Epsilon Energy Ltd.
TSX : EPS

Epsilon Energy Ltd.

September 05, 2012 09:00 ET

Epsilon Energy Ltd. Announces Normal Course Issuer Bid for Common Shares and Convertible Debentures

CONCORD, ONTARIO--(Marketwire - Sept. 5, 2012) - Epsilon Energy Ltd. ("Epsilon" or the "Corporation") (TSX:EPS), announces that it has received Toronto Stock Exchange ("TSX") approval to a Notice of Intention to commence a normal course issuer bid through the facilities of the TSX, permitting the Corporation to repurchase, for cancellation, up to 2,000,000 of the 49,814,252 common shares that are currently issued and outstanding (the "common share NCIB"). This represents 4.0% of the issued and outstanding common shares. The average daily trading volume for the last six completed calendar months was 85,400 common shares. The number of shares to be purchased in any one day shall not exceed 21,350 common shares (being 25% of the average daily trading volume). The common share NCIB will commence on September 7, 2012, and run until the earlier of the date on which purchases under the bid have been completed and September 6, 2013.

Epsilon also announces that it has received TSX approval to a Notice of Intention to commence a normal course issuer bid through the facilities of the TSX, permitting the Corporation to repurchase, for cancellation, up to $3,960,000 principal amount of the $40,000,000 principal amount 7.75% convertible unsecured subordinated debentures issued on February 28, 2012 ("convertible debentures") that are currently issued and outstanding (the "debenture NCIB"). This represents 10% of the public float of convertible debentures. The average daily trading volume for the last six completed calendar months was $136,000 principle amount. The number of convertible debentures to be purchased in any one day shall not exceed $34,000 principle amount (being 25% of the average daily trading volume). The bid will commence on September 7, 2012, and run until the earlier of the date on which purchases under the bid have been completed and September 6, 2013. By repurchasing convertible debentures, Epsilon will reduce interest payments, resulting in cash savings for the Corporation in the long term.

The common share NCIB and debenture NCIB purchases are to be made through the facilities of the TSX in accordance with its policy statements on normal course issuer bids. The price, which Epsilon will pay for any common shares or convertible debentures, will be the market price at the time of acquisition plus brokerage fees. Purchases may commence on September 7, 2012, and will terminate no later than September 6, 2013.

To the knowledge of the directors and officers of Epsilon, no director or officer, associate of a director or officer of the Corporation, no person acting jointly or in concert with the Corporation nor any person holding 10 percent or more of the common shares has any present intention to sell common shares or convertible debentures during the period of the normal course issuer bid. During the past 12 months, the Corporation previously purchased 100,000 common shares, at an average price cost of $2.66 per share, pursuant to a normal course issuer bid which expired on October 31, 2011.

Epsilon believes that the market price of the common shares does not fully reflect the value of its business and its future business prospects and represents an attractive investment opportunity. Epsilon currently has uncommitted cash available which it can use for these bids and the Corporation is of the view that long-term value for its remaining shareholders will be enhanced.

About Epsilon Energy Ltd.

Epsilon Energy Ltd. is a North American onshore exploration and production company with a current focus in the Marcellus Shale in Pennsylvania, Bakken Shale in Saskatchewan and Lower Smackover in Mississippi.

Special note for news distribution in the United States

The securities described in the news release have not been registered under the United Stated Securities Act of 1933, as amended, (the "1933 Act") or state securities laws. Any holder of these securities, by purchasing such securities, agrees for the benefit of Epsilon Energy Ltd. (the "Corporation") that such securities may not be offered, sold, or otherwise transferred only (A) to the Corporation or its affiliates; (B) outside the United States in accordance with applicable state laws and either (1) Rule 144(as) under the 1933 Act or (2) Rule 144 under the 1933 Act, if applicable.

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