Epsilon Energy Ltd. Leases Disclosure
12. Leases
Under ASC 842, Leases, the Company recognized an operating lease related to its corporate office as of December 31, 2025 summarized in the following table:
| December 31, | | December 31, | |||
2025 | 2024 | |||||
Asset | ||||||
Operating lease right-of-use assets, long term | $ | 488,949 | $ | 344,589 | ||
Total operating lease right-of-use assets | $ | 488,949 | $ | 344,589 | ||
Liabilities | ||||||
Operating lease liabilities | $ | 271,494 | $ | 121,135 | ||
Operating lease liabilities, long term | 340,052 | 355,776 | ||||
Total operating lease liabilities | $ | 611,546 | $ | 476,911 | ||
Operating lease costs | $ | 269,910 | $ | 236,044 | ||
Cash paid for amounts included in the measurement of lease liabilities | ||||||
Operating cash flows from operating leases | $ | 316,435 | $ | 214,230 | ||
Weighted average remaining lease term (years) - operating lease | 1.86 | 2.50 | ||||
Weighted average discount rate (annualized) - operating lease | 8.25% | 8.25% | ||||
On March 1, 2023, the Company commenced a new office lease with a 70 month lease term and future lease payments estimated to be approximately $0.85 million. Through its subsidiaries, the Company also leases office space in both Englewood, CO and Wright, WY. Lease expense for operating leases was $0.27 million and $0.24 for the years ended December 31, 2025 and 2024, respectively. This lease expense is presented in other general and administrative expenses in the consolidated statements of operations and comprehensive income.
Future minimum lease payments as of December 31, 2025 are as follows:
Operating Leases | |||
2026 | $ | 334,155 | |
2027 | 282,059 | ||
2028 | 183,963 | ||
Total minimum lease payments | 800,177 | ||
Less: imputed interest | (188,631) | ||
Present value of future minimum lease payments | 611,546 | ||
Less: current obligations under leases | (271,494) | ||
Long-term lease obligations | $ | 340,052 | |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 19, 2025 | |
| 2023 | Mar 21, 2024 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.