Document:

Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”) is made and entered into as of June 23, 2022 by and among Epsilon Energy USA Inc.
(the “Company” or “Epsilon”), a wholly owned subsidiary of Epsilon Energy Ltd. (“Parent”),
and Jason Stabell (the “Executive” and, together with the Company, the “Parties”) with reference
to the following:

 

WHEREAS,
the Company desires to employ Executive, and Executive desires to be employed by the Company pursuant to the terms and conditions set
forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual agreements and covenants set forth in this Agreement, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

1.            Employment
and Duties. Executive shall commence employment with the Company on July 1, 2022 or
such other date as mutually agreed to by the parties (the “Effective Date”). Executive shall be employed by the Company
and serve as the Chief Executive Officer for the Company and the Parent. Executive shall report directly to the Parent’s board of
directors (the “Board”). Executive shall have such duties and responsibilities, commensurate with Executive’s
position, as may be reasonably assigned to Executive from time to time by the Board. Executive’s duties under this Agreement shall
further include the following: (i) Executive shall devote Executive’s full business time, best efforts, and attention to rendering
his duties to the Company; and (ii) Executive shall use good faith efforts to perform all services under this Agreement in accordance
with all applicable federal, state, and local laws and regulations and all requirements of all applicable regulatory, self-regulatory,
and administrative bodies, and, Executive shall follow and comply with the rules, regulations, policies, and guidelines adopted from time
to time by the Parent and the Company that apply to executive officers, each as in effect from time to time. Executive’s principal
place of employment shall be in the greater Houston, Texas metropolitan area.

 

2.            At
Will Employment. Executive’s employment with the Company is an at-will employee and
nothing in this Agreement shall be interpreted or construed to alter this status, or to confer upon Executive any right with respect to
continuance of employment by the Company for any specified duration or by any of its affiliates, nor interfere in any way with the right
of the Company to terminate Executive’s employment at any time. This Agreement commences upon the Effective Date and terminates
upon the termination (the “Date of Termination”) of Executive’s employment with the Company and its subsidiaries
(the “Employment Period”). The termination of Executive’s employment shall not affect any of the obligations
that expressly extend beyond continued employment, including the Continuing Obligations set forth in Section 7 of this Agreement.

 

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3.            Compensation
and Benefits. Subject to the provisions of this Agreement, the Company shall pay and provide
the following compensation and other benefits to Executive during the Employment Period as compensation for services rendered hereunder:

 

(a)           Base
Salary. The Company shall pay to Executive an annual salary of $300,000 (the “Base Salary”) in substantially equal
monthly installments in accordance with the Company’s then-current payroll practices as established, and as may be modified, from
time to time. For the avoidance of doubt, the term “Base Salary” as used in this Agreement shall not be deemed to include
any of the additional benefits or amounts outlined in Sections 3(b)-(f) hereof. The Company shall have the right, but not
the obligation, to increase Executive’s Base Salary from time to time.

 

(b)          Annual
Bonus. In addition to the Base Salary, Executive shall be eligible to receive an annual incentive bonus (the “Annual Bonus”)
targeted at $200,000 (the “Target Bonus”) for achieving performance goals established by the Compensation Committee
of the Parent’s Board of Directors (the “Committee”) in its sole discretion (the “Performance Goals”)
for the then current calendar year. It is anticipated that, for any given year, the amount of the Annual Bonus could range from 0% of
Target Bonus (in the event of a failure to achieve any of the Performance Goals), to 100% of Target Bonus (in the event of achievement
of the Performance Goals at target), to between 100% and 150% of Target Bonus (in the event that a substantial number of the Performance
Goals are significantly exceeded). The determination of whether Executive has achieved or significantly exceeded the Performance Goals
shall be in the Committee’s reasonable discretion. The Committee may in its discretion determine that the Performance Goals on balance
as a whole have been met notwithstanding the fact that certain of the Performance Goals may not have been met if other Performance Goals
are exceeded. All Performance Goals may be adjusted in the discretion of the Committee as it deems appropriate (i) to exclude the
effect of extraordinary, unusual and/or non-recurring items, discontinued operations and accounting charges and (ii) to reflect such
other facts as the Board deems appropriate so as to reflect the Performance Goals and not distort the calculation of the Performance Goals.
The Annual Bonus, if earned, shall be paid on or about the March 15th immediately following the performance year, provided
Executive is employed on such date, or any earlier date approved by the Compensation Committee for executive officer bonuses. For the
period from the Effective Date through December 31, 2022, Executive’s Target Bonus shall be prorated to reflect the date on
which Executive commences employment with the Company under this Agreement.

 

(c)           Equity
Award. On the Effective Date, Executive shall receive restricted stock units (“RSUs”) with a grant date value of
$600,000, based on the closing price of the Company’s common stock on such date. The RSUs will be granted under, and subject to,
the terms of the Epsilon Energy Ltd. 2020 Equity Incentive Plan (the “Plan”) and an award agreement issued to Executive
under the Plan. The RSUs shall vest over a four year period beginning on the Effective Date as follows: twenty-five percent (25%) of the
RSUs on the first anniversary of the Effective Date, and an additional 6.25% of the RSUs vesting on the first day of each subsequent quarter,
with full vesting on July 1, 2026, provided that Executive is employed by the Company on each such vesting date. All outstanding
RSUs shall vest at target upon a Change in Control, as defined in the Plan, provided Executive then remains employed by the Company. Executive
shall be eligible to receive an annual equity award under the Plan on such terms and conditions as determined in the discretion of the
Compensation Committee of the Board.

 

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(d)           Expenses.
The Company will reimburse Executive for all reasonable and necessary business expenses incurred by Executive in the performance of his
duties under this Agreement, subject to any maximum annual limit and other restrictions on such expenses set by the Company, and also
subject to submission of such reasonable substantiation and documentation as may be required from time to time. Executive’s right
to payment or reimbursement for business expenses hereunder shall further be subject to the following additional rules: (i) the amount
of expenses eligible for payment or reimbursement during any calendar year shall not affect the expenses eligible for payment or reimbursement
in any other calendar year; (ii) payment or reimbursement shall be made upon or as soon as practicable after submission of such substantiation
or documentation, and in any event, not later than December 31st of the calendar year following the calendar year in which the expense
or payment was incurred; and (iii) the right to payment or reimbursement is not subject to liquidation or exchange for any other
benefit.

 

(e)           Vacation
Policy. Executive shall be entitled to participate in a flexible vacation policy, which policy is based on mutual trust between the
Company and Executive and allows Executive the opportunity to work or take time off as Executive sees fit, as long as he fulfills the
duties and responsibilities set forth herein. Executive does not accrue time off so the Company will not pay out unused time upon resignation
or termination of employment. This policy does not interfere or change eligibility for legally established leaves.

 

(f)            Executive
Benefits. Executive shall be 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. Participation will be subject to the
terms of the applicable plan documents and generally applicable Company policies, as may be in effect from time to time, and any other
restrictions or limitations imposed by law. During the Employment Period, the Company will purchase and maintain, at its own expense,
directors’ and officers’ liability insurance providing coverage to Executive on terms equivalent to those provided to other
executive officers and members of the Board.

 

(g)          Accrued
Obligations. If Executive’s employment with the Company is terminated for any reason, the Company shall pay or provide to the
Executive (or to the Executive’s authorized representative or estate) (i) any Base Salary earned through the Date of Termination;
(ii) unpaid expense reimbursements (subject to, and in accordance with, Section 3(d) of this Agreement); and (iii) any
then vested benefits Executive may have under any employee benefit plan or compensation arrangement of the Parent or the Company (including
equity compensation plans and insurance coverages) through the Date of Termination, which vested benefits shall be paid and/or provided
in accordance with the terms of such employee benefit plans. In the event that the Executive terminates employment due to death or disability,
Executive (or in the case of death, the Executive’s estate) shall be entitled to receive the Earned Bonus (as defined in Section 5(a)),
if any, at the same time bonuses are paid to other employees who are actively employed by the Company. The amounts described under this
Section 3(g) are referred to below as the “Accrued Obligations.”

 

4.            Termination
of Employment Upon Executive’s Death or Disability, or by the Company for Cause, or by Executive without Good Reason.

 

(a)           Termination
of Employment Due to Executive’s Death. If Executive’s employment with the Company terminates due to death, the Company
shall pay to the estate of Executive such compensation as would otherwise have been payable to Executive (and any expense reimbursements
for expenses incurred) up to the date of his death. Other than the obligations set forth in this Section 4(a), the Company
shall have no additional financial obligation under this Agreement to Executive or his estate.

 

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(b)           Termination
of Employment Due to Executive’s Disability, Illness, or Incapacity. If, in the opinion of a physician selected by the
Company and reasonably approved by Executive, Executive becomes physically or mentally disabled or develops an illness or incapacity during
the Employment Period that renders Executive at least temporarily unable to perform (either with or without reasonable accommodation)
the essential functions of his job for a period of 180 days within any continuous 12-month period, then Executive shall continue to receive
the Base Salary until the end of such 180-day period, less any benefits received during the foregoing respective period by Executive under
any disability insurance carried or provided by the Company. If Executive’s employment is terminated due to a permanent disability,
as reasonably determined by the Company in accordance with applicable law, then the Company shall pay to Executive such compensation as
would otherwise have been payable to Executive (and any expense reimbursements for expenses incurred) up to the end of the month in which
Executive’s employment is terminated, and the Company shall have no additional obligation under this Agreement to Executive. The
Company is not obligated to, but may, carry disability insurance for its employees.

 

(c)           Termination
of Employment by the Company for Cause, or by Executive without Good Reason. If the Company terminates the employment of Executive
for Cause (defined below), then the Company shall pay to Executive compensation earned by Executive (and any expense reimbursements for
expenses incurred) up to the Date of Termination, and no other compensation, bonus, or other amount shall be due and owing to Executive.
Executive may terminate Executive’s employment hereunder voluntarily and without Good Reason (defined below) upon giving at least
30 days’ prior written notice to the Company. If Executive terminates Executive’s employment voluntarily and without Good
Reason, then the Company shall pay to Executive compensation earned by Executive up to Date of Termination, and no other compensation,
bonus, or other amount shall be due and owing to Executive

 

(1)            For
purposes of this Agreement, the term “Good Reason” shall mean without Executive’s prior written consent: (i) a
material diminution in the nature or scope of Executive’s authority, duties, responsibilities, or title from those applicable to
Executive as of the Effective Date; (ii) a relocation of Executive’s principal worksite that increases Executive’s one-way
commute by more than 30 miles; or (iii) a material breach by the Company of any term or provision of this Agreement. Notwithstanding
anything in this Section 4(c)(1) to the contrary, no event or condition described in this Section shall constitute
Good Reason unless: (x) within 90 days from Executive first acquiring actual knowledge of the existence of the Good Reason condition
described in this Section, Executive provides the Company written notice of Executive’s intention to terminate Executive’s
employment for Good Reason and the grounds for such termination; (y) such grounds for termination (if susceptible to correction)
are not corrected by the Company as soon as reasonably practicable, but in any case within 30 days of the Company’s receipt of such
notice (or, in the event that all such grounds cannot be corrected within such 30-day period, the Company has substantially corrected
such grounds within such 30-day period and is making correction as soon as reasonably practicable); and (z) Executive terminates
Executive’s employment with the Company immediately following expiration of such 30-day period.

 

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(2)            For
purposes of this Agreement, the term “Cause” shall mean a termination by the Company of Executive’s employment
because of: (i) any act or omission that constitutes an intentional and material breach by Executive of any of Executive’s
obligations under this Agreement; (ii) Executive’s conviction of, or plea of nolo contendere to, any felony or another crime
involving dishonesty; (iii) Executive willfully engaging in any misconduct, negligence, act of dishonesty, violence or threat of
violence (including any violation of federal securities laws) that is materially injurious to the Company or any of its parents, subsidiaries,
or affiliates; (iv) Executive’s intentional and material breach of a known written policy of the Company or the rules of
any governmental or regulatory body applicable to the Company that is or could reasonably be materially injurious to the Company; (v) Executive’s
repeated refusal to follow the lawful directions of the Company that are consistent with Executive’s duties and responsibilities
under this Agreement; or (vi) any other willful misconduct by Executive that is materially injurious to the financial condition or
business reputation of the Company or any of its parents, subsidiaries, or affiliates.

 

5.           Termination
of Employment by Executive for Good Reason, or by the Company Without Cause. If Executive’s
employment is terminated by the Company without Cause (and not for death or disability) or Executive terminates employment for Good Reason,
then, in addition to the Accrued Obligations, and subject to (i) Executive signing a separation agreement and release substantially
in the form attached hereto as Exhibit A (the “Separation Agreement”), which provides that if Executive materially
breaches any of the Continuing Obligations (as defined in Section 7 below), all payments of the Severance Amount shall immediately
cease, (ii) the Separation Agreement becoming irrevocable, and (iii) Executive not being eligible for benefits due to a qualifying
termination during the Change in Control Period under Section 6 below:

 

(a)           Cash
Severance. The Company shall pay Executive an amount equal to (i) twenty-four (24) months of Executive’s Base Salary, plus
(ii) an amount equal to Executive’s then current Target Bonus or Target Bonus for the prior year if higher, pro rated
for the number of complete or partial months of employment during the then-current year (the “Severance Amount”), and,
(iii) in the event that Executive’s employment is terminated after the end of the calendar year but prior to the payment of
any Annual Bonus for the immediately preceding calendar year, Executive shall be entitled to receive a lump sum payment of any unpaid
Annual Bonus earned based on achievement of Performance Goals, without any reduction for individual performance, with respect to such
immediately preceding calendar year (the “Earned Bonus”).

 

(b)           Accelerated
Vesting of Equity Awards. Notwithstanding anything to the contrary in any equity award under the Plan or otherwise, any time-based
equity awards shall immediately accelerate and become fully vested and exercisable or nonforfeitable upon the Date of Termination and
any employment or service based requirement under any performance-based equity award shall be fully waived, with payment to be made based
on the achievement of the Company’s actual performance during the performance period.

 

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(c)           COBRA
Premiums. Subject to Executive’s copayment of premium amounts at the applicable active employees’ rate and Executive’s
timely election to receive benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall pay to the group health plan provider or the COBRA provider a monthly payment equal to the monthly employer contribution
that the Company would have made to provide health insurance to Executive if Executive had remained employed by the Company until the
earliest of (A) the twelve month anniversary of the Date of Termination; (B) the date that Executive becomes eligible for group
medical plan benefits under any other employer’s group medical plan; or (C) the cessation of Executive’s health continuation
rights under COBRA; provided, however, that if the Company determines that it cannot pay such amounts to the group health plan provider
or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of
the Public Health Service Act), then the Company shall convert such payments to payroll payments directly to Executive for the time period
specified above. Such payments to Executive shall be subject to tax-related deductions and withholdings and paid on the Company’s
regular payroll dates.

 

(d)           Severance
Payment Timing. The amounts payable under this Section 5 (other than the Earned Bonus, as applicable), to the extent taxable,
shall be paid or commence to be paid within sixty (60) days after the Date of Termination; provided, however, that if the period applicable
to Executive’s termination of employment begins in one calendar year and ends in a second calendar year, such payments to the extent
they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), shall be paid or commence to be paid in the second calendar year by the last day
of such period. Half of the Severance Amount shall be paid in a single lump sum, the remaining half in twelve equal monthly installments
and the Earned Bonus, if any, shall be paid at the same time as if Executive had remained employed with the Company through the payment
date.

 

6.            Severance
Pay and Benefits Upon Termination by the Company without Cause or by Executive for Good Reason within the Change in Control Period.
The provisions of this Section 6 shall apply in lieu of, and expressly supersede, the provisions of Section 5
if (i) Executive’s employment is terminated either by the Company without Cause or by Executive for Good Reason and (ii) the
Date of Termination occurs on or within twelve months of a Change in Control (as defined under the Plan), which is referred to herein
as the “Change in Control Period.” These provisions of this Section 6 shall terminate and be of no further
force or effect after the end of the Change in Control Period. If Executive’s employment is terminated by the Company without Cause
or Executive terminates employment for Good Reason, and in each case the Date of Termination occurs during the Change in Control Period,
then, in addition to the Accrued Obligations, and subject to the signing of, and compliance with, the Separation Agreement by Executive
and the Separation Agreement becoming fully effective, all within the time frame set forth in the Separation Agreement:

 

(a)           Cash
Severance. The Company shall pay Executive a lump sum in cash in an amount equal to the sum of (A) twenty-four (24) months of
Executive’s then-current Base Salary (or Executive’s Base Salary in effect immediately prior to the Change in Control, if
higher), and (B) an amount equal to Executive’s Target Bonus for the then-current year (or Executive’s Target Bonus in
effect immediately prior to the Change in Control, if higher), pro rated for the number of complete or partial months of employment
during the then-current year, plus, if applicable, any Earned Bonus (the “Change in Control Payment”).

 

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(b)          COBRA
Premiums. The COBRA related payments described in Section 5(b) above shall be eligible to extend for eighteen (18) months
after the Date of Termination.

 

(c)           Accelerated
Vesting of Equity Awards. Notwithstanding anything to the contrary in any equity award under the Plan or otherwise, any time-based
equity awards shall immediately accelerate and become fully vested and exercisable or nonforfeitable upon the Date of Termination and
any employment or service based requirement under any performance-based equity award shall be fully waived, with payment to be made based
on the achievement of the Company’s actual performance during the performance period, as reasonably determined in the Company’s
discretion.

 

(d)          Change
in Control Payment Timing. With the exception of the payment of any performance-based equity awards, the amounts payable under this
Section 6, to the extent taxable, shall be paid or commence to be paid within sixty (60) days after the Date of Termination;
provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments to the extent
they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, shall be paid or
commence to be paid in the second calendar year by the last day of such 60-day period. The Change in Control Payment shall be paid in
a single lump sum and the Earned Bonus, if any, shall be paid at the same time as if Executive had remained employed with the Company
through the payment date.

 

7.            Continuing
Obligations.

 

(a)           Restrictive
Covenants Agreement. As a condition of entering into this Agreement, Executive agrees to the terms of the Employee
Proprietary Information and Inventions Assignment Agreement, to be dated as of the Effective Date, between the Company and Executive
(the “Restrictive Covenants Agreement”). For purposes of this Agreement, the obligations in this Section 7 and those
that arise in the Restrictive Covenants Agreement and any other agreement relating to confidentiality, assignment of inventions, or
other restrictive covenants that may later be agreed to by Executive shall collectively be referred to as the “Continuing
Obligations.”

 

(b)           Third-Party
Agreements and Rights. Executive hereby represents, warrants, covenants, understands and agrees that: (i) Executive is free to
enter into this Agreement; (ii) Executive is not obligated or a party to any engagement, commitment or agreement with any person
or entity that will, does or could conflict with or interfere with Executive’s full and faithful performance of this Agreement,
nor does Executive have any commitment, engagement or agreement of any kind requiring Executive to render services or preventing or restricting
Executive from rendering services or respecting the disposition of any rights or assets that Executive has or may hereafter acquire or
create in connection with his services hereunder; (iii) Executive shall not intentionally use any material or content of any kind
in connection with Executive’s products, software or website that is copyrighted or owned or licensed by a party other than the
Company or Parent or that would or could infringe the rights of any other party; and (iv) Executive shall not intentionally use in
the course of Executive’s performance under this Agreement, and shall not disclose to the Company, any confidential information
belonging, in part or in whole, to any third party.

 

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(c)           Litigation
and Regulatory Cooperation. During and after Executive’s employment, Executive shall, upon Company’s request, cooperate
with the Company in (i) the defense or prosecution of any claims or actions now in existence or which may be brought in the future
against or on behalf of the Company which relate to events or occurrences that transpired while Executive was employed by the Company,
and (ii) the investigation, whether internal or external, of any matters about which the Company believes Executive may have knowledge
or information. Executive’s full cooperation in connection with such claims, actions or investigations shall include, but not be
limited to, being available to meet with counsel upon reasonable notice to answer questions or to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times. During and after Executive’s employment, Executive also
shall reasonably cooperate with the Company in connection with any investigation or review of any federal, state or local regulatory authority
as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company. All
such activities shall be scheduled, to the extent reasonably possible, to accommodate Executive’s business and personal obligations
at the time. The Company shall reimburse Executive for any reasonable out of pocket expenses incurred in connection with Executive’s
performance of obligations pursuant to this Section 7(c), which shall be in addition to its obligations to provide indemnification
to Executive. If Executive is requested or required to provide material cooperation under this Section 7(c) more than
24 months after the Date of Termination, Employee shall be compensated at an hourly rate (based on Executive’s Base Salary as of
the Date of Termination), except to the extent prohibited by applicable law.

 

(d)           Relief.
Executive agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by Executive
of the Continuing Obligations, and that in any event monetary damages would be an inadequate remedy for any such breach. Accordingly,
Executive agrees that if Executive breaches, or proposes to breach, any portion of the Continuing Obligations, the Company shall be entitled,
in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Company.

 

8.            280G
Limitation.

 

(a)          Anything
in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company
to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, calculated in a manner consistent with Section 280G of the Code, and the applicable regulations thereunder (the “Aggregate
Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be
reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which Executive becomes
subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in
Executive receiving a higher After Tax Amount (as defined below) than Executive would receive if the Aggregate Payments were not subject
to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological
order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject
to Section 280G of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject
to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that
in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1,
Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or
(c).

 

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(b)           For
purposes of this Section 8, the “After Tax Amount” means the amount of the Aggregate Payments less all
federal, state, and local income, excise and employment taxes imposed on Executive as a result of Executive’s receipt of the Aggregate
Payments. For purposes of determining the After Tax Amount, Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and
local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and local taxes.

 

(c)           For
purposes of determining whether and the extent to which the Aggregate Payments will be subject to the excise tax, (i) no portion
of the Aggregate Payments the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute
a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion
of the Aggregate Payments shall be taken into account which, in the written opinion of independent auditors or advisors of nationally
recognized standing (“Independent Advisors”) selected by the Company prior to a Change in Control, does not constitute
a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of
the Code) and, in calculating the excise tax, no portion of such Aggregate Payments shall be taken into account which, in the opinion
of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of
the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable
compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Aggregate Payments shall
be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. The
Independent Advisors shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days
of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or Executive. Any determination
by the Independent Advisors shall be binding upon the Parties.

 

9.            Section 409A.

 

(a)          Anything
in this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service within the meaning of Section 409A
of the Code, the Company determines that Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code, then to the extent any payment or benefit that Executive becomes entitled to under this Agreement or otherwise on account of
Executive’s separation from service would be considered deferred compensation otherwise subject to the 20% additional tax imposed
pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such
payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six (6) months
and one day after Executive’s separation from service, or (B) Executive’s death. If any such delayed cash payment is
otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have
been paid during the 6-month period but for the application of this provision, and the balance of the installments shall be payable in
accordance with their original schedule.

 

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(b)          All
in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by
Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable,
but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense
was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind
benefits to be provided or the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate
limitation applicable to medical expenses). Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange
for another benefit.

 

(c)           To
the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under
Section 409A of the Code, and to the extent that such payment or benefit is payable upon Executive’s termination of employment,
then such payments or benefits shall be payable only upon Executive’s “separation from service.” The determination of
whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation
Section 1.409A-1(h).

 

(d)          The
parties intend that this Agreement will be administered in a manner not intended to violate Section 409A of the Code. To the extent
that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read
in such a manner so that all payments hereunder comply with Section 409A of the Code. Each payment pursuant to this Agreement is
intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). Any such payment that may be
excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral (each
as described in Treasury regulations issued under Section 409A) shall be excluded from Section 409A to the greatest extent possible.

 

(e)            The
Company makes no representation or warranty and shall have no liability to Executive or any other person if any provisions of this Agreement
are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the
conditions of, Section 409A.

 

    10 

     

    

 

10.            Recoupment.
Executive shall be required to repay incentive pay to the Company as described in this Section 10, and the Company may offset
payments otherwise due and payable under this Agreement by the amounts required to be repaid under this Section 10. Repayment
of incentive pay shall be required if, and to the extent that, the Committee determines, in its sole discretion, that repayment is due
on account of a restatement of the Parent’s financial statements or otherwise pursuant to any clawback or compensation recoupment
policy as may be in effect or amended from time to time (the “Recoupment Policy”). Where the result of a performance
measure was a factor in determining the compensation awarded or paid, but (i) the subsequently-restated performance measure was not
the only factor used to determine the compensation awarded or paid, or (ii) the incentive-based compensation is not awarded or paid
on a formulaic basis, the Committee will determine in its sole discretion the amount, if any, by which the payment or award should be
reduced. If the Committee seeks to recover payment of incentive pay as a result of a restatement of the Company’s financial statements
or otherwise under the Recoupment Policy, Executive shall pay to the Company, as applicable, (A) all or a portion (as determined
by the Committee in its reasonable discretion) of the amount by which the payment received by Executive exceeds the amount that would
have been paid to Executive based on the restated financial statements, or (B) the amount (as determined by the Committee in its
reasonable discretion) to be repaid pursuant to the Recoupment Policy. Nothing in this Section 10 shall preclude the Company,
the Parent or any other person from taking any other action.

 

11.          No
Mitigation; Offset. In the event of any termination of employment and service hereunder, Executive
shall be under no obligation to seek other employment, and there shall be no offset against any amounts due Executive under this Agreement
on account of any remuneration attributable to any subsequent employment that Executive may obtain. The preceding sentence shall not limit
the Company’s right to discontinue payments due to a violation of Continuing Obligations or exercise its recoupment rights under
Section 11.

 

12.          Indemnification.
The Company will (i) indemnify Executive with respect to claims arising out of any action taken or not taken in Executive’s
capacity as an officer or employee of the Company or its subsidiaries; provided, that Executive acted in good faith and in a manner that
he reasonably believed to be in or not opposed to the best interests of the Company or its subsidiaries, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that his conduct was unlawful, (ii) advance to Executive all reasonable
and documented out of pocket costs and expenses incurred by Executive in connection with the foregoing clause (i), including but not limited
to attorneys’ fees, and (iii) provide for Executive to be covered by D&O insurance, with respect to clauses (i) and
(ii), on the same terms as are made available to the CEO and/or members of the Board, as applicable; provided that, this Agreement constitutes
an undertaking that amounts advanced under clause (ii) shall be promptly repaid to the Company by Executive if it shall ultimately
be determined by a court of competent jurisdiction that Executive is not entitled to be indemnified by the Company pursuant to this Section 12.
Nothing herein shall limit any right that Executive may have in respect of indemnification, advancement or liability insurance coverage
under the organizational documents of the applicable entity, any other policy, plan, contract or arrangement of the Company, the Parent
or their respective subsidiaries or under applicable law with respect to his services as an officer or employee for the Parent, Company
or their subsidiaries.

 

13.          Resignation
of All Other Positions. To the extent applicable, Executive shall be deemed to have resigned
from all officer and board member positions that Executive holds with the Company, Parent, or any of their respective subsidiaries and
affiliates upon the Date of Termination. Executive shall execute any documents in reasonable form as may be requested to confirm or effectuate
any such resignations.

 

    11 

     

    

 

14.          Survival.
The provisions of this Agreement shall survive the termination of this Agreement and/or the termination of Executive’s employment
to the extent necessary to effectuate the terms contained herein, including but not limited to the Company’s obligation to make
severance payments or provide indemnification and Executive’s obligations to comply with the Continuing Obligations.

 

15.          Waiver
of Breach. The waiver of a breach of any of the provisions of this Agreement by the Parties
shall not be construed as a waiver of any subsequent breach by the breaching party.

 

16.          Binding
Effect; Assignment. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is a personal employment contract,
and the rights, obligations, and interests of Executive hereunder may not be sold, assigned, delegated, transferred, pledged, or hypothecated.

 

17.          Entire
Agreement. This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, if any, between the Company and
Executive with respect to the terms and conditions of Executive’s employment with the Company. No supplement, modification, amendment,
or waiver of any of the terms, conditions, or provisions in this Agreement can be made unless in writing and signed by both an authorized
representative of the Company, the Board, and Executive.

 

18.          Notice.
All notices that are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given: When
received if personally delivered; when transmitted if transmitted by telecopy or similar electronic transmission method; one business
day after it is sent, if sent by recognized expedited delivery service; and five days after it is sent, if mailed, first class mail, certified
mail, return receipt requested, with postage prepaid. In each case notice shall be sent to:

 

If to Executive:

 

	 	Jason Stabell
	 	2198 Troon Road
	 	Houston, TX 77019

 

		If
                            to the Company:	Epsilon
Energy Ltd.

16945 Northchase Drive, Suite 1610 

Houston, Texas 77060 

Attn: Lane Bond

 

19.          Severability.
If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court
of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision
to such person or circumstances other than those to which it is so determined to be invalid and unenforceable shall not be affected, and
each provision of this Agreement shall be validated and shall be enforced to the fullest extent permitted by law.

 

    12 

     

    

 

20.          Taxes.
All salary, benefits, reimbursements and any other payments to Executive under this Agreement
shall be subject to all applicable payroll and withholding taxes and deductions required by any law, rule or regulation of and federal,
state or local authority. Executive shall in all events be solely responsible for payment of all applicable federal and state taxes that
may be assessed against compensation or benefits paid or payable by the Parent or the Company or Parent under this Agreement or otherwise,
and no representation or warranty is provided by either the Company or Parent as to any particular tax consequences associated with any
item of compensation or benefits.

 

21.          Governing
Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas without giving effect to principles of conflicts of laws that would apply the laws of another jurisdiction. 
All claims arising out of or relating to this Agreement shall be heard and determined exclusively in any federal or state court sitting
in Harris County, Texas. Consistent with the preceding sentence, the Parties irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, any claim that it is not subject personally to the jurisdiction of the aforementioned courts, that its property
is exempt or immune from attachment or execution, that the claim is brought in an inconvenient forum, that the venue of the claim is improper,
or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the aforementioned courts.

 

22.          Employee’s
Representations and Warranties. EXECUTIVE UNDERSTANDS ALL OF THE TERMS OF THIS "AT WILL"
EMPLOYMENT AGREEMENT AND HAS REVIEWED THIS AGREEMENT FULLY AND IN DETAIL PRIOR TO AGREEING TO EACH AND ALL OF THE PROVISIONS HEREOF and
no statement, representation, promise, or inducement has been made to Executive, in connection with the terms of this Agreement, the execution
hereof or otherwise, except as is expressly set forth in this Agreement.

 

23.          Counterparts.
This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

 

[SIGNATURES ON NEXT PAGE]

 

    13 

     

    

 

IN WITNESS WHEREOF, the Parties
hereto have executed this Agreement this  24 day of June 2022.

 

		Epsilon Energy USA
Inc.
	 	 	 
	 	By: 	/s/ John Lovoi
	 	Name:	John Lovoi
	 	Its: 	Chairman of the Board of Directors
	 	 	 
	 	EXECUTIVE:
	 	 	 
	 	/s/ Jason Stabell
	 	Jason Stabell

 

    14 

     

    

 

EXHIBIT A

GENERAL RELEASE OF ALL CLAIMS

 

This General Release of All
Claims is made as of __________(“General Release”), by and between ______________ (“Executive”)
and Epsilon Energy USA Inc. (the “Company”).

 

WHEREAS, the Company and Executive
are parties to an Employment Agreement dated as of June [ ], 2022 (the “Employment Agreement”);

 

WHEREAS, [the Executive has
terminated employment with the Company for Good Reason under the Employment Agreement] [the Company has terminated Executive’s employment
with the Company without Cause under the Employment Agreement];

 

WHEREAS, the execution of
this General Release is a condition precedent to the payment of severance benefits under the Employment Agreement;

 

WHEREAS, in consideration
for Executive’s signing of this General Release, the Company will make payments to Executive pursuant to [Section 5] [Section [6]
of the Employment Agreement; and

 

WHEREAS, Executive and the
Company intend that this General Release satisfies the obligation to provide a Release under the Employment Agreement.

 

    15 

     

    

 

NOW, THEREFORE, in consideration
of the promises and the mutual covenants and agreements herein contained, the Company and Executive agree as follows:

 

1.            Executive,
for himself, Executive’s spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other
persons claiming through Executive, if any (collectively, “Releasers”), does hereby release, waive, and forever discharge
the Company and each of its respective agents, subsidiaries, parents, affiliates, related organizations, employees, officers, directors,
attorneys, successors, and assigns (collectively, the “Releasees”) from, and does fully waive any obligations of Releasees
to Releasers for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums
of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent
or absolute, which heretofore has been or which hereafter may be suffered or sustained, directly or indirectly, by Releasers in consequence
of, arising out of, or in any way relating to: (a) Executive’s employment with the Company or any of its subsidiaries or affiliates;
(b) the termination of Executive’s employment with the Company and any of its subsidiaries or affiliates; (c) the Employment
Agreement; or (d) any and all events occurring on or prior to the date of this General Release. The foregoing release, discharge
and waiver includes, but is not limited to, all claims and any obligations or causes of action arising from such claims, under common
law including wrongful or retaliatory discharge, breach of contract (including but not limited to any claims under the Employment Agreement
and any claims under any equity incentive arrangements between Executive, on the one hand, and the Company or any of its subsidiaries
or affiliates, on the other hand) and any action arising in tort including libel, slander, defamation or intentional infliction of emotional
distress, and claims under any federal, state or local statute including the Age Discrimination in Employment Act (“ADEA”),
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations
Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation
Act of 1973, or the discrimination or employment laws of any state or municipality, any claims as a stockholder of the Company (including
but not limited to any breach of fiduciary duty claims) and/or any claims under any express or implied contract which Releasers may claim
existed with Releasees. This also includes a release of any claims for wrongful discharge and all claims for alleged physical or personal
injury, emotional distress relating to or arising out of Executive’s employment with the Company or any of its subsidiaries or affiliates
or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that
advance notice be given of certain work force reductions. Nothing in this Section 1 shall be deemed to operate or shall
operate as a release, settlement or discharge of any (i) obligation, undertaking, or commitment by the Company under the Employment
Agreement that survives the termination of Executive’s employment with the Company; (ii) any
right to indemnification, defense, and advancement of expenses now existing under the Company’s (or its parent, subsidiary, affiliated
companies, and their successors’) certificates of formation, articles of incorporation, bylaws, and other Company policies of indemnification
or under any insurance policies available to the Company (or its parent, subsidiary, affiliated companies, and their successors) or Executive;
(iii) any rights to the receipt of Executive’s employee benefits that were accrued and vested on or prior to the date of this
General Release; and (0v) the right to receive payments under [Section 5] [Section 6] of the Employment Agreement.

 

2.            Excluded
from this General Release and waiver are any claims which cannot be waived by law, including but not limited to the right to file a charge
with a government agency or participate in an investigation conducted by certain government agencies. Executive does, however, waive Executive’s
right to any monetary recovery should any agency (such as the Equal Employment Opportunity Commission) pursue any claims on Executive’s
behalf. Executive represents and warrants that Executive has not filed any complaint, charge, or lawsuit against the Releasees with any
government agency or any court. The Company represents and warrants that neither it, nor any of its parent, subsidiary, and affiliated
companies, have filed any complaint, charge, or lawsuit against Executive Releasees with any government agency or court.

 

3.            Executive
agrees never to seek personal recovery from Releasees in any forum for any claim covered by the above waiver and release language, except
that Executive may bring a claim under the ADEA to challenge this General Release. If Executive violates this General Release by suing
Releasees, other than under the ADEA or as otherwise set forth in Section 1 hereof, Executive shall be liable to the Company
for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit. Nothing in this General
Release is intended to reflect any party’s belief that Executive’s waiver of claims under ADEA is invalid or unenforceable,
it being the intent of the parties that such claims are waived.

 

    16 

     

    

 

4.            Executive
acknowledges and agrees that Executive shall continue to be bound by the Continuing Obligations set forth and described in Section 7
of the Employment Agreement, including the Restrictive Covenants Agreement (as defined in the Employment Agreement). The Company acknowledges
and agrees that the Company shall continue to be bound by the provisions of the Employment Agreement that survive the termination of Executive’s
employment with the Company. Executive understands that notwithstanding any other provision of the Employment Agreement and this General
Release, nothing contained in the Employment Agreement or this General Release limits Executive’s ability to file a charge or complaint
with the Equal Employment Opportunity Commission, the Securities and Exchange Commission or any other federal, state or local governmental
agency or commission (collectively, “Government Agencies”), or prevents the Executive from providing truthful testimony
in response to a lawfully issued subpoena or court order. Further, nothing in the Employment Agreement or this General Release shall (a) prohibit
the Executive from making reports of possible violations of federal law or regulation to any Government Agencies, including but not limited
to the Securities and Exchange Commission, in accordance with the provisions of and rules promulgated under Section 21F of the
Securities Exchange Act of 1934, as amended, or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection
provisions of federal law or regulation, or (b) require notification or prior approval by the Company of any such report; provided
that the Executive is not authorized to disclose communications with counsel that were made for the purpose of receiving legal advice
or that contain legal advice or that are protected by the attorney work product or similar privilege. Further, the Employment Agreement
and this General Release do not limit the Executive’s ability to communicate with any Government Agencies or otherwise participate
in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information,
without notice to the Company. The Employment Agreement and this General Release do not limit Executive’s right to seek an award
pursuant to Section 21F of the Securities Exchange Act of 1934. In addition, for the avoidance of doubt, pursuant to the federal
Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law
for the disclosure of a trade secret that (x) is made (i) in confidence to a federal, state or local government official, either
directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of
law; or (y) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

5.            Executive
agrees that Executive shall not issue, circulate, publish or utter any false or disparaging statement or remarks about the Releasees unless
giving truthful testimony under subpoena or court order. Notwithstanding anything to the contrary in this Release, Executive may provide
truthful information to any governmental agency or self-regulatory organization with or without subpoena or court order.

 

6.            Executive
agrees that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed
at any time to be an admission by the Company, any Releasee or Executive of any improper or unlawful conduct.

 

		7.	Executive acknowledges and recites that:

 

		(a)	Executive has executed this General Release knowingly and voluntarily;

 

		(b)	Executive has read and understands this General Release in its entirety;

 

		(c)	Executive has been advised and directed orally and in writing (and this subparagraph (c) constitutes such written direction)
to seek legal counsel and any other advice Executive wishes with respect to the terms of this General Release before executing it;

 

    17 

     

    

 

		(d)	Executive’s execution of this General Release has not been forced by any employee or agent of the Company, and Executive has
had an opportunity to negotiate about the terms of this General Release; and

 

		(e)	Executive has been offered 21 calendar days after receipt of this General Release to consider its terms before executing it.1

 

8.            This
General Release shall be governed by the internal laws (and not the choice of laws) of the State of Texas, except for the application
of pre-emptive Federal law.

 

9.            Executive
shall have 7 days from the date he executes this General Release to revoke his waiver of any ADEA claims by providing written notice of
the revocation to the Company. The Company represents and warrants that the individual signing this General Release has the full authority
and right to execute it upon its behalf.

 

10.          Defined
terms not defined in this General Release have the meanings given in the Employment Agreement.

 

PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.

 

EXECUTIVE:

 

____________________________________ Date: ____________________

 

 

 

 

1
In the event the Company determines that Executive’s termination constitutes “an exit incentive or other employment termination
program offered to a group or class of employees” under the ADEA, the Company will provide Executive with: (1) 45 days to consider
the General Release; and (2) the disclosure schedules required for an effective release under the ADEA.

 

    18Exhibit 10.3

 

June 23, 2022

 

Mr. B. Lane Bond

9844 Cypresswood Dr., #1801

Houston, TX 77070

 

		Re:	Retirement and Consulting Letter
Agreement

 

Dear Lane:

 

This Retirement and Consulting Letter Agreement (this “Agreement”)
sets forth our agreement regarding your retirement from Epsilon Energy USA, Inc. (“Epsilon USA”) and Epsilon
Energy Ltd. and their related subsidiaries and affiliated entities (collectively, the “Company”), effective
June 30, 2022, and service as a consultant thereafter to the Company until March 31, 2023, or such earlier date as may be determined
under Section 4 below.

 

1.             RETIREMENT.
You agree that your last day of employment with the Company will be June 30, 2022 (the “Retirement Date”), 
and you hereby resign, effective as of the Retirement Date, from your positions at the Company, including but not limited to Chief Financial
Officer of the Company and all other offices and directorships you hold with the Company or any subsidiary or affiliate thereof without
further action on either your part or by the relevant entity. You agree to execute and deliver any documents reasonably necessary to effectuate
such resignations, and hereby irrevocably appoint Andrew Williamson, who has been approved to serve as the chief financial officer of
the Company (“CFO”) effective July 1, 2022, with the power to act as your attorney-in-fact to execute any
such documents and do anything in your name to affect such resignations.

 

2.             TERMINATION
OF OFFER LETTER. By signing this Agreement, you acknowledge and agree that the offer letter between you and Epsilon USA dated September 1,
2013 (the “Offer Letter”) is hereby terminated and cancelled. You further release and discharge the Company
and its affiliates from any and all obligations and liabilities, whether fixed or contingent, under or by virtue of the Offer Letter.

 

    

     

    

 

3.             TERMINATION
PAYMENTS. In consideration of the covenants and releases contained in this Agreement, your consulting services to the Company, and in
lieu of any other payments which may be due under the Offer Letter or otherwise, Epsilon USA agrees to provide you with the following
termination payments:

 

		a.	Accrued Amounts. Epsilon USA shall pay to you at such time or times as required by applicable law or the terms of the applicable
Epsilon USA plan, program, policy or arrangement (i) any unpaid base salary through the Retirement Date; (ii) reimbursement
for any unreimbursed expenses incurred through the Retirement Date in accordance with the Epsilon USA business expense reimbursement policy;
and (iii) the other payments and benefits to which you are entitled under the terms of the compensation arrangements and benefit
plans or programs (collectively, “Accrued Amounts”).

 

		b.	Vesting of RSUs . All unvested restricted stock units previously granted to Executive under the Epsilon Energy LTD Share Compensation
Plan (the “Equity Plan”) that are outstanding as of the Retirement Date (collectively, “RSUs”)
shall immediately accelerate and vest as of the Release Effective Date. The RSUs are set forth on Exhibit A to this Agreement.
All RSUs will remain subject to the terms and conditions of the Equity Plan and the applicable award agreements.

 

		c.	Pro-Rata 2022 Bonus. In lieu of any right to receive an annual bonus for your services through your Retirement Date, you shall
receive a payment of $37,500 at the end of your Consulting Term (the “Pro-Rata 2022 Bonus”).

 

		d.	Supplemental Lump Sum. The Company shall pay you a lump sum amount equal to $15,000, and not continued employer funded COBRA
coverage, within ten business days after the Release Effective Date.

 

You and the Company agree that the obligation of the Company to provide
you with accelerated vesting of the RSUs, the Pro-Rata 2022 Bonus and the Supplemental Lump Sum is conditioned on and subject to your
execution of a release substantially in the form attached hereto as Exhibit B (the “Release”) as
of the Release Effective Date.

 

The obligation of the Company to pay any and all amounts under this
Section 3 (other than the Accrued Benefits) on and after the Retirement Date shall be contingent upon you (i) entering into
a written agreement with the Company (in the form attached hereto as Exhibit B) in which Executive agrees to a general release
of any claims against the Company and its affiliates (the “Release Agreement”) on or within twenty-one days
after employment termination (or such longer period of time as required under applicable law to have a binding release of one or more
claims) that has become irrevocable (such date on which such release agreement becomes irrevocable, the “Release Effective
Date”) and (b) complying with the confidentiality and non-disparagement provisions in Section 6 and Section 7
below. For avoidance of doubt, all rights to receive or continue to receive the payments and benefits referred to in Section 3 (other
than the Accrued Benefits) shall cease if you do not enter into the Release Agreement, revoke the Release Agreement or materially breach
any of the covenants referred to in this Section 3. The form of general release to be signed by you pursuant to this Section 3
shall in no way prohibit you from reporting possible violations of law to any governmental agency or entity in accordance with applicable
whistleblower protection provisions including, without limitation, the rules promulgated under Section 21F of the Exchange Act
or Section 806 of the Sarbanes-Oxley Act of 2002 or require you to notify the Company (or obtain its prior approval) of any such
reporting.

 

    2

     

    

 

4.             CONSULTING
SERVICES. From July 1, 2022 through March 31, 2023, but in no event prior to the filing of SEC Form 10-K for the 2022 fiscal
year by Epsilon Energy Ltd. (the “Consulting Term”), you agree to assist the CFO in order to affect an orderly,
smooth and efficient transition of your former duties as Mr. Williamson may reasonably request as CFO during the Consulting Term,
including consulting on matters that arose while serving the Company on or prior to the Retirement Date and providing information regarding
the Company’s operations, practices and policies. You shall provide customary and reasonable certifications and representations
in connection with the filing of the Company’s annual and periodic reports with the Securities and Exchange Commission, as well
as the completion of the external audit reviews of the Company’s financial statements and internal controls, regarding any period
in which you were employed by the Company consistent with applicable law and as reasonably requested by the CFO, including but not limited
to your knowledge of any material misstatements or omissions of material fact, ineffective disclosure controls or procedures, internal
control weaknesses, practices or policies inconsistent with Generally Accepted Accounting Principles, or material violations of law that
have not been previously disclosed to the Company’s Audit Committee. You agree to render up to 30 hours of service for the month
of July 2022 and up to 10 hours of service per calendar month during the remainder Consulting Term, as may be requested by the CFO.
During the Consulting Term, the Company shall pay you a fee of $16,666.67 per calendar month, payable within five business days after
the end of each month (the “Consulting Fee”). Further, you shall be entitled to reimbursement for all reasonable
expenses incurred by you in the performance of consulting services hereunder, in accordance with the policies of the Company, including
monthly cellphone expenses.

 

5.             INDEPENDENT
CONTRACTOR STATUS. Your status during the Consulting Term shall be that of an independent contractor and not, for any purpose, that of
an employee or agent with authority to bind the Company in any respect. You shall not have the right (express or implied) to act on behalf
of the Company or its affiliates. The parties intend that the services provided by you during the Consulting Term will result in you having
a “separation from service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
as of July 31, 2022. All payments and other consideration made or provided to you under Section 4 of this Agreement shall be
made or provided without withholding or deduction of any kind, and you shall assume sole responsibility for discharging all tax or other
obligations associated therewith. All other payments described in this Agreement will be subject to applicable tax withholding. In your
capacity as a consultant to the Company, you shall not be entitled to any benefits, coverages or privileges, including, without limitation,
social security, unemployment, medical, requirement or equity compensation awards, made available to active employees of the Company.

 

    3

     

    

 

		6.	CONFIDENTIALITY

 

		a.	You agree that you shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person,
other than in the course of your consulting services and for the benefit of the Company, during the Consulting Term or at any time thereafter,
any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated
companies or businesses, which shall have been obtained by you during the course of your employment with the Company. The foregoing shall
not apply to information that (i) was known to the public prior to its disclosure to you; (ii) becomes known to the public subsequent
to disclosure to you through no wrongful act of you or any of your representatives; or (iii) you are required to disclose by applicable
law, regulation or legal process (provided that you provide the Company with prior notice of the contemplated disclosure and reasonably
cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information). Notwithstanding
clauses (i) and (ii) of the preceding sentence, your obligation to maintain such disclosed information in confidence shall not
terminate where only portions of the information are in the public domain.

 

		b.	Nothing in this Agreement prohibits you at any time from communicating with government agencies about possible violations of federal,
state, or local laws or otherwise providing information to government agencies or participating in government agency investigations or
proceedings. You are not required to notify the Company of any such communications; provided, however, that nothing herein authorizes
the disclosure of information you obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding
your confidentiality and nondisclosure obligations, you are hereby advised as follows pursuant to the “Defend Trade Secrets Act”
 “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of
a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly,
or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made
in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a
lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the
individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the
trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

7.             NON-DISPARAGEMENT.
You agree not to make statements to clients, customers and suppliers of the Company (or any of its affiliates) or to other members of
the public, the media or the investment community that are in any way disparaging or negative towards the Company, any of its affiliates,
or the products, services, representatives or employees of any of the foregoing. The Company agrees to instruct its directors and executive
officers to not make statements to clients, customers and suppliers of the Company (or any of its affiliates) or to other members of the
public, the media or the investment community that are in any way disparaging or negative towards you. This Section 7 does not, in
any way, restrict or impede either party from exercising protected rights to the extent that such rights cannot be waived by agreement
or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government
agency, provided that such compliance does not exceed that required by the law, regulation, or order. You shall promptly provide written
notice of any such order to the Board.

 

    4

     

    

 

8.             RETURN
OF COMPANY PROPERTY AND RECORDS. You agree that on or before the Retirement Date you will surrender to the Company in good condition (reasonable
wear and tear excepted) all property and equipment belonging to the Company and all records kept by you containing any proprietary or
confidential information of the Company or any operational, financial or other documents given to you during your employment with the
Company. Notwithstanding the foregoing, you shall be permitted to keep any Company provided phone that may have been provided to you during
your employment if it is appropriately wiped clean of any proprietary or confidential data or information pertaining to the Company or
its business.

 

9.             EQUITABLE
RELIEF AND OTHER REMEDIES. You and the Company acknowledge and agree that the other party’s remedies at law for a breach or threatened
breach of any of the provisions of Sections 6 through 8 of this Agreement would be inadequate and, in recognition of this fact, the parties
agree that, in the event of such a breach or threatened breach, in addition to any remedies at law, the other party, without posting any
bond, shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.

 

10.           SECTION 409A.
The intent of the parties is that payments and benefits under this Agreement be exempt from or comply with Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”), to the extent subject thereto, and accordingly, to the
maximum extent permitted, this Agreement shall be interpreted and administered in accordance with such intention. Notwithstanding anything
contained herein to the contrary, you shall not be considered to have terminated employment with the Company for purposes of any payments
under this Agreement which are subject to Section 409A until Executive would be considered to have incurred a “separation from
service” from the Company within the meaning of Section 409A. Each amount to be paid or benefit to be provided under this Agreement
shall be construed as a separate identified payment for purposes of Section 409A. The Company makes no representation that any or
all of the payments described in this Agreement shall be exempt from or comply with Section 409A and makes no undertaking to preclude
Section 409A from applying to any such payment. The Executive shall be solely responsible for the payment of any taxes and penalties
incurred under Section 409A.

 

11.           SECTION HEADINGS;
INCONSISTENCY. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement. If there is any inconsistency between this Agreement and any other agreement (including but
not limited to any option, stock, long-term incentive or other equity award agreement), plan, program, policy or practice (collectively,
 “Other Provision”) of the Company, the terms of this Letter Agreement shall control over such Other Provision;
provided, however, that nothing in this Letter Agreement shall adversely affect your entitlement to the Accrued Amounts.

 

12.           NO
ASSIGNMENT. This Agreement is personal to each of the parties hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto, except that the Company may assign this Agreement to any successor
to all or substantially all of the business and/or assets of the Company provided the Company shall require such successor to expressly
assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place and shall deliver a copy of such assignment to you.

 

    5

     

    

 

13.           SEVERABILITY.
The provisions of this Agreement shall be deemed severable and the invalidity of unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

 

14.           COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute
one and the same instruments. One or more counterparts of this Agreement may be delivered by facsimile, with the intention that delivery
by such means shall have the same effect as delivery of an original counterpart thereof.

 

15.           MISCELLANEOUS.
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer or director as may be designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement
together with all exhibits hereto sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein.
No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas without regard to its conflicts of law principles.

 

16.           REPRESENTATIONS.
You represent and warrant to the Company that you have the legal right to enter into this Letter Agreement and to perform all of the obligations
on your part to be performed hereunder in accordance with its terms and that you are not a party to any agreement or understanding, written
or oral, which could prevent you from entering into this Letter Agreement or performing all of your obligations hereunder.

 

If you agree with the terms as contained in this letter, please confirm
your acceptance of same by signing below and returning this letter to me.

 

		Sincerely,
	 	 
	 	/s/ John Lovoi
	 	John Lovoi
	 	Chair of the Board

 

Acknowledged and Agreed 

as of the first date written above

 

 /s/ B. Lane Bond

 

B. Lane Bond

 

    6

     

    

 

EXHIBIT A

 

RESTRICTED STOCK UNITS

 

	Unvested Restricted Stock Units	 	 	16,992	 

 

    7

     

    

 

EXHIBIT B

 

RELEASE
AGREEMENT

 

1.            I,
B. Lane Bond, have served as Chief Financial Officer (“CFO”) of Epsilon Energy USA, Inc. (“Epsilon
USA”) and Epsilon Energy Ltd. (“Parent”). Epsilon USA and I entered the Retirement and Consulting
Agreement dated as of June [__], 2022 (the “Retirement Agreement”). I will cease to serve as CFO of Epsilon
USA and Parent and as a member of the board of directors of any of their subsidiaries as of June 30, 2022 (the “Separation
Date”).

 

2.            I
agree to the terms, commitments, covenants, conditions and general release of claims contained in this Release Agreement (this “Agreement”),
in consideration for the compensation set forth in Section 3 of the Retirement Agreement. I understand this Agreement must be returned
to Epsilon USA no later than 45 calendar days after the day I received this Agreement and this Agreement may be revoked by written notice
to the Company for 7 days after it is signed. Epsilon USA has advised me to consult with an attorney prior to signing this Agreement.

 

3.            I
acknowledge and agree that other than as specifically set forth in the Retirement Agreement, following the Separation Date, I am
not and will not be due any additional compensation and will not be eligible to earn or accrue additional benefits under the benefit plans
of Epsilon USA after the Separation Date. My participation (if any) in any of the compensation or benefit plans of Epsilon USA as of and
after the Separation Date shall be subject to and determined in accordance with the terms and conditions of such plans as they may be
amended from time to time.

 

4.            I,
on behalf of myself, my heirs, administrators, representatives, executors, successors, and assigns, hereby irrevocably and unconditionally
release, acquit, and forever discharge Epsilon USA and Parent and each of their respective predecessors, parents, subsidiaries, affiliates,
divisions, any related entity, successors and assigns, and all of their current and former agents, officers, directors, shareholders,
employees, members, trustees, fiduciaries, representatives, attorneys and all persons acting by, through, under or in concert with any
of them (the “Released Parties”) from any and all charges, complaints, claims, liabilities, obligations, promises,
agreements, damages, causes of action, suits, demands, losses, debts, and expenses of any nature whatsoever, known or unknown (“Claims”)
which I have, had or claim to have against any Released Party up to and including the date I sign this Agreement. This general release
of Claims shall include, without limitation, Claims relating to my employment and retirement from employment with Epsilon USA, Claims
of discrimination under the common law or any federal or state statute (including, without limitation, the Civil Rights Act of 1964, the
Americans with Disabilities Act and the Age Discrimination in Employment Act, all as amended), Claims for wrongful discharge, Claims for
the payment of any salary, wages, bonuses, commissions, vacation pay, severance pay or benefits, Claims of detrimental reliance, and all
other statutory, common law or other Claims of any nature whatsoever, to the extent permitted by law. This general release of Claims does
not apply to any Claims concerning a breach of the Retirement Agreement, claims for indemnification, claims for Accrued Benefits (as defined
in the Retirement Agreement) or any claims arising after the date I sign this Agreement. With respect to the Claims I am waiving herein, I
acknowledge that I am waiving my right to receive money or any other relief in any action instituted by me or on my behalf by any other
person, entity or government agency.

 

    8

     

    

 

5.            To
the maximum extent permitted by law, I covenant not to sue or to institute or cause to be instituted any action in any federal, state,
or local agency or in court against any of the Released Parties, including, without limitation, any of the Claims released by this Agreement.
Notwithstanding the foregoing, nothing herein shall prevent me or any of the Released Parties from filing a charge with an administrative
agency related to the validity of this Agreement, from instituting any action required to enforce the terms of this Agreement, or from
challenging whether the release outlined in Section 5 above is knowing and voluntary. However, I may not recover monetary damages
resulting from any charge filed with an administrative agency related to the validity of this Agreement. In addition, nothing herein shall
be construed to prevent me from enforcing any rights I may have to recover vested benefits under the Employee Retirement Income Security
Act of 1974, as amended.

 

6.            I
understand that notwithstanding any other provision of this Agreement, nothing contained in this Agreement limits my ability to file a
charge or complaint with the Equal Employment Opportunity Commission, the Securities and Exchange Commission or any other federal, state
or local governmental agency or commission (collectively, “Government Agencies”), or prevents me from providing
truthful testimony in response to a lawfully issued subpoena or court order. Further, nothing in this Agreement shall (1) prohibit
me from making reports of possible violations of federal law or regulation to any Government Agencies, including but not limited to the
Securities and Exchange Commission, in accordance with the provisions of and rules promulgated under Section 21F of the Securities
Exchange Act of 1934, as amended, or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions
of federal law or regulation, or (2) require notification or prior approval by Epsilon USA or Parent of any such report; provided
that I am not authorized to disclose communications with counsel that were made for the purpose of receiving legal advice or that contain
legal advice or that are protected by the attorney work product or similar privilege. Further, this Agreement does not limit my ability
to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government
Agency, including providing documents or other information, without notice to Epsilon USA. This Agreement does not limit my right to seek
an award pursuant to Section 21F of the Securities Exchange Act of 1934. In addition, for the avoidance of doubt, pursuant to the
federal Defend Trade Secrets Act of 2016, I shall not be held criminally or civilly liable under any federal or state trade secret
law for the disclosure of a trade secret that (x) is made (i) in confidence to a federal, state or local government official,
either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation
of law; or (y) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

7.            I
acknowledge by signing this Agreement that I have read and understand this document, that I have conferred with or had opportunity to
confer with my attorney regarding the terms and meaning of this Agreement, that I have had sufficient time to consider the terms provided
for in this Agreement, that no representations or inducements have been made to me except as set forth in this Agreement, and that I have
signed the same KNOWINGLY AND VOLUNTARILY.

 

    9

     

    

 

8.            If
any one or more of the provisions of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions will not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained
in this Agreement are held to be excessively broad as to duration, scope, activity or subject, such provisions will be construed by limiting
and reducing them so as to be enforceable to the maximum extent compatible with applicable law.

 

		 
	b. lane
bond	 
	 	 
	Date:____________________,
2022	 

 

    10

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