Epsilon Energy Announces Year End 2011 Reserves Report

CONCORD, ONTARIO--(Marketwire - Feb. 15, 2012) - Epsilon Energy Ltd. ("Epsilon" or the "Company") (TSX:EPS) is pleased to provide the results of its December 31, 2011 independent reserves report as well as additional operational updates.

Epsilon has recently reached a new production milestone in its Marcellus property in Susquehanna County, Pennsylvania, with net production now exceeding 32 MMCF/D. New multi-well pads continue to come online and material production increases are expected to continue throughout 2012.

The following reserves data is based upon an evaluation performed by the Company's independent reserve engineering firm, Miller and Lents, Ltd. ("MLL"). The evaluation of Epsilon's natural gas and petroleum reserves was conducted pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook reserves definitions.

December 31, 2011 Net Reserves Summary (Forecast Pricing)(1)(2)
Natural Gas Light & Medium Oil Total Gas Equivalent
(MMScf) (Mbbl) (MMScfe) (6:1)
Developed producing 17,734.8 22.9 17,872.2
Developed non-producing 19,232.2 0.0 19,232.2
Undeveloped 35,479.7 0.0 35,479.7
Total Proved 72,446.8 22.9 72,584.1
Probable 16,087.4 139.2 16,922.6
Total Proved plus Probable 88,534.1 162.1 89,506.7
(1) "Net" means the Company's reserves net of royalties
(2) Forecast pricing based on NYMEX strip pricing as at December 31, 2011 then escalated 2%
December 31, 2011 Net Present Value Summary (Forecast Pricing) (1)(2)
Net Present Value Before Income Taxes (M$)
0% 5% 10% 15% 20%
Developed producing 52,702.9 39,446.0 32,587.2 28,359.2 25,443.6
Developed non-producing 56,522.3 42,378.8 35,036.1 30,479.1 27,312.4
Undeveloped 72,995.6 45,653.0 31,657.4 23,125.3 17,318.9
Total Proved 182,220.7 127,477.8 99,280.7 81,963.5 70,074.9
Probable 38,020.0 24,168.7 16,931.2 12,455.7 9,380.5
Total Proved plus Probable 220,240.7 151,646.5 116,211.9 94,419.3 79,455.4
(1) "Net" means the Company's reserves net of royalties
(2) Forecast pricing based on NYMEX strip pricing as at December 31, 2011 then escalated 2%

The net present value of the Company's reserves in its Marcellus property include a deduction for the fees paid to Epsilon's wholly owned subsidiary, Epsilon Midstream, LLC, associated with the Auburn gathering system in which Epsilon holds a 35% working interest. The associated income for Epsilon Midstream, LLC is not accounted for in the MLL report.

The MLL report has 24.3 net drilled and undrilled well locations booked on the Marcellus property. Epsilon believes there are over 16 net additional unbooked horizontal well locations based on current spacing units with the potential for further downspacing by using spacing units consistent with the practice undertaken by other operators in Epsilon's area of operations. The non-producing, undeveloped and probable development locations in the MLL report have been assigned reserves of 4.9 bcf per well.

About Epsilon Energy Ltd.

Epsilon is engaged in the exploration and production of oil and natural gas reserves. Established in 2005, the Company has been a producer of natural gas and oil since 2006. Epsilon's ongoing business strategy involves a focused approach on targeting low risk natural gas properties within the Marcellus Shale in Pennsylvania and New York, oil properties within the Bakken Shale is Saskatchewan as well as additional unconventional reservoirs throughout Canada and the United States.

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 that such securities may not be offered, sold, or otherwise transferred only (A) to the Company 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.

Contact Information:

Epsilon Energy Ltd.
Ramik Arandjelovic
Chief Operating Officer
(281) 670-0002