Epsilon Announces Settlement Agreement With Concerned Shareholders and New Board Composition

CONCORD, ONTARIO–(Marketwired – Jul 12, 2013) –
Epsilon Energy Ltd. (”
Epsilon” or the ”
Company“) (TSX:EPS) today announced that following
discussions with JVL Advisors, LLC and Advisory Research, Inc., the
Company has agreed to support a change in the board of directors of
the Company. Joseph Feldman, Stephen Altbaum, Kurt Portmann, and
Raymond Savoie will resign effective Monday, July 15, 2013 from the
Company’s Board of Directors. John V. Lovoi, Matthew W. Dougherty,
Ryan Roebuck and Adrian Montgomery will be appointed as new
directors of the Company as of the same date. As a result, the
Special Meeting of the Company currently scheduled to be held on
August 20, 2013 will be canceled.

The newly reconstituted Board of Directors effective Monday,
July 15, 2013 will be composed of John V. Lovoi, Matthew W.
Dougherty, Ryan Roebuck, Adrian Montgomery and Ramik Arandjelovic
(the ”
New Board of Directors“).

The Company would like to thank Joseph Feldman, Stephen Altbaum,
Kurt Portmann, and Raymond Savoie for their contribution and
commitment to the Company and its shareholders during their
respective tenures as directors of the Company.

The Company will provide further information after the New Board
of Directors is appointed.

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

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.