What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-19 compared with 2024-03-21 · 70 added, 74 removed, 421 unchanged (25% of the section changed)

60 unchanged sentences

Lovoi has been the managing partner of JVL Advisors, LLC, a private natural gas and oil investment advisor, since November 2002.

He is a Director of Helix Energy Solutions Group, an operator of offshore natural gas and oil properties and production facilities, the Chairman of Dril-Quip, Inc., a provider of subsea, surface and offshore rig equipment.

He is a Director of Helix Energy Solutions Group, an operator of offshore natural gas and oil properties and production facilities, the Chairman of Innovex International, a leading provider of a broad range of products and services to the global oil and gas industry.

We believe that Mr.

4 unchanged sentences

He is the founder of Westminster Advisors, a CEO advisory services company, and served as its Chief Executive Officer from January 2018.

He was previously employed by Resources Global Professionals, a large business consulting company, from July 2001 to December 2016, and was the Chief Operating Officer the last three years.

He was previously employed by Resources Global Professionals, a large business consulting company, from

July 2001 to December 2016, and was the Chief Operating Officer the last three years.

We believe that Mr.

38 unchanged sentences

Lovoi is the Managing Partner of JVL Advisors, LLC, beneficial owner of 1.29% of our common shares and Chairman of the Board.

The Board held eleven meetings during 2023 and thirteen meetings during 2022.

The Board held ten meetings during 2024 and eleven meetings during 2023.

All Board meetings were conducted with open and candid discussions.

1 unchanged sentence

The members of the Board have the ability to meet on their own and are authorized to retain independent financial, legal and other experts as required whenever, in their opinion, matters come before the Board that require an independent analysis by the members of the Board.

The Board intends to hold at least four regular meetings each year, as well as additional meetings as required.

intends to hold at least four regular meetings each year, as well as additional meetings as required.

The Board has not established any required attendance levels for the Board and committee meetings.

31 unchanged sentences

Board Diversity .

Our Compensation, Nominating and Corporate Governance Committee is responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills and experience required for the board of directors as a whole and its individual members.

for the board of directors as a whole and its individual members.

In evaluating the suitability of individual candidates (both new candidates and current members), the nominating and corporate governance committee, in recommending candidates for election, and the board of directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:

56 unchanged sentences

Jason Stabell’s employment agreement is effective from July 1, 2022 and filed in Form 8-K with the SEC on June 24, 2022.

Henry Clanton’s employment agreement is effective from January 4, 2019 and filed in Form 10-12B with the SEC on December 21, 2018.

Henry Clanton’s employment agreement is effective from January 1, 2024 and filed in Form 8K with the SEC on March 12, 2024.

Andrew Williamson’s employment agreement is effective from July 1, 2022 and filed in Form 8-K with the SEC on June 24, 2022.

3 unchanged sentences

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 following table sets out information concerning the compensation paid to our principal executive officer and our two most highly compensated executive officers other than our principal executive officer, or our named executive officers, for the two years ended December 31, 2024 and 2023.

Compensation amounts in the following table are in U.S.

Non-equity incentive

plan compensation

Name and principal

6 unchanged sentences

2024—Share award of 88,889 common shares valued at $6.21 per share, market price on the grant date of December 31, 2024, which vests evenly over a three year period.

2023—Share award of 108,465 common shares valued at $5.08 per share, market price on the grant date of December 31, 2023, which vests evenly over a three year period.

Share award of 56,180 common shares valued at $5.34 per share, market price on the grant date of July 1, 2023.

1 unchanged sentence

The grant vests evenly over a three year period.

2022—Share award of 97,560 common shares valued at $6.15 per share, market price on the grant date, July 1, 2022.

This grant was awarded up-front on the employment effective date as part of the employment agreement.

The grant vests over a four-year period with 25% vesting on the first anniversary and an additional 6.25% vesting on the first day of each subsequent quarter, with full vesting on July 1, 2026 so long as Mr.

Stabell is still employed.

Henry Clanton was hired as our chief operating officer in January 2018.

1 unchanged sentence

2024—Share award of 26,409 common shares valued at $6.21 per share, market price on the grant date of December 31, 2024, which vest evenly over a three year period.

2022— Share award of 12,825 common shares valued at $6.33 per share, market price on the grant date, April 6, 2022, and a share award of 13,877 common shares valued at $6.63 per share, market price on the grant date, December 31, 2022, both of which vest evenly over a three year period, so long as Mr.

Clanton is still employed.

2023—Share award of 18,111 common shares valued at $5.08 per share, market price on the grant date of December 31, 2023, which vest evenly over a three year period.

Andrew Williamson was hired as our chief financial officer in July 2022.

1 unchanged sentence

2024—Share award of 35,588 valued at $6.21 per share, market price on the grant date of December 31, 2024, which grants vest evenly over a three year period.

2023—Share award of 45,276 valued at $5.08 per share, market price on the grant date of December 31, 2023, which grants vest evenly over a three year period.

Share award of 23,409 common shares valued at $5.34 per share, market price on the grant date of July 1, 2023.

1 unchanged sentence

The grant vests evenly over a three year period.

2022— Share award of 40,650 common shares valued at $6.15 per share, market price on the grant date, July 1, 2022.

This grant was awarded up-front on the employment effective date as part of the employment agreement.

Williamson is still employed.

(4) As a Company policy, Epsilon matches on 401K contributions up to 5%.

Stabell and the Company entered into an Executive Employment Agreement, effective July 1, 2022.

The terms of the Employment Agreement have been adjusted by the Board subsequent to its effective date.

Stabell serves as CEO on an “at-will” basis for an annual base salary of $322,000 during 2024 and $311,000 during 2023.

In addition to his base salary, Mr.

Stabell is eligible to receive an annual incentive cash bonus targeted at $200,000 for achieving performance goals established by the Compensation Committee of the Board in its sole discretion for the then current calendar year.

Additionally, Mr.

Stabell is eligible for equity awards in the discretion of the Compensation Committee, which in 2024 included 88,889 common shares valued at $6.21 per share (market price on the grant date of December 31, 2024), which vests evenly over a three year period, and in 2023 included 108,465 common shares valued at $5.08 per share (market price on the grant date of December 31, 2023), which vests evenly over a three year period.

Stabell is entitled to participate in all applicable Company benefit plans, programs, or arrangements that the Company may offer to its executives generally, from time to time, and as may be amended from time to time.

Clanton and the Company entered into an Executive Employment Agreement, effective January 14, 2024.

The terms of the Employment Agreement have been adjusted by the Board subsequent to its effective date.

Clanton serves as COO on an “at-will” basis for an annual base salary of $282,000 during 2024 and $272,000 during 2023.

In addition to his base salary, Mr.

Clanton is eligible to receive an annual incentive cash bonus targeted at $150,000 for achieving performance goals established by the Compensation Committee of the Board in its sole discretion for the then current calendar year.

Additionally, Mr.

Clanton is eligible for equity awards in the discretion of the Compensation Committee, which in 2024 included 26,409 common shares valued at $6.21 per share (market price on the grant date of December 31, 2024), which vests evenly over a three year period, and in 2023 included 18,811 common shares valued at $5.08 per share (market price on the grant date of December 31, 2023), which vests evenly over a three year period.

Clanton is entitled to participate in all applicable Company benefit plans, programs, or arrangements that the Company may offer to its executives generally, from time to time, and as may be amended from time to time.

Williamson and the Company entered into an Executive Employment Agreement, effective July 1, 2022.

The terms of the Employment Agreement have been adjusted by the Board subsequent to its effective date.

Williamson serves as CFO on an “at-will” basis for an annual base salary of $264,000 during 2024 and $239,000 during 2023.

In addition to his base salary, Mr.

Williamson is eligible to receive an annual incentive cash bonus targeted at $170,000 for achieving performance goals established by the Compensation Committee of the Board in its sole discretion for the then current calendar year.

Additionally, Mr.

Williamson is eligible for equity awards in the discretion of the Compensation Committee, which in 2024 included 35,588 common shares valued at $6.21 per share (market price on the grant date of December 31, 2024), which vests evenly over a three year period, and in 2023 included 45,276 common shares valued at $5.08 per share (market price on the grant date of December 31, 2023), which vests evenly over a three year period.

Williamson is entitled to participate in all applicable Company benefit plans, programs, or arrangements that the Company may offer to its executives generally, from time to time, and as may be amended from time to time.

Description of the 2020 Equity Incentive Plan

4 unchanged sentences

The maximum number common shares that may be issued under the 2020 Plan is 2,000,000.

As of December 31, 2023, 234,834 performance stock units (“PSUs”), and 807,677 time-based restricted shares were outstanding, leaving 957,489 shares available to be granted under the 2020 Plan.

As of December 31, 2024, 234,834 performance stock units (“PSUs”), and 1,323,663 time-based restricted shares have been issued, leaving 676,337 shares available to be granted under the 2020 Plan.

If the shares granted under the 2020 Plan expire or terminate for any reason without having been issued or are forfeited, they again become available for grant under the 2020 Plan.

4 unchanged sentences

Weighted Average

Issued Upon Exercise or

Exercise or Vesting Price

Number of Shares Remaining

Vesting of Outstanding

of Outstanding Options

Issued Upon Exercise

Exercise Price of

Available for Future Issuance

Plan Category

Options or Shares

of Outstanding Options,

Outstanding Options,

Under Equity Compensation Plans

Equity share options under Amended and Restated 2017 Stock Option Plan

Plan Category

Warrants and Rights

(excluding shares in column (a))

Common shares under 2020 Equity Incentive Plan

1 unchanged sentence

Outstanding Share-Based Awards and Option-Based Awards as of December 31, 2024 are as follows:

Option-based Awards

Share-based Awards

Payout Value of

Shares or Units

of Share-Based

Vested Share-

of Shares that

not Paid Out or

Jason Stabell

2 unchanged sentences

The values of incentive plan awards that were vested or earned during the year ended December 31, 2024 are as follows:

Non-Equity Incentive Plan

Option-Based Awards—Value

Share-based awards—Value

Compensation—Value Earned

Vested During the Year

During the Year

Jason Stabell

4 unchanged sentences

The following table contains compensation earned in the year ended December 31, 2024 by our independent directors who are not named executive officers:

Incentive Plan

Tracy Stephens

3 unchanged sentences

As of January 1, 2023, board member compensation is fixed at an annual fee of $55,000 paid in cash quarterly and $65,000 as a share-based award valued at the prior year-end share price (vesting evenly over a three year period).

The chairman of the board receives an additional $40,000 annual cash fee, the chairman of the audit committee receives an

additional $15,000 annual cash fee, and the chairman of the compensation, nominating, and corporate governance committee receives an additional $10,000 annual cash fee.

The chairman of the board receives an additional $40,000 annual cash fee, the chairman of the audit committee receives an additional $15,000 annual cash fee, and the chairman of the compensation, nominating, and corporate governance committee receives an additional $10,000 annual cash fee.

Incentive Plan Awards—Value Vested or Earned During the Year for Directors (Other Than Named Executive Officers)

Outstanding Share-Based Awards and Option-Based Awards as of December 31, 2024 are as follows:

Option-based Awards

Share-based Awards

Payout Value of

Shares or Units

of Share-Based

Vested Share-

of Shares that

not Paid Out or

Tracy Stephens

2 unchanged sentences

The values of incentive plan awards that were vested or earned during the year ended December 31, 2024 are as follows:

Non-Equity Incentive Plan

Option-Based Awards—Value

Share-based awards—Value

Compensation—Value Earned

Vested During the Year

Share-based awards

During the Year

4 unchanged sentences

We maintain directors’ and officers’ liability insurance for the protection of our directors and officers against liability incurred by them in their capacities as our directors and officers.

The policy provides an aggregate limit of liability of $35,000,000 with a retention held by the Company of $1,500,000.

The policy provides an aggregate limit of liability

of $30,000,000 with a retention held by the Company of $1,500,000.

The current annual premium for the Directors’ and Officers’ liability insurance is approximately $350,000 and is re-bid annually.

7 unchanged sentences

5% Stockholders

Palo Duro Energy Fund, LP (1)

Solas Capital Management LLC (1)

Jumana Capital Investments LLC (2)

Named Executive Officers and Directors

9 unchanged sentences

Indicates beneficial ownership of less than 5% of outstanding shares.

(1) The address of Palo Duro Energy Fund, LP, or Palo Duro is 311 S.

Wacker Drive, Suite 1250, Chicago, Illinois 60606.

Matthew Dougherty is the managing partner of Palo Duro and exercises the voting and dispositive power with respect to the common shares held by Palo Duro.

(2) The address of Solas Capital Management, LLC is 405 Park Avenue, New York, NY 10022.

(1) The address of Solas Capital Management, LLC is 1063 Post Rd, 2 nd Floor, Darien, Connecticut 06820.

Pursuant to a Schedule 13G filed with the SEC on February 14, 2024, Solas Capital Management, LLC (“Solas”) and Frederick Tucker Golden share voting and dispositive power with respect to these common shares.

All of the securities reported are owned by advisory clients of Solas, none of which is a beneficial owner of more than 5% as of July 14, 2020.

(2) The address of Jumana Capital Investments LLC is 1717 St.

James Place, Suite 335, Houston, Texas 77056.

Christopher Martin is the managing of Jumana Capital and exercises the voting and dispositive power with respect to the common shares held by Jumana Capital.

Stabell is our chief executive officer and a member of our board of directors.

(4) Includes 30,000 shares issuable upon the exercise (at exercise price of $5.03) of options exercisable within 60 days of March 20, 2024.

Clanton is our chief operating officer.

Williamson is our chief financial officer.

(6) Includes the shares held by JVL.

Lovoi is the chairman of our board of directors.

Lovoi is the chairman of our board of directors and is the managing member of JVL Advisors, LLC.

Stephens is a member of our board of directors.

2 unchanged sentences

Maddox is a member of our board of directors.

(11) Includes 30,000 shares issuable upon the exercise (at exercise price of $5.03) of options exercisable within 60 days of March 20, 2024.

Changes in Control.

15 unchanged sentences

We may advance funds to an Indemnified Person for the costs, charges and expenses of a proceeding;

however, the Indemnified Person shall repay the moneys if such individual does not fulfill the Indemnification Conditions.

Indemnified Person shall repay the moneys if such individual does not fulfill the Indemnification Conditions.

The indemnification may be made in connection with a derivative action only with court approval and only if the Indemnification Conditions are met.

1 unchanged sentence

The ABCA provides that we may not purchase insurance for the benefit of an Indemnified Person against a liability that relates to the person's failure to act honestly and in good faith with a view to our best interests.

Our by-laws provide that, subject to the ABCA, the Indemnified Persons shall be indemnified against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by such person in respect of any civil, criminal or administrative action or proceeding to which such person is made a party by

reason of being or having been a director or officer of the Company or such body corporate, if the Indemnification Conditions are satisfied.

In addition, pursuant to our by-laws, we may indemnify such person in such other circumstances as the ABCA or law permits.

27 unchanged sentences

001-38770, filed on March 18, 2020)

Henry Clanton Offer Letter (incorporated by reference to Exhibit 10.7 of Form 10, File No.

001-38770, filed on December 21, 2018)

Henry Clanton Employment Agreement (incorporated by reference to Exhibit 10.2 of Form 8-K, File No.

001-38770, filed on March 12, 2024)

Anchor Shipper Gas Gathering Agreement, effective January 1, 2024, by and between Appalachia Midstream Services, L.L.C.

and Epsilon Energy USA, Inc., as shipper and producer (incorporated by reference to Exhibit 10.8 of Form 10, File No.

001-38770, filed on December 21, 2018)

Amended and Restated 2017 Stock Option Plan (incorporated by reference to Exhibit 10.9 of Form 10, File No.

001-38770, filed on December 21, 2018)

and Epsilon Energy USA, Inc., as shipper and producer (incorporated by reference to Exhibit 10.1 of Form 8 -K , File No.

001-38770, filed on May 21, 2024)

2020 Equity Incentive Plan effective as of September 1, 2020 (incorporated by reference to Exhibit 10.1 of Form8-K, File No.

001-38770, filed on September 1, 2020)

Share Compensation Plan (incorporated by reference to Exhibit 10.10 of Form 10, File No.

6 unchanged sentences

001-38770, filed on June 24, 2022)

Credit Agreement, dated as of June 28, 2023, by and among Epsilon Energy USA Inc., Frost Bank, as agent and issuing bank, and the lenders from time to time party hereto.

Credit Agreement, dated as of June 28, 2023, by and among Epsilon Energy USA Inc., Frost Bank, as agent and issuing bank, and the lenders from time to time party hereto (incorporated by reference to Exhibit 10.8 of Form 10-K, File No.

001-38770, filed on March 21, 2024)

Participation Agreement with HWN Energy, Ltd dated October 22, 2024 (incorporated by reference to Exhibit 10.1 of Form 8-K, File No.

001-38770, filed on October 28, 2024)

Insider Trading Policy, updated November 13, 2024

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of Form 10, File No.

7 unchanged sentences

Epsilon Energy Ltd.

Clawback Policy

Clawback Policy (incorporated by reference to Exhibit 97.1 of Form 10-K, File No.

001-38770, filed on March 21, 2024)

Summary Reserve Report

27 unchanged sentences

/s/ John Lovoi

Chairman of the Board

Chairman of the Board and Director

March 19, 2025

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures