[Part I—Financial Information](index=4&type=section&id=Part%20I%E2%80%94Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended September 30, 2021, reflect increased total assets to $202.2 million, a net loss of $5.0 million primarily due to unrealized derivative losses, and stable operating cash flow of $18.8 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets increased to $202.2 million, total liabilities rose to $109.2 million, and total equity decreased to $93.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $19,314 | $8,911 | | **Total Property and Equipment, Net** | $182,271 | $191,053 | | **Total Assets** | **$202,178** | **$200,484** | | **Total Current Liabilities** | $26,675 | $14,120 | | **Total Liabilities** | **$109,203** | **$102,486** | | **Total Equity** | **$92,975** | **$97,998** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the nine months ended September 30, 2021, the company reported a net loss of $5.02 million, or ($2.52) per share, primarily due to a $7.16 million unrealized loss on derivative instruments, despite a 75% increase in oil and gas sales revenue Statement of Operations Summary (in thousands, except per share amounts) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total Revenues | $47,670 | $45,178 | | Total Costs and Expenses | $53,029 | $61,227 | | Gain on Sale of Assets | $111 | $14,967 | | Net (Loss) Income | $(5,017) | $(46) | | Net (Loss) Income Attributable to PrimeEnergy | $(5,021) | $65 | | Basic (Loss) Income Per Share | $(2.52) | $0.03 | [Condensed Consolidated Statement of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Equity) Total equity decreased by $5.0 million to $93.0 million as of September 30, 2021, primarily due to the net loss recorded during the period - Total equity decreased by **$5.0 million** during the first nine months of 2021, moving from **$98.0 million** to **$93.0 million**, mainly as a result of the period's net loss[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, net cash provided by operating activities was $18.8 million, while investing activities used $11.2 million and financing activities used $5.0 million, resulting in a $2.6 million increase in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $18,824 | $17,889 | | Net Cash (Used in) Investing Activities | $(11,190) | $(2,365) | | Net Cash (Used in) Financing Activities | $(5,006) | $(12,453) | | **Net Increase in Cash** | **$2,628** | **$3,071** | | **Cash at End of Period** | **$3,624** | **$4,086** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide details on accounting policies, long-term debt including a $40 million credit facility and PPP loans, and derivative instruments, which resulted in a net liability of $7.8 million as of September 30, 2021 - On February 11, 2021, the company amended its credit agreement, setting the borrowing base at **$40 million** and extending the maturity to February 11, 2023; as of September 30, 2021, **$31.5 million** was outstanding[28](index=28&type=chunk)[29](index=29&type=chunk) - The company received **$1.75 million** in PPP loans in May 2020 and has submitted an application for forgiveness[30](index=30&type=chunk) - The fair value of commodity derivative contracts shifted from a net liability of **$671 thousand** at year-end 2020 to a net liability of **$7.83 million** at September 30, 2021[44](index=44&type=chunk)[50](index=50&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operation) Management discusses the company's financial performance, noting a net loss despite increased oil and gas sales due to derivative losses and the absence of prior-year asset sales, while focusing on Permian Basin development and managing liquidity through operating cash flow and a revolving credit facility [Overview and Strategy](index=15&type=section&id=Overview%20and%20Strategy) PrimeEnergy is an independent oil and gas company focused on acquiring, developing, and producing properties primarily in Texas and Oklahoma, managing a balanced portfolio, and using derivative instruments to mitigate commodity price risk - The company is an independent oil and natural gas company with properties primarily in Texas and Oklahoma[55](index=55&type=chunk) - Primary sources of liquidity are cash from operations and a credit facility; the company uses derivative instruments to manage commodity price risk[55](index=55&type=chunk)[56](index=56&type=chunk) [District and Reserve Information](index=16&type=section&id=District%20and%20Reserve%20Information) As of December 31, 2020, total proved reserves decreased to 10,435 MBoe, with West Texas holding 79% and proved undeveloped reserves at 3,221 MBoe, resulting in a standardized measure of discounted future net cash flows of $41.6 million Proved Reserves by Region (as of Dec 31, 2020) | Region | Total Proved Reserves (MBoe) | % of Total | | :--- | :--- | :--- | | West Texas | 8,242 | 79% | | Mid-Continent | 1,670 | 16% | | Gulf Coast | 517 | 5% | | Other | 6 | <1% | | **Total** | **10,435** | **100%** | Total Proved Reserves Trend (MBoe) | Year-End | Proved Developed | Proved Undeveloped | Total Proved | | :--- | :--- | :--- | :--- | | 2018 | 12,622 | 43 | 12,665 | | 2019 | 10,268 | 3,608 | 14,235 | | 2020 | 7,214 | 3,221 | 10,435 | [Recent Activities and Future Development](index=18&type=section&id=Recent%20Activities%20and%20Future%20Development) The company is actively developing its Permian Basin acreage, completing nine new horizontal wells in Upton County in Q3 2021, with extensive future drilling plans in West Texas and Oklahoma, potentially adding hundreds of new wells - In Q3 2021, **nine new horizontal wells** on the Kashmir tract in Upton County, TX, were completed and began production by October 4, 2021; the company's investment is approximately **$24 million** for a **47.5%** working interest[80](index=80&type=chunk) - The company has extensive future development plans in the Permian Basin, anticipating the drilling of **over 250 additional horizontal wells** across its acreage in Reagan, Upton, and Martin counties[82](index=82&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[95](index=95&type=chunk) - In Oklahoma, the company participated in drilling **four horizontal wells** in Q2 2021 and believes its acreage could support up to **49 new horizontal wells**[81](index=81&type=chunk)[100](index=100&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources are operating cash flow, which was $18.8 million for the first nine months of 2021, and a revolving credit facility with a $40 million borrowing base, $8.5 million available, and an expected increase to $50 million - Net cash provided by operating activities was **$18.8 million** for the nine months ended September 30, 2021[88](index=88&type=chunk) - As of September 30, 2021, the company had **$31.5 million** in outstanding borrowings under its credit facility, with **$8.5 million** in availability; the borrowing base is expected to be increased to **$50 million**[92](index=92&type=chunk) - The company is required to hedge a portion of its production and has swap agreements in place for oil and natural gas through 2023[93](index=93&type=chunk)[94](index=94&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) For the first nine months of 2021, the company shifted from a $65 thousand income to a $5.0 million loss, despite a 75.2% increase in oil and gas revenue to $46.1 million, primarily due to unrealized derivative losses and the absence of a $15.0 million gain on asset sales from the prior year Production and Price Comparison (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Oil Production (MBbls) | 480 | 538 | (10.8)% | | Avg. Oil Price ($/Bbl) | $63.28 | $38.41 | +64.8% | | Gas Production (MMcf) | 2,395 | 2,038 | +17.5% | | Avg. Gas Price ($/Mcf) | $3.32 | $1.20 | +177.1% | | **Total Oil & Gas Revenue (in 000's)** | **$46,105** | **$26,316** | **+75.2%** | - General and administrative expenses for the nine months ended Sep 30, 2021, decreased by **42.0%** to **$7.5 million** from **$12.9 million** in the prior year, primarily due to lower employee wages and staff reductions in 2020[112](index=112&type=chunk) - A **$15.0 million** gain on the sale of assets in the first nine months of 2020, primarily from undeveloped acreage in West Texas, was not repeated in 2021[113](index=113&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide disclosures regarding market risk - As a smaller reporting company, no response is required for this item[116](index=116&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the first nine months of 2021 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures are **effective**[117](index=117&type=chunk) - **No material changes** occurred in the Company's internal control over financial reporting during the first nine months of 2021[118](index=118&type=chunk) [Part II—Other Information](index=24&type=section&id=Part%20II%E2%80%94Other%20Information) [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[120](index=120&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is not required to provide disclosures regarding risk factors - As a smaller reporting company, no response is required for this item[121](index=121&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any equity securities or repurchase shares under its authorized program during the nine months ended September 30, 2021, with 147,021 shares remaining available for repurchase - **No shares** of common stock were repurchased during the nine months ended September 30, 2021[123](index=123&type=chunk)[124](index=124&type=chunk) - The Board of Directors has authorized a total of **3,700,000 shares** for the stock repurchase program; through September 30, 2021, a total of **3,552,279 shares** have been repurchased[124](index=124&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[125](index=125&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) The company reported no other material information - None[125](index=125&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the 10-Q report, including corporate governance documents, credit agreements, officer certifications, and XBRL data files - The report includes various exhibits, such as amendments to the credit agreement, CEO/CFO certifications, and XBRL interactive data files[127](index=127&type=chunk)[128](index=128&type=chunk)

Part I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the six months ended June 30, 2021, the company reported a net loss of $3.9 million, an improvement from a $6.4 million loss in the same period of 2020, with total assets slightly decreasing to $198.5 million and liabilities increasing to $104.4 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets were $198.5 million, a slight decrease from $200.5 million at December 31, 2020, primarily due to a reduction in net property and equipment, while total liabilities increased to $104.4 million Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $15,673 | $8,911 | | **Total Property and Equipment, Net** | $182,394 | $191,053 | | **Total Assets** | **$198,505** | **$200,484** | | **Total Current Liabilities** | $20,666 | $14,120 | | **Total Liabilities** | **$104,376** | **$102,486** | | **Total Equity** | **$94,129** | **$97,998** | | **Total Liabilities and Equity** | **$198,505** | **$200,484** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $2.4 million for Q2 2021, a significant improvement from the $6.8 million loss in Q2 2020, driven by increased oil, gas, and NGL sales due to higher commodity prices Condensed Consolidated Statements of Operations (in thousands) | (In thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $13,663 | $7,278 | $28,635 | $33,386 | | **Total Costs and Expenses** | $16,751 | $17,625 | $33,117 | $43,447 | | **(Loss) from Operations** | $(2,982) | $(10,265) | $(4,376) | $(9,867) | | **Net (Loss)** | $(2,412) | $(6,786) | $(3,869) | $(6,990) | | **Net (Loss) Attributable to PrimeEnergy** | $(2,403) | $(6,266) | $(3,858) | $(6,436) | | **Basic (Loss) Per Common Share** | $(1.20) | $(3.14) | $(1.93) | $(3.23) | [Condensed Consolidated Statement of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Equity) Total equity decreased from $98.0 million at the end of 2020 to $94.1 million as of June 30, 2021, primarily due to the net loss incurred during the first six months of the year - The company's total equity decreased by **$3.87 million** in the first six months of 2021, moving from **$97.998 million** at December 31, 2020, to **$94.129 million** at June 30, 2021, primarily driven by the net loss of **$3.869 million** during the period[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash provided by operating activities was $11.4 million, an increase from $8.8 million in the prior-year period, with cash and cash equivalents increasing by $2.8 million to $3.8 million Condensed Consolidated Statements of Cash Flows (in thousands) | (In thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $11,424 | $8,803 | | **Net Cash (Used in) Investing Activities** | $(3,623) | $(5,852) | | **Net Cash (Used in) Provided by Financing Activities** | $(5,000) | $534 | | **Net Increase in Cash and Cash Equivalents** | $2,801 | $3,485 | | **Cash and Cash Equivalents at End of Period** | $3,797 | $4,500 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, debt structure, and derivative instruments, including a $40 million credit facility with $32 million outstanding and a significant increase in derivative liabilities to $6.6 million - The company's credit agreement was amended in February 2021, setting the borrowing base at **$40 million** and extending the maturity to February 11, 2023, with **$32 million** outstanding and **$8 million** available as of June 30, 2021[25](index=25&type=chunk)[26](index=26&type=chunk) - In May 2020, subsidiaries received PPP loans totaling **$1.75 million**, with proceeds used for qualifying expenses and an application for forgiveness submitted[27](index=27&type=chunk) - The fair value of commodity derivative contract liabilities increased significantly from **$0.768 million** at year-end 2020 to **$6.64 million** at June 30, 2021, with value changes recognized in earnings as these derivatives are not designated as hedges[42](index=42&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operation) Management attributes improved Q2 2021 results to higher commodity prices, which more than offset lower production volumes, with the company maintaining liquidity through cash from operations and its revolving credit facility [Overview](index=15&type=section&id=Overview) The company's strategy focuses on developing oil and gas reserves through horizontal drilling, primarily in the Permian Basin and Oklahoma, with financial results highly dependent on volatile commodity prices managed through derivative instruments - The company's core strategy is to develop its extensive oil and gas reserves through horizontal drilling[54](index=54&type=chunk) - Key acreage positions are in the Permian Basin (**12,460 net acres**) with potential for **250 additional horizontal wells**, and Oklahoma (**10,300 net acres**) with potential for **49 new horizontal wells**[58](index=58&type=chunk) [District Information](index=16&type=section&id=District%20Information) The company operates in three main regions: Gulf Coast, Mid-Continent, and West Texas, with West Texas being the most significant, accounting for 79% of total proved reserves and the majority of daily production as of year-end 2020 Proved Reserves and Production by Region | Region | Proved Reserves (MBoe) | % of Total | Avg. Daily Production (Boe/day) | | :--- | :--- | :--- | :--- | | West Texas | 8,242 | 79% | 3,178 | | Mid-Continent | 1,670 | 16% | 788 | | Gulf Coast | 517 | 5% | 297 | [Reserve Information](index=17&type=section&id=Reserve%20Information) As of December 31, 2020, total proved reserves were 10,435 MBoe, a decrease from 14,235 MBoe at year-end 2019, with the standardized measure of discounted future net cash flows significantly down to $41.6 million due to lower average commodity prices Proved Reserves and Standardized Measure | As of December 31, | Total Proved Reserves (MBoe) | Proved Undeveloped (MBoe) | Standardized Measure ($ thousands) | | :--- | :--- | :--- | :--- | | **2020** | 10,435 | 3,221 | $41,619 | | **2019** | 14,235 | 3,608 | $81,612 | | **2018** | 12,665 | 43 | $137,909 | - The average oil price used for 2020 reserve calculations was **$39.57 per barrel**, compared to **$55.69** in 2019, while the average natural gas price was **$1.985 per MMBtu**, down from **$2.58** in 2019[77](index=77&type=chunk) [Recent Activities](index=18&type=section&id=Recent%20Activities) The company is actively pursuing development through joint ventures, including completing nine horizontal wells in Upton County, TX, and establishing significant joint development agreements in Reagan County, TX, and Canadian County, OK - Participated with Apache Corporation in completing **nine horizontal wells** in Upton County, TX, with a total net investment of approximately **$27.8 million**, which are currently being placed on production as of August 23, 2021[66](index=66&type=chunk)[81](index=81&type=chunk) - Agreed to jointly develop approximately **3,680 gross acres** with Pioneer Natural Resources in Reagan County, TX, which could facilitate up to **108 horizontal laterals** with a net investment of approximately **$236 million**[83](index=83&type=chunk) - Participating in **four horizontal wells** in Canadian County, OK, operated by Ovintiv, with an **11.25% interest** and a net investment of approximately **$1.98 million**[85](index=85&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations, which provided $11.4 million in the first half of 2021, and its revolving credit facility, which had $8 million in availability as of August 23, 2021 - Net cash provided by operating activities was **$11.4 million** for the six months ended June 30, 2021, compared to **$8.8 million** for the same period in 2020[88](index=88&type=chunk) - As of August 23, 2021, the company had **$32 million** in outstanding borrowings under its **$40 million** borrowing base, with **$8 million** in availability, and the credit facility matures in February 2023[92](index=92&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) For Q2 2021, oil, gas, and NGL sales increased by 230.3% to $15.4 million, driven by significantly higher average sales prices that offset production declines, contributing to a narrower net loss for the six-month period Oil, Gas, and NGL Revenue and Average Prices (in thousands) | Six Months Ended June 30, | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Oil Revenue (in 000's)** | $19,934 | $14,324 | 39.2% | | Average Oil Price | $60.77 | $37.89 | 60.4% | | **Gas Revenue (in 000's)** | $3,950 | $1,389 | 184.4% | | Average Gas Price | $2.73 | $0.77 | 254.5% | | **NGL Revenue (in 000's)** | $4,149 | $1,738 | 138.7% | | Average NGL Price | $21.28 | $8.16 | 160.7% | - Lease operating expense decreased by **15.9%** to **$10.6 million** for the six months ended June 30, 2021, due to the sale or shut-in of high-cost properties[108](index=108&type=chunk) - General and administrative expense decreased by **50.4%** to **$5.1 million** for the six months ended June 30, 2021, reflecting staff reductions and lower compensation[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, PrimeEnergy Resources Corporation is not required to provide a response for this item - The Company is a smaller reporting company and no response is required pursuant to this Item[115](index=115&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the reporting period, with no material changes to internal control over financial reporting during the first six months of 2021 - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective[116](index=116&type=chunk) - No changes in internal control over financial reporting occurred during the first six months of 2021 that have materially affected, or are reasonably likely to materially affect, these controls[117](index=117&type=chunk) Part II [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[120](index=120&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, PrimeEnergy Resources Corporation is not required to provide a response for this item - The Company is a smaller reporting company and no response is required pursuant to this Item[121](index=121&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities or repurchase any shares under its authorized stock repurchase program during the six months ended June 30, 2021, with 147,721 shares remaining available for purchase - There were no sales of equity securities by the Company during the period covered by this report[122](index=122&type=chunk) - No shares were repurchased during the six months ended June 30, 2021, and the company has **147,721 shares** remaining that may be purchased under its stock repurchase program[123](index=123&type=chunk) [Defaults Upon Senior Securities](index=25&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[124](index=124&type=chunk) [Other Information](index=25&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[124](index=124&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q report, including the Certificate of Incorporation, Bylaws, various credit agreements and amendments, and officer certifications as required by the Sarbanes-Oxley Act - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[128](index=128&type=chunk) - Exhibits filed include the Sixth Amendment to the Third Amended and Restated Credit Agreement, dated February 11, 2021[127](index=127&type=chunk)

Part I—Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) PrimeEnergy Resources Corporation reported a **$1.46 million** net loss for Q1 2021, with total assets slightly down and operating cash flow decreasing [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets slightly decreased to **$199.3 million**, total liabilities remained stable at **$102.8 million**, and total equity declined to **$96.5 million** due to the net loss Condensed Consolidated Balance Sheets (Unaudited) | (Thousands of dollars) | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $ 12,978 | $ 8,911 | | **Total Property and Equipment, Net** | $ 185,356 | $ 191,053 | | **Total Assets** | **$ 199,338** | **$ 200,484** | | **Total Current Liabilities** | $ 15,690 | $ 14,120 | | **Total Liabilities** | **$ 102,797** | **$ 102,486** | | **Total Equity** | **$ 96,541** | **$ 97,998** | | **Total Liabilities and Equity** | **$ 199,338** | **$ 200,484** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2021, the company reported a net loss of **$1.46 million**, significantly higher than the **$0.20 million** loss in Q1 2020, primarily due to a **$7.5 million** swing in derivative instrument gains/losses Condensed Consolidated Statements of Operations (Unaudited) | (Thousands of dollars, except per share) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Total Revenues** | $ 14,972 | $ 26,108 | | **Total Costs and Expenses** | $ 16,366 | $ 25,822 | | **(Loss) Income from Operations** | $ (1,394) | $ 398 | | **Net (Loss)** | **$ (1,457)** | **$ (204)** | | **Net (Loss) Attributable to PrimeEnergy** | $ (1,455) | $ (170) | | **Basic & Diluted (Loss) Per Common Share** | **$ (0.73)** | **$ (0.09)** | [Condensed Consolidated Statement of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Equity) Total equity decreased by **$1.46 million** during Q1 2021, from **$98.0 million** to **$96.5 million**, solely due to the net loss for the period - Total equity decreased by **$1.46 million** during Q1 2021, from **$98.0 million** to **$96.5 million**, entirely due to the net loss for the period[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$4.7 million** in Q1 2021 from **$7.4 million** in Q1 2020, with cash and cash equivalents increasing by **$3.0 million** to **$4.0 million** Condensed Consolidated Statements of Cash Flows (Unaudited) | (Thousands of dollars) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Net Cash provided by Operating Activities** | $ 4,732 | $ 7,380 | | **Net Cash (Used in) Investing Activities** | $ (660) | $ (1,471) | | **Net Cash (Used in) Financing Activities** | $ (1,050) | $ (709) | | **Net Increase in Cash and Cash Equivalents** | $ 3,022 | $ 5,200 | | **Cash and Cash Equivalents at End of Period** | **$ 4,018** | **$ 6,215** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's **$40 million** credit facility with **$36.0 million** outstanding, **$1.76 million** in PPP loans, and a **$1.58 million** net liability from derivative instruments - On February 11, 2021, the company amended its credit agreement, establishing a borrowing base of **$40 million** and extending the maturity to February 11, 2023[26](index=26&type=chunk) - As of March 31, 2021, the company had **$36.0 million** of borrowings outstanding under its revolving credit facility at a weighted-average interest rate of **5.31%**, with **$4.05 million** available for future borrowings[27](index=27&type=chunk) - The company's subsidiaries received PPP loans totaling **$1.75 million** in May 2020, which are accounted for as financial liabilities pending a forgiveness application[28](index=28&type=chunk) Fair Value of Derivative Instruments (March 31, 2021) | (Thousands of dollars) | Asset | Liability | | :--- | :--- | :--- | | **Commodity derivative contracts** | $ 94 | $ (1,676) | | **Total** | **$ 94** | **$ (1,676)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operation) Management attributes the **$1.46 million** Q1 2021 net loss to unrealized derivative losses, despite higher commodity prices offsetting decreased production volumes, while focusing on Permian Basin development and financial flexibility [Overview and Strategy](index=14&type=section&id=Overview%20and%20Strategy) The company's strategy focuses on acquiring and operating producing properties for cost-efficient growth of its oil and gas reserve base, with significant horizontal drilling potential in its Permian Basin and Oklahoma acreage - The company's main objective is to acquire income-producing assets to build stockholder value through consistent, cost-efficient growth in its oil and gas reserve base[54](index=54&type=chunk) - The company believes its Permian Basin acreage could support up to **250** additional horizontal wells, and its Oklahoma acreage could support up to **52** new horizontal wells[58](index=58&type=chunk)[59](index=59&type=chunk) [District and Reserve Information](index=16&type=section&id=District%20and%20Reserve%20Information) As of December 31, 2020, total proved reserves decreased to **10,435 MBoe**, with **79%** in West Texas, and the standardized measure of discounted future net cash flows (PV-10) declined to **$41.6 million** Proved Reserves by Region (as of Dec 31, 2020) | (MBoe) | Gulf Coast | Mid Continent | West Texas | Total | | :--- | :--- | :--- | :--- | :--- | | **Developed** | 517 | 1,575 | 5,116 | 7,214 | | **Undeveloped** | — | 95 | 3,126 | 3,221 | | **Total** | **517** | **1,670** | **8,242** | **10,435** | Total Proved Reserves by Category (MBoe) | As of December 31, | 2019 | 2020 | | :--- | :--- | :--- | | **Proved Developed** | 10,268 | 7,214 | | **Proved Undeveloped** | 3,608 | 3,221 | | **Total Proved** | **14,235** | **10,435** | - The standardized measure of discounted future net cash flows from proved reserves decreased to **$41.6 million** at year-end 2020 from **$81.6 million** at year-end 2019[75](index=75&type=chunk) [Recent Activities](index=19&type=section&id=Recent%20Activities) The company continues horizontal drilling in the Permian Basin, investing approximately **$111.2 million** in 77 wells since 2015, with nine new wells in Upton County, Texas, costing an estimated **$26.7 million** slated for Q2 2021 completion - The company's strategy is to develop its reserves primarily through horizontal drilling, which it believes provides superior economic results compared to vertical development[81](index=81&type=chunk) - Nine horizontal wells in Upton County, TX are scheduled for completion by the end of Q2 2021, with the company's **47.5%** interest costing approximately **$26.7 million**[87](index=87&type=chunk) - In May 2021, the company agreed to participate in drilling four horizontal wells in Canadian County, OK, with an **11.25%** interest and an investment of approximately **$1.98 million**[90](index=90&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) The net loss increased to **$1.46 million** in Q1 2021 due to **$0.91 million** unrealized derivative losses, despite higher commodity prices offsetting **30%** production volume decreases, while operating expenses significantly declined due to staff reductions Production Volumes and Average Sales Prices (Q1 2021 vs Q1 2020) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | **Oil Produced (Bbls)** | 163,000 | 234,000 | (30.3)% | | **Avg. Oil Price ($/Bbl)** | $56.87 | $45.77 | +24.3% | | **Gas Sold (Mcf)** | 665,000 | 938,000 | (29.1)% | | **Avg. Gas Price ($/Mcf)** | $2.49 | $0.90 | +177.0% | | **NGLs Sold (Bbls)** | 86,000 | 127,000 | (32.3)% | | **Avg. NGL Price ($/Bbl)** | $20.29 | $9.79 | +107.3% | - Unrealized losses on derivative instruments were **$0.91 million** in Q1 2021, compared to unrealized gains of **$6.56 million** in Q1 2020, a major driver of the increased net loss[13](index=13&type=chunk)[97](index=97&type=chunk) - General and administrative expense decreased by **$5.1 million** (**66%**) YoY, primarily due to staff cutbacks implemented in late Q1 2020[102](index=102&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources are cash from operations and a **$40 million** revolving credit facility with **$4.05 million** available, with future capital spending discretionary and dependent on cash flows and market conditions - Net cash from operations was **$4.7 million** for Q1 2021, down from **$7.4 million** in Q1 2020[106](index=106&type=chunk) - The company's credit facility has a borrowing base of **$40 million**, with **$4.05 million** in availability as of May 15, 2021, and the next borrowing base review is scheduled for July 2021[110](index=110&type=chunk) Commodity Hedging Swap Agreements (as of March 31, 2021) | Commodity | 2021 Volume | 2021 Avg. Price | 2022 Volume | 2022 Avg. Price | | :--- | :--- | :--- | :--- | :--- | | **Natural Gas** | 1,219,000 MMBTU | $2.48 | 928,000 MMBTU | $2.67 | | **Oil** | 157,500 barrels | $53.60 | 196,200 barrels | $51.99 | [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, PrimeEnergy is not required to provide a response to this item - As a smaller reporting company, no response is required for this item[122](index=122&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of the period end, with no material changes to internal control over financial reporting during Q1 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[123](index=123&type=chunk) - No material changes were made to the company's internal control over financial reporting during Q1 2021[124](index=124&type=chunk) Part II - Other Information [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[126](index=126&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, PrimeEnergy is not required to provide a response for this item - The Company is a smaller reporting company and no response is required pursuant to this Item[127](index=127&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities or repurchase shares during Q1 2021, with **147,721** shares remaining authorized for future repurchase - There were no purchases of equity securities by the company during the first quarter of 2021[128](index=128&type=chunk) - As of March 31, 2021, a total of **3,552,279** shares have been repurchased under the stock repurchase program for **$74.9 million**, at an average price of **$21.09** per share, with **147,721** shares remaining available for repurchase[129](index=129&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[130](index=130&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[131](index=131&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q report, including corporate governance documents, credit agreements, and officer certifications - Exhibits filed with the report include the Certificate of Incorporation, Bylaws, various amendments to the Credit Agreement, and certifications by the CEO and CFO[132](index=132&type=chunk)[133](index=133&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to . is Commission File Number 0-7406 PrimeEnergy Resources Corporation (Exact name of registrant as specified in its charter) Delaware 84-063734 ...