Prairie Operating Co. (NASDAQ:PROP) is one of the Reddit stocks that will go to the moon. On October 14, Clear Street analyst Tim Moore lowered the firm’s price target on Prairie Operating to $10 from $11 and kept a Buy rating on the shares. The firm reduced the company’s Q3 and Q4 estimates for 2025 to reflect slightly lower volume forecast. Clear Street thinks that the company’s Operations offer an attractive risk/reward profile as the Q3 2025 report approaches, due to substantial upside potential. Earli ...

Core Insights - Prairie Operating Co. (NASDAQ:PROP) is recognized as one of the best oil and gas penny stocks to buy, highlighting its significant upside potential according to analysts [1]. Production and Operations - Prairie Operating Co. has completed nine wells from its Opal/Coalbank pad, achieving a first 30-day average production rate of 525 barrels of oil equivalent per day (boepd) [2]. - The company is advancing several projects in the Denver-Julesburg Basin, bolstered by wells acquired in the Bayswater deal [3]. - The Nobel pad is currently drilling four 2-mile U-turn wells and three 1-mile laterals, with initial output expected by Q4 2025. Additionally, 11 wells in the Niobrara and Codell zones are being turned to sales at the Rusch pad [4]. - Six 2-mile wells are scheduled for completion later this year at the Simpson pad, contributing to the company's operational progress [4]. Strategic Acquisitions - Prairie Operating Co. completed two bolt-on acquisitions last month, enhancing its oil-weighted inventory and adding 16,000 net acres to its holdings [4].

Core Viewpoint - Prairie Operating Co. (PROP) and Ring Energy (REI) are two smaller oil and energy companies in the U.S. market, both trading under $5 per share and facing a challenging environment, making it essential for investors to compare their prospects [1][2]. Company Overview - PROP is aggressively expanding in the Denver-Julesburg (DJ) Basin, while REI is adopting a more measured growth strategy in the Permian Basin [2]. Prairie Operating Co. (PROP) Analysis - PROP has expanded its land to approximately 60,000 acres, allowing for a decade of drilling potential, and achieved a fivefold production increase in Q2 2025 compared to the previous quarter [3]. - The company plans to bring 41 new wells online in 2025, but faces risks from ambitious growth targets and rising drilling costs, which may impact profitability [4]. - Financially, PROP's foundation is weakening due to significant equity dilution, with Q2 2025 average output at 21,052 barrels of oil-equivalent per day, falling short of expectations [5]. - Well costs exceeded projections, further reducing project returns, and the fully diluted share count increased significantly due to Series F preferred equity [6]. Ring Energy (REI) Analysis - REI reported record oil sales in Q2 2025, exceeding forecasts, with over 70% of its production being oil, leading to higher profit margins [7]. - The company generated $25 million in free cash flow, allowing for debt repayment and future project funding, while managing costs effectively with a 12% reduction in lease operating expenses [8]. - Despite its strengths, REI faces challenges with high debt levels nearing $450 million, which could limit financial flexibility if oil prices decline [9]. Price Performance - Over the past year, PROP's stock has dropped 74%, while REI's shares have decreased by 40%, indicating greater investor skepticism towards PROP's growth strategy and dilution risks [10][11]. Valuation Comparison - REI trades at 0.58X forward price-to-sales with a Zacks Value Score of A, reflecting its high-margin production and cash generation, while PROP trades at 0.21X forward sales with a Value Score of C, indicating concerns over dilution and financial stability [13]. Earnings Outlook - The Zacks Consensus Estimate for REI's 2025 earnings has increased by 20% over the past 30 days, while PROP has seen no upward revisions and a 38% cut to 2026 estimates, suggesting analysts view REI more favorably [14][16]. Conclusion - PROP's rapid expansion presents significant risks due to financial weaknesses and operational challenges, while REI offers more stable cash flow and better cost management, positioning it more favorably in the current market [18].

Core Viewpoint - Prairie Operating Co. is focused on enhancing production growth, margins, and cash flow through operational optimization and a robust drilling schedule in the Denver-Julesburg Basin [3][11]. Operations Update - The company has successfully integrated acquired assets, leading to increased production growth and cash flow [3]. - An initial batch of 32 high-return workovers is planned for the third and fourth quarters of 2025 [3]. 2025 Drilling Schedule - The company plans to drill a total of 41 wells in 2025, with specific pads and formations outlined for each quarter [4]. - The drilling program includes: - Shelduck Pad: 8 wells - Opal/Coalbank Pad: 9 wells - Rusch Pad: 11 wells - Noble Pad: 7 wells - Simpson Pad: 6 wells - New Locations: 10 wells - Workovers: 32 wells [4]. Recent Performance Highlights - The Opal/Coalbank pad has exceeded expectations with an average initial production rate of approximately 525 barrels of oil equivalent per day (boepd) per well over the first 30 days [7]. - The Rusch Pad has completed drilling and is expected to contribute significantly to production growth in the second half of 2025 [7]. - The Noble Pad features the company's first U-turn wells, designed for cost efficiency, with first production anticipated in Q4 2025 [7]. - The Simpson Pad is currently drilling and expected to finalize completions in Q4 2025 [7].

Core Insights - Prairie Operating Co. has significantly increased its production, achieving an average of 21,052 barrels of oil equivalent per day (Boe/d) in Q2 2025, which is over five times its Q1 output [1][10] - The company has a robust drilling schedule, having drilled 18 wells and completed nine during the quarter, showcasing efficiency with eight wells drilled in one continuous run at the Rusch pad [2][10] - Prairie is focused on cost management and efficiency, reducing drilling times to just over five days and utilizing an electric frac fleet to lower emissions [3][10] Production and Drilling Activity - The surge in production is attributed to a busy drilling schedule, with Prairie drilling 18 wells and completing nine in Q2 2025 [2] - The company employed innovative techniques such as U-shaped laterals to enhance production while minimizing land use [2] - Prairie anticipates maintaining strong output levels in 2025, projecting an average production between 24,000 Boe/d and 26,000 Boe/d [2] Cost Management and Efficiency - Prairie has successfully cut drilling times to just over five days while keeping expenditures nearly on budget [3] - The deployment of an electric frac fleet has contributed to reduced emissions and faster completion times [3] Market Position and Strategy - Prairie Operating Co. has secured 157 permits and identified around 700 drilling locations, providing a strong inventory for over 10 years [6] - The company is focusing on the DJ Basin while larger competitors like Chevron and Civitas Resources are diversifying their efforts, allowing Prairie to capture value in a less competitive environment [4][6] Stock Performance and Valuation - Shares of Prairie Operating Co. have declined over 60% this year, contrasting with a 5.4% increase in the Oil/Energy sector [7] - The company is currently trading at a discount in terms of forward price-to-sales ratio compared to the industry average [8]

Core Viewpoint - Prairie Operating Co. has successfully closed two bolt-on acquisitions, adding approximately 16,000 net acres and significant new inventory, which strengthens its oil-weighted asset base and aligns with its growth strategy [1][2][3]. Group 1: Acquisitions - The recent acquisitions add around 16,000 net acres and include permitted locations, sourced off-market and funded with existing working capital, expected to be immediately accretive [2]. - The acquisitions are part of the company's strategy focused on disciplined capital allocation and opportunistic consolidation [3]. Group 2: Company Overview - Prairie Operating Co. is an independent energy company based in Houston, engaged in the development and acquisition of oil, natural gas, and natural gas liquids in the Denver-Julesburg (DJ) Basin, particularly in the Niobrara and Codell formations [7][8]. - The company emphasizes responsible development and aims to maximize returns through consistent growth, capital discipline, and sustainable cash flow generation [8].

Financial Data and Key Metrics Changes - The company generated $38.6 million in adjusted EBITDA for Q2 2025, representing over a 600% increase quarter over quarter [11][12] - Net income for the quarter totaled $35.7 million, reflecting disciplined capital deployment [12] - Total revenue for the quarter was $68.1 million, supported by realized prices of $65.66 per barrel of oil, $8.7 per barrel for natural gas liquids, and $1.8 per Mcf for natural gas [12][13] - Total operating expenses were $25.66 per BOE, including lease operating expenses of $5.92 per BOE and general and administrative expenses of $8.58 per BOE [13][14] Business Line Data and Key Metrics Changes - The company achieved record production of 21,052 barrels of oil equivalent per day, with approximately 50% being oil, marking a 540% increase quarter over quarter [6][12] - Capital expenditures totaled $56.6 million for the quarter, aligned with the one rig development program targeting approximately 60 wells per year [5][14] Market Data and Key Metrics Changes - The company has a robust pipeline of accretive acquisition targets and is in the process of closing two additional acquisitions, adding approximately 18,000 net acres expected to close in Q3 [7][9] - The company’s hedging program covers approximately 85% of proved developed production, securing pricing of $68.04 per barrel of oil through 2025 [9][15] Company Strategy and Development Direction - The company focuses on delivering long-term sustainable value through disciplined growth, strong capital efficiency, and opportunistic portfolio expansion [4][29] - The strategy includes both organic growth and continued consolidation through acquisitions, with a commitment to capital efficiency and operational excellence [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving corporate cash flow breakeven and emphasized the importance of returning capital to shareholders through dividends [10][29] - The company revised its full-year production guidance from 7,000-8,000 BOE per day to 24,000-26,000 BOE per day, reflecting enhanced visibility and successful integration of recent acquisitions [28][29] Other Important Information - The company ended the quarter with total proved reserves of approximately 100 million BOE, with 55 million BOE classified as proved developed producing [16][17] - The integration of recently acquired assets has been seamless, with a focus on operational efficiency and cost control [17][18] Q&A Session Summary Question: Thoughts on M&A market and measuring returns on development locations - Management highlighted a disciplined approach to acquisitions, focusing on accretive deals at lower multiples compared to peers [35][36] Question: Key components to reduce well costs - Management discussed strategies to reduce well costs from $5.6 million to $5 million, emphasizing cost discipline and competitive vendor processes [38][39] Question: Learning curve with Bayswater assets and current production levels - Management noted that production from Bayswater assets was impacted by timing of the acquisition and expected to ramp up steadily [45][46] Question: Update on Rush Pad completions - Management confirmed that completions are on schedule and expressed excitement about the potential production rates [48][49] Question: Clarification on production numbers from Bayswater - Management clarified that the reported production numbers were accurate based on the effective date of the acquisition [56][57] Question: Guidance on future production and capital expenditures - Management indicated a significant ramp in production expected in Q3 and Q4, with capital expenditures aligned with guidance [59][61]

PART I FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The company's financial statements reflect a significant transformation driven by acquisitions, resulting in substantial revenue and asset growth [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet expanded dramatically due to acquisitions, with total assets increasing nearly 5.5-fold, funded by significant debt and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$858,540** | **$156,554** | **+448.4%** | | Cash and cash equivalents | $10,653 | $5,192 | +105.2% | | Total property and equipment, net | $738,313 | $134,620 | +448.4% | | **Total Liabilities** | **$599,777** | **$103,786** | **+477.9%** | | Credit facility | $387,000 | $28,000 | +1282.1% | | **Mezzanine Equity** | **$164,590** | **$0** | **N/A** | | **Total Stockholders' Equity** | **$94,173** | **$52,768** | **+78.5%** | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company generated significant revenue for the first time, shifting from a net loss to a net income from continuing operations in Q2 2025 Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$68,100** | **$0** | **$80,915** | **$0** | | Income (loss) from operations | $18,936 | $(8,569) | $20,687 | $(16,613) | | Unrealized gain on derivatives | $23,206 | $0 | $23,090 | $0 | | **Net income (loss) from continuing operations** | **$35,683** | **$(8,514)** | **$33,066** | **$(16,506)** | | Net income (loss) attributable to common stockholders | $48,503 | $(8,514) | $(44,971) | $(17,551) | | **Diluted EPS** | **$0.18** | **$(3.49)** | **$(1.27)** | **$(1.60)** | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow turned positive while investing activities were dominated by acquisitions, funded by substantial financing inflows Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $9,722 | $(8,448) | | Net cash used in investing activities | $(522,289) | $(11,841) | | Net cash provided by financing activities | $518,028 | $9,478 | | **Net increase (decrease) in cash** | **$5,461** | **$(10,811)** | - The primary use of cash in investing activities was **$467.5 million** paid for the Bayswater asset purchase[32](index=32&type=chunk) - Financing activities were driven by **$359.0 million** in borrowings on the Credit Facility, **$148.3 million** from Series F Preferred Stock issuance, and **$43.8 million** from Common Stock issuance[32](index=32&type=chunk) [Note 1 – Organization, Description of Business, and Basis of Presentation](index=15&type=section&id=Note%201%20%E2%80%93%20Organization%2C%20Description%20of%20Business%2C%20and%20Basis%20of%20Presentation) The company is an independent oil and gas producer focused on the DJ Basin, having recently exited the cryptocurrency mining business - The company's strategic focus is on the acquisition and development of crude oil, natural gas, and NGLs in the DJ Basin[35](index=35&type=chunk) - The company exited the cryptocurrency mining business in January 2024; these activities are now classified as discontinued operations[39](index=39&type=chunk) - As of June 30, 2025, the company had a working capital deficit of **$64.2 million** and an accumulated deficit of **$86.7 million**, but management does not believe there is substantial doubt about its ability to continue as a going concern due to available liquidity[43](index=43&type=chunk)[48](index=48&type=chunk) [Note 3 – Acquisitions](index=20&type=section&id=Note%203%20%E2%80%93%20Acquisitions) The company completed two major asset acquisitions, Bayswater and NRO, for a combined consideration of over $545 million Bayswater Acquisition Preliminary Purchase Price Allocation (in thousands) | Component | Amount | | :--- | :--- | | Cash consideration | $466,402 | | Common stock issued to sellers | $16,000 | | Direct transaction costs | $7,094 | | **Total consideration** | **$489,496** | | *Allocation to Oil and natural gas properties* | *$526,163* | - The Bayswater Acquisition closed on March 26, 2025, and was funded with cash on hand, proceeds from stock issuances, and borrowings under the Credit Facility[67](index=67&type=chunk) - The NRO Acquisition closed on October 1, 2024, with a final purchase price of **$55.5 million**[74](index=74&type=chunk) [Note 5 – Derivative Instruments](index=24&type=section&id=Note%205%20%E2%80%93%20Derivative%20Instruments) The company utilizes commodity swap contracts to hedge production, recognizing significant realized and unrealized gains in the first half of 2025 - As of June 30, 2025, the company had outstanding commodity swap contracts for crude oil, natural gas, and NGLs extending through 2028[83](index=83&type=chunk) Gains on Derivatives for Six Months Ended June 30, 2025 (in thousands) | Type | Amount | | :--- | :--- | | Realized gain on derivatives (cash settlements) | $4,162 | | Unrealized gain on derivatives (non-cash) | $23,090 | | **Total gain on derivatives, net** | **$27,252** | [Note 10 – Debt](index=34&type=section&id=Note%2010%20%E2%80%93%20Debt) The company's debt structure was significantly altered, with a new $1.0 billion credit facility and the full conversion of its senior convertible note - The Credit Facility was amended and restated with a maximum commitment of **$1.0 billion** and a borrowing base of **$475.0 million**, maturing in March 2029[118](index=118&type=chunk) - As of June 30, 2025, the company had **$387.0 million** of borrowings outstanding under the Credit Facility, with **$88.0 million** of availability[119](index=119&type=chunk) - The Senior Convertible Note was fully converted into **2.1 million shares** of common stock during the first quarter of 2025[132](index=132&type=chunk) [Note 13 – Mezzanine Equity](index=40&type=section&id=Note%2013%20%E2%80%93%20Mezzanine%20Equity) The company issued $148.3 million of Series F Convertible Preferred Stock, classified as mezzanine equity, to fund the Bayswater Acquisition - Issued 148,250 shares of Series F Preferred Stock for **$148.3 million** in March 2025 to partially fund the Bayswater Acquisition[145](index=145&type=chunk) - The Series F Preferred Stock is classified as mezzanine equity and carries a **12% cumulative dividend**, with the first dividend paid via common stock issuance[146](index=146&type=chunk) [Note 19 – Subsequent Events](index=55&type=section&id=Note%2019%20%E2%80%93%20Subsequent%20Events) Post-quarter, the company continued its acquisition strategy and saw a partial conversion of its Series F Preferred Stock into common stock - On July 2, 2025, the company agreed to acquire assets from Edge Energy II LLC for **$12.5 million**[218](index=218&type=chunk) - On August 8, 2025, the company acquired approximately 5,500 net acres from Exok for **$1.3 million**[219](index=219&type=chunk) - In July 2025, 13,000 shares of Series F Preferred Stock were converted into **4,612,000 shares** of Common Stock[221](index=221&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's transformation into a DJ Basin producer, recent developments, and significantly improved operational results [Recent Developments](index=56&type=section&id=Recent%20Developments) The company launched a new well development program, established an ATM offering, and entered into another asset acquisition agreement - Launched an 11-well development program at the Rusch pad in April 2025, with initial production expected in Q3 2025[228](index=228&type=chunk) - Entered into an agreement on July 2, 2025, to acquire assets from Edge Energy for **$12.5 million**[231](index=231&type=chunk) - Established a **$75.0 million** at-the-market (ATM) common stock offering program in June 2025[233](index=233&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) The company's new oil and gas business generated $68.1 million in revenue in Q2 2025 on production of 21,052 Boe/d Production and Revenue Summary | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Total Revenues (in thousands) | $68,100 | $80,915 | | Total Production (MBoe) | 1,916 | 2,211 | | Average Sales Volumes (Boe/d) | 21,052 | 12,213 | | Average Price (per MBoe) | $35.55 | $36.60 | Operating Expenses per Boe | Expense Category | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Lease operating expenses | $5.92 | $6.04 | | Gathering, transportation, and processing | $1.17 | $1.07 | | Ad valorem and production taxes | $3.35 | $3.34 | | Depreciation, depletion, and amortization | $6.37 | $6.48 | | **Total operating expenses per Boe** | **$25.66** | **$27.25** | [Non-GAAP Financial Measures](index=64&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA for the first six months of 2025 was $43.0 million, a significant turnaround driven by new oil and gas operations Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net income (loss) from continuing operations | $35,683 | $33,066 | | Adjustments: | | | | Depreciation, depletion, and amortization | $12,199 | $14,315 | | Non-cash stock-based compensation | $2,419 | $3,786 | | Interest expense (income), net | $9,030 | $10,336 | | Non-cash loss on adjustment to fair value | $2,373 | $4,537 | | Unrealized gain on derivatives | $(23,206) | $(23,090) | | **Adjusted EBITDA** | **$38,564** | **$43,021** | [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by its credit facility and access to capital markets, which management deems sufficient for the next year - As of June 30, 2025, the company had a working capital deficit of **$64.2 million** and cash of **$10.7 million**[271](index=271&type=chunk) - Key sources of liquidity include the amended credit facility (with **$88.0 million** available as of June 30, 2025), a new **$75.0 million** ATM offering, and an effective S-3 registration statement[265](index=265&type=chunk)[266](index=266&type=chunk)[278](index=278&type=chunk) - Management expects cash balance, revenues, and available liquidity to be sufficient to meet obligations over the next 12 months[297](index=297&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This disclosure is not required as the company is a smaller reporting company - Disclosure is not required[301](index=301&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[303](index=303&type=chunk) - No changes in internal control over financial reporting occurred during the six months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[306](index=306&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The Company is not involved in any material legal proceedings[307](index=307&type=chunk) [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes in the risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[308](index=308&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company had no unregistered sales of equity securities during the quarter that were not previously reported - There were no unregistered sales of the Company's equity securities during the quarter that were not otherwise disclosed in a Current Report on Form 8–K[309](index=309&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q report

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Prairie Operating Co. achieved record Q2 2025 results, driven by strategic acquisitions and strong operational execution, with significant growth in production, revenue, and Adjusted EBITDA [Management Commentary](index=1&type=section&id=Management%20Commentary) Management emphasized record growth, successful asset integration, and a strengthened financial foundation for future returns - CEO Edward Kovalik highlighted tremendous growth, record production, and new highs in adjusted EBITDA, attributing success to disciplined capital allocation and strategic off-market acquisitions that expanded inventory and improved capital efficiency[5](index=5&type=chunk) - The company successfully integrated the Bayswater assets, expanded its team from 20 to 59 employees, and increased its portfolio of operated wells from 34 to over 360, laying the groundwork for lower costs and continued production growth[5](index=5&type=chunk) - CFO Gregory Patton noted the strengthening of Prairie's financial and operating foundation, with EBITDA growing more than six-fold, an expanded credit facility, and over **$600.0 million** in accretive acquisitions[10](index=10&type=chunk) - With leverage at approximately **1x** and attractive pricing locked in through 2028, the company is well-positioned to generate cash flow, pursue strategic growth, and optimize cost structures to improve margins and returns[10](index=10&type=chunk) [Q2 2025 Results Summary](index=1&type=section&id=Q2%202025%20Results%20Summary) Q2 2025 saw substantial quarter-over-quarter growth in key financial and operational metrics, including revenue and production Q2 2025 Key Metrics vs. Prior Quarter | Metric | Q2 2025 Value | Quarter-over-Quarter Change | | :--- | :--- | :--- | | Total Revenue | $68.1 million | ~400% Increase | | Total Production | 21,052 Boe/d | ~540% Increase | | Net Income (to common stockholders) | $48.5 million | - | | Basic EPS | $1.04 | - | | Adjusted EBITDA | $38.6 million | >600% Increase | - The company acquired over **$600.0 million** of producing oil and gas assets and initiated a hedging program to secure commodity pricing through 2028[8](index=8&type=chunk) - The credit facility was amended, adding two banks to the syndicate and reaffirming the borrowing base at **$475.0 million**[8](index=8&type=chunk) [Operational Performance](index=2&type=section&id=Operational%20Performance) The company demonstrated strong operational momentum, drilling 18 wells and completing 9, while improving efficiency and deploying innovative technologies - Drilled 18 and completed 9 wells during the quarter, with average spud-to-total-depth times improving to **5.3 days**[11](index=11&type=chunk) - Successfully executed the 11-well Rusch pad in Weld County, with first production expected in Q3[12](index=12&type=chunk) - Implemented innovative U-shaped lateral well designs to maximize drainage and minimize surface impact[13](index=13&type=chunk) - Deployed an electric frac fleet, which significantly reduced emissions and completion costs, achieving an average of **14 stages per day**[14](index=14&type=chunk) - Turned 17 wells to sales in H1 2025 and now operates over 360 wells, installing plunger lift systems on 30 wells to optimize production[15](index=15&type=chunk) [Detailed Financial Results (Q2 2025)](index=3&type=section&id=Detailed%20Financial%20Results%20%28Q2%202025%29) Prairie generated **$68.1 million** in total revenue and **$48.5 million** in net income, supported by **$98.7 million** in liquidity and strategic capital deployment [Revenue and Production](index=3&type=section&id=Revenue%20and%20Production) Q2 2025 revenue was primarily driven by oil sales, contributing to a total production of **1,916 MBoe** Q2 2025 Revenue & Production Breakdown | Category | Value (in thousands, except per unit) | | :--- | :--- | | **Revenues** | | | Oil Revenue | $57,941 | | Natural Gas Revenue | $6,084 | | NGL Revenue | $4,075 | | **Total Revenues** | **$68,100** | | **Production** | | | Oil (MBbls) | 883 | | Natural Gas (MMcf) | 3,388 | | NGL (MBbls) | 469 | | **Total Production (MBoe)** | **1,916** | | **Average Daily Volume** | **21,052 Boe/d** | Q2 2025 Average Realized Prices | Commodity | Price (excluding derivatives) | | :--- | :--- | | Oil (per Bbl) | $65.66 | | Natural Gas (per Mcf) | $1.80 | | NGL (per Bbl) | $8.70 | [Operating Costs](index=4&type=section&id=Operating%20Costs) Operating costs for Q2 2025 included lease operating expenses, gathering, transportation, processing, and G&A expenses Q2 2025 Operating Costs | Expense Category | Total (in thousands) | Per Boe | | :--- | :--- | :--- | | Lease operating expenses | $11,348 | $5.92 | | Gathering, transportation, and processing | $2,234 | $1.17 | | Ad valorem and production taxes | $6,416 | $3.35 | | General and administrative expenses | $16,443 | $8.58 | [Acquisitions, Capital Expenditures, and Liquidity](index=4&type=section&id=Acquisitions%2C%20Capital%20Expenditures%2C%20and%20Liquidity) The company maintained **$98.7 million** in liquidity as of June 30, 2025, following significant cash expenditures for the Bayswater asset acquisition - As of June 30, 2025, the company had approximately **$98.7 million** of liquidity, comprising **$88.0 million** available under its credit facility and **$10.7 million** in cash[22](index=22&type=chunk) Cash Expenditures for Six Months Ended June 30, 2025 | Category | Amount (in thousands) | | :--- | :--- | | Cash paid for Bayswater asset purchase | $467,461 | | Capital expenditures – cash | $53,973 | | Leasehold purchases | $950 | [Outlook and Hedging Strategy](index=4&type=section&id=Outlook%20and%20Hedging%20Strategy) Prairie issued updated full-year 2025 guidance, projecting strong production and Adjusted EBITDA, supported by a robust hedging program through 2028 [2025 Full-Year Guidance](index=4&type=section&id=2025%20Full-Year%20Guidance) Updated full-year 2025 guidance projects average daily production of **24,000 – 26,000 BOEPD** and Adjusted EBITDA of **$240.0 – $260.0 million** Updated Full-Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Average Daily Production | 24,000 – 26,000 BOEPD | | Capital Expenditures | $260.0 – $280.0 million | | Adjusted EBITDA | $240.0 – $260.0 million | - Guidance is based on a commodity price deck of **$60.00 – $64.00 per Bbl** for oil and **$4.00 per Mcf** for gas[23](index=23&type=chunk) [Commodity Hedging Program](index=4&type=section&id=Commodity%20Hedging%20Program) The company implemented a comprehensive hedging program covering approximately **85%** of current daily production with contracts extending through 2028 - The company has executed a portfolio of hedges covering approximately **85%** of its current daily production[24](index=24&type=chunk) Crude Oil Swaps Weighted Average Price | Period | Weighted Avg. Price ($/Bbl) | | :--- | :--- | | Jul-Dec 2025 | $68.04 | | 2026 | $64.42 | | 2027 | $64.16 | | 2028 | $63.47 | Natural Gas Swaps Weighted Average Price | Period | Weighted Avg. Price ($/MMBtu) | | :--- | :--- | | Jul-Dec 2025 | $4.30 | | 2026 | $4.08 | | 2027 | $4.07 | | 2028 | $4.00 | [Financial Statements](index=9&type=section&id=Financial%20Statements) The condensed consolidated financial statements reflect transformative growth, with total assets increasing to **$858.5 million** and a shift to net income for Q2 2025 [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a substantial increase in total assets to **$858.5 million** as of June 30, 2025, primarily due to acquisitions Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $97,400 | $18,302 | | Total Property and Equipment, net | $738,313 | $134,620 | | **Total Assets** | **$858,540** | **$156,554** | | Total Current Liabilities | $161,638 | $63,009 | | Credit Facility | $387,000 | $28,000 | | **Total Liabilities** | **$599,777** | **$103,786** | | **Total Stockholders' Equity** | **$94,173** | **$52,768** | [Condensed Consolidated Statements of Operations](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations highlights a significant turnaround, moving from a net loss in Q2 2024 to a net income of **$35.7 million** in Q2 2025 Statement of Operations Summary (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $68,100 | $0 | | Total Operating Expenses | $49,164 | $8,569 | | Income (Loss) from Operations | $18,936 | $(8,569) | | **Net Income (Loss) from Continuing Operations** | **$35,683** | **$(8,514)** | | **Net Income (Loss) to Common Stockholders** | **$48,503** | **$(8,514)** | | **Basic EPS** | **$1.04** | **$(3.49)** | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements detail significant investing activities, primarily the Bayswater acquisition, financed through equity and credit facility borrowings Cash Flow Summary for Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $9,722 | $(8,448) | | Net cash used in investing activities | $(522,289) | $(11,841) | | Net cash provided by financing activities | $518,028 | $9,478 | | **Net increase (decrease) in cash** | **$5,461** | **$(10,811)** | | **Cash at end of period** | **$10,653** | **$2,226** | - Investing activities were dominated by the **$467.5 million** cash payment for the Bayswater asset purchase, while financing included **$148.3 million** from Series F Preferred Stock and **$359.0 million** in Credit Facility borrowings[47](index=47&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes Adjusted EBITDA, a non-GAAP measure, to assess performance, reporting **$38.6 million** for Q2 2025, a significant improvement from the prior year - Adjusted EBITDA is used by management to evaluate business performance, make operational decisions, and assess cash flow generation capabilities, adjusting net income for items like interest, taxes, DD&A, stock-based compensation, and unrealized derivative gains/losses[27](index=27&type=chunk)[28](index=28&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) from continuing operations | $35,683 | $(8,514) | | Adjustments | $2,881 | $1,456 | | **Adjusted EBITDA** | **$38,564** | **$(7,058)** | Reconciliation for Full-Year 2025 Guidance (in millions) | | Low Range | High Range | | :--- | :--- | :--- | | Net income | $192 | $202 | | Adjustments | $48 | $58 | | **Adjusted EBITDA** | **$240** | **$260** | [Other Disclosures](index=7&type=section&id=Other%20Disclosures) This section provides standard legal and corporate disclosures, including cautionary statements on forward-looking information and details on public communication channels - The report contains forward-looking statements that involve risks and uncertainties, and readers are cautioned not to place undue reliance on them[32](index=32&type=chunk)[33](index=33&type=chunk) - The company discloses material information through SEC filings, press releases, conference calls, its website, and official social media accounts on X (@PrairieOpCo) and LinkedIn[35](index=35&type=chunk)[36](index=36&type=chunk) - Prairie Operating Co. is a Houston-based independent energy company focused on the development and acquisition of oil and gas resources in the DJ Basin, primarily in the Niobrara and Codell formations[37](index=37&type=chunk)

Core Insights - Prairie Operating Co. reported significant growth in its financial and operational performance for Q2 2025, achieving record production and adjusted EBITDA, while completing strategic acquisitions to strengthen its position in the DJ Basin [4][6][10]. Financial Performance - Total revenue reached $68.1 million, marking an increase of approximately 400% quarter-over-quarter [6][7]. - Net income attributable to common stockholders was $48.5 million, reflecting an increase of over 500% quarter-over-quarter [7][8]. - Adjusted EBITDA was recorded at $38.6 million, an increase of over 600% quarter-over-quarter [6][8]. - Quarterly production surged over 540% to a total of 21,052 Boe/d, with approximately 50% being oil [6][19]. Operational Highlights - The company successfully integrated the Bayswater assets acquired earlier in the year, expanding its operated wells from 34 to over 360 [4]. - Prairie drilled 18 and completed 9 wells during the quarter, with average spud-to-total-depth times improving to 5.3 days [11]. - The execution of the 11-well Rusch pad was a key highlight, achieving average rates of penetration exceeding 450 feet per hour [12]. - The company implemented U-shaped lateral designs to enhance drilling efficiency and maximize resource extraction [13]. Capital Expenditures and Acquisitions - Capital expenditures incurred were $56.6 million, with over $600 million spent on acquiring producing oil and gas assets [17][7]. - The company amended its Credit Facility Agreement with Citibank, reaffirming the borrowing base to $475 million [7][10]. Liquidity and Guidance - As of June 30, 2025, Prairie had approximately $98.7 million in liquidity, consisting of $88 million available under its Credit Facility and $10.7 million in unrestricted cash [23]. - The updated guidance for 2025 anticipates adjusted EBITDA to range between $240 million and $260 million, supported by an active hedging program [26][25].