Epsilon Energy Ltd. (EPS:TSX) Announces Operational Results for Its Pennsylvania Marcellus Shale Joint Venture and Provides a Status Update on Its Additional Assets

CONCORD, ONTARIO--(Marketwire - Nov. 1, 2011) -

Pennsylvania Marcellus Gas Shale:

Epsilon Energy Ltd. (TSX:EPS) ("Epsilon" or "the Company") today announced that as at Tuesday, November 1, 2011, its Joint Venture with Chesapeake Energy Corporation (NYSE:CHK) had brought online 6 additional gas wells with a total daily production of 41.259 MMCF (7.6 MMCF net to Epsilon). As a result, Epsilon is currently producing at a total net rate of 11.1 MMCF per day out of the North-East Pennsylvania Marcellus project.

With respect to the Joint Venture, there are now:

8 wells producing

9 wells waiting on pipeline

36 wells waiting on fracking

10 wells in various stages in the drilling process

Epsilon expects its year end production to reach 28 MMCFD representing a significant milestone for the Company.

Associated Marcellus Gas Gathering Systems/Pipelines:

As previously reported on August 31st, Epsilon Energy Ltd. ("Epsilon" or "the Company") has completed and signed an Interim Agreement for Gas Gathering Systems in its Marcellus Shale project with partners Chesapeake Energy Corporation, Statoil USA Onshore Properties, Inc and their respective affiliates. This Agreement governs both current and future gathering systems for the project, in which Epsilon holds a 35% Interest. Chesapeake and Statoil hold the remaining 65% Interests.

Historical Gas Gathering System: The Company sold an additional 15% interest in an existing gathering system. Epsilon retains a 35% an interest in this gathering system, down from the 50%, originally anticipated in the farm-out agreement. Epsilon received total proceeds of $6,500,000 from this sale. The sale was made to better align Epsilon's interest in the overall project area and to match the Company's ownership in the larger gathering system currently being developed (below).

New Development JV Pipeline: The new gathering system, jointly owned by Epsilon, Chesapeake and Statoil is currently under construction to transport gas from Susquehanna County and several phases of the project are already operational. The system is estimated to have an ultimate capacity of 400 MMCFPD and will service both the 3-party farm-out area as well as have additional capacity for off system gas being developed nearby. The planned gathering system is a critical component for the development of this project, as well as the greater area and represents a major step forward for future takeaway capacity in the region. Based on the long-life, significant capacity and attractive rates of return on this asset, the Company sees substantial value inherent in it and will closely monitor the best way to realize this value for shareholders.

New York Marcellus Gas Shale:

On June 30^th, 2011 the State of New York announced its intention to lift a previously imposed shale drilling moratorium. Epsilon currently has 15,830 net acres 100% owned and operated in NY State and is encouraged by the recent reported increases in NY land sale prices and the potential significance that Marcellus shale development presents. We feel our experience in developing the Company's Pennsylvania assets will provide considerable assistance in exploiting any opportunity in NY. Large percent of Epsilon's acreage is in the immediate proximity to Millennium pipe line making development of infrastructure very economic.

Saskatchewan JV:

Also announced previously on August 31^st were results from our CEYLON and TORQUAY projects in Saskatchewan. CEYLON is a 13,440 acre block of contiguous acreage in which the Company holds a 50% interest. Spartan Oil Corporation (Spartan) owns the remaining 50% interest and operates the project. A well drilled earlier in the year was completed after delays due to weather and lease sales. The well has averaged approx. 24 bbl/d for the first 85 days. This well produces from an un-stimulated Bakken interval. The Company believes much greater rates can be achieved in the project with horizontal drilling and fracture stimulation. A 3D seismic survey is currently being shot and once processed, will be followed by a horizontal Bakken well prior to year end.

At the nearby TORQUAY project, the company has tested a Midale discovery The well has averaged 211 bbl/d for the first 30 days. This Midale discovery was drilled off a proprietary 3D seismic survey which shows multiple Midale and Bakken locations. Initial indications are that this first well has strong economic viability, but we caution that not all targets will have similar properties. Spartan Oil Corp. is operator and has 50% interest in this well, with Epsilon Energy having the remaining 50%. Epsilon looks forward to accelerating these oil projects in Saskatchewan and is excited about the potential of the area and pleased with our relationship with the operator.

Mississippi:

Further to the press release dated Aug. 12, 2011, Epsilon has completed an evaluation of its horizontal well in Mississippi targeting the Brown Dense Formation. At that time the Company stated its opinion that there is a presence of hydrocarbons but that the formation is too tight to produce in any significant quantities if left unstimulated. Consequently, in order to recover commercial quantities of oil, it is the Company's opinion that the well will need to be stimulated. Other Industry participants have also deemed the formation as prospective, but have reached similar conclusions in terms of having to stimulate production. Given the complexity of such an operation, Epsilon is actively seeking an industry partner to assist with this stimulation and to participate in the development of this asset. Some preliminary meetings have been held with interested parties but no conclusive arrangement has been reached. Epsilon has fulfilled all current financial obligations related to this asset.

Ethiopia:

On May 14, 2009, the Corporation announced that it had signed a Production Sharing Agreement ("PSA") with the Ministry of Mines and Energy (the "Ministry") in Democratic Republic of Ethiopia. The PSA covers an area of 82,500 square kilometres (approximately 20,400,000 acres) in northwest Ethiopia. Terms of the PSA include an initial three-year exploration period that includes a minimum financial commitment of $3,000,000 to drill one exploratory well and to acquire a minimum of 200 kilometres of 2D seismic. In the event the Company makes a commercial discovery, the initial percentage split of profit oil and/or gas will be 80% for Epsilon and 20% for the Ministry. Thus far, the Company has completed $2,200,000 of the original commitment.

The Hosan Field, located approximately 300 kilometres west in Sudan, is the nearest commercial oil and gas field, which reportedly has estimated recoverable gas reserves of approximately 350 BCFE. Other nearby Sudanese oil and gas fields have estimated recoverable oil reserve sizes ranging from 100 to 600 MMBO. The Company's Ethiopian acreage has technical similarities to the Sudan oil and gas fields.

At this point in time, the Company considers this asset as non-core but feels there may be an opportunity to bring in an industry partner/regional operator, with the technical and financial resources to fund and develop the exploitation of this concession.

APPOINTMENT OF COO

Epsilon is pleased to announce the appointment of Ramik Arandjelovic as Chief Operating Officer for the Company effective October 18, 2011. Ramik Arandjelovic will be responsible for the strategic and operational leadership of Epsilon, overseeing corporate operations and engineering related activities. Mr. Arandjelovic has a strong background and experience in both engineering and economics, having received a Bachelor of Applied Science and a Bachelor of Arts in Economics from Queen's University. He has spent considerable time in all facets of upstream and midstream operations, from drilling and completion to production, gathering and marketing. Mr. Arandjelovic has previously worked for Epsilon in the capacity of New York Project Manager, followed by being the Director of Operations.

"I am delighted to announce the appointment of Ramik Arandjelovic as our COO. He brings a unique blend of business management training, consulting and operational experience. We look forward to his strategic and operational contributions to the Company in this new capacity." said Joseph Feldman, Director.

Share Buy Back Program

Previously announced share buy back program has expired on October 31^st 2011. During that time Epsilon has purchased for cancelation a total of 225,000 shares. Epsilon plans to apply for a new buy back program in the New Year.

About Epsilon Energy Ltd.

Epsilon is engaged in the exploration and production of natural gas reserves. The Company also has participating interests and production sharing agreements in other natural gas and oil plays within North America and Africa. Established in 2005, the Company has been a producer of natural gas and oil since 2006. Epsilon's ongoing business strategy involves focused targeting of lower risk natural gas properties within the Marcellus Shale and other parts of Canada and the United States, as well as the high potential oil and gas properties in Africa.

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)