Epsilon Energy (EPSN) 10-Q 6 May 21 2021 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 05, 2021
Document and Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Entity Registrant Name	EPSILON ENERGY LTD.
Title of 12(b) Security	Common Shares, no par value
Trading Symbol	EPSN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		23,798,884
Entity Central Index Key	0001726126
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

Unaudited Condensed Consolidate

Unaudited Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 17,851,587	$ 13,270,913
Accounts receivable	3,462,548	3,917,288
Fair value of derivatives	401,141
Prepaid income taxes		89,285
Other current assets	339,209	500,583
Total current assets	22,054,485	17,778,069
Oil and gas properties, successful efforts method
Proved properties	134,831,162	133,902,723
Unproved properties	21,510,765	21,552,063
Accumulated depletion, depreciation, amortization and impairment	(99,469,225)	(98,200,111)
Total oil and gas properties, net	56,872,702	57,254,675
Gathering system	42,215,928	42,202,644
Accumulated depletion, depreciation, amortization and impairment	(32,480,738)	(32,101,624)
Total gathering system, net	9,735,190	10,101,020
Land	637,764	637,764
Buildings and other property and equipment, net	335,455	338,419
Total property and equipment, net	67,581,111	68,331,878
Other assets:
Restricted cash	566,540	565,858
Prepaid drilling costs	223	379
Total non-current assets	68,147,874	68,898,115
Total assets	90,202,359	86,676,184
Current liabilities
Accounts payable trade	725,168	1,195,479
Gathering fees payable	780,096	909,768
Royalties payable	1,414,126	1,155,698
Income taxes payable	247,513
Accrued capital expenditures	724,714	139,766
Other accrued liabilities	786,130	1,002,935
Asset retirement obligations	108,258	106,734
Total current liabilities	4,786,005	4,510,380
Non-current liabilities
Asset retirement obligations	3,042,871	3,043,509
Deferred income taxes	10,908,211	10,102,852
Total non-current liabilities	13,951,082	13,146,361
Total liabilities	18,737,087	17,656,741
Commitments and contingencies (Note 9)
Shareholders' equity
Common shares, no par value, unlimited shares authorized and 23,985,799 issued and 23,862,599 outstanding at March 31, 2021 and 23,985,799 shares issued and outstanding at December 31, 2020.	131,730,401	131,730,401
Treasury shares, 123,200 at March 31, 2021	(492,479)
Additional paid-in capital	8,081,618	7,879,119
Accumulated deficit	(77,675,157)	(80,410,724)
Accumulated other comprehensive income	9,820,889	9,820,647
Total shareholders' equity	71,465,272	69,019,443
Total liabilities and shareholders' equity	$ 90,202,359	$ 86,676,184

Unaudited Condensed Consolida_2

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Unaudited Condensed Consolidated Balance Sheets
Par value	$ 0	$ 0
Common shares authorized	Unlimited	Unlimited
Common shares issued	23,985,799	23,985,799
Common shares outstanding	23,862,599	23,985,799
Treasury shares	123,200

Unaudited Condensed Consolida_3

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues from contracts with customers:
Total revenue	$ 8,441,312	$ 6,427,846
Operating costs and expenses:
Lease operating expenses	1,594,188	2,047,767
Gathering system operating expenses	190,947	97,778
Development geological and geophysical expenses	11,539	2,629
Depletion, depreciation, amortization, and accretion	1,682,860	2,414,376
Impairment of proved properties	0	1,760,000
General and administrative expenses:
Stock based compensation expense	202,499	173,919
Other general and administrative expenses	1,327,161	1,008,113
Total operating costs and expenses	5,009,194	7,504,582
Operating income (loss)	3,432,118	(1,076,736)
Other income (expense):
Interest income	7,813	21,529
Interest expense	(27,073)	(28,006)
Gain on derivative contracts	465,341	1,721,018
Other income (expense)	1,941	(2,225)
Other income, net	448,022	1,712,316
Net income before income tax expense	3,880,140	635,580
Income tax expense	1,144,573	325,281
NET INCOME	2,735,567	310,299
Currency translation adjustments	242	(114)
NET COMPREHENSIVE INCOME	$ 2,735,809	$ 310,185
Net income per share, basic	$ 0.11	$ 0.01
Net income per share, diluted	$ 0.11	$ 0.01
Weighted average number of shares outstanding, basic	23,947,222	26,565,084
Weighted average number of shares outstanding, diluted	24,030,104	26,565,084
Gas, oil, NGLs and condensate revenue
Revenues from contracts with customers:
Total revenue	$ 6,439,155	$ 4,111,144
Gathering and compression fees
Revenues from contracts with customers:
Total revenue	$ 2,002,157	$ 2,316,702

Unaudited Condensed Consolida_4

Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($)	Common stock	Treasury Shares	Additional paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total
Balance at Dec. 31, 2019	$ 140,808,923		$ 7,029,488	$ 9,810,478	$ (81,285,895)	$ 76,362,994
Balance (in shares) at Dec. 31, 2019	26,790,985
Increase (Decrease) in Stockholders' Equity
Net income					310,299	310,299
Stock-based compensation expenses			173,919			173,919
Buyback of common shares		$ (1,499,586)				(1,499,586)
Buyback of common shares (in shares)		(488,029)
Other comprehensive income (loss)				(114)		(114)
Balance at Mar. 31, 2020	$ 140,808,923	$ (1,499,586)	7,203,407	9,810,364	(80,975,596)	75,347,512
Balance (in shares) at Mar. 31, 2020	26,790,985	(488,029)
Balance at Dec. 31, 2020	$ 131,730,401		7,879,119	9,820,647	(80,410,724)	69,019,443
Balance (in shares) at Dec. 31, 2020	23,985,799
Increase (Decrease) in Stockholders' Equity
Net income					2,735,567	2,735,567
Stock-based compensation expenses			202,499			202,499
Buyback of common shares		$ (492,479)				$ (492,479)
Buyback of common shares (in shares)		(123,200)				(123,200)
Other comprehensive income (loss)				242		$ 242
Balance at Mar. 31, 2021	$ 131,730,401	$ (492,479)	$ 8,081,618	$ 9,820,889	$ (77,675,157)	$ 71,465,272
Balance (in shares) at Mar. 31, 2021	23,985,799	(123,200)

Unaudited Condensed Consolida_5

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net income	$ 2,735,567	$ 310,299
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion	1,682,860	2,414,376
Impairment of proved properties	0	1,760,000
Gain on derivative contracts	(465,341)	(1,721,018)
Cash received from settlements of derivative contracts	64,200	1,345,942
Settlement of asset retirement obligation	(3,483)
Stock-based compensation expense	202,499	173,919
Deferred income tax expense (benefit)	805,359	(69,478)
Changes in assets and liabilities:
Accounts receivable	454,740	530,156
Prepaid income taxes and other current assets	161,374	478,540
Accounts payable, royalties payable and other accrued liabilities	(349,705)	(9,215)
Income taxes payable	336,798
Net cash provided by operating activities	5,624,868	5,213,521
Cash flows from investing activities:
Additions to unproved oil and gas properties	(23,702)	(61,978)
Additions to proved oil and gas properties	(481,021)	(2,045,439)
Additions to gathering system properties	(40,963)	(101,473)
Additions to land, buildings and property and equipment	(5,745)	(145,640)
Prepaid drilling costs	156	244
Net cash used in investing activities	(551,275)	(2,354,286)
Cash flows from financing activities:
Buyback of common shares	(492,479)	(1,499,586)
Net cash used in financing activities	(492,479)	(1,499,586)
Effect of currency rates on cash, cash equivalents and restricted cash	242	(114)
Increase in cash, cash equivalents and restricted cash	4,581,356	1,359,535
Cash, cash equivalents and restricted cash, beginning of period	13,836,771	14,613,711
Cash, cash equivalents and restricted cash, end of period	18,418,127	15,973,246
Supplemental cash flow disclosures:
Interest paid	29,562	28,006
Non-cash investing activities:
Change In Unproved Properties Accrued In Accounts Payable And Accrued Liabilities	(65,000)
Change in proved properties accrued in accounts payable and accrued liabilities	468,972	(903,544)
Change in gathering system accrued in accounts payable and accrued liabilities	(27,679)	(21,026)
Asset retirement obligation asset additions and adjustments	$ (21,554)	$ 3,937

Description of Business

Description of Business	3 Months Ended
	Mar. 31, 2021
Description of Business
Description of Business	1. Description of Business Epsilon Energy Ltd. (the “Company” or “Epsilon” or “we”) was incorporated under the laws of the Province of Alberta, Canada on March 14, 2005. On October 24, 2007, the Company became a publicly traded entity trading on the Toronto Stock Exchange (“TSX”) in Canada. On February 14, 2019, Epsilon’s registration statement on Form 10 was declared effective by the United States Securities and Exchange Commission and on February 19, 2019, the Company began trading in the United States on the NASDAQ Global Market under the trading symbol “EPSN.” Effective as of the close of trading on March 15, 2019 Epsilon voluntarily delisted its common shares from the TSX. The Company is engaged in the acquisition, development, gathering and production of primarily natural gas reserves in the United States.

Basis of Preparation

Basis of Preparation	3 Months Ended
	Mar. 31, 2021
Basis of Preparation
Basis of Preparation	2. Basis of Preparation Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the appropriate rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. All adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented have been included. The interim financial information and notes hereto should be read in conjunction with the Company’s consolidated financial statements as of and for the year ended December 31, 2020. The results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year. Principles of Consolidation The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Epsilon Energy USA, Inc. and its wholly owned subsidiaries, Epsilon Midstream, LLC, Dewey Energy GP, LLC, Dewey Energy Holdings, LLC, Epsilon Operating, LLC, and Altolisa Holdings, LLC. With regard to the gathering system, in which Epsilon owns an undivided interest in the asset, proportionate consolidation accounting is used. All inter-company transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates pertain to proved natural gas and oil reserves and related cash flow estimates used in impairment tests of natural gas and oil, and gathering system properties, asset retirement obligations, accrued natural gas and oil revenues and operating expenses, accrued gathering system revenues and operating expenses, as well as the valuation of commodity derivative instruments. Actual results could differ from those estimates. COVID-19 Management is actively monitoring the impact of the COVID-19 pandemic on the Company's financial condition, liquidity, operations, suppliers, industry and ability to obtain financing in future reporting periods. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is currently not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for the future. Recently Issued Accounting Standards The Company, an emerging growth company (“EGC”), has elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies. In March 2020, the FASB issued ASU No. 2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”). This was followed by ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), issued in January 2021. The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates (“IBORs”) to alternative reference rates. ASC 848 applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to be discontinued because of reference rate reform. The guidance may be applied upon issuance of ASC 848 through December 31, 2022. We do not expect a material impact from the adoption of this ASU. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies other areas of the topic to clarify the application of GAAP. Certain amendments within the standard are required to be applied on a retrospective basis and others on a prospective basis. Effective January 1, 2021, we adopted this ASU with no material impact on the Company’s consolidated financial position or results of operations. In June 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, and must be applied retrospectively. Early adoption is permitted. Epsilon will adopt ASU 2016-13 as of January 1, 2023. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (ASU 2016-02), which significantly changes accounting for leases by requiring that lessees recognize a right of use asset and a related lease liability representing the obligation to make lease payments, for all lease transactions with terms greater than one year. Additional disclosures about an entity’s lease transactions will also be required. ASU 2016-02 defines a lease as “a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.” ASU 2016-02 is effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. In July, the FASB voted to extend the adoption date by one year for private and non-profit companies, and thus emerging growth companies as well. As an emerging growth company, Epsilon plans to defer adoption of ASU 2016-02 until the fiscal year beginning after December 15, 2021. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented in the financial statements using a modified retrospective approach. Epsilon is currently assessing the expected impact on our consolidated financial statements and will adopt for the year beginning in 2022.

Cash, Cash Equivalents, and Res

Cash, Cash Equivalents, and Restricted Cash	3 Months Ended
	Mar. 31, 2021
Cash, Cash Equivalents, and Restricted Cash
Cash, Cash Equivalents, and Restricted Cash	3. Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include cash on hand and short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Restricted cash consists of amounts deposited to back bonds or letters of credit for potential well liabilities. The Company presents restricted cash with cash and cash equivalents in the Consolidated Statements of Cash Flows. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts in the Consolidated Statements of Cash Flows as of March 31, 2021 and 2020: March 31, March 31, 2021 2020 Cash and cash equivalents $ 17,851,587 $ 15,410,599 Restricted cash included in other assets 566,540 562,647 Cash, cash equivalents and restricted cash in the statement of cash flows $ 18,418,127 $ 15,973,246

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2021
Property and Equipment
Property and Equipment	4. Property and Equipment The following table summarizes the Company’s property and equipment as of March 31, 2021 and December 31, 2020: March 31, December 31, 2021 2020 Property and equipment: Oil and gas properties, successful efforts method Proved properties $ 134,831,162 $ 133,902,723 Unproved properties 21,510,765 21,552,063 Accumulated depletion, depreciation, amortization and impairment (99,469,225) (98,200,111) Total oil and gas properties, net 56,872,702 57,254,675 Gathering system 42,215,928 42,202,644 Accumulated depletion, depreciation, amortization and impairment (32,480,738) (32,101,624) Total gathering system, net 9,735,190 10,101,020 Land 637,764 637,764 Buildings and other property and equipment, net 335,455 338,419 Total property and equipment, net $ 67,581,111 $ 68,331,878 Property Impairment Epsilon performs a quantitative impairment test quarterly or whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable, over proved properties using the published NYMEX forward prices, timing, methods and other assumptions consistent with historical periods. When indicators of impairment are present, GAAP requires that the Company first compares expected future undiscounted cash flows by asset group to their respective carrying values. If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the natural gas properties to their estimated fair values is required, which is determined based on discounted cash flow techniques using significant assumptions including projected revenues, future commodity prices, and a market-specific weighted average cost of capital which are affected by expectations about future market and economic conditions. During the three months ended March 31, 2021, no impairment was required. During the three months ended March 31, 2020, Epsilon recognized certain indicators of impairments specific to our Oklahoma assets related to historically low oil and NGL prices and determined that the carrying value of those assets was not recoverable. As a result of this assessment, a $1.76 million impairment was recorded on the Company’s Oklahoma assets during the three months ended March 31, 2020.

Revolving Line of Credit

Revolving Line of Credit	3 Months Ended
	Mar. 31, 2021
Revolving Line of Credit
Revolving Line of Credit	5 . Revolving Line of Credit Effective July 30, 2013, Epsilon Energy USA Inc., a wholly owned subsidiary of the Company, executed a three-year senior secured revolving credit facility with a bank (‘‘Credit Facility’’) for a total commitment of up to $100 million. Upon each advance, interest is charged at the rate of LIBOR plus an ‘‘applicable margin’’. The applicable margin is based on the percent of the line of credit utilized. The terms “Borrowing Base” and “Mortgaged Properties” include the Company’s gathering system assets in addition to the natural gas and oil properties. The “Required Reserve Value” is the lesser of 90% of the recognized value of all proved natural gas and oil properties or 150% of the then current borrowing base. On February 11, 2020 the borrowing base was reaffirmed at $23 million and hedging requirements remained unchanged. Currently, when the Company’s utilization exceeds 25%, the Company must have in place acceptable commodity hedging agreements covering at least 75% of projected production for the first full twelve months after such occurrence and 50% of projected production of natural gas for the succeeding six months. On April 6, 2021 the agreement was amended to extend the maturity date to March 1, 2024 and the borrowing base was decreased from $23 million to $18 million. In addition, the “applicable margin” rates were adjusted from 2.75%-3.75% to 3.25%-4.25%, a LIBOR minimum rate of 0.25% was added, and the leverage ratio compliance threshold was decreased from less than 3.5 to less than 3.0. The amendment also includes a “Benchmark Replacement” definition and transition plan to be used at such time when the LIBOR rate is discontinued. This rate also has a minimum of 0.25%. The lender under the Credit Facility has a first priority security interest in the tangible and intangible assets, including the gathering system, of Epsilon Energy USA, Inc. to secure any outstanding amounts under the agreement. Under the terms of the agreement, the Company must maintain the following covenants:  Interest coverage ratio greater than 3 based on income adjusted for interest, taxes and non-cash amounts.  Current ratio, adjusted for line of credit amounts used and available and non-cash amounts, greater than 1.  Leverage ratio less than 3.0 based on income adjusted for interest, taxes and non-cash amounts. The Company was in compliance with the financial covenants of the Credit Facility as of March 31, 2021 and expects to be in compliance with the financial covenants for the next 12 months. A commitment fee of 0.50% is assessed quarterly on the daily average unused borrowing base on the Credit Facility. Balance at Balance at March 31, December 31, Current Interest Rate 2021 2020 Borrowing Base 3 mo. Revolving line of credit $ — $ — $ 18,000,000 LIBOR + 3.25% (1) (1) At March 31, 2021, the weighted average interest rate was 3.50%.

Shareholders Equity

Shareholders Equity	3 Months Ended
	Mar. 31, 2021
Shareholders' Equity
Shareholders' Equity	6. Shareholders’ Equity (a) The Company is authorized to issue an unlimited number of Common Shares with no par value and an unlimited number of Preferred Shares with no par value. (b) Normal Course Issuer Bid Commencing on May 20, 2019, the Company entered into a share repurchase program on the NASDAQ conducted in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934. The Company was authorized to repurchase up to 1,367,762 of its outstanding common shares, representing 5% of the outstanding common shares of Epsilon as of May 20, 2019, for an aggregate purchase price of not more than $5.0 million. The program ended on May 19, 2020, but Epsilon’s final repurchase under this program occurred on May 8, 2020, and the shares were subsequently cancelled. Commencing on January 1, 2021, the Company entered into a share repurchase program on the NASDAQ conducted in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934. The Company is authorized to repurchase up to 1,193,000 of its outstanding common shares, representing 5% of the outstanding common shares of Epsilon as of January 1, 2021. The program will end on December 31, 2021 unless the maximum amount of common shares is purchased before then or Epsilon provides earlier notice of termination. Repurchases may be made at management’s discretion from time to time through the facilities of the NASDAQ Global Market. The price paid for the common shares will be, subject to applicable securities laws, the prevailing market price of such common shares on the NASDAQ Global Market at the time of such purchase. The Company intends to fund the purchase out of available cash and does not expect to incur debt to fund the share repurchase program. The shares are accounted for as treasury shares until such a time as they are cancelled. The following table contains activity relating to our acquisition of equity securities during the three months ended March 31, 2021: Maximum number of shares that may yet be Total number Average price purchased under of shares paid per the plans or purchased share programs Beginning of normal-course issuer bid, January 1, 2021 1,193,000 January 2021 (1) — $ — February 2021 (1) 62,400 $ 4.07 March 2021 (1) 60,800 $ 3.92 Total as of March 31, 2021 123,200 $ 4.00 1,069,800 (1) Epsilon repurchased these shares under its share repurchase program that commenced on January 1, 2021, as described above. (c) Epsilon’s board of directors (the “Board”) adopted the 2020 Equity Incentive Plan (the “2020 Plan”) on July 22, 2020 subject to approval by Epsilon’s shareholders at Epsilon’s 2020 Annual General and Special Meeting of Shareholders, which occurred on September 1, 2020 (the “Meeting”). Shareholders approved the 2020 Plan at the Meeting. Following Epsilon’s listing on the NASDAQ Global Market, the Board determined that it is in the best interest of the shareholders to approve a new incentive plan that is compliant with U.S. public company equity plan rules and practices that would replace Epsilon’s Amended and Restated 2017 Stock Option Plan (including its predecessors) and the Share Compensation Plan (collectively referred to as the “Predecessor Plans”). No further awards will be granted under the Predecessor Plans. The 2020 Plan provides for incentive compensation in the form of stock options, stock appreciation rights, restricted stock and stock units, performance shares and units, other stock-based awards and cash-based awards. Under the 2020 Plan, Epsilon will be authorized to issue up to 2,000,000 Common Shares. As of December 31, 2020, the Company granted, after the Compensation Committee approved the terms, target formulas, and peer group applicable to the performance incentive awards, 214,000 performance stock units (“PSUs”), and 111,900 time-based restricted shares to employees, leaving 1,674,100 shares available to be granted under the 2020 Plan. No shares subject to awards currently outstanding under the Predecessor Plans that expire or are forfeited will become available for issuance under the 2020 Plan. Restricted and Performance Stock Units For the three months ended March 31, 2021, no shares of Restricted Stock were awarded. For the year ended December 31, 2020, 111,900 common shares of Restricted Stock with a weighted average market price at the grant date of $3.71 were awarded to the Company’s officers, employees, and board of directors. These shares vest over a three-year period, with one-third of the shares being issued per period on the anniversary of the award resolution. The vesting of the shares is contingent on the individuals’ continued employment or service. The Company determined the fair value of the granted Restricted Stock-based on the market price of the common shares of the Company on the date of grant. The following table summarizes Restricted Stock activity for the three months ended March 31, 2021, and the year ended December 31, 2020: Three months ended Year ended March 31, 2021 December 31, 2020 Weighted Weighted Number of Average Number of Average Shares Remaining Life Shares Remaining Life Outstanding (years) Outstanding (years) Balance non-vested Restricted Stock at beginning of period 290,070 1.60 346,499 1.67 Granted — — 111,900 3.00 Vested — — (168,329) — Forfeited (22,000) 1.68 — — Balance non-vested Restricted Stock at end of period 268,070 1.34 290,070 1.60 Stock compensation expense for the granted Restricted Stock is recognized over the vesting period. Stock compensation expense recognized during the three months ended March 31, 2021 and 2020 related to these awards was $137,206 and $172,052, respectively. At March 31, 2021, the Company had unrecognized stock-based compensation related to these shares of $850,929 to be recognized over a weighted average period of 1.10 years (at December 31, 2020: $1,068,819 over 1.2 years). Performance Share Unit Awards (“PSU”) The Company grants PSUs, which are paid in stock to certain key employees. For the three months ended March 31, 2021, no PSUs were awarded. For the year ended December 31, 2020, 214,000 PSUs. PSUs are based on a three-year performance period with performance being measured each year at December 31. The PSUs will vest on the last day of the performance period. The number of PSUs that will ultimately vest is based on two performance targets as follows: · The targets for the PSUs are based on (i) the relative total stockholder return (“TSR”) percentile ranking and (ii) the relative cash flow per debt adjusted share – growth (“CFDAS Growth”) percentile ranking of the Company, each as compared to the Company’s Performance Peer Group during the applicable one-year performance period ending on December 31. · Cash Flow per Debt Adjusted Share (“CFDAS”) is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) divided by the sum of the 1) the total debt plus the value of preferred stock minus cash and the amount of dividends paid for the year divided by the share price at the end of the year; and 2) the actual share count at year end. · The vesting of each PSU Award will be based 50% on TSR performance and 50% based on CFDAS Growth performance. · The recipient of the award must be employed with the Company at the time of vesting. The number of shares ultimately issued under these awards can range from zero to 200% of target award amounts. The PSUs are accounted for as equity awards. The fair value of the 50% for performance based on CFDAS Growth was determined as the market price of the common shares of the Company on the date of grant. Weighted average fair value of CFDAS PSUs granted during the year ended December 31, 2020 was $3.41 per unit. The fair value of the 50% for performance based on TSR was determined on the grant date by the application of a Monte Carlo simulation model. Weighted average fair value of TSR PSUs granted during the year ended December 31, 2020 was $4.10 per share. The Monte Carlo simulation model calculated grant date fair value for awards issued during the period using the following assumptions: March 31, December 31, 2021 2020 Expected life (in years) — 0.33 - 3 Expected volatility — 42.1% - 53.6% Risk-free rate of return — 0.10% - 0.17% Weighted average grant-date fair value per PSU $ — $ 4.10 The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the performance stock awards, to calculate the fair value of the awards. Expected volatilities in the model were estimated using a historical period consistent with the expected term for each annual performance period of the awards. The risk-free interest rate was based on the United States Treasury rate measured over a term commensurate with the expected term for each annual performance period of the awards. The expected term is based on the time between the valuation date and the end of each annual performance period of the awards. The valuation model assumes dividends are immediately reinvested. The following table summarizes PSUs for the three months ended March 31, 2021 and the year ended December 31, 2020: Three months ended Year ended March 31, 2021 December 31, 2020 Weighted Weighted Number of Average Number of Average Shares Remaining Life Shares Remaining Life Outstanding (years) Outstanding (years) Balance non-vested PSUs at beginning of period 193,167 1.60 — — Granted — — 214,000 1.61 Vested — — (20,833) — Balance non-vested PSUs at end of period 193,167 1.35 193,167 1.60 Stock compensation expense for the granted PSUs is recognized over the vesting period. Stock compensation expense recognized during the three months ended March 31, 2021 related to PSUs was $65,293 (for the three months ended March 31, 2020, nil). At March 31, 2021, the Company had unrecognized stock-based compensation related to these shares of $503,293 to be recognized over a weighted average period of 1.27 years (at March 31, 2020: nil over nil years). Stock Options Through March 31, 2021, the Company had outstanding stock options covering 245,000 Common Shares at an overall average exercise price of $5.27 per Common Share to directors, officers, and employees of the Company and its subsidiaries. These 245,000 options have a weighted average expected remaining term of approximately 2.2 years. The following table summarizes stock option activity for the three months ended March 31, 2021 and the year ended December 31, 2020: Three months ended Year ended March 31, 2021 December 31, 2020 Weighted Weighted Number of Average Number of Average Options Exercise Options Exercise Exercise price in US$ Outstanding Price (1) Outstanding Price (1) Balance at period-end 245,000 $ 5.27 245,000 $ 5.27 Exercisable at period-end 245,000 $ 5.27 245,000 $ 5.27 (1) Exercise price has been converted to US$ using the rate of Cdn$1.33 to US$1, the rate on March 15, 2019, the date Epsilon Energy, Ltd was delisted from the TSX. At March 31, 2021, using the Black Scholes model, the Company had unrecognized stock-based compensation, related to these options, of nil (at December 31, 2020: nil). The aggregate intrinsic value at March 31, 2021 was nil (at December 31, 2020: nil). For the three months ended March 31, 2021, nil of stock compensation expense, related to these options, was recognized (for the three months ended March 31, 2020, $1,867). During the three months ended March 31, 2021 and the year ended December 31, 2020, the Company awarded no stock options.

Revenue Recognition

Revenue Recognition	3 Months Ended
	Mar. 31, 2021
Revenue Recognition
Revenue Recognition	7. Revenue Recognition Revenues are comprised primarily of sales of natural gas along with the revenue generated from the Company’s ownership interest in the gas gathering system in the Auburn field in Northeastern Pennsylvania. Also included to a much lesser degree is natural gas, crude oil and NGLs from Oklahoma. Overall, product sales revenue generally is recorded in the month when contractual delivery obligations are satisfied, which occurs when control is transferred to the Company’s customers at delivery based on contractual terms and conditions. In addition, gathering and compression revenue generally is recorded in the month when contractual service obligations are satisfied, which occurs as control of those services is transferred to the Company’s customers. The following table details revenue for the three months ended March 31, 2021 and 2020. Three Months Ended March 31, 2021 2020 Operating revenue Natural gas $ 6,332,099 $ 4,019,764 Natural gas liquids 45,621 31,658 Oil and condensate 61,435 59,722 Gathering and compression fees 2,002,157 2,316,702 Total operating revenue $ 8,441,312 $ 6,427,846 Product Sales Revenue The Company enters into contracts with third party purchasers to sell its natural gas, oil, NGLs and condensate production. Under these product sales arrangements, the sale of each unit of product represents a distinct performance obligation. Product sales revenue is recognized at the point in time that control of the product transfers to the purchaser based on contractual terms which reflect prevailing commodity market prices. To the extent that marketing costs are incurred by the Company prior to the transfer of control of the product, those costs are included in lease operating expenses on the Company’s consolidated statements of operations. Settlement statements for product sales, and the related cash consideration, are received from the purchaser within 30 days. As a result, the Company must estimate the amount of production delivered to the customer and the consideration that will ultimately be received for sale of the natural gas, oil, NGLs, or condensate. Estimated revenue due to the Company is recorded within the receivables line item on the accompanying consolidated balance sheets until payment is received. Gas Gathering and Compression Revenue The Company also provides natural gas gathering and compression services through its ownership interest in the gas gathering system in the Auburn field. For the provision of gas gathering and compression services, the Company collects its share of the gathering and compression fees per unit of gas serviced and recognizes gathering revenue over time using an output method based on units of gas gathered. The settlement statement from the operator of the Auburn Gas Gathering System is received two months after transmission and compression has occurred. As a result, the Company must estimate the amount of production that was transmitted and compressed within the system. Estimated revenue due to the Company is recorded within the receivables line item on the accompanying consolidated balance sheets until payment is received. Allowance for Doubtful Accounts The Company records an allowance for doubtful accounts on a case-by-case basis once there is evidence that collection is not probable. As of March 31, 2021 and 2020, there were no accounts for which collection was not probable. The following table details accounts receivable as of March 31, 2021 and December 31, 2020. March 31, December 31, 2021 2020 Accounts receivable Natural gas and oil sales $ 1,860,300 $ 2,107,910 Joint interest billing 87,713 69,495 Gathering and compression fees 1,446,478 1,736,043 Other 68,057 3,840 Total accounts receivable $ 3,462,548 $ 3,917,288

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2021
Income Taxes
Income Taxes	8. Income Taxes Income tax provisions for the three months ended March 31, 2021 and 2020 are as follows: Three months ended March 31, 2021 2020 Current: Federal $ 155,370 $ 297,863 State 183,844 96,896 Total current income tax expense 339,214 394,759 Deferred: Federal 663,202 (131,081) State 142,157 61,603 Total deferred tax expense (benefit) 805,359 (69,478) Income tax expense $ 1,144,573 $ 325,281 The Company files federal income tax returns in the United States and Canada, and various returns in state and local jurisdictions. The Company believes it has appropriate support for the income tax positions taken and to be taken on our tax returns and that the accruals for tax liabilities are adequate for all open years based on our assessment of various factors including past experience and interpretations of tax law applied to the facts of each matter. The Company's tax returns are open to audit under the statute of limitations for the years ending December 31, 2017 through December 31, 2020. To the extent we utilize net operating losses generated in earlier years, such earlier years may also be subject to audit. Our effective tax rate will typically differ from the statutory federal rate primarily as a result of state income taxes and the valuation allowance against the Canadian net operating loss. The effective tax rate for the three months ended March 31, 2021 was higher than the statutory federal rate as a result of the state income taxes and the valuation allowance against the Canadian net operating loss.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies
Commitments and Contingencies	9. Commitments and Contingencies The Company’s future minimum lease commitments as of March 31, 2021 are summarized in the following table: Year ended December 31, Payments 2021 $ 77,925 2022 106,797 2023 36,013 $ 220,735 The Company enters into commitments for capital expenditures in advance of the expenditures being made. As of March 31, 2021, the Company had commitments of $1.49 million for capital expenditures. Litigation On March 10, 2021, Epsilon filed a complaint against Chesapeake Appalachia, LLC (“Chesapeake”) in the United States District Court for the Middle District of Pennsylvania, Scranton, Pennsylvania. Epsilon claims that Chesapeake has breached a settlement agreement and several operating agreements (“JOAs”) to which Epsilon and Chesapeake are parties. Epsilon asserts that Chesapeake has failed to cooperate with Epsilon’s efforts to develop resources in the Auburn Development, located in North-Central Pennsylvania, as required under both the settlement agreement and JOAs. Epsilon has requested a preliminary injunction, among other requests for relief. Accordingly, a hearing on that request is expected to be heard during the summer of 2021.

Net Income Per Share

Net Income Per Share	3 Months Ended
	Mar. 31, 2021
Net Income Per Share
Net Income Per Share	10. Net Income Per Share Basic net income per share is computed on the basis of the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed based upon the weighted-average number of common shares outstanding during the period plus the assumed issuance of common shares for all potentially dilutive securities. The net income used in the calculation of basic and diluted net income per share is as follows: Three months ended March 31, 2021 2020 Net income available to shareholders $ 2,735,567 $ 310,299 In calculating the net income per share, basic and diluted, the following weighted-average shares were used: Three months ended March 31, 2021 2020 Basic weighted-average number of shares outstanding 23,947,222 26,565,084 Unvested time-based restricted shares 29,034 — Unvested performance-based restricted shares 53,848 — Basic and diluted weighted average shares outstanding 24,030,104 26,565,084 The Company excluded the following shares from the diluted EPS because their inclusion would have been anti-dilutive. Three months ended March 31, 2021 2020 Anti-dilutive options 245,000 245,000 Anti-dilutive unvested time-based restricted shares 239,036 346,499 Anti-dilutive unvested performance-based restricted shares 139,319 — Total Anti-dilutive shares 623,355 591,499

Operating Segments

Operating Segments	3 Months Ended
	Mar. 31, 2021
Operating Segments.
Operating Segments	11. Operating Segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as executive management. Segment performance is evaluated based on operating profit or loss as shown in the table below. Interest income and expense, and income taxes are managed separately on a group basis. The Company’s reportable segments are as follows: a. The Upstream segment activities include acquisition, development and production of oil, natural gas, and other liquid reserves on properties within the United States; b. The Gas Gathering segment partners with two other companies to operate a natural gas gathering system; and c. The Corporate segment activities include corporate listing and governance functions of the Company. Segment activity as of, and for the three months ended March 31, 2021 and 2020 is as follows: Upstream Gas Gathering Corporate Elimination Consolidated As of and for the three months ended March 31, 2021 Operating revenue Natural gas $ 6,332,099 $ — $ — $ — $ 6,332,099 Natural gas liquids 45,621 — — — 45,621 Oil and condensate 61,435 — — — 61,435 Gathering and compression fees — 2,386,588 — (384,431) 2,002,157 Total operating revenue (1) $ 6,439,155 $ 2,386,588 $ — $ (384,431) $ 8,441,312 Net earnings (loss) for the period $ 3,531,142 $ 1,430,636 $ (2,226,211) (3) $ — $ 2,735,567 Operating costs 1,594,188 575,378 — (384,431) 1,785,135 Development geological and geophysical expenses 11,539 — — — 11,539 Depletion, deprec., amortization and accretion 1,302,286 380,574 — — 1,682,860 Impairment — — — — — Segment assets $ 76,473,690 $ 13,674,102 $ 54,567 $ — $ 90,202,359 Capital expenditures (2) 914,440 13,284 — — 927,724 Proved properties (net) 35,361,937 — — — 35,361,937 Unproved properties (net) 21,510,765 — — — 21,510,765 Gathering system (net) — 9,735,190 — — 9,735,190 Other property and equipment (net) 973,219 — — — 973,219 As of and for the three months ended March 31, 2020 Operating revenue Natural gas $ 4,019,764 $ — $ — $ — $ 4,019,764 Natural gas liquids 31,658 — — — 31,658 Oil and condensate 59,722 — — — 59,722 Gathering and compression fees — 2,736,138 — (419,436) 2,316,702 Total operating revenue (1) $ 4,111,144 $ 2,736,138 $ — $ (419,436) $ 6,427,846 Net earnings for the period $ (1,580,897) $ 1,686,193 $ 205,003 (3) $ — $ 310,299 Operating costs 2,047,767 517,214 — (419,436) 2,145,545 Development geological and geophysical expenses 2,629 — — — 2,629 Depletion, deprec., amortization and accretion 1,881,645 532,731 — — 2,414,376 Gain on sale of property 1,760,000 — — — 1,760,000 Segment assets $ 80,725,283 $ 14,907,581 $ 71,626 $ — $ 95,704,490 Capital expenditures (2) 1,349,514 80,446 — — 1,429,960 Proved properties (net) 39,122,341 — — — 39,122,341 Unproved properties (net) 21,109,490 — — — 21,109,490 Gathering system (net) — 11,032,630 — — 11,032,630 Other property and equipment (net) 727,616 — — — 727,616 (1) Segment operating revenue represents revenues generated from the operations of the segment. Inter-segment sales during the three months ended March 31, 2021 and 2020 have been eliminated upon consolidation. For the three months ended March 31, 2021, Epsilon sold natural gas to 18 unique customers. The one customer over 10% comprised 54% of total revenue. For the three months ended March 31, 2020, Epsilon sold natural gas to 23 unique customers. The four customers over 10% comprised 27%, 22%, 16% and 13% of total revenue. (2) Capital expenditures for Upstream segment consist primarily of the acquisition of properties, and the drilling and completing of wells while Gas Gathering consists of expenditures relating to the expansion and completion of the gathering and compression facility. (3) Segment reporting for net earnings for the period does not include non-monetary compensation, general and administrative expense, interest income, interest expense, both gains and (losses) on derivative contracts, or income tax amounts as they are managed on a group basis and are instead included in the corporate column for reconciliation purposes.

Commodity Risk Management Activ

Commodity Risk Management Activities	3 Months Ended
	Mar. 31, 2021
Commodity Risk Management Activities
Commodity Risk Management Activities	12. Commodity Risk Management Activities Commodity Price Risks Epsilon engages in price risk management activities from time to time. These activities are intended to manage Epsilon’s exposure to fluctuations in commodity prices for natural gas by securing fixed price contracts for a portion of expected sales volumes. Inherent in the Company’s fixed price contracts, are certain business risks, including market risk and credit risk. Market risk is the risk that the price of natural gas and oil will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by the Company’s counterparty to a contract. The Company does not currently require collateral from any of its counterparties nor does its counterparties require collateral from the Company. The Company enters into certain commodity derivative instruments to mitigate commodity price risk associated with a portion of its future natural gas production and related cash flows. The natural gas revenues and cash flows are affected by changes in commodity product prices, which are volatile and cannot be accurately predicted. The objective for holding these commodity derivatives is to protect the operating revenues and cash flows related to a portion of the future natural gas sales from the risk of significant declines in commodity prices, which helps ensure the Company’s ability to fund the capital budget. Epsilon has historically elected not to designate any of its financial commodity derivative contracts as accounting hedges and, accordingly, accounts for these financial commodity derivative contracts using the mark-to-market accounting method. Under this accounting method, changes in the fair value of outstanding financial instruments are recognized as gains or losses in the period of change and are recorded as gain on derivative contracts on the condensed consolidated statements of operations and comprehensive income. The related cash flow impact is reflected in cash flows from operating activities. During the three months ended March 31, 2021, Epsilon recognized gains on commodity derivative contracts of $465,341. This amount included cash received on settlements of these contracts of $64,200. For the three months ended March 31, 2020, Epsilon recognized gains on commodity derivative contracts of $1,721,018. This amount included cash received on settlements of these contracts of $1,345,942. Commodity Derivative Contracts Presented below is a summary of Epsilon’s natural gas price and basis swap contracts as of March 31, 2021. Fair Value Volume Ceiling Floor Basis March 31, Derivative Type (MMbtu) Price Price Differential 2021 2021 Basis swap 305,000 $ (1.10) (27,181) Two-way costless collar 2,755,000 $ 3.27 $ 2.78 411,801 2022 Two-way costless collar 900,000 $ 3.34 $ 2.80 16,521 $ 401,141 As of March 31, 2021 and 2020, all of the Company’s economic derivative hedge positions were with large financial institutions, which are not known to the Company to be in default on their derivative positions. The Company is exposed to credit risk to the extent of non-performance by the counterparties in the derivative contracts discussed above; however, the Company does not anticipate non-performance by such counterparties. None of the Company’s derivative instruments contains credit-risk related contingent features. Derivatives are net on the balance sheet as they are subject to the right to offset the liabilities with the assets. The following tables summarize the gross fair values of our derivative instruments, presenting the impact of offsetting the derivative assets and liabilities on our condensed consolidated balance sheets as of the dates indicated below: Fair Value of Derivative March 31, December 31, 2021 2020 Current Basis swap $ — $ — Two-way costless collar 894,240 — $ 894,240 $ — Fair Value of Derivative March 31, December 31, 2021 2020 Current Basis swap $ (27,181) $ — Two-way costless collar (465,918) — $ (493,099) $ — Net Fair Value of Derivatives $ 401,141 $ — The following table presents the changes in the fair value of Epsilon’s commodity derivatives for the periods indicated: Three months ended March 31, 2021 2020 Fair value of asset (liability), beginning of the period $ — $ 1,999,802 Gains (losses) on derivative contracts included in earnings 465,341 1,721,018 Settlement of commodity derivative contracts (64,200) (1,345,942) Fair value of asset, end of the period $ 401,141 $ 2,374,878

Asset Retirement Obligations

Asset Retirement Obligations	3 Months Ended
	Mar. 31, 2021
Asset Retirement Obligations
Asset Retirement Obligations	13. Asset Retirement Obligations Asset retirement obligations were estimated by management based on Epsilon’s net ownership interest in all wells and the gathering system, estimated costs to reclaim and abandon such assets and the estimated timing of the costs to be incurred in future periods. The following tables summarize the changes in asset retirement obligations for the periods indicated: Three Months Ended Year ended March 31, December 31, 2021 2020 Balance beginning of period $ 3,150,243 $ 2,909,855 Liabilities from drilling of new wells 6,908 5,826 Wells plugged and abandoned (31,945) (850) Change in estimates — 32,668 Accretion 25,923 202,744 Balance end of period $ 3,151,129 $ 3,150,243

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2021
Fair Value Measurements
Fair Value Measurements	14. Fair Value Measurements The methodologies used to determine the fair value of our financial assets and liabilities at March 31, 2021 were the same as those used at December 31, 2020. Cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. The Company’s revolving line of credit has a recorded value that approximates its fair value since its variable interest rate is tied to current market rates and the applicable margins represent market rates. Commodity derivative instruments consist of fixed-price swaps and basis swap contracts for natural gas. The Company’s derivative contracts are valued based on an income approach. The model considers various assumptions, such as quoted forward prices for commodities, time value and volatility factors. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace, and are therefore designated as Level 2 within the valuation hierarchy. The Company utilizes its counterparties’ valuations to assess the reasonableness of its own valuations.

Basis of Preparation (Policies)

Basis of Preparation (Policies)	3 Months Ended
	Mar. 31, 2021
Basis of Preparation
Interim Financial Statements	Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the appropriate rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. All adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented have been included. The interim financial information and notes hereto should be read in conjunction with the Company’s consolidated financial statements as of and for the year ended December 31, 2020. The results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year.
Principles of Consolidation	Principles of Consolidation The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Epsilon Energy USA, Inc. and its wholly owned subsidiaries, Epsilon Midstream, LLC, Dewey Energy GP, LLC, Dewey Energy Holdings, LLC, Epsilon Operating, LLC, and Altolisa Holdings, LLC. With regard to the gathering system, in which Epsilon owns an undivided interest in the asset, proportionate consolidation accounting is used. All inter-company transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates pertain to proved natural gas and oil reserves and related cash flow estimates used in impairment tests of natural gas and oil, and gathering system properties, asset retirement obligations, accrued natural gas and oil revenues and operating expenses, accrued gathering system revenues and operating expenses, as well as the valuation of commodity derivative instruments. Actual results could differ from those estimates.
COVID-19	COVID-19 Management is actively monitoring the impact of the COVID-19 pandemic on the Company's financial condition, liquidity, operations, suppliers, industry and ability to obtain financing in future reporting periods. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is currently not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for the future.
Recently Issued Accounting Standards	Recently Issued Accounting Standards The Company, an emerging growth company (“EGC”), has elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies. In March 2020, the FASB issued ASU No. 2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”). This was followed by ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), issued in January 2021. The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates (“IBORs”) to alternative reference rates. ASC 848 applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to be discontinued because of reference rate reform. The guidance may be applied upon issuance of ASC 848 through December 31, 2022. We do not expect a material impact from the adoption of this ASU. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies other areas of the topic to clarify the application of GAAP. Certain amendments within the standard are required to be applied on a retrospective basis and others on a prospective basis. Effective January 1, 2021, we adopted this ASU with no material impact on the Company’s consolidated financial position or results of operations. In June 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, and must be applied retrospectively. Early adoption is permitted. Epsilon will adopt ASU 2016-13 as of January 1, 2023. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (ASU 2016-02), which significantly changes accounting for leases by requiring that lessees recognize a right of use asset and a related lease liability representing the obligation to make lease payments, for all lease transactions with terms greater than one year. Additional disclosures about an entity’s lease transactions will also be required. ASU 2016-02 defines a lease as “a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.” ASU 2016-02 is effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. In July, the FASB voted to extend the adoption date by one year for private and non-profit companies, and thus emerging growth companies as well. As an emerging growth company, Epsilon plans to defer adoption of ASU 2016-02 until the fiscal year beginning after December 15, 2021. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented in the financial statements using a modified retrospective approach. Epsilon is currently assessing the expected impact on our consolidated financial statements and will adopt for the year beginning in 2022.

Cash, Cash Equivalents and Rest

Cash, Cash Equivalents and Restricted Cash (Tables)	3 Months Ended
	Mar. 31, 2021
Summary of Significant Accounting Policies
Schedule of cash, cash equivalents and restricted cash	March 31, March 31, 2021 2020 Cash and cash equivalents $ 17,851,587 $ 15,410,599 Restricted cash included in other assets 566,540 562,647 Cash, cash equivalents and restricted cash in the statement of cash flows $ 18,418,127 $ 15,973,246

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2021
Property and Equipment
Schedule of property and equipment	March 31, December 31, 2021 2020 Property and equipment: Oil and gas properties, successful efforts method Proved properties $ 134,831,162 $ 133,902,723 Unproved properties 21,510,765 21,552,063 Accumulated depletion, depreciation, amortization and impairment (99,469,225) (98,200,111) Total oil and gas properties, net 56,872,702 57,254,675 Gathering system 42,215,928 42,202,644 Accumulated depletion, depreciation, amortization and impairment (32,480,738) (32,101,624) Total gathering system, net 9,735,190 10,101,020 Land 637,764 637,764 Buildings and other property and equipment, net 335,455 338,419 Total property and equipment, net $ 67,581,111 $ 68,331,878

Revolving Line of Credit (Table

Revolving Line of Credit (Tables)	3 Months Ended
	Mar. 31, 2021
Revolving Line of Credit
Schedule of revolving line of credit	Balance at Balance at March 31, December 31, Current Interest Rate 2021 2020 Borrowing Base 3 mo. Revolving line of credit $ — $ — $ 18,000,000 LIBOR + 3.25% (1) (1) At March 31, 2021, the weighted average interest rate was 3.50%.

Shareholders Equity (Tables)

Shareholders Equity (Tables)	3 Months Ended
	Mar. 31, 2021
Shareholders' Equity
Schedule of purchases of equity Shares	Maximum number of shares that may yet be Total number Average price purchased under of shares paid per the plans or purchased share programs Beginning of normal-course issuer bid, January 1, 2021 1,193,000 January 2021 (1) — $ — February 2021 (1) 62,400 $ 4.07 March 2021 (1) 60,800 $ 3.92 Total as of March 31, 2021 123,200 $ 4.00 1,069,800 (1) Epsilon repurchased these shares under its share repurchase program that commenced on January 1, 2021, as described above.
Schedule of restricted stock activity	Three months ended Year ended March 31, 2021 December 31, 2020 Weighted Weighted Number of Average Number of Average Shares Remaining Life Shares Remaining Life Outstanding (years) Outstanding (years) Balance non-vested Restricted Stock at beginning of period 290,070 1.60 346,499 1.67 Granted — — 111,900 3.00 Vested — — (168,329) — Forfeited (22,000) 1.68 — — Balance non-vested Restricted Stock at end of period 268,070 1.34 290,070 1.60
Schedule of assumptions used to calculate grant date fair value	March 31, December 31, 2021 2020 Expected life (in years) — 0.33 - 3 Expected volatility — 42.1% - 53.6% Risk-free rate of return — 0.10% - 0.17% Weighted average grant-date fair value per PSU $ — $ 4.10
Schedule of PSU activity	Three months ended Year ended March 31, 2021 December 31, 2020 Weighted Weighted Number of Average Number of Average Shares Remaining Life Shares Remaining Life Outstanding (years) Outstanding (years) Balance non-vested PSUs at beginning of period 193,167 1.60 — — Granted — — 214,000 1.61 Vested — — (20,833) — Balance non-vested PSUs at end of period 193,167 1.35 193,167 1.60
Summary of stock option activity	Three months ended Year ended March 31, 2021 December 31, 2020 Weighted Weighted Number of Average Number of Average Options Exercise Options Exercise Exercise price in US$ Outstanding Price (1) Outstanding Price (1) Balance at period-end 245,000 $ 5.27 245,000 $ 5.27 Exercisable at period-end 245,000 $ 5.27 245,000 $ 5.27 (1) Exercise price has been converted to US$ using the rate of Cdn$1.33 to US$1, the rate on March 15, 2019, the date Epsilon Energy, Ltd was delisted from the TSX.

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
	Mar. 31, 2021
Revenue Recognition
Summary of revenue	Three Months Ended March 31, 2021 2020 Operating revenue Natural gas $ 6,332,099 $ 4,019,764 Natural gas liquids 45,621 31,658 Oil and condensate 61,435 59,722 Gathering and compression fees 2,002,157 2,316,702 Total operating revenue $ 8,441,312 $ 6,427,846
Schedule of accounts receivable net of allowance for doubtful accounts	March 31, December 31, 2021 2020 Accounts receivable Natural gas and oil sales $ 1,860,300 $ 2,107,910 Joint interest billing 87,713 69,495 Gathering and compression fees 1,446,478 1,736,043 Other 68,057 3,840 Total accounts receivable $ 3,462,548 $ 3,917,288

Income Taxes (Tables)

Income Taxes (Tables)	3 Months Ended
	Mar. 31, 2021
Income Taxes
Schedule of current and deferred tax expense (benefit)	Three months ended March 31, 2021 2020 Current: Federal $ 155,370 $ 297,863 State 183,844 96,896 Total current income tax expense 339,214 394,759 Deferred: Federal 663,202 (131,081) State 142,157 61,603 Total deferred tax expense (benefit) 805,359 (69,478) Income tax expense $ 1,144,573 $ 325,281

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies
Schedule of future minimum lease commitments	Year ended December 31, Payments 2021 $ 77,925 2022 106,797 2023 36,013 $ 220,735

Net Income Per Share (Tables)

Net Income Per Share (Tables)	3 Months Ended
	Mar. 31, 2021
Net Income Per Share
Schedule of net income used in the calculation of basic and diluted net income per share	Three months ended March 31, 2021 2020 Net income available to shareholders $ 2,735,567 $ 310,299
Schedule of weighted-average shares used in calculation of net income per share	Three months ended March 31, 2021 2020 Basic weighted-average number of shares outstanding 23,947,222 26,565,084 Unvested time-based restricted shares 29,034 — Unvested performance-based restricted shares 53,848 — Basic and diluted weighted average shares outstanding 24,030,104 26,565,084
Schedule of anti-dilutive shares	Three months ended March 31, 2021 2020 Anti-dilutive options 245,000 245,000 Anti-dilutive unvested time-based restricted shares 239,036 346,499 Anti-dilutive unvested performance-based restricted shares 139,319 — Total Anti-dilutive shares 623,355 591,499

Operating Segments (Tables)

Operating Segments (Tables)	3 Months Ended
	Mar. 31, 2021
Operating Segments.
Schedule of segment financial information	Upstream Gas Gathering Corporate Elimination Consolidated As of and for the three months ended March 31, 2021 Operating revenue Natural gas $ 6,332,099 $ — $ — $ — $ 6,332,099 Natural gas liquids 45,621 — — — 45,621 Oil and condensate 61,435 — — — 61,435 Gathering and compression fees — 2,386,588 — (384,431) 2,002,157 Total operating revenue (1) $ 6,439,155 $ 2,386,588 $ — $ (384,431) $ 8,441,312 Net earnings (loss) for the period $ 3,531,142 $ 1,430,636 $ (2,226,211) (3) $ — $ 2,735,567 Operating costs 1,594,188 575,378 — (384,431) 1,785,135 Development geological and geophysical expenses 11,539 — — — 11,539 Depletion, deprec., amortization and accretion 1,302,286 380,574 — — 1,682,860 Impairment — — — — — Segment assets $ 76,473,690 $ 13,674,102 $ 54,567 $ — $ 90,202,359 Capital expenditures (2) 914,440 13,284 — — 927,724 Proved properties (net) 35,361,937 — — — 35,361,937 Unproved properties (net) 21,510,765 — — — 21,510,765 Gathering system (net) — 9,735,190 — — 9,735,190 Other property and equipment (net) 973,219 — — — 973,219 As of and for the three months ended March 31, 2020 Operating revenue Natural gas $ 4,019,764 $ — $ — $ — $ 4,019,764 Natural gas liquids 31,658 — — — 31,658 Oil and condensate 59,722 — — — 59,722 Gathering and compression fees — 2,736,138 — (419,436) 2,316,702 Total operating revenue (1) $ 4,111,144 $ 2,736,138 $ — $ (419,436) $ 6,427,846 Net earnings for the period $ (1,580,897) $ 1,686,193 $ 205,003 (3) $ — $ 310,299 Operating costs 2,047,767 517,214 — (419,436) 2,145,545 Development geological and geophysical expenses 2,629 — — — 2,629 Depletion, deprec., amortization and accretion 1,881,645 532,731 — — 2,414,376 Gain on sale of property 1,760,000 — — — 1,760,000 Segment assets $ 80,725,283 $ 14,907,581 $ 71,626 $ — $ 95,704,490 Capital expenditures (2) 1,349,514 80,446 — — 1,429,960 Proved properties (net) 39,122,341 — — — 39,122,341 Unproved properties (net) 21,109,490 — — — 21,109,490 Gathering system (net) — 11,032,630 — — 11,032,630 Other property and equipment (net) 727,616 — — — 727,616 (1) Segment operating revenue represents revenues generated from the operations of the segment. Inter-segment sales during the three months ended March 31, 2021 and 2020 have been eliminated upon consolidation. For the three months ended March 31, 2021, Epsilon sold natural gas to 18 unique customers. The one customer over 10% comprised 54% of total revenue. For the three months ended March 31, 2020, Epsilon sold natural gas to 23 unique customers. The four customers over 10% comprised 27%, 22%, 16% and 13% of total revenue. (2) Capital expenditures for Upstream segment consist primarily of the acquisition of properties, and the drilling and completing of wells while Gas Gathering consists of expenditures relating to the expansion and completion of the gathering and compression facility. Segment reporting for net earnings for the period does not include non-monetary compensation, general and administrative expense, interest income, interest expense, both gains and (losses) on derivative contracts, or income tax amounts as they are managed on a group basis and are instead included in the corporate column for reconciliation purposes.

Commodity Risk Management Act_2

Commodity Risk Management Activities (Tables)	3 Months Ended
	Mar. 31, 2021
Commodity Risk Management Activities
Schedule of natural gas price and basis swap contracts	Fair Value Volume Ceiling Floor Basis March 31, Derivative Type (MMbtu) Price Price Differential 2021 2021 Basis swap 305,000 $ (1.10) (27,181) Two-way costless collar 2,755,000 $ 3.27 $ 2.78 411,801 2022 Two-way costless collar 900,000 $ 3.34 $ 2.80 16,521 $ 401,141
Schedule of fair value of derivatives	Fair Value of Derivative March 31, December 31, 2021 2020 Current Basis swap $ — $ — Two-way costless collar 894,240 — $ 894,240 $ — Fair Value of Derivative March 31, December 31, 2021 2020 Current Basis swap $ (27,181) $ — Two-way costless collar (465,918) — $ (493,099) $ — Net Fair Value of Derivatives $ 401,141 $ —
Schedule of fair value of derivatives rollforward	Three months ended March 31, 2021 2020 Fair value of asset (liability), beginning of the period $ — $ 1,999,802 Gains (losses) on derivative contracts included in earnings 465,341 1,721,018 Settlement of commodity derivative contracts (64,200) (1,345,942) Fair value of asset, end of the period $ 401,141 $ 2,374,878

Asset Retirement Obligations (T

Asset Retirement Obligations (Tables)	3 Months Ended
	Mar. 31, 2021
Asset Retirement Obligations
Schedule of activity in asset retirement obligations	Three Months Ended Year ended March 31, December 31, 2021 2020 Balance beginning of period $ 3,150,243 $ 2,909,855 Liabilities from drilling of new wells 6,908 5,826 Wells plugged and abandoned (31,945) (850) Change in estimates — 32,668 Accretion 25,923 202,744 Balance end of period $ 3,151,129 $ 3,150,243

Cash, Cash Equivalents, and R_2

Cash, Cash Equivalents, and Restricted Cash - Reconciliation of Cash (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Summary of Significant Accounting Policies
Cash and cash equivalents	$ 17,851,587	$ 13,270,913	$ 15,410,599
Restricted cash included in other assets	566,540		562,647
Cash, cash equivalents and restricted cash in the statement of cash flows	$ 18,418,127	$ 13,836,771	$ 15,973,246	$ 14,613,711

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Oil and gas properties, successful efforts method
Proved properties	$ 134,831,162		$ 133,902,723
Unproved properties	21,510,765	$ 21,109,490	21,552,063
Accumulated depletion, depreciation, amortization and impairment	(99,469,225)		(98,200,111)
Total oil and gas properties, net	56,872,702		57,254,675
Gathering system	42,215,928		42,202,644
Accumulated depletion, depreciation, amortization and impairment	(32,480,738)		(32,101,624)
Total gathering system, net	9,735,190	11,032,630	10,101,020
Land	637,764		637,764
Buildings and other property and equipment, net	335,455		338,419
Total property and equipment, net	67,581,111		$ 68,331,878
Impairment of oil and gas properties	$ 0	$ 1,760,000

Revolving Line of Credit (Detai

Revolving Line of Credit (Details) - Revolving Credit Facility	Apr. 06, 2021USD ($)	Feb. 11, 2020USD ($)	Jul. 30, 2013USD ($)	Mar. 31, 2021USD ($)
Revolving Credit Facility
Debt term			3 years
Total commitments			$ 100,000,000
Current borrowing base	$ 18,000,000	$ 23,000,000		$ 18,000,000
Leverage ratio				3
Minimum utilization percentage		25.00%
Hedging percentage on production for succeeding six months		50.00%
Required Reserve percentage on proved oil and gas properties			90.00%
Minimum
Revolving Credit Facility
Margin added to variable interest rate	3.25%	2.75%
Leverage ratio	3	3.5
Hedging percentage on production for first twelve months		75.00%
Maximum
Revolving Credit Facility
Margin added to variable interest rate	4.25%	3.75%
Reserve percentage on borrowing base			150.00%
LIBOR
Revolving Credit Facility
Margin added to variable interest rate				3.25%
LIBOR | Minimum
Revolving Credit Facility
Margin added to variable interest rate	0.25%

Revolving Line of Credit - Rati

Revolving Line of Credit - Ratios (Details) - Revolving Credit Facility	3 Months Ended
	Mar. 31, 2021USD ($)	Apr. 06, 2021USD ($)	Feb. 11, 2020USD ($)
Revolving Credit Facility
Interest coverage ratio	3
Current ratio	1
Leverage ratio	3
Commitment fee assessed quarterly on the daily average unused commitments	0.50%
Current borrowing base	$ 18,000,000	$ 18,000,000	$ 23,000,000
Weighted average interest rate (as a percent)	3.50%
LIBOR
Revolving Credit Facility
Margin added to variable interest rate	3.25%

Shareholders Equity - Share Cap

Shareholders Equity - Share Capital (Details) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Components of share capital:
Common Stock, No Par Value	$ 0	$ 0
Preferred Stock, No Par Value	$ 0

Shareholders Equity - Purchases

Shareholders Equity - Purchases of Equity Shares (Details) - USD ($) $ / shares in Units, $ in Millions	Jan. 01, 2021	May 20, 2019	Mar. 31, 2021	Feb. 28, 2021	Mar. 31, 2021	Dec. 31, 2020
Shareholders' Equity
Authorized shares to be repurchased	1,193,000	1,367,762	1,069,800		1,069,800	1,193,000
Shares repurchased as a percentage of outstanding common shares	5.00%	5.00%
Authorized amount repurchase		$ 5
Purchased shares			60,800	62,400	123,200
Average price paid per share			$ 3.92	$ 4.07	$ 4

Shareholders Equity - Equity In

Shareholders Equity - Equity Incentive Plan (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to be issued		2,000,000
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	0	214,000
Time-based restricted shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		111,900
Equity Incentive 2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for issuance		1,674,100

Shareholders Equity - Restricte

Shareholders Equity - Restricted and Performance Stock Units (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Restricted stock awards
Share Compensation Plan
Grant date fair value (in dollars per share)			$ 3.71
Vesting period			3 years
Stock based compensation expense	$ 137,206	$ 172,052
Compensation cost not yet recognized	$ 850,929		$ 1,068,819
Weighted average period for recognition	1 year 1 month 6 days		1 year 2 months 12 days
Number outstanding
Balance non-vested Restricted Stock at beginning of period (in shares)	290,070	346,499	346,499
Granted (in shares)	0		111,900
Vested (in shares)			(168,329)
Forfeited (in shares)	(22,000)
Balance non-vested Restricted Stock at end of period (in shares)	268,070		290,070	346,499
Weighted Average Remaining Life
Granted (in years)			3 years
Forfeited (in years)	1 year 8 months 5 days
Balance non-vested Restricted Stock at end of period (in years)	1 year 4 months 2 days		1 year 7 months 6 days	1 year 8 months 1 day
Performance stock units
Share Compensation Plan
Vesting period			3 years
Stock based compensation expense	$ 65,293	$ 0
Compensation cost not yet recognized	$ 503,293	$ 0
Weighted average period for recognition	1 year 3 months 7 days	0 years
Number outstanding
Balance non-vested Restricted Stock at beginning of period (in shares)	193,167
Granted (in shares)	0		214,000
Vested (in shares)			(20,833)
Balance non-vested Restricted Stock at end of period (in shares)	193,167		193,167
Weighted Average Remaining Life
Granted (in years)			1 year 7 months 10 days
Balance non-vested Restricted Stock at end of period (in years)	1 year 4 months 6 days		1 year 7 months 6 days
Performance stock units | TSR performance
Share Compensation Plan
Grant date fair value (in dollars per share)			$ 4.10
Vesting percentage	50.00%		50.00%
Performance stock units | CFDAS
Share Compensation Plan
Grant date fair value (in dollars per share)			$ 3.41
Vesting percentage	50.00%		50.00%
Maximum | Performance stock units
Share Compensation Plan
Percentage of number of shares issued on target award amounts	200.00%
Minimum | Performance stock units
Share Compensation Plan
Percentage of number of shares issued on target award amounts	0.00%

Shareholders Equity - Assumptio

Shareholders Equity - Assumption (Details) - Performance stock units - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)	0 years
TSR performance
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant-date fair value per PSU		$ 4.10
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)		3 months 29 days
Expected volatility		42.10%
Risk-free rate of return		0.10%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)		3 years
Expected volatility		53.60%
Risk-free rate of return		0.17%

Shareholders Equity - Performan

Shareholders Equity - Performance Stock Units (Details) - Performance stock units - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Share Compensation Plan
Stock based compensation expense	$ 65,293	$ 0
Compensation cost not yet recognized	$ 503,293	$ 0
Weighted average period for recognition	1 year 3 months 7 days	0 years
Number outstanding
Balance non-vested Restricted Stock at beginning of period (in shares)	193,167
Granted (in shares)	0		214,000
Vested (in shares)			(20,833)
Balance non-vested Restricted Stock at end of period (in shares)	193,167		193,167
Weighted Average Remaining Life
Granted (in years)			1 year 7 months 10 days
Balance non-vested Restricted Stock at end of period (in years)	1 year 4 months 6 days		1 year 7 months 6 days

Shareholders Equity - Stock Opt

Shareholders Equity - Stock Option Activity (Details) - Stock options	3 Months Ended
	Mar. 31, 2021$ / sharesshares	Dec. 31, 2020$ / sharesshares	Mar. 15, 2019$ / $
Share Compensation Plan
Average share price, converted to US$ using rate of Cdn | $ / $			1.33
Number of Options Outstanding
Balance at period-end (in shares) | shares	245,000	245,000
Exercisable at period-end (in shares) | shares	245,000	245,000
Weighted average exercise price
Balance at period-end (in dollars per share) | $ / shares	$ 5.27	$ 5.27
Exercisable at period-end (in dollars per share) | $ / shares	$ 5.27	$ 5.27
Additional disclosures
Weighted average expected remaining term	2 years 2 months 12 days

Shareholders Equity - Stock O_2

Shareholders Equity - Stock Option Activity, Narrative (Details) - Stock options - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Share Compensation Plan
Unrecognized stock based compensation to be recognized over a period	$ 0		$ 0
Aggregate intrinsic value of options outstanding	0		$ 0
Stock based compensation expense	$ 0	$ 1,867
Granted (in shares)	0		0

Revenue Recognition - Summary o

Revenue Recognition - Summary of revenue (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue recognition
Total operating revenue	$ 8,441,312	$ 6,427,846
Natural gas
Revenue recognition
Total operating revenue	6,332,099	4,019,764
Natural gas liquids
Revenue recognition
Total operating revenue	45,621	31,658
Oil and condensate
Revenue recognition
Total operating revenue	61,435	59,722
Gathering and compression fees
Revenue recognition
Total operating revenue	$ 2,002,157	$ 2,316,702

Revenue Recognition - Additiona

Revenue Recognition - Additional Information (Details)	3 Months Ended
	Mar. 31, 2021
Gas, oil, NGLs and condensate revenue
Revenue recognition
Period settlement statement received	30 days
Gathering and compression fees | Auburn Gas Gathering System
Revenue recognition
Period settlement statement received	2 months

Revenue Recognition - Accounts

Revenue Recognition - Accounts receivable (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Accounts receivable	$ 3,462,548		$ 3,917,288
Provision for doubtful accounts	0	$ 0
Natural gas and oil sales
Disaggregation of Revenue [Line Items]
Accounts receivable	1,860,300		2,107,910
Joint interest billing
Disaggregation of Revenue [Line Items]
Accounts receivable	87,713		69,495
Gathering and compression fees
Disaggregation of Revenue [Line Items]
Accounts receivable	1,446,478		1,736,043
Other
Disaggregation of Revenue [Line Items]
Accounts receivable	$ 68,057		$ 3,840

Income Taxes - Current and Defe

Income Taxes - Current and Deferred Tax Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Current:
Federal	$ 155,370	$ 297,863
State	183,844	96,896
Total current income tax expense	339,214	394,759
Deferred:
Federal	663,202	(131,081)
State	142,157	61,603
Total deferred tax expense (benefit)	805,359	(69,478)
Income tax expense	$ 1,144,573	$ 325,281

Commitments and Contingencies_2

Commitments and Contingencies (Details)	Mar. 31, 2021USD ($)
Future minimum lease commitments
2021	$ 77,925
2022	106,797
2023	36,013
Total future minimum lease commitments	220,735
Commitments for capital expenditures	$ 1,490,000

Net Income Per Share (Details)

Net Income Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Net income available to shareholders	$ 2,735,567	$ 310,299
Weighted average number of shares - basic and diluted
Basic weighted-average number of shares outstanding	23,947,222	26,565,084
Basic and diluted weighted average shares outstanding	24,030,104	26,565,084
Total Anti-dilutive shares	623,355	591,499
Stock options
Weighted average number of shares - basic and diluted
Total Anti-dilutive shares	245,000	245,000
Time-based restricted shares
Weighted average number of shares - basic and diluted
Incremental common shares	29,034
Total Anti-dilutive shares	239,036	346,499
Performance stock units
Weighted average number of shares - basic and diluted
Incremental common shares	53,848
Total Anti-dilutive shares	139,319

Operating Segments - Segments (

Operating Segments - Segments (Details)	3 Months Ended
	Mar. 31, 2021USD ($)segment	Mar. 31, 2020USD ($)	Dec. 31, 2020USD ($)
Segment information
Total operating revenue	$ 8,441,312	$ 6,427,846
Net earnings (loss) for the period	2,735,567	310,299
Operating costs	1,785,135	2,145,545
Development geological and geophysical expenses	11,539	2,629
Depletion, depreciation, amortization, and accretion	1,682,860	2,414,376
Gain on sale of property		1,760,000
Impairment of oil and gas properties	0	1,760,000
Segment assets	90,202,359	95,704,490
Capital expenditures	927,724	1,429,960
Proved properties	35,361,937	39,122,341
Unproved properties	21,510,765	21,109,490	$ 21,552,063
Gathering system	9,735,190	11,032,630	$ 10,101,020
Other property and equipment	973,219	727,616
Corporate
Segment information
Net earnings (loss) for the period	(2,226,211)	205,003
Segment assets	54,567	71,626
Elimination
Segment information
Total operating revenue	(384,431)	(419,436)
Operating costs	(384,431)	(419,436)
Natural gas
Segment information
Total operating revenue	6,332,099	4,019,764
Natural gas liquids
Segment information
Total operating revenue	45,621	31,658
Oil and condensate
Segment information
Total operating revenue	61,435	59,722
Gathering and compression fees
Segment information
Total operating revenue	2,002,157	2,316,702
Gathering and compression fees | Elimination
Segment information
Total operating revenue	(384,431)	(419,436)
Upstream | Operating Segments
Segment information
Total operating revenue	6,439,155	4,111,144
Net earnings (loss) for the period	3,531,142	(1,580,897)
Operating costs	1,594,188	2,047,767
Development geological and geophysical expenses	11,539	2,629
Depletion, depreciation, amortization, and accretion	1,302,286	1,881,645
Gain on sale of property		1,760,000
Segment assets	76,473,690	80,725,283
Capital expenditures	914,440	1,349,514
Proved properties	35,361,937	39,122,341
Unproved properties	21,510,765	21,109,490
Other property and equipment	973,219	727,616
Upstream | Natural gas | Operating Segments
Segment information
Total operating revenue	6,332,099	4,019,764
Upstream | Natural gas liquids | Operating Segments
Segment information
Total operating revenue	45,621	31,658
Upstream | Oil and condensate | Operating Segments
Segment information
Total operating revenue	$ 61,435	59,722
Gas Gathering | Operating Segments
Operating Segments
Number of companies partnered to operate natural gas gathering system | segment	2
Segment information
Total operating revenue	$ 2,386,588	2,736,138
Net earnings (loss) for the period	1,430,636	1,686,193
Operating costs	575,378	517,214
Depletion, depreciation, amortization, and accretion	380,574	532,731
Segment assets	13,674,102	14,907,581
Capital expenditures	13,284	80,446
Gathering system	9,735,190	11,032,630
Gas Gathering | Gathering and compression fees | Operating Segments
Segment information
Total operating revenue	$ 2,386,588	$ 2,736,138

Operating Segments - Customers

Operating Segments - Customers (Details) - customer	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Concentration risk
Number of customers	18	23
Customer Concentration risk
Concentration risk
Number of customers	1	4
Threshold concentration risk for reporting (as a percent)	10.00%	10.00%
Total Revenue | Customer Concentration risk | Customer One
Concentration risk
Concentration risk (as a percent)	54.00%	27.00%
Total Revenue | Customer Concentration risk | Customer Two
Concentration risk
Concentration risk (as a percent)		22.00%
Total Revenue | Customer Concentration risk | Customer Three
Concentration risk
Concentration risk (as a percent)		16.00%
Total Revenue | Customer Concentration risk | Customer Four
Concentration risk
Concentration risk (as a percent)		13.00%

Commodity Risk Management Act_3

Commodity Risk Management Activities - Commodity Price Risks (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Commodity Risk Management Activities
Recognized gains on financial commodity derivative contracts	$ 465,341	$ 1,721,018
Cash received on settlements of contracts	$ 64,200	$ 1,345,942

Commodity Risk Management Act_4

Commodity Risk Management Activities - Commodity Derivative Contracts (Details)	3 Months Ended
	Mar. 31, 2021USD ($)MMBTU$ / MMBTU
Risk Management Activities
Fair Value | $	$ 401,141
2021 Contracts | Basis swap
Risk Management Activities
Volume (Mmbtu) | MMBTU	305,000
Basis Differential	(1.10)
Fair Value | $	$ (27,181)
2021 Contracts | Two-way costless collar
Risk Management Activities
Volume (Mmbtu) | MMBTU	2,755,000
Ceiling Price	3.27
Floor Price	2.78
Fair Value | $	$ 411,801
2022 Contracts | Two-way costless collar
Risk Management Activities
Volume (Mmbtu) | MMBTU	900,000
Ceiling Price	3.34
Floor Price	2.80
Fair Value | $	$ 16,521

Commodity Risk Management Act_5

Commodity Risk Management Activities - Fair Value of Derivative Instruments (Details)	Mar. 31, 2021USD ($)DerivativeInstrument
Risk Management Activities
Number of credit risk derivatives held | DerivativeInstrument	0
Fair Value of Derivative Assets	$ 894,240
Fair Value of Derivative Liabilities	(493,099)
Net Fair Value of Derivatives	401,141
Basis swap
Risk Management Activities
Fair Value of Derivative Liabilities	(27,181)
Two-way costless collar
Risk Management Activities
Fair Value of Derivative Assets	894,240
Fair Value of Derivative Liabilities	$ (465,918)

Commodity Risk Management Act_6

Commodity Risk Management Activities - Fair value of asset (liability) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Commodity Risk Management Activities
Fair value of asset (liability), beginning of the period		$ 1,999,802
Gains (losses) on derivative contracts included in earnings	$ 465,341	1,721,018
Settlement of commodity derivative contracts	(64,200)	(1,345,942)
Fair value of asset, end of the period	$ 401,141	$ 2,374,878

Asset Retirement Obligations (D

Asset Retirement Obligations (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Reconciliation of provision for asset retirement obligations
Balance beginning of period	$ 3,150,243	$ 2,909,855
Liabilities from drilling of new wells	6,908	5,826
Wells plugged and abandoned	(31,945)	(850)
Change in estimates		32,668
Accretion	25,923	202,744
Balance end of period	$ 3,151,129	$ 3,150,243