Epsilon Energy Ltd.: Corporate Update

HOUSTON, TEXAS--(Marketwired - Nov. 20, 2013) - Epsilon Energy Ltd. ("Epsilon" or the "Company") (TSX:EPS) today reported subsequent events following the end of the third quarter through the date of this release:

• Agreement to Sell the Majority of the Canadian Assets under two separate transactions for a combined $3.467 mm (Cdn)
  
  
• Termination of Employment Contract with the President of Epsilon
  
  

Canadian Asset Marketing Update

As previously announced Epsilon initiated a marketing process for the majority of the Canadian assets and received multiple bids prior to the deadline. Epsilon purposefully excluded certain lands referred to as the Boundary Lake Leases from the data room as management believes those to have incremental future market value. After review, Epsilon accepted an offer from a private Canadian oil and gas company for a net consideration of $2.467 mm (Cdn) comprised of $800,000 cash and assumption of $1.667 mm in P&A liability. This transaction is anticipated to close at the end of November but may extend into early December.

During October Epsilon sold a portion of our Boundary Lake leases for $1.0 mm (Cdn) to a large Canadian independent oil and gas company. We are awaiting results from analog leases to determine the value and market potential of our remaining leases in Boundary Lake.

Personnel Update

In its ongoing efforts to reduce G&A, the Board and CEO have decided to eliminate the position of President. As a result, Epsilon has terminated the employment contract of the President which was put in place by the prior Board. Ramik Arandjelovic, Epsilon's President, will transition out of the company effective November 30^th, 2013. We wish to thank Ramik for his contribution and professionalism over the past few months, and extend our best wishes for his future endeavors.

Management Comments

Michael Raleigh, Epsilon's CEO, commented, "The sale of our Canadian Assets largely completes the restructuring initiatives undertaken by the current Management and Board of Epsilon to focus the company's efforts on its core Pennsylvania assets. We now have a significantly streamlined and aligned management team and Board of Directors focused on maximizing the value of our Midstream and Upstream Marcellus Shale assets. Over the last several months, we have identified a number of value enhancing opportunities with respect to both assets. Increased demand for throughput capacity of the Midstream assets have firmed in recent months as area operators seek attractive market outlets for their Marcellus gas production. Based on current expressions of interest from third parties, we anticipate throughput volumes to grow meaningfully through 2014. If these volumes become committed to our system we would need to add compression and expand the current system capacity. In our upstream operations, we expect our operating partners to continue to optimize their completion programs, including the current field activity. We anticipate that this will lead to upgrades of our undeveloped reserves. Further, the company is now in a very solid financial position with ample liquidity to fund its operations going forward."

About Epsilon

Epsilon Energy Ltd. is a North American onshore exploration and production company with a current focus on the Marcellus Shale of Pennsylvania.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", 'may", "will", "project", "should", 'believe", and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements are based on reasonable assumption but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.

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.