S-1/A: Prairie Operating Co. Files Amendment No. 1 to Form S-1 Registration Statement

Prairie Operating Co. files an amendment to its Form S-1 registration statement, including expert consents and updated financial information related to its proposed offering and recent acquisitions.

Summary

• Prairie Operating Co. filed Amendment No. 1 to its Form S-1 registration statement with the SEC on March 19, 2024.
• The filing includes consents from independent petroleum reserve experts and registered public accounting firms.
• The amendment pertains to the registration of common stock and includes information about the company's assets, including the Initial Genesis Assets, Central Weld Assets, and Genesis Bolt-on Assets.
• The company is planning a drilling program for its assets following the consummation of transactions, including the Genesis Bolt-on Assets acquired effective January 31, 2024.
• The filing also references the NRO Acquisition and the Crypto Sale, with pro forma financial information included for illustrative purposes.
• The document outlines the company's development plan, permitting process, and business strategy, emphasizing growth through drilling, acquisitions, and operational efficiency.
• The company aims to fund drilling operations with internally generated cash flows and limit leverage.
• The document also details recent developments, including the NRO Acquisition, Crypto Sale, and Nasdaq listing.
• The filing includes unaudited pro forma condensed combined financial information and reserve data.
• The company is focused on the acquisition and development of crude oil, natural gas, and NGLs in the DJ Basin.

Sentiment

Score: 6

Explanation: The document is largely factual, presenting information about the company's operations, assets, and financial condition. While there are positive aspects, such as the potential for growth and the experience of the management team, there are also significant risks and uncertainties, particularly related to the NRO Acquisition and the company's financial history.

Positives

• The company has a development plan to drill up to 30 wells in 2024 and 45 wells in 2025.
• The company's assets are located in the DJ Basin, which is known for its substantial liquids-rich reserves.
• The company has access to substantial midstream takeaway capacity, service providers, and electrification.
• The company has a highly experienced and successful management team.
• The company has a balance sheet with ample liquidity and minimal leverage.

Negatives

• The company has no history of drilling producing oil and gas wells.
• The company has historically incurred significant losses and may be unable to generate profitability.
• The company is dependent on the consummation of the NRO Acquisition or its ability to raise additional capital.
• The company faces strong competition from other oil and gas companies.
• The company's operations are subject to extensive government regulation and liability.

Risks

• The company may not consummate the NRO Acquisition.
• The company does not currently have sufficient funds or committed financing necessary to consummate the NRO Acquisition.
• The company may be unsuccessful in integrating the Central Weld Assets or in realizing all or any part of the anticipated benefits of the NRO Acquisition.
• The company may not achieve the perceived benefits of the Crypto Sale and the NRO Acquisition.
• The development of the company's estimated PUDs and estimated possible undeveloped reserves may take longer and may require higher levels of capital expenditures than currently anticipated.
• Oil, natural gas and NGLs prices are highly volatile.
• The company's plan to develop and operate the E&P Assets will require substantial additional capital, which the company may be unable to raise on acceptable terms in the future.
• Drilling locations that the company decides to drill may not yield oil or natural gas in commercially viable quantities.
• The company is dependent upon obtaining access to midstream infrastructure to market its oil and natural gas production.
• All of the E&P Assets are located in the DJ Basin, making the company vulnerable to risks associated with operating primarily in a single geographic area.
• The company's operations will be subject to federal, state and local laws and regulations related to environmental and natural resources protection and occupational health and safety.
• The company's oil and gas exploration, production, and development activities may be subject to a series of risks related to climate change and energy transition initiatives.
• The company depends on the services of a small number of key personnel, and may not be able to operate and grow its business effectively if it loses their services or is unable to attract qualified personnel in the future.
• The unaudited pro forma condensed combined financial information and pro forma combined proved reserves and production data included in this prospectus may not be representative of the company's future results or operations.
• You will incur immediate and substantial dilution.
• Insiders have substantial control over the company, and they could delay or prevent a change in the company's corporate control even if other stockholders want it to occur.

Future Outlook

The company intends to grow production rapidly following the NRO Acquisition and plans to drill up to 30 wells in 2024 and up to 45 wells in 2025, which it expects will rapidly grow its production and free cash flow.

Industry Context

The announcement reflects ongoing activity in the oil and gas sector, particularly in the DJ Basin, with a focus on strategic acquisitions and efficient development of resources.

Comparison to Industry Standards

• The document references several comparable companies operating in the DJ Basin, including Chevron Corporation, Civitas Resources, Inc., Verdad Resources LLC, Bison Oil and Gas, EOG Resources, Inc. and Samson Energy Company, LLC.
• The document references the activity of large operators on adjacent or nearby drilling locations in the same horizontal formations, geologic data, type logs and core samples to assess the quality of both the Genesis Assets and the Central Weld Assets.
• The document references the use of state-of-the-art drilling techniques in the DJ Basin and deploying the latest in next-generation drilling technology and completion techniques to lead to competitive well-level economics when compared to other U.S. onshore conventional basins.

Related Party Transactions

• Edward Kovalik (Chief Executive Officer and Chairman of the Board), Gary C. Hanna (President and Director) and Paul Kessler (Director) have certain overriding royalty interests in the Initial Genesis Assets.
• Bristol Investment Fund purchased $1,250,000 of Series D Preferred Stock and Series D PIPE Warrants in the Series D PIPE.
• First Idea Ventures LLC purchased $750,000 of Series D Preferred Stock and Series D PIPE Warrants in the Series D PIPE. Jonathan H. Gray, a director of the Company, holds 50% and his spouse, Chloe Gray, holds 50% of the interests of First Idea Ventures LLC and each share voting and investment power over the securities held by First Idea Ventures LLC.
• John D. Maatta purchased $50,000 of Series D Preferred Stock and Series D PIPE Warrants in the Series D PIPE.

Stakeholder Impact

• Shareholders will be impacted by the potential dilution from the offering and the conversion or exercise of outstanding securities.
• Employees may be impacted by changes in the company's operations and strategy.
• Customers and suppliers may be impacted by changes in the company's production and development activities.
• Creditors may be impacted by the company's ability to meet its financial obligations.

Next Steps

• Consummation of the NRO Acquisition.
• Execution of the company's development plan, including drilling and permitting activities.
• Continued engagement with regulatory agencies and local communities.
• Potential future acquisitions to supplement existing properties.

Key Dates

Keywords

Prairie Operating Co., NRO Acquisition, Crypto Sale, Genesis Assets, Central Weld Assets, oil and gas, DJ Basin, reserves, drilling, production, S-1, SEC, Weld County, Colorado, permitting, exploration, development, financials