10-Q: Prairie Operating Co. Reports Q1 2025 Results, Completes Bayswater Acquisition

Prairie Operating Co. announces its Q1 2025 financial results, highlighting the completion of the Bayswater Acquisition and its impact on production and financial strategy.

Summary

• Prairie Operating Co. reported a net loss of $2.6 million for Q1 2025.
• The company completed the Bayswater Acquisition on March 26, 2025, for approximately $482.5 million in cash and 3,656,099 shares of common stock.
• Q1 2025 revenue totaled $13.59 million, driven by crude oil, natural gas, and NGL sales.
• The company's exploration and production assets included approximately 23,740 net leasehold acres as of December 31, 2024.
• The company launched a development program at the Rusch Pad in Weld County, consisting of 11 two-mile lateral wells, with drilling expected to be completed in early Q2 2025.
• The company amended and restated its credit facility, providing for a maximum credit commitment of $1.0 billion.
• As of March 31, 2025, the company had $377.0 million in revolving borrowings and $98.0 million of availability under the credit facility.
• The company executed a hedging program covering approximately 85% of its current daily production through the first quarter of 2028.
• The company's average sales price per MBoe was $46.07 before derivatives and $43.42 after derivatives.
• General and administrative expenses decreased to $5.551 million compared to $7.603 million in Q1 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company reported a net loss, it completed a significant acquisition and secured financing, indicating potential for future growth. The hedging program also provides some stability.

Positives

• Completion of the Bayswater Acquisition is expected to increase production and reserves.
• The amended and restated credit facility provides increased financial flexibility with a maximum credit commitment of $1.0 billion.
• The hedging program mitigates the risk of commodity price volatility.
• General and administrative expenses decreased, indicating improved cost management.
• The company launched a development program at the Rusch Pad in Weld County, consisting of 11 two-mile lateral wells, with drilling expected to be completed in early Q2 2025.

Negatives

• The company reported a net loss of $2.6 million for Q1 2025.
• The company had a working capital deficit of $54.7 million as of March 31, 2025.
• Interest expense increased to $1.378 million due to borrowings under the credit facility.
• The company recognized a loss on derivatives of $0.898 million.

Risks

• The company's future performance is subject to commodity price volatility.
• The company's development program is dependent on cash flow from operations and the availability of additional financing.
• The company is subject to certain financial covenants under the credit facility, which require it to maintain a Net Leverage Ratio of no greater than 3.00 to 1.00 and a Current Ratio of at least 1.00 to 1.00.
• The company's ability to borrow under its Amended & Restated Credit Agreement does not require action on the part of management, other than requesting the borrowing.

Future Outlook

Management expects that the company's cash balance, expected revenues from the producing Bayswater wells, and liquidity available under the Amended & Restated Credit Agreement and potential offerings under its effective Form S-3 registration statement will be sufficient to fund its development program and operations.

Industry Context

The company operates in the DJ Basin, which is considered one of the premier resource plays in the U.S., particularly in Weld County, Colorado, known for its low break-even prices and consistent production results.

Related Party Transactions

• The Noteholders, First Idea Ventures LLC and The Hideaway Entertainment LLC, are entities controlled by Jonathan H. Gray, who is a director of the Company, therefore the Subordinated Note and Subordinated Note Warrants are presented as related-party on our consolidated balance sheets as of March 31, 2025 and December 31, 2024.

Stakeholder Impact

• Shareholders: The Bayswater Acquisition and financing activities could impact shareholder value.
• Employees: The acquisition and development program could create job opportunities.
• Customers: The hedging program could impact the price of oil and gas.
• Creditors: The amended and restated credit facility impacts the company's debt obligations.

Next Steps

• Complete drilling operations at the Rusch Pad development in early Q2 2025.
• Bring the Opal Coalbank pad wells online by the end of Q2 2025.
• Continue to monitor and manage compliance with financial covenants under the credit facility.
• Continue to execute the hedging program to mitigate commodity price volatility.

Key Dates

Keywords

Bayswater Acquisition, credit facility, production, financial results, oil and gas, hedging, NGL, revenue, expenses, drilling