.10
Oil swaps:
Notional volume (Bbl)			65,894			217,622			105,986			8,308
Weighted average swap price ($/Bbl)		$	65.26		$	63.33		$	63.94		$	63.15
Oil collars:
Notional volume (Bbl)			11,894			55,230			118,096			8,308
Weighted average ceiling price ($/Bbl)		$	71.77		$	69.23		$	67.83		$	67.96
Weighted average floor price ($/Bbl)		$	61.91		$	59.37		$	57.61		$	57.57

Derivative Gains and Losses — Cash receipts and payments reflect the gains or losses on derivative contracts which matured during the applicable period, calculated as the difference between the contract price and the market settlement price of matured contracts. The derivative contracts of the Company are settled based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on the New York Mercantile Exchange (“NYMEX”) West Texas Intermediate pricing and natural gas derivative settlements based primarily on NYMEX Henry Hub pricing. Non-cash gains and losses represent the change in fair value of derivative instruments which continued to be held at period end and the reversal of previously recognized non-cash gains or losses on derivative contracts that matured during the period.

The following table summarizes the commodity derivative activity of the Company (in thousands):


	Nine Months Ended September 30,
	2025		2024
Cash (paid) received on derivatives	$	(117)	$	(399)
Non-cash (loss) on derivatives		3,290		(2,426)
Gain (loss) on commodity derivatives	$	3,173	$	(2,825)

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

Financial Statement Presentation — All derivative financial instruments are recognized at their current fair value as either assets or liabilities in the condensed consolidated balance sheets. The Company determines the current and long-term classification based on the timing of expected future cash flows of individual trades. Amounts related to contracts allowed to be netted upon payment subject to a master netting arrangement with the same counterparty are reported on a net basis in the consolidated balance sheets.

The following table presents the fair value of the commodity derivative instruments of the Company on a gross basis and on a net basis as presented in the condensed consolidated balance sheets for the periods indicated (in thousands):


	As of September 30, 2025
	Gross Fair		Amounts
	Value		Netted		Net Fair Value
Commodity derivative assets:
Commodity derivative asset, current	$	712	$	—	$	712
Commodity derivative asset, noncurrent		538		—		538
Total commodity derivative assets	$	1,250	$	—	$	1,250
Commodity derivative liabilities:
Commodity derivative liability, current	$	(104)	$	—	$	(104)
Commodity derivative liability, noncurrent		(261)		—		(261)
Total commodity derivative liabilities	$	(365)	$	—	$	(365)


	As of December 31, 2024
	Gross Fair		Amounts
	Value		Netted		Net Fair Value
Commodity derivative assets:
Commodity derivative asset, current	$	89	$	—	$	89
Commodity derivative asset, noncurrent		—		—		—
Total commodity derivative assets	$	89	$	—	$	89
Commodity derivative liabilities:
Commodity derivative liability, current	$	(1,156)	$	—	$	(1,156)
Commodity derivative liability, noncurrent		(1,339)		—		(1,339)
Total commodity derivative liabilities	$	(2,495)	$	—	$	(2,495)

NOTE 9. FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, trade payables, accrued liabilities, long-term debt, and derivatives. The carrying value of cash and cash equivalents, trade receivables, and trade payables and accrued liabilities are considered to be representative of their fair market value due to the short maturity of these instruments.

The Company’s debt is subject to variable interest rates and accordingly the carrying value is considered to be representative of its fair market value.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

The following table provides the carrying value and fair value measurement information for certain of the financial assets and liabilities of the Company (in thousands):


							Fair Value Measurements Using:
		Carrying			Total		Level 1		Level 2		Level 3
		Amount			Fair Value		Inputs		Inputs		Inputs
September 30, 2025 assets (liabilities):
Commodity derivatives		$	885		$	885	$	—	$	885	$	—
December 31, 2024 assets (liabilities):
Commodity derivatives		$	(2,406)		$	(2,406)	$	—	$	(2,406)	$	—

The following methods and assumptions were used to estimate the fair values in the table above.

Level 2 Fair Value Measurements

Impairment — The calculation of the impairment as discussed in notes 3, 5, and 6 are Fair Value Level 3 non-recurring measurements based on terms outlined in the executed term sheet dated June 13, 2025.

Commodity derivatives — The fair value of commodity derivatives is estimated using observable market data and assumptions with adjustments based on widely accepted valuation techniques. A discounted cash flow analysis on the expected cash flows of each derivative reflects the contractual terms of the derivative, including period to maturity, and uses observable market-based inputs, including interest rate curves, implied volatilities and credit risk.

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities of the Company are reported at fair value on a nonrecurring basis in the consolidated financial statements. The following methods and assumptions were used to estimate the fair values for those assets and liabilities.

Asset retirement obligations — The fair value of asset retirement obligations is estimated using discounted cash flow projections using numerous estimates, assumptions and judgments regarding such factors as the existence of a legal obligation, estimated plugging and abandonment costs, timing of remediation, the credit-adjusted risk-free rate and inflation rate. Significant unobservable inputs (Level 3) utilized in the determination of asset retirement obligations include estimated plugging and abandonment costs of approximately $0.1 million per well, the timing of remediation, which is estimated based on the aggregate average useful life of the Company’s wells, and the credit adjusted risk free rate.

Proved oil and Natural Gas Reserves — The Company’s estimates of proved and proved developed reserves are the major component of its impairment calculations for oil and natural gas properties. The Company reviews and evaluates its oil and natural gas properties for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. If there is an indication the carrying amount of oil and natural gas properties may not be recovered, the asset is assessed for potential impairment by management through an established process. If, upon review, the sum of the undiscounted pre-tax reserve cash flows is less than the carrying value of the asset, the carrying value is written down to estimated fair value. Because there is usually a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants or by comparable transactions. The Company’s proved reserves represent the element of these calculations that require various subjective judgments. Estimates of proved reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. These forecasts rely heavily on historical experience of production results, incurred capital costs, operating expenses and workover experience, among other factors. An impairment loss is measured as the amount by which asset carrying value exceeds Level 3 fair value on an individual field-by-field basis.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

NOTE 10. DEBT AND RELATED EXPENSES

The following table presents the outstanding debt and related expenses of the Company (in thousands):


	As of		As of
	September 30,		December 31,
	2025		2024
Fortress Credit Agreement	$	49,600	$	54,250
Total debt, including current portion		49,600		54,250
Debt issuance costs		(1,338)		(2,069)
Total debt, including current portion, net		48,262		52,181
Less: current portion of debt		48,262		6,200
Long-term debt, net	$	—	$	45,981

Fortress Credit Agreement — On January 31, 2023, the Company (“Borrower”) entered into a new Credit and Guaranty Agreement with Fortress Credit Corp. (“Credit Agreement”) with initial loan commitments of $62.0 million provided by Fortress Credit Corp. and Cargill, Incorporated (collectively, the “Lenders”). Upon execution of the Credit Agreement, the Company was issued a new term loan with the Lenders for the full commitment amount of $62.0 million which matures on January 31, 2027 (“Maturity Date”). Proceeds from the new loan were utilized to repay in full the existing Credit Facility and NPA, as well as debt issuance costs. The remaining unused proceeds served as additional cash to the Company’s consolidated balance sheet.

Initially, the obligations under the Credit Agreement are guaranteed by certain of the Borrower’s subsidiaries (the “Guarantors”) and the Credit Agreement is secured by substantially all of the assets owned by the Company and the Guarantors (subject to customary exceptions). Borrowings outstanding under the Credit Agreement will initially be Term SOFR Loans (as defined in the Credit Agreement) which bear interest at a rate equal to the sum of (i) the Term SOFR Rate for a three-month interest period, plus 0.15% (“Adjusted Term SOFR Rate”); and (ii) 8.00% per annum. The Administrative Agent (permitted only as expressly set forth in Section 2.07 of the Credit Agreement), may convert any outstanding Term SOFR Loan to an ABR Loan (as defined in the Credit Agreement). Borrowings constituting ABR Loans shall bear interest at a rate equal to the sum of (i) the Alternate Base Rate, defined as the greater of (a) the Prime Rate and (b) the NYFRB Rate plus 0.50%; and (ii) 7.00% per annum. Interest accrued on all outstanding loans is payable at the end of each quarter, through the Maturity Date. For the quarter ended September 30, 2025 and for the year ended December 31, 2024, the interest rate on the outstanding balance Credit Agreement was 12.44% and 12.74%, respectively.

The Company is required to repay to the Lenders an amount equal to 2.50% of the full commitment amount of $62.0 million, including accrued interest, on the first business day of the immediately succeeding quarter. Furthermore, the Company is subject to mandatory repayment provisions, including in the event of default where the Lenders elect to accelerate amounts due. The Credit Agreement further outlines the ability to prepay the loans in whole, or in part, at the option of the Company. In the event of any repayment or prepayment of the loans, the Company shall immediately pay the applicable premium (as defined in the Credit Agreement) and all accrued interest.

The Credit Agreement contains restrictive covenants that limit the Company’s ability to, among other things: (i) incur additional indebtedness; (ii) incur liens; (iii) enter into mergers; (iv) dispose of assets; (v) engage in new business type; (vi) make any investments; (vii) enter into certain swap agreements; (viii) make restrictive payments; and (ix) engage in certain transactions with affiliates. These restrictive covenants are subject to a number of important exceptions and qualifications.

In addition, the Credit Agreement requires the Company to maintain compliance with the following financial ratios determined as of the last day of the quarter: (A) a current ratio (as defined in the Credit Agreement) of no less than 1.00 to 1.00; (B) a proved developed producing (“PDP”) asset coverage ratio (as defined in the Credit Agreement) of no less than 1.75 to 1.00; (C) a leverage ratio (as defined in the Credit Agreement) of no more than 2.75 to 1.00; and (D) liquidity (as

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

defined in the Credit Agreement) of not less than $5.0 million. Furthermore, for any year, general and administrative expenses (as defined in the Credit Agreement) attributable to the Company must not exceed $8.5 million. On April 24, 2024, the Company entered into the First Amendment to the Credit Agreement, which moved the payment date for the required quarterly principal and interest payments to the first business day of the immediately succeeding quarter. As of December 31, 2024, the company was not in compliance with the current ratio of no less than 1.00 to 1.00. However, on February 28, 2025, the Company received a waiver related to non-compliance with the current ratio. On May 9, 2025, the Company entered into the Second Amendment to the Credit Agreement which modified certain covenants with an effective date of March 31, 2025 and applicable compliance period commencing with the quarter ended March 31, 2025 through and including the quarter ended March 31, 2026. Covenants that were amended include: (A) a current ratio (as defined in the Credit Agreement) of no less than .85 to 1.00; (B) a proved developed producing (“PDP”) asset coverage ratio (as defined in the Credit Agreement) of no less than 1.50 to 1.00; and (C) a leverage ratio (as defined in the Credit Agreement) of no more than 3.00 to 1.00.At the end of the applicable compliance period, the covenants will revert back to the original covenants listed above. As of June 30, 2025, the Company was not in compliance with the current ratio of no less than .85 or the leverage ratio of no more than 3.00 to 1.00. However, on August 11, 2025, the Company received a waiver related to non-compliance. On August 29, 2025, the Company entered into the Third Amendment to the Credit Agreement with the following language: “Borrower shall repay in cash to the Administrative Agent for the ratable account of each Lender as follows: (i) on January 2, 2026, an amount equal to 5.00% of the aggregate principal amount of the Term Loan outstanding on the Effective Date; and (ii) on each April 1, July 1, October 1 and January 1 ending thereafter (or if such date is not a Business Day, then the immediately subsequent Business Day) (each such date, a “Payment Date”), an aggregate principal amount equal to 2.50% of the aggregate principal amount of the Term Loan outstanding on the Effective Date. Each payment of Loans pursuant to this Section 2.06(e) shall be accompanied by accrued and unpaid interest with respect thereto and other amounts pursuant to Section 2.09 and Section 2.13, if any.” As of September 30, 2025, the Company was not in compliance with the current ratio of no less than .85 or the leverage ratio of no more than 3.00 to 1.00. However, the Company is not seeking another waiver and has decided to reclass the debt to current pending the closing of the MIPA in November.

NOTE 11. EQUITY AND SHARE BASED COMPENSATION

Preferred Equity — The Company has issued 958,864 units of preferred shares for cash totaling $95.9 million as of September 30, 2025 and December 31, 2024. The Company has not issued any preferred shares since 2018. The preferred shares include the following characteristics and rights:

●

When declared, the Company shall pay distributions in cash to the holders of the preferred shares in the amount of 6.0% per annum, paid in arrears.

●

All or a portion of the preferred shares and accrued but unpaid interest can be converted into common units at a price of $65.00 per unit, or the conversion price then in effect at the time of conversion.

●

Each holder of the preferred shares is entitled to one vote per preferred share.

●

The preferred shares include a liquidation preference over common units.

The preferred shares may not demand repayment of the equity or accrued dividends, and if not converted to common units, once the amount of the preferred shares and all accrued dividends has been paid, the holders have no additional rights or claims to the assets of the Company. For the nine months ended September 30, 2025 and 2024 no dividends have been declared, therefore, are not recorded on the condensed consolidated balance sheets. The balance of accumulated undeclared distributions totaled $54.0 million as of September 30, 2025 and $49.7 million as of December 31, 2024. The accumulated liquidation preference totaled $149.9 million as of September 30, 2025 and $145.6 million as of December 31, 2024.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

Share Based Compensation — The Company has a total of 69,855 and 87,389 options outstanding as of September 30, 2025 and December 31, 2024, respectively. The options are exercisable at a price of $100 per option, to purchase common stock. During the six months ended September 30, 2025, 17,534 options were forfeited, however, no options were granted or exercised during the nine months ended September 30, 2025. There were no options granted, forfeited or exercised during the year ended December 31, 2024. Therefore, the Company had no compensation expense for the nine months ended September 30, 2025 and 2024.

The approximate remaining weighted-average contractual term of options outstanding at September 30, 2025 is approximately three years. At September 30, 2025, all options were vested and the Company had no unrecognized share-based compensation expense.

NOTE 12. LEASES

The following table summarizes the operating leases of the Company for the periods indicated (in thousands):


	Nine Month Ended September 30,
	2025		2024
Operating lease expenses	$	115	$	113
Cash paid for operating lease liabilities	$	115	$	113
Right-of-use assets obtained in exchange for operating lease liabilities	$	—	$	—
Amortization of right-of-use assets	$	112	$	114
Lease liability balance	$	292	$	390
Weighted-average discount rate (%)		1.37		1.37
Weighted-average remaining lease term (years)		1.89		2.81

Total expense for all leases was $1.4 million and $1.5 million for both the nine months ended September 30, 2025 and 2024, respectively.

Future minimum annual lease payments as of September 30, 2025 are as follows (in thousands):


2025	$	39
2026		157
2027		101
Total lease payments		297
Less: interest		(5)
Present value of lease liabilities	$	292

NOTE 13. COMMITMENTS AND CONTINGENCIES

Environmental Matters — Various federal, state and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, may affect the operations and the cost of crude oil and natural gas exploration, development, and production operations of the Company. The Company does not anticipate that it will be required in the near future to expend significant amounts for compliance with such federal, state and local laws and regulations, and therefore, no amounts have been accrued for such purposes. At September 30, 2025 and December 31, 2024, there were no known environmental or regulatory matters which are reasonably expected to result in a material liability to the Company.

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PEAK EXPLORATION AND PRODUCTION, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 AND 2024

concerning operations, royalty rates, and various other matters, including taxation. Oil and gas industry legislation and administrative regulations are periodically changed for a variety of political, economic, and other reasons. As of September 30, 2025 and December 31, 2024, the Company has not been fined or cited for any violations of governmental regulations that would have a material adverse effect upon the financial condition, capital expenditures, earnings, or competitive position of the Company in the oil and gas industry.

Litigation — The Company is involved in various legal proceedings including, but not limited to, commercial disputes, claims from royalty and surface owners, property damage claims, personal injury claims, regulatory compliance matters, disputes with tax authorities and other matters. While the outcome of these legal matters cannot be predicted with certainty, the Company does not expect any such matters to have a material effect on its financial condition, results of operations or cash flows.

NOTE 14. RELATED PARTY TRANSACTIONS

The Company is subject to an Administrative Service Agreement (“ASA”) with Peak BLM Lease, LLC (“Peak BLM”), an affiliate, that specifies the Company will perform administrative duties associated with Peak BLM’s properties. Per the ASA, Peak BLM is to pay the Company approximately $0.1 million monthly. For the nine months ended September 30, 2025 and 2024, the Company received or accrued for reimbursements, related to the administrative duties, from Peak BLM in the amount of $0.9 million and $0.9 million, respectively. These reimbursements are reflected as a reduction to “general and administrative” on the accompanying unaudited condensed consolidated statements of operations for the nine months ended September 30, 2025 and 2024. In addition, the Company performs as the administrator of three jointly owned wells, which resulted in Peak BLM paying $1.3 million and $0.5 million for nine months ended September 30, 2025 and 2024, respectively, for capital expenditures and/or lease operating expenses. During the nine months ended September 30, 2024, the Company purchased interests in two wells from Peak E&P in the amount of $3.2 million, which represents the historical book value.

NOTE 15. SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides certain supplemental cash flow information for the periods indicated (in thousands):


	Nine Months Ended September 30,
	2025		2024
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	5,020	$	4,025
Supplemental Disclosure of Non-Cash Information:
Oil and natural gas additions through accounts payable and accrued expenses	$	2,625	$	(405)

NOTE 16. SUBSEQUENT EVENTS

In preparing the accompanying consolidated financial statements of the Company, management has evaluated all subsequent events and transactions for potential recognition or disclosure through November 14, 2025, the date the consolidated financial statements of the Company were available for issuance. On August 11, 2025, the Company signed the MIPA with a third-party purchaser, where the Company will be acquired by the third-party purchaser. The MIPA is scheduled to close on or around November 14, 2025.

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Table of Contents

Exhibit 99.2

Peak BLM Lease LLC and Subsidiary

Condensed Consolidated Financial Statements

September 30, 2025 and 2024

Table of Contents

PEAK BLM LEASE LLC AND SUBSIDIARY

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	PAGE

Condensed Consolidated Balance Sheets – September 30, 2025 and December 31, 2024	3

Condensed Consolidated Statements of Operations – For the Nine Months Ended September 30, 2025 and 2024	4

Condensed Consolidated Statements of Member’s Equity – For the Nine Months Ended September 30, 2025 and 2024	5

Condensed Consolidated Statements of Cash Flows – For the Nine Months Ended September 30, 2025 and 2024	6

Notes to Condensed Consolidated Financial Statements	7

Table of Contents

PEAK BLM LEASE LLC AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)


		September 30,			December 31,
		2025			2024
ASSETS
Current assets:
Cash and cash equivalents		$	15		$	337
Accounts receivable, net			609			792
Prepaid expenses and other current assets			34			7
Total current assets			658			1,136
Oil and natural gas property and equipment, based on successful efforts method of accounting, net			18,997			51,962
Total assets		$	19,655		$	53,098
LIABILITIES AND MEMBER’S EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	276		$	865
Total current liabilities			276			865
Other noncurrent liabilities:
Asset retirement obligation			51			61
Total other noncurrent liabilities			51			61
Total liabilities			327			926
Commitments and contingencies (Note 5)
Member’s equity:
Member’s equity			57,000			57,000
Accumulated deficit			(37,672)			(4,828)
Total member’s equity			19,328			52,172
Total liabilities and member’s equity		$	19,655		$	53,098

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK BLM LEASE LLC AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands)


		Nine Months Ended September 30,
		2025			2024
REVENUES:
Oil and natural gas sales, net		$	1,813		$	2,506
Total revenues, net			1,813			2,506

OPERATING EXPENSES:
Lease operating			350			569
Production and ad valorem taxes			233			339
Depletion, depreciation and amortization			545			1,050
Accretion			3			3
Impairment of oil & gas properties			29,655			—
General and administrative			1,659			1,284
Total operating expenses			32,445			3,245
(Loss) from operations			(30,632)			(739)

OTHER INCOME (LOSS):
Interest income			163			—
Interest Expense			8			—
Other gain			—			277
Loss on sale of properties			(2,383)			—
Total other income (loss)			(2,212)			277
NET (LOSS)		$	(32,844)		$	(462)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table of Contents

PEAK BLM LEASE LLC AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS EQUITY (UNAUDITED)

(in thousands)


		Member’s			Accumulated
		Equity			Deficit			Total
BALANCE, JANUARY 1, 2025		$	57,000		$	(4,828)		$	52,172
Net loss			—			(32,844)			(32,844)
BALANCE, SEPTEMBER 30, 2025		$	57,000		$	(37,672)		$	19,328


		Member’s			Accumulated
		Equity			Deficit			Total
BALANCE, JANUARY 1, 2024		$	57,000		$	(2,344)		$	54,656
Net loss			—			(462)			(462)
BALANCE, SEPTEMBER 30, 2024		$	57,000		$	(2,806)		$	54,194

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK BLM LEASE LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


		Nine Months Ended September 30,
		2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)		$	(32,844)		$	(462)
Adjustments to reconcile (loss) to net cash provided by (used in) operating activities
Depletion, depreciation and amortization			545			1,050
Net loss on sale of properties			2,383			—
Provision for credit losses			113			—
Impairment of oil & gas properties			29,655			—
Accretion expense			3			3
Changes in operating assets and liabilities:
Accounts receivable, net			70			90
Prepaid expenses and other current assets			(27)			156
Accounts payable and accrued expenses			(150)			283
Net cash provided by (used in) operating activities			(252)			1,120
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties			(1,038)			(354)
Acquisition of oil and natural gas properties			—			(3,235)
Proceeds from sale of other assets			968			—
Net cash (used in) investing activities			(70)			(3,589)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by financing activities			—			—
Net decrease in cash and cash equivalents			(322)			(2,469)
Cash and cash equivalents at beginning of period			337			3,677
Cash and cash equivalents at end of period		$	15			1,208
SUPPLEMENTAL STATEMENT OF CASH FLOW DISCLOSURES: Oil and gas additions through accounts payable and accrued expenses		$	438			(665)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PEAK BLM LEASE LLC AND SUBSIDIARY

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025 and 2024

Note 1. Organization and Significant Accounting Policies

Description of the Business — The accompanying condensed consolidated financial statements include the accounts of Peak BLM Lease LLC (“Peak BLM”) and Peak Powder River Acquisitions, LLC (“PPRA”, collectively, the “Company”). The Company is an independent oil and natural gas company engaged in exploration and development of crude oil and natural gas assets. The Company, at this time, conducts its activities in Wyoming. As a Limited Liability Company (“LLC”), the amount of loss at risk for each individual member is limited to the amount of capital contributed to the LLC, and unless otherwise noted, the sole Member’s liability for indebtedness of an LLC is limited to the Member’s actual capital contribution. The Company will have LLC status until perpetual existence unless it is terminated.

Basis of Presentation — The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of Peak BLM and PPRA. All intercompany accounts and transactions have been eliminated. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024. Results for the interim periods are not necessarily indicative of results to be expected for the full year ended December 31, 2025. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the result for the periods indicated.

Use of Estimates — The preparation of the condensed consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ significantly from these estimates, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include timing and costs associated with asset retirement obligations, and oil and gas reserve quantities, which are the basis for the calculation of depreciation, depletion and impairment of oil and natural gas properties.

Accounts Receivable – Oil and Gas Sales — The Company accrues for oil and natural gas sales based on actual production dates. These are due within 45 days of production. The Company determines its allowance for each type of receivable based on the length of time the receivable is past due, its previous loss history, and customers current ability to pay its obligation. The Company estimates the allowance on receivables using relevant available information for internal and external sources, related historical events, current conditions, and supportable forecasts of economic condition. The Company writes off specific receivables when they become uncollectible. Once an allowance is recorded, any subsequent payments received on such receivables are credited to the allowance for credit losses. The Company recorded provisions for certain credit losses for the nine months ended September 30, 2025 and for the year ended December 31, 2024. The provisions for the credit losses were related to the initial public offering (“IPO”) expenses that were paid by the Company and would be paid by the new public entity once the IPO closed. To date, the Company has not experienced any pattern of credit losses related to its oil and gas revenues. The Company will continually monitor the creditworthiness of its counterparties by reviewing credit ratings, financial statements, and payment history. Accounts receivable from oil and gas sales for the quarter ended September 30, 2025 and the year ended December 31, 2024 were $0.4 million and $0.8 million, respectively. The Company’s accounts receivable from oil and gas sales were $0.7 million at January 1, 2024.

The following table details the change in the allowance for credit losses for the periods indicated (in thousands):


		September 30, 2025			December 31, 2024
Balance at beginning of period		$	1,072		$	—
Credit loss expense			113			1,072
Deductions			—			—
Provision for credit loss at end of period		$	1,185		$	1,072

Credit loss expense for the nine months ended September 30, 2025 and for the year ended December 31, 2024 are related to a single party and is recorded in G&A expense on the statement of operations.

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PEAK BLM LEASE LLC AND SUBSIDIARY

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025 and 2024

Note 2. Oil and Natural Gas Properties

The following table reflects the aggregate capitalized costs associated with the Company (in thousands):


		As of			As of
		September 30, 2025			December 31, 2024
Oil and natural gas properties:
Unproved properties		$	39,148		$	39,148
Proved properties			10,654			17,163
Work in process			3,535			2,935
Total oil and natural gas properties			53,337			59,246
Less: Accumulated depreciation, depletion, amortization, and impairment			(34,340)			(7,284)
Oil and natural gas properties, net		$	18,997		$	51,962

Depletion expense was $0.5 million and $1.1 million for the nine months ended September 30, 2025 and 2024, respectively.

On March 11, 2025, the Company completed the sale of certain non-operated oil and natural gas wells with an effective date of March 1, 2025. The Company received proceeds of $1.0 million and recognized a net loss of $2.4 million for the nine months ended September 30, 2025.

For the nine months ended September 30, 2025, the Company recorded an impairment related to its oil and gas properties in the amount of $29.7 million based on terms outlined in the executed term sheet dated June 13, 2025. The calculation of the impairment is a Fair Value Level 3 non-recurring measurement.

Note 3. Revenue

The following table presents the disaggregation of oil and natural gas revenue of the Company (in thousands):


		Nine Months Ended September 30,
		2025			2024
Oil sales		$	1,506		$	2,270
Natural gas sales			307			236
Total oil and natural gas sales, net		$	1,813		$	2,506

Note 4. Asset Retirement Obligations

The following table presents changes in asset retirement obligations of the Company (in thousands):


			As of			As of
		September 30, 2025			December 31, 2024
Asset retirement obligations at beginning of period		$	61		$	50
Liabilities incurred			—			7
Liabilities settled and divested			(13)			—
Accretion expense on discounted obligation			3			4
Asset retirement obligations at end of period		$	51		$	61

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PEAK BLM LEASE LLC AND SUBSIDIARY

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025 and 2024

Note 5. Commitments And Contingencies

Government Regulation — Many aspects of the oil and gas industry are extensively regulated by federal, state, and local governments in all areas in which the Company has operations. Regulations govern such things as drilling permits, environmental protection and pollution control, spacing of wells, the unitization and pooling of properties, reports concerning operations, royalty rates, and various other matters, including taxation. Oil and gas industry legislation and administrative regulations are periodically changed for a variety of political, economic, and other reasons. As of September 30, 2025 and December 31, 2024, the Company has not been fined or cited for any violations of governmental regulations that would have a material adverse effect upon the financial condition, capital expenditures, earnings, or competitive position of the Company in the oil and gas industry.

Note 6. Related Party Transactions

The Company is subject to an Administrative Service Agreement (“ASA”) with Peak Exploration and Production, LLC (“Peak E&P”), an affiliate, that specifies that Peak E&P will perform administrative duties associated with the Company’s properties. Per the ASA, the Company is to pay Peak E&P $0.1 million monthly. For the nine months ended September 30, 2025 and 2024 the Company reimbursed or accrued $0.9 million and $0.9 million, respectively. These reimbursements are reflected within “general and administrative” on the accompany condensed consolidated statements of operations. In addition, Peak E&P performs as the administrator of three jointly owned wells, which resulted in the Company paying $1.3 million and $0.5 million for the nine months ended September 30, 2025 and 2024, respectively for capital expenditures and/or lease operating expenses. During the nine months ended September 30, 2024, the Company purchased interests in two wells from Peak E&P in the amount of $3.2 million, which represents the historical book value.

Note 7. Subsequent Events

In preparing the accompanying consolidated financial statements of the Company, management has evaluated all subsequent events and transactions for potential recognition or disclosure through November 14, 2025, the date the consolidated financial statements of the Company were available for issuance. On August 11, 2025, the Company signed a Membership Interest Purchase Agreement (“MIPA”) with a third-party purchaser, where the Company will be acquired by the third-party purchaser. The MIPA is expected to close on or around November 14, 2025.

-9-

Exhibit 99.3

Epsilon Energy Ltd.

Unaudited Pro Forma Condensed Combined Financial Information

On August 11, 2025, Epsilon Energy Ltd. (the “Company” or “Epsilon”) entered into (i) that Membership Interest Purchase Agreement (the “Peak E&P Purchase Agreement”) by and among the Company, Epsilon Energy USA, Inc. (“Epsilon USA”), Peak Exploration & Production, LLC (“Peak E&P”), certain seller signatory thereto, and Yorktown Energy Partners XI, L.P., as representative of such sellers (such sellers and their representatives, collectively, “Yorktown”), and (ii) that Membership Interest Purchase Agreement (the “Peak BLM Purchase Agreement” and together with the Peak E&P Purchase Agreement, the “Purchase Agreements”) by and among the Company, Epsilon USA, Yorktown, and Peak BLM Lease LLC (“Peak BLM”). Subject to the terms and conditions of the Purchase Agreements, Epsilon USA, a wholly owned subsidiary of the Company, will acquire all of the issued and outstanding limited liability company interests of each of Peak E&P and Peak BLM (collectively, together with their respective subsidiaries, the “Acquired Companies”), and as a result the Acquired Companies would become indirect wholly owned subsidiaries of the Company. The Purchase Agreements closed on November 14, 2025 (the “Closing Date”).

Total consideration paid as of the Closing Date, was $88.5 million. Total consideration, as of the Closing Date, consisted of 5,591,372 common shares, no par value (“Common Shares”), of the Company at closing under the Peak E&P Purchase Agreement. At the Closing Date, the Company issued 90,117 Common Shares to Yorktown under the Peak BLM Purchase Agreement and, subject to the conditions of the Peak BLM Purchase Agreement, the Company issued an additional 2,234,847 Common Shares following the Closing Date on November 19, 2025. Epsilon shareholders will retain approximately 73.5% of Epsilon outstanding equity and approximately 26.5% will be owned by Yorktown. Additionally, the Company made a payment of $50.3 million (with proceeds from the Company’s revolving credit facility), to satisfy all indebtedness of Peak E&P.

The Acquired Companies are privately held oil and gas exploration and production companies that operate in the Power River Basin (“PRB”). As of December 31, 2024, the Acquired Companies own approximately 39,600 net leasehold acres (out of 61,000 gross acres) in the PRB, primarily in Campbell and Converse Counties, Wyoming. The Acquired Companies’ operations are focused on the development of multiple productive horizons, including the Parkman, Shannon, Turner, Niobrara, and Mowry formations, utilizing advanced horizontal drilling and completion technologies.

The acquisition of the Acquired Companies has been assumed to be accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). The assets acquired and liabilities assumed would be recorded at their respective fair values as of the Closing Date. Any transaction costs were assumed to be expensed as incurred in accordance with ASC 805. The unaudited pro forma condensed combined financial statements presented herein have been prepared to reflect the transaction accounting adjustments to Epsilon’s historical condensed consolidated financial information.

The Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2025 gives effect to the acquisition of the Acquired Companies as if it had been completed on September 30, 2025. The Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2025 and the Year Ended December 31, 2024 give effect to the acquisition of the Acquired Companies as if it had been completed on January 1, 2024. The unaudited pro forma condensed combined financial information has been compiled in a manner consistent with the accounting policies adopted by Epsilon. These pro forma adjustments are described in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements. Additional assumptions and estimates underlying the pro forma adjustments are also described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Epsilon would have been had the acquisition of the Acquired Companies occurred on the dates noted above, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. Future results may vary significantly from the results reflected because of various factors. In Epsilon’s opinion, all adjustments that are necessary to present fairly the unaudited pro forma condensed combined financial information have been made.

The unaudited pro forma condensed combined financial information does not reflect the benefits of potential cost savings or the costs that may be necessary to achieve such savings, opportunities to increase revenue generation or other factors that may result from the acquisition of the Acquired Companies and, accordingly, does not attempt to predict or suggest future results.

The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with:

•

The audited consolidated financial statements and accompanying notes of Epsilon contained in Epsilon’s Annual Report on Form 10-K for the year ended December 31, 2024;

•

The unaudited consolidated financial statements and accompanying condensed notes contained in Epsilon’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025;

•

The audited consolidated financial statements and related notes of Peak E&P for the year ended December 31, 2024, which are included elsewhere in this filing;

•

The audited consolidated financial statements and related notes of Peak BLM for the year ended December 31, 2024, which are included elsewhere in this filing;

•

The unaudited consolidated financial statements and related notes of Peak E&P as of September 30, 2025 and for the nine months ended September 30, 2025, which are included elsewhere in this filing; and

•

The unaudited consolidated financial statements and related notes of Peak BLM as of September 30, 2025 and for the nine months ended September 30, 2025, which are included elsewhere in this filing.


Epsilon Energy Ltd.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2025

											Transaction Accounting Adjustments
		Historical									Conforming and			Acquisition			Pro Forma
		Epsilon			Peak BLM			Peak E&P			Reclassifications			Adjustments			Combined
ASSETS
Current assets
Cash and cash equivalents		$	12,766,167		$	15,000		$	5,172,000		$	—		$	50,336,000	(b)	$	17,953,167
															(50,336,000)	(b)
Accounts receivable, net			4,515,199			609,000			9,005,000			—						14,129,199
Fair value of derivatives			889,187			—			—			712,000	(a)					1,601,187
Commodity derivatives			—			—			712,000			(712,000)	(a)					—
Prepaid income taxes			—			—			—			—						—
Inventories			—			—			105,000			(105,000)	(a)					—
Other current assets			965,970			—			—			722,000	(a)					1,826,970
												105,000	(a)
												34,000	(a)
Prepaid expenses and other current assets			—			34,000			722,000			(722,000)	(a)					—
												(34,000)	(a)
Total current assets			19,136,523			658,000			15,716,000			—			—			35,510,523
Non-current assets
Property and equipment:
Oil and gas properties, successful efforts method
Proved properties			200,066,005			—			—			539,426,000	(a)		(539,426,000)	(c)		245,421,691
															44,000,000	(d)
															1,355,686	(e)
Unproved properties			33,396,744			—			—			63,158,000	(a)		(63,158,000)	(c)		89,074,837
															55,678,093	(d)
Accumulated depletion, depreciation, amortization and impairment			(134,181,378)									(477,846,000)	(a)		477,846,000	(c)		(134,181,378)
Oil and natural gas property and equipment, based on successful efforts method accounting, net			—			18,997,000			105,741,000			(124,738,000)	(a)		—			—
Total oil and gas properties, net			99,281,371			18,997,000			105,741,000			—			(23,704,221)			200,315,150
Gathering system			43,540,301			—			—			4,308,000	(a)		—			47,848,301
Accumulated depletion, depreciation, amortization and impairment			(37,271,826)			—			—			(3,728,000)	(a)		—			(40,999,826)
Total gathering system, net			6,268,475			—			—			580,000			—			6,848,475
Land			637,764			—			—			594,000	(a)		—			1,231,764
Buildings and other property and equipment, net			221,901			—			—			740,000	(a)		3,070,000	(j)		4,031,901
Other property, plant and equipment, net			—			—			1,334,000			(1,334,000)	(a)		—			—
Total property and equipment, net			106,409,511			18,997,000			107,075,000			580,000			(20,634,221)			212,427,290
Other assets:
Right-of-use assets			—			—			276,000			(276,000)	(a)		—			—
Operating lease right-of-use assets, long term			272,298			—			—			276,000	(a)		—			548,298
Restricted cash			470,000			—			—			—			—			470,000
Commodity derivatives			—			—			538,000			(538,000)	(a)		—			—
Fair value of derivatives			—			—			—			538,000	(a)		—			538,000
Prepaid drilling costs			4,673			—			—			—			—			4,673
Other assets, net			—			—			940,000			(580,000)	(a)		—			360,000
Total non-current assets			107,156,482			18,997,000			108,829,000			—			(20,634,221)			214,348,261
Total assets		$	126,293,005		$	19,655,000		$	124,545,000		$	—		$	(20,634,221)		$	249,858,784


Epsilon Energy Ltd.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2025

											Transaction Accounting Adjustments
		Historical									Conforming and			Acquisition			Pro Forma
		Epsilon			Peak BLM			Peak E&P			Reclassifications			Adjustments			Combined
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable trade		$	2,963,805		$	—		$	—		$	8,003,000		$	2,470,000	(i)	$	13,436,805
Gathering fees payable			978,890			—			—			—			—			978,890
Royalties payable			1,481,520			—			—			—			—			1,481,520
Income taxes payable			1,556,724			—			—			—			—			1,556,724
Accrued capital expenditures			1,605,705			—			—			19,000	(a)		—			1,624,705
Accrued compensation			726,213			—			—			—			—			726,213
Other accrued liabilities			490,970			—			—			2,169,000	(a)		3,900,000	(f)		9,073,970
												2,514,000	(a)
Fair value of derivatives			—			—			—			104,000	(a)		—			104,000
Operating lease liabilities			120,799			—			—			150,000	(a)		—			270,799
Accounts payable and accrued expenses			—			276,000			10,260,000			(19,000)	(a)		—			—
												(2,514,000)	(a)
												(8,003,000)	(a)
Oil and natural gas revenue payable			—			—			9,565,000			—			—			9,565,000
Production and ad valorem taxes payable			—			—			2,169,000			(2,169,000)	(a)		—			—
Commodity derivatives			—			—			104,000			(104,000)	(a)		—			—
Current portion of long-term debt			—			—			48,262,000			—			(50,336,000)	(b)		—
															736,000	(b)
															1,338,000	(b)
Right-of-use liabilities			—			—			150,000			(150,000)	(a)		—			—
Total current liabilities			9,924,626			276,000			70,510,000			—			(41,892,000)			38,818,626
Non-current liabilities
Asset retirement obligations			3,822,030			51,000			3,066,000			—			(1,761,315)	(e)		5,177,715
Revolving line of credit			—			—			—			—			50,336,000	(b)		50,336,000
Deferred income taxes			12,062,053			—			—			—			—			12,062,053
Operating lease liabilities, long term			266,263			—			—			142,000	(a)		—			408,263
Fair value of derivatives			—			—			—			261,000	(a)		—			261,000
Ad valorem taxes			—			—			8,284,000			—			—			8,284,000
Contingent consideration			—			—			—			—			10,637,872	(h)		10,637,872
Commodity derivatives			—			—			261,000			(261,000)	(a)		—			—
Right-of-use liabilities			—			—			142,000			(142,000)	(a)		—			—
Long term debt, net			—			—			—			—			—			—
Total non-current liabilities			16,150,346			51,000			11,753,000			—			59,212,557			87,166,903
Total liabilities			26,074,972			327,000			82,263,000			—			17,320,557			125,985,529
Commitments and contingencies
Shareholders'/Member's equity
Preferred shares			—			—			—			—			—			—
Common shares			116,081,031			—			—			—			27,555,222	(g)		143,636,253
Additional paid-in capital			13,267,196			—			—			—			—			13,267,196
Accumulated other comprehensive income			9,864,979			—			—			—			—			9,864,979
Preferred equity			—			—			95,886,000			—			(95,886,000)	(c)		—
Common equity			—			57,000,000			242,518,000			—			(299,518,000)	(c)		—
Accumulated deficit			(38,995,173)			(37,672,000)			(296,122,000)			—			335,132,000	(c)		(42,895,173)
															(3,900,000)	(f)
															(1,338,000)	(b)
Total shareholders' equity			100,218,033			19,328,000			42,282,000			—			(37,954,778)			123,873,255
Total liabilities and shareholders'/member's equity		$	126,293,005		$	19,655,000		$	124,545,000		$	—		$	(20,634,221)		$	249,858,784


Epsilon Energy Ltd.
Unaudited Pro Forma condensed Combined Statements of Operations
For the Nine Months Ended September 30, 2025

											Transaction Accounting Adjustments
		Historical									Conforming and			Acquisition			Pro Forma
		Epsilon			Peak BLM			Peak E&P			Reclassifications			Adjustments			Combined
Revenues from contracts with customers:
Gas, oil, NGL, and condensate revenue		$	31,586,766		$	1,813,000		$	23,153,000		$	—		$	—		$	56,552,766
Gas gathering and compression revenue			5,182,566			—			—			—			—			5,182,566
Total revenue			36,769,332			1,813,000			23,153,000			—			—			61,735,332

Operating costs and expenses:
Lease operating expenses			7,615,735			350,000			7,497,000			3,206,000	(a)		—			18,668,735
Gathering system operating expenses			1,729,988			—			—			—			—			1,729,988
Depletion, depreciation, amortization, and accretion			9,247,973			—			—			8,468,000	(a)		(5,864,836)	(b)		11,871,904
												169,000	(a)		(148,233)	(b)
Depletion, depreciation, amortization			—			545,000			7,923,000			(8,468,000)	(a)		—			—
Accretion expense			—			3,000			166,000			(169,000)	(a)		—			—
Impairment expense			2,676,669			—			—			1,716,000	(a)		—			4,392,669
Production and ad valorem taxes			—			233,000			2,973,000			(3,206,000)	(a)		—			—
Abandonment			—			—			1,716,000			(1,716,000)	(a)		—			—
Impairment of oil and gas properties			—			29,655,000			18,333,000			—			(47,988,000)	(g)		—
General and administrative expenses:																		—
Stock based compensation expense			1,148,289			—			—			—			—			1,148,289
Other general and administrative expenses			5,748,081			—			—			6,248,000	(a)		(280,855)	(h)		11,715,226
General and administrative			—			1,659,000			4,589,000			(6,248,000)	(a)		—			—
Total operating costs and expenses			28,166,735			32,445,000			43,197,000			—			(54,281,924)			49,526,811
Operating income (loss)			8,602,597			(30,632,000)			(20,044,000)			—			54,281,924			12,208,521

Other income (expense):
Interest income			117,440			163,000			—			—			—			280,440
Interest expense			(43,783)			8,000			(5,549,000)			—			2,762,720	(c)		(2,822,063)
Gain on derivative contracts			2,076,000			—			3,173,000			—			—			5,249,000
Other expense			(28,086)			—			—			—			—			(28,086)
Loss on sale of assets			—			(2,383,000)			(3,000)			—			2,386,000	(i)		—
Other gain			—			—			324,000			—			—			324,000
Other income (expense), net			2,121,571			(2,212,000)			(2,055,000)			—			5,148,720			3,003,291

Net income (loss) before income tax expense (benefit)			10,724,168			(32,844,000)			(22,099,000)			—			59,430,644			15,211,812
Income tax expense			4,084,378			—			—			—			942,405	(d)		5,026,783
NET INCOME (LOSS)		$	6,639,790		$	(32,844,000)		$	(22,099,000)		$	—		$	58,488,239		$	10,185,029

Net income per share, basic		$	0.30											$	$0.07	(e)	$	$0.37
Net income per share, diluted		$	0.30											$	$0.04	(e)	$	$0.34
Weighted average number of shares outstanding, basic			22,028,248												5,681,489	(e)		27,709,737
Weighted average number of shares outstanding, diluted			22,170,223												7,916,336	(e)		30,086,559


Epsilon Energy Ltd.
Unaudited Pro Forma condensed Combined Statements of Operations
For the Year Ended December 31, 2024

											Transaction Accounting Adjustments
		Historical									Conforming and			Acquisition			Pro Forma
		Epsilon			Peak BLM			Peak E&P			Reclassifications			Adjustments			Combined
Revenues from contracts with customers:
Gas, oil, NGL, and condensate revenue		$	25,998,712		$	3,504,000		$	41,740,000		$	—		$	—		$	71,242,712
Gas gathering and compression revenue			5,524,063			—			—			—			—			5,524,063
Total revenue			31,522,775			3,504,000			41,740,000			—			—			76,766,775

Operating costs and expenses:
Lease operating expenses			7,264,824			740,000			11,750,000			5,917,000	(a)		—			25,671,824
Gathering system operating expenses			2,265,190			—			—			—			—			2,265,190
Depletion, depreciation, amortization, and accretion			10,185,119			—			—			228,000	(a)		(9,656,450)	(b)		14,207,738
												13,596,000	(a)		(144,931)	(b)
Depletion, depreciation, amortization			—			1,413,000			12,183,000			(13,596,000)	(a)		—			—
Accretion expense			—			5,000			223,000			(228,000)	(a)		—			—
Impairment expense			1,450,076			—			—			7,118,000	(a)		—			8,568,076
Production and ad valorem taxes			—			464,000			5,453,000			(5,917,000)	(a)		—			—
Abandonment			—			886,000			6,232,000			(7,118,000)	(a)		—			—
General and administrative expenses:
Stock based compensation expense			1,244,416			—			—			—			—			1,244,416
Other general and administrative expenses			5,688,714			—			—			9,747,000	(a)		3,900,000	(f)		19,335,714
															(1,587,291)	(h)		(1,587,291)
General and administrative			—			2,835,000			6,912,000			(9,747,000)	(a)		—			—
Total operating costs and expenses			28,098,339			6,343,000			42,753,000			—			(7,488,672)			69,705,667
Operating income (loss)			3,424,436			(2,839,000)			(1,013,000)			—			7,488,672			7,061,108

Other income (expense):
Interest income			493,277			38,000			—			—			—			531,277
Interest expense			(46,400)			—			(8,630,000)			—			4,914,960	(c)		(3,761,440)
Loss on derivative contracts			(391,147)			—			(2,128,000)			—			—			(2,519,147)
Other income			76,727			317,000			480,000			—			—			873,727
Loss on sale of assets			—			—			(301,000)			—			301,000	(i)		—
Other income (expense), net			132,457			355,000			(10,579,000)			—			5,215,960			(4,875,583)

Net income (loss) before income tax expense (benefit)			3,556,893			(2,484,000)			(11,592,000)			—			12,704,632			2,185,525
Income tax expense (benefit)			1,629,093			—			—			—			(287,987)	(d)		1,341,106
NET INCOME (LOSS)		$	1,927,800		$	(2,484,000)		$	(11,592,000)		$	—		$	12,992,619		$	844,419

Net income (loss) per share, basic		$	0.09											$	($0.06)	(e)	$	$0.03
Net income (loss) per share, diluted		$	0.09											$	($0.06)	(e)	$	$0.03
Weighted average number of shares outstanding, basic			21,930,277												5,681,489	(e)		27,611,766
Weighted average number of shares outstanding, diluted			21,930,277												7,916,336	(e)		29,846,613

Epsilon Energy Ltd.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

1.	Basis of Presentation

The accompanying unaudited pro forma condensed combined financial statements were prepared based on the historical consolidated financial statements of Epsilon and the historical consolidated financial statements of Peak E&P and Peak BLM. The acquisition of the Acquired Companies has been assumed to be accounted for as a business combination in accordance with ASC 805. The assets acquired and liabilities assumed are estimated at their respective fair values as of September 30, 2025. Any transaction costs were assumed to be expensed as incurred in accordance with ASC 805.

The Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2025 and the Year Ended December 31, 2024 were prepared assuming the acquisition of the Acquired Companies occurred on January 1, 2024. The Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2025 was prepared as if the acquisition of the Acquired Companies had occurred on September 30, 2025. These pro forma adjustments are described in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Epsilon would have been had the acquisition of the Acquired Companies occurred on the dates noted above, nor are they indicative of future consolidated results of operations or consolidated financial position. Future results may vary significantly from the results reflected in the Unaudited Pro Forma Condensed Combined Statement of Operations. In Epsilon’s opinion, all adjustments that are necessary to fairly present the unaudited pro forma condensed combined financial information have been made.

2.	Consideration and Purchase Price Allocation

The preliminary allocation of the total purchase price is based upon management’s estimates of, and assumptions related to, the fair value of assets acquired and liabilities to be assumed as of November 14, 2025, using currently available information and market data. Because the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on financial position and results of operations may differ significantly from the pro forma amounts included herein.

The preliminary purchase price allocation is subject to change due to several factors, including but not limited to changes in the estimated fair value of assets acquired and liabilities assumed as of the closing date of the transaction, which could result from changes in future oil and natural gas commodity prices, reserve estimates, interest rates, as well as other factors.

The consideration transferred and the fair value of assets acquired and liabilities assumed by Epsilon are as follows:


Consideration:		5,681,489
Common Shares issued	$	4.85
Common Share price at November 14, 2025	$	27,555,222
Common Shares consideration		2,234,847
Contingent consideration	$	4.76
Common Share price at November 19, 2025		10,637,872
Contingent consideration		50,336,000
Repayment of indebtedness of Peak E&P	$	88,529,093
Total consideration

Fair value of assets acquired:
Cash and cash equivalents	$	5,187,000
Accounts receivable, net		9,614,000
Fair value of derivatives, current		712,000
Other assets, current		861,000
Oil and gas properties		101,033,779
Other property and equipment		4,984,000
Fair value of derivatives, non-current		538,000
Other assets, non-current		636,000
Amounts attributable to assets acquired	$	123,565,779

Fair value of liabilities assumed:
Accounts payable trade	$	10,473,000
Accrued capital expenditures		19,000
Oil and natural gas revenue payable		9,565,000
Other accrued liabilities		4,683,000
Fair value of derivatives, current		104,000
Operating lease liabilities, current		150,000
Asset retirement obligation		1,355,686
Fair value of derivatives, non-current		261,000
Operating lease liabilities, non-current		142,000
Other liabilities, non-current		8,284,000
Amounts attributable to liabilities assumed	$	35,036,686

Total identifiable net assets	$	88,529,093

The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation.

Significant unobservable inputs included future commodity prices adjusted for differentials, projections of estimated quantities of recoverable reserves, forecasted production based on decline curve analysis, estimated timing and amount of future operating and development costs, and a weighted average cost of capital.

3.	Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet and Unaudited Pro Forma Condensed Combined Statements of Operations

The unaudited pro forma condensed combined financial information has been compiled in a manner consistent with the accounting policies adopted by Epsilon. Actual results may differ materially from the assumptions and estimates contained herein.

The pro forma adjustments are based on currently available information and certain estimates and assumptions that Epsilon believes provide a reasonable basis for presenting the significant effects of the acquisition of the Acquired Companies. General descriptions of the pro forma adjustments are provided below.

Unaudited Pro Forma Condensed Combined Balance Sheet

The following adjustments were made in the preparation of the Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2025:

(a)

Adjustments necessary to reclassify various assets and liabilities to conform to the presentation of Epsilon.

(b)

As a closing condition to consummate the acquisition of the Acquired Companies, Epsilon repaid the outstanding debt of Peak E&P of $50.3 million. Epsilon drew down on its revolving line of credit in order to repay the outstanding debt of Peak E&P. The outstanding debt of Peak E&P includes $1.3 million of unamortized debt issuance costs, which will be written off by Peak E&P and is shown as a charge against accumulated deficit.

(c)

Adjustments necessary to remove the historical book basis of proved property, unproved property, accumulated depreciation, depletion, amortization and impairment as well as the historical book basis of member’s equity of the Acquired Companies.

(d)

Adjustments necessary to reflect the estimated fair value of proved and unproved oil and natural gas properties. The fair value of proved oil and natural gas properties was estimated using a discounted cash flow approach and strip oil and natural gas prices as of November 14, 2025.

(e)

Adjustments necessary to reflect the estimated fair value of asset retirement obligations assumed as of September 30, 2025. The fair value of asset retirement obligations was estimated using assumptions consistent with those of Epsilon, including a credit-adjusted risk-free rate of 8.25%, an inflation rate of 2.0%, a 35 year well life and a reclamation cost of $0.2 million per well.

(f)

Adjustment necessary to reflect estimated direct costs for the acquisition of the Acquired Companies expected to be incurred subsequent to September 30, 2025. These estimated direct costs will be incurred during the latter part of 2025 and early 2026 and have been retrospectively reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as though incurred and payable at September 30, 2025.

(g)

Adjustment necessary to reflect the issuance of 5,681,489 Common Shares of Epsilon, based on the November 14, 2025 closing price of Epsilon of $4.85 per Common Share.

(h)

Under the Peak BLM Purchase Agreement and, subject to the conditions of the Peak BLM Purchase Agreement, Epsilon issued an additional 2,234,847 Common Shares which settled on November 19, 2025.

(i)

Adjustment to include certain incremental liabilities of the sellers that are being assumed by Epsilon.

(j)

Adjustment necessary to reflect the estimated fair value of a building acquired from Peak E&P. The value of the building acquired was based upon a third-party appraisal.

Unaudited Pro Forma Condensed Combined Statements of Operations

The following adjustments were made in the preparation of the Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2025 and the Year Ended December 31, 2024:

(a)

Adjustments necessary to reclassify various expenses to conform to the presentation of Epsilon.

(b)

Adjustments necessary to depreciation, depletion, and amortization expense resulting from the change in basis of property and equipment acquired and accretion expense from new asset retirement obligations recognized as a result of the acquisition of the Acquired Companies. The depletion adjustment was calculated using the unit-of-production method under the successful efforts method of accounting using estimated proved reserves and production volumes attributable to the Acquired Companies.

(c)

Adjustment necessary to reflect the estimated interest expense in the period presented with respect to the incremental borrowings to finance the acquisition of the Acquired Companies. The interest rate utilized as of September 30, 2025 was 7.5% per annum. A one-eighth point change in interest rates as of September 30, 2025 would change interest expense by $0.1 million for the nine months ended September 30, 2025 and the year ended December 31, 2024.

(d)

Adjustment necessary to reflect estimated income taxes from the operations of the Acquired Companies. Income taxes were estimated by applying the statutory rate of 21.0% to pre-tax income of the operations of the Acquired Companies and to the transaction accounting adjustments.

(e)

The following table reconciles historical and pro forma basic and diluted earnings per share for the period indicated:


		For the Nine Months						For the Year Ended
		Ended September 30, 2025						December 31, 2024
		Historical			Pro Forma			Historical			Pro Forma
Net Income		$	6,639,790		$	10,185,029		$	1,927,800		$	844,419

Common shares:
Common Shares outstanding — basic			22,028,248			27,709,737			21,930,277			27,611,766
Dilutive effect of potential Common Shares			141,975			2,376,822			—			2,234,847
Common Shares outstanding — diluted		$	22,170,223		$	30,086,559		$	21,930,277		$	29,846,613

Net income per share:
Basic		$	0.30		$	0.37		$	0.09		$	0.03
Diluted		$	0.30		$	0.34		$	0.09		$	0.03

(f)

Adjustment necessary to reflect estimated direct costs expected to be incurred subsequent to September 30, 2025 for the acquisition of the Acquired Companies. These estimated direct costs will be incurred during the latter part of 2025 and early 2026 and have been retrospectively reflected in the Unaudited Pro Forma Condensed Combined Statement of Operations as though incurred for the year ended December 31, 2024.

(g)

Adjustment necessary to remove impairments during the nine months ended September 30, 2025. The Unaudited Pro Forma Condensed Combined Statement of Operations for the Nine Months Ended September 30, 2025, assumes the acquisition of the Acquired Companies occurred on January 1, 2024 and the acquired assets are recorded at their respective fair values, including oil and gas properties.

(h)

Adjustment necessary to remove certain non-recurring general and administrative costs of the Acquired Companies. During the nine months ended September 30, 2025 and the year ended December 31, 2024, the Acquired Companies incurred various non-recurring costs in preparation for an initial public offering. These costs included legal, accounting, consulting, engineering and other associated costs. Such amounts represent non-recurring costs that will not impact the ongoing operations of the Acquired Companies.

(i)

Adjustment necessary to remove losses on the sale of certain assets during the nine months ended September 30, 2025 and the year ended December 31, 2024. The Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months ended September 30, 2025 and the Year Ended December 31, 2024, assumes the acquisition of the Acquired Companies occurred on January 1, 2024 and the acquired assets are recorded at their respective fair values, including oil and gas properties and other property, plant and equipment.

4.	Supplemental Unaudited Pro Forma Combined Oil and Natural Gas Reserves and Standardized Measure Information

The following tables set forth information with respect to the historical and pro forma combined estimated oil and natural gas reserves as of December 31, 2024 for Epsilon, Peak BLM and Peak E&P. The reserve information of Epsilon has been prepared by DeGolyer and MacNaughton, independent petroleum engineers. Peak BLM and Peak E&P reserve information has been prepared by Cawley, Gillespie and Associates, Inc., independent petroleum engineers. The following unaudited pro forma combined proved reserve information is not necessarily indicative of the results that might have occurred had the acquisition of the Acquired Companies taken place on January 1, 2024, nor is it intended to be a projection of future results. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Periodic revisions or removals of estimated reserves and future cash flows may be necessary as a result of a number of factors, including reservoir performance, new drilling, crude oil and natural gas prices, changes in costs, technological advances, new geological or geophysical data, changes in business strategies, or other economic factors. Accordingly, proved reserve estimates may differ significantly from the quantities of crude oil and natural gas ultimately recovered. For Epsilon, Peak BLM and Peak E&P, the reserve estimates shown below were determined using the average first day of the month price for each of the preceding 12 months for oil and natural gas for the year ended December 31, 2024.


ESTIMATED OIL AND NATURAL GAS RESERVES

		As of December 31, 2024
								Pro Forma
		Epsilon		Peak BLM		Peak E&P		Combined
Natural Gas (MMcf)
Net proved reserves at December 31, 2023		65,915		953		28,235		95,103
Revisions of previous estimates		8,157		717		(2,853)		6,021
Acquisitions		1,471		1,003		387		2,861
Extensions		—		945		9,592		10,537
Divestitures		—		(387)		(1,004)		(1,391)
Production		(6,142)		(211)		(2,323)		(8,676)
Net proved reserves at December 31, 2024		69,401		3,020		32,034		104,455
Natural Gas Liquids (MBbl)⁽²⁾
Net proved reserves at December 31, 2023		383		—		—		383
Revisions of previous estimates		88		—		—		88
Acquisitions		475		—		—		475
Extensions		—		—		—		—
Divestitures		—		—		—		—
Production		(69)		—		—		(69)
Net proved reserves at December 31, 2024		877		—		—		877
Oil and Condensate (MBbl)
Net proved reserves at December 31, 2023		341		274		5,011		5,626
Revisions of previous estimates		223		14		(459)		(222)
Acquisitions		1,192		48		19		1,259
Extensions		—		202		1,117		1,319
Divestitures		—		(19)		(48)		(67)
Production		(184)		(43)		(507)		(734)
Net proved reserves at December 31, 2024		1,572		476		5,133		7,181
Total Company (Mmcfe)⁽¹⁾
Net proved reserves at December 31, 2023		70,262		2,597		58,301		131,160
Revisions of previous estimates		10,022		801		(5,606)		5,217
Acquisitions		11,473		1,291		501		13,265
Extensions		—		2,157		16,294		18,451
Divestitures		—		(501)		(1,291)		(1,792)
Production		(7,660)		(469)		(5,365)		(13,494)
Net proved reserves at December 31, 2024		84,097		5,876		62,834		152,807

⁽¹⁾ Assumes a ratio of 1 bbl of oil per 6 Mcfe.

⁽²⁾ Peak E&P and Peak BLM reserve quantities are shown in 2-streams, with natural gas liquids included with natural gas.


ESTIMATED OIL AND NATURAL GAS RESERVES

		As of December 31, 2024
								Pro Forma
		Epsilon		Peak BLM		Peak E&P		Combined
Proved developed reserves:
Oil (MBbl)		847		274		3,562		4,683
Natural Gas (MMcf)		56,851		2,075		18,283		77,209
Natural gas liquids (MBbl)⁽²⁾		490		—		—		490
Total proved developed reserves (Mmcfe) ⁽¹⁾		64,872		3,720		39,657		108,249
Proved undeveloped reserves:
Oil (MBbl)		725		202		1,571		2,498
Natural Gas (MMcf)		12,550		945		13,751		27,246
Natural gas liquids (MBbl)⁽²⁾		387		—		—		387
Total proved undeveloped reserves (Mmcfe) ⁽¹⁾		19,225		2,156		23,177		44,558


ESTIMATED OIL AND NATURAL GAS RESERVES

		As of December 31, 2023
								Pro Forma
		Epsilon		Peak BLM		Peak E&P		Combined
Proved developed reserves:
Oil (MBbl)		272		274		4,306		4,852
Natural Gas (MMcf)		47,555		953		20,374		68,882
Natural gas liquids (MBbl)⁽²⁾		249		—		—		249
Total proved developed reserves (Mmcfe)⁽¹⁾		50,681		3,720		39,657		99,488
Proved undeveloped reserves:
Oil (MBbl)		69		—		705		774
Natural Gas (MMcf)		18,361		—		7,861		26,222
Natural gas liquids (MBbl)⁽²⁾		134		—		—		134
Total proved undeveloped reserves (Mmcfe)⁽¹⁾		19,579		2,156		23,177		31,670

⁽¹⁾ Assumes a ratio of 1 bbl of oil per 6 Mcfe.

⁽²⁾ Peak E&P and Peak BLM reserve quantities are shown in 2-streams, with natural gas liquids included with natural gas.

The following table presents the Standardized Measure of Discounted Future Net Cash Flows (as defined by FASB Accounting Standards Codification 932) relating to the proved crude oil and natural gas reserves of Epsilon and of the Acquired Companies on a pro forma combined basis as of December 31, 2024. The Pro Forma Combined Standardized Measure shown below represents estimates only and should not be construed as the market value of either Epsilon’s crude oil and natural gas reserves or the crude oil and natural gas reserves attributable to the Acquired Companies.


STANDARDIZED MEASURE OF DISCOUNTED FUTURE CASH FLOWS

			As of December 31, 2024
											Transaction			Pro Forma
		Epsilon			Peak BLM			Peak E&P			Adjustments			Combined
Future cash inflows		$	248,266,584		$	41,000,900		$	441,235,616		$	—		$	730,503,100
Future production costs			(109,070,217)			(17,976,409)			(208,937,432)			—			(335,984,058)
Future development costs			(31,461,723)			(4,633,644)			(55,168,825)			—			(91,264,192)
Future income taxes			(18,611,204)			—			—			(19,267,334)	(a)		(37,878,538)
Future net cash flows (undiscounted)			89,123,440			18,390,847			177,129,359			(19,267,334)			265,376,312
10% annual discount for estimated timing of cash flows			(38,466,846)			(8,850,431)			(84,035,064)			8,439,101	(a)		(122,913,240)
Standardized measure of discounted future net cash flows		$	50,656,594		$	9,540,416		$	93,094,295		$	(10,828,233)		$	142,463,072

(a)

Transaction adjustments represent the estimated effect of income taxes on the undiscounted and discounted future net cash flows associated with Peak BLM and Peak E&P.

The following table sets forth the changes in the Standardized Measure of discounted future net cash flows attributable to estimated net proved crude oil and natural gas reserves of Epsilon and the Acquired Companies on a pro forma combined basis for the year ending December 31, 2024:


CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE CASH FLOWS

			As of December 31, 2024
											Transaction			Pro Forma
		Epsilon			Peak BLM			Peak E&P			Adjustments			Combined
Beginning of year		$	32,972,908		$	7,471,670		$	115,563,752		$	(13,034,672)	(a)	$	142,973,658
Revenue less production and other costs			(17,599,243)			(2,357,423)			(24,537,391)			—			(44,494,057)
Changes in price, net of production costs			(3,339,422)			(1,313,485)			(8,637,392)			—			(13,290,299)
Development costs incurred			14,319,839			(20,030)			—			—			14,299,809
Net changes in future development costs			(26,549,734)			664,820			5,760,297			—			(20,124,617)
Revisions of previous quantity estimates			6,014,458			1,350,685			(12,343,143)			—			(4,978,000)
Accretion of discount			3,742,998			747,167			11,556,375			1,303,467	(a)		17,350,007
Net change in income taxes			(3,647,700)			—			—			902,972	(a)		(2,744,728)
Purchases of reserves in place			40,846,884			1,457,831			572,562			—			42,877,277
Extensions			—			2,180,312			11,602,891			—			13,783,203
Sale of reserves in place			—			(572,562)			(1,457,831)			—			(2,030,393)
Timing differences and other technical revisions			3,895,607			(68,569)			(4,985,825)			—			(1,158,787)
End of year		$	50,656,595		$	9,540,416		$	93,094,295		$	(10,828,233)		$	142,463,073

(a)

Transaction adjustments represent the estimated effect of income taxes on the undiscounted and discounted future net cash flows associated with Peak BLM and Peak E&P.


Alberta, Canada	001-38770	98-1476367
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Shares, no par value	EPSN	NASDAQ Capital Market


Exhibit
Number	Description
23.1*	Consent of Baker Tilly US, LLP
23.2*	Consent of Baker Tilly US, LLP
23.3*	Consent of Cawley, Gillespie & Associates, Inc.
99.1*	Unaudited Consolidated Financial Statements of Peak Exploration and Production, LLC as of September 30, 2025 and for the nine months ended September 30, 2025 and 2024
99.2*	Unaudited Consolidated Financial Statements of Peak BLM Lease LLC as of September 30, 2025 and for the nine months ended September 30, 2025 and 2024
99.3*	Unaudited Pro Forma Condensed Combined Financial Information as of September 30, 2025 and for the nine months ended September 30, 2025 with respect to the Company’s acquisitions of Peak E&P and Peak BLM
99.4	Summary Reserve Report of Cawley, Gillespie & Associates, Inc. (incorporated by reference to Annex D to definitive proxy statement, File No. 001-38770, filed on October 10, 2025)
99.5	Summary Reserve Report of Cawley, Gillespie & Associates, Inc. (incorporated by reference to Annex E to definitive proxy statement, File No. 001-38770, filed on October 10, 2025)
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)


	EPSILON ENERGY LTD.

Date: January 13, 2026	By:	/s/ J. Andrew Williamson
		J. Andrew Williamson
		Chief Financial Officer