PrimeEnergy Q2 Earnings Fall Y/Y on Lower Oil Prices, Stock Declines

Core Viewpoint - PrimeEnergy Resources Corporation reported significant declines in revenues and net income for the second quarter of 2025, primarily due to lower oil prices, despite some growth in natural gas and NGL volumes [2][3][14]. Earnings & Revenue Performance - Revenues for Q2 2025 were $42 million, down 35% from $64.8 million in Q2 2024 [2]. - Net income fell to $3.2 million from $19.7 million year-over-year, with diluted earnings per share dropping to $1.33 from $7.77 [2]. - For the first half of 2025, total revenues were $92 million compared to $107.8 million in the prior year, and net income decreased to $12.4 million from $31.1 million [3]. Key Business Metrics - Oil sales decreased to $34.2 million from $56.2 million a year earlier, reflecting a 14% decline in production volumes and a 30% drop in realized oil prices [4]. - Natural gas revenues plummeted 48% to $43,000, while natural gas liquids sales rose 5% to $5.6 million due to a 39% increase in volumes [5]. - Field service income fell 32% to $2 million as the company scaled back service operations [5]. Expense Overview - Oil and gas production costs decreased 19% year-over-year to $10.1 million, while production and ad valorem taxes fell by more than 50% [6]. - General and administrative expenses declined 23% to $3 million, but depreciation, depletion, and amortization increased 20% to $20.8 million due to new wells [6]. - Interest expenses more than tripled to $0.7 million, reflecting higher borrowings [6]. Management Commentary - Chairman Charles E. Drimal, Jr. emphasized the resilience of the diversified production base and the importance of maintaining a balanced production mix [7]. - Management expressed confidence in long-term value creation through continued execution of its development program, particularly in the Permian Basin [8]. Factors Influencing Performance - The declines in earnings were primarily due to oil price volatility, with average realized oil prices at $56.96 per barrel, down nearly 30% year-over-year [9]. - The drop in commodity pricing eroded revenues despite higher natural gas and NGL volumes [9]. Outlook - PrimeEnergy plans to continue share repurchases, having already deployed $12.1 million in the first half of 2025 [11]. - The company expects to invest $98 million in 44 horizontal wells this year, highlighting ongoing development activity [12]. Other Developments - The company consolidated shareholder control, with chairman Drimal entering into voting rights agreements covering 155,926 shares, bringing affiliated shareholders' control to over 80% [13]. - Continued investment in the Permian Basin includes multiple joint ventures and horizontal drilling projects [14]. - PrimeEnergy repurchased 16,970 shares in Q2 at an average price of $173.43, reflecting its capital return strategy [14].