Core Viewpoint - PrimeEnergy Resources Corporation (PNRG) has shown resilience in a challenging oil market, outperforming its peers and focusing on expanding its natural gas production while managing share buybacks to reward investors [1][2][16]. Company Performance - PNRG stock has increased by 14.9% over the past year, contrasting with a 13.9% decline in the industry [1]. - The company has faced declining crude prices, impacting earnings and margins, yet it has maintained solid cash flow and is actively repurchasing shares [2][9]. - For the first half of 2025, PNRG reported revenues of $92 million, down from $107.8 million the previous year, with net income decreasing to $12.4 million from $31.1 million [8]. Production and Investment Strategy - PNRG is focusing on its core assets in the Permian Basin, emphasizing horizontal drilling to enhance production while minimizing environmental impact [3]. - The company plans to invest $129 million in 43 horizontal wells in 2025, an increase from $113 million in 2024 and $96 million in 2023 [4]. - Between 2023 and 2025, PNRG projects a total investment of $338 million in horizontal development, primarily in West Texas [5]. Market Environment - The U.S. Energy Information Administration forecasts Brent crude prices to average $58 per barrel in Q4 2025, potentially dropping to $50 in early 2026 due to oversupply [10]. - In contrast, natural gas prices are expected to rise, with Henry Hub spot prices projected to reach $4.30 per MMBtu in 2026, supported by increased LNG exports [10]. - PNRG's growth in natural gas and NGL production is helping to balance revenues against the volatility of oil prices [11]. Valuation Metrics - PNRG is currently trading at a trailing 12-month EV/EBITDA ratio of 1.89X, significantly lower than the industry average of 11.19X and its peers, indicating potential undervaluation [12].

Financial Data and Key Metrics Changes - The company reported a stabilization in production, achieving approximately 950 barrels of oil per day, with expectations to increase this by 50% by the end of the year [12][19] - Lease operating expenses (LOE) were reduced from over $800,000 per month to an average of $765,000 in 2024, with a target of around $700,000 per month for 2025 [65][66] - The company is hedged at 70% or greater at $70 per barrel through 2025, which provides some stability against market fluctuations [30][84] Business Line Data and Key Metrics Changes - The company is focusing on the Seven Rivers waterflood project, with plans to develop 250 patterns, each expected to produce 20 barrels of oil per day [19][20] - The horizontal drilling potential in the San Andres formation has been identified, with 50 wells expected to yield 300 to 500 barrels of oil per day [16][36] Market Data and Key Metrics Changes - The company is navigating volatility in oil pricing and tariffs that impact oil prices, which is a concern for the overall market [7][78] - The management expressed optimism about the oil market, suggesting that any reduction in oil prices may be short-lived due to the social costs faced by oil-producing countries [84] Company Strategy and Development Direction - The company plans to acquire a 10% royalty from the seller for approximately $15 million, which is expected to be accretive to shareholders [11][72] - Future strategies include cutting general and administrative expenses and lease operating expenses to improve profitability [21][74] - The company aims to make at least one acquisition in the year, focusing on Permian properties and gas opportunities [22][72] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2024 but emphasized the importance of infrastructure repairs and upgrades for future profitability [20][25] - The company expects a significant improvement in 2025, with plans to increase production and reduce costs [19][21] - Management is optimistic about the potential for horizontal drilling and workovers, indicating a bright future for the company [90][91] Other Important Information - The company has made significant strides in cleaning up its balance sheet, including settling liabilities and reducing debt [43][45] - The management team is committed to a balanced approach to funding, avoiding excessive equity dilution and debt [48][51] Q&A Session Summary Question: What are your largest concerns that might negatively impact your plans? - The largest concern is market volatility, particularly oil prices and tariffs [78] Question: What are your plans regarding future use of stock in lieu of cash for accounts payable and other liabilities? - The company plans to use stock sparingly for settling debts related to acquisitions and services [80] Question: Are you still working on the workover wells, or is this less of a priority compared to Seven Rivers? - Workovers are a top priority and are tied to the development of the Seven Rivers project [87] Question: What are you doing to negotiate and benchmark parts, pumps, and other goods necessary for productivity savings? - The company conducts thorough bidding processes to ensure the best value for parts and services [95] Question: If oil prices recover to $85 to $90 per barrel, would you increase production faster? - The company would accelerate workovers and drilling if funding allows, but will proceed cautiously [102] Question: Is the $52.8 million revenue sharing of volumetric funding arrangement with Enstream Capital still on track for June 2025 closing? - The lender has indicated that the deal is still on track, but the company remains cautious [106][109] Question: What is your relationship with drilling permits in New Mexico? - The regulatory environment has improved, potentially reducing the permit process from eight to six months [115]