Q3 2025 Prairie Operating Co Earnings Call
Speaker #1: Good morning. Welcome to the Prairie Operating Co. Q3 2025 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Wabi Pulexma, Vice President of Investor Relations and Capital Markets.
Speaker #1: Please go
Speaker #2: Thank you, Operator. Good morning, everyone, and thank you for joining us for Prairie Operating Co.'s Q3, 2025 earnings call. Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements.
Speaker #2: Which are subject to certain risks, uncertainties, and assumptions. Actual results could differ materially from those in any forward-looking statements. Additionally, we may refer to non-GAAP measures.
Speaker #2: For more detailed discussion of the risks and uncertainties that could cause actual results to differ materially, from any forward-looking statement, as well as the
Speaker #1: Friday , Filed November 14th , 2025 . Joining me today are editor Kowalczyk , chairman , CEO and cofounder Gary Hanna , president and co-founder and Greg Patton , executive vice chief financial president and officer .
Speaker #1: With that , I'll turn the call over to our chairman . CEO and co-founder , Ed Kowalczyk .
Speaker #2: , and good morning , Thanks everyone . The third quarter marked another step forward for major Prairie as we continue to execute across all facets of our business operationally , financially and strategically .
Speaker #2: I'm incredibly proud of the progress our team has made and the strong momentum we've built as we move toward the end of the year.
Speaker #2: One of the most milestones of the quarter was the successful significant completion of the transition service period . Following our acquisition of assets from Bayswater and Exploration Production with Prairie assuming full operational Bayswater assets .
Speaker #2: We are driving our development schedule forward as planned. I want to take a moment to thank Bayswater for their professionalism throughout the collaboration transition process, which ensured a seamless handoff and smooth integration.
Speaker #2: Today, Prairie is operating across our footprint as an expanded, unified, efficient organization. While our production rate in the third quarter was 23,029 barrels per day.
Speaker #2: Today , Prairie is operating across our footprint as a expanded unified , efficient organization . While our production rate in the third quarter was 23,029 barrels per day Our current production rate has increased to approximately 27,000 net barrels of oil equivalent per day , reflecting the significant production the fourth quarter that we have been guiding ramp in towards our recent bolt on acquisitions .
Speaker #2: Further strengthen our core DJ basin position , adding approximately 3400 net acres and 11 net drilling locations at an attractive average of cost roughly $680 per acre .
Speaker #2: of these Each transactions underscores our disciplined and accretive to approach growth , expanding our high quality drilling inventory while maintaining capital efficiency and balance sheet strength .
Speaker #2: Operationally , flow back on the seven new wells that our noble pad is now complete . In addition , completion activities have been finalized on six newly drilled wells at the Simpson Pad .
Speaker #2: The Noble Pad is now fully online, and the Simpson Pad is expected to be online this full quarter, adding to production growth as we head into year-end.
Speaker #2: Financially , we remain in a solid position . Earlier this year , we amended and expanded our $1 billion credit facility , reaffirming our borrowing base at 475 million and adding new banking partners , Bank of America and West Texas National Bank , alongside Citibank .
Speaker #2: This facility provides ample liquidity to support our capital program and flexibility to pursue future opportunities. Our comprehensive hedge program continues to secure strong pricing across a significant portion of our approved production, developed through 2028.
Speaker #2: This prudent approach allows us to protect flows cash volatility , and plan capital deployment with confidence . Looking ahead , our strategy remains clear and disciplined .
Speaker #2: We're focused building on long term shareholder value through a combination of high return organic development , continued operational optimization and accretive acquisitions . Every decision we make guided by is our commitment sustainable to growth capital efficiency and balance sheet strength .
Speaker #2: Prairie Foundation has never been stronger. Our growth story is still in its early chapters, and I'm more confident than ever in the road ahead.
Speaker #2: The progress we've made this year has set the stage for continued momentum into beyond 2026 and . With that , I'll now turn the call to CFO , over Greg our Patton , to walk through the financial and liquidity position in more detail .
Speaker #2: Thanks and good morning , everyone . For the third of 2025 , quarter we strong delivered financial results income from continuing operations for the quarter $1.3 million , totaled adjusted EBITDA coming in at $56.3 million , representing over a 45% increase over quarter quarter .
Speaker #2: These improvements were driven by a combination of higher volumes and commodity pricing , supported by our hedge book a top from line perspective , we reported total revenue of $77.7 million for the quarter realized , supported by prices of $58.70 per oil barrel of , $12.27 per barrel for natural gas liquids , and $2.15 per MCF for natural gas .
Speaker #2: Net loss attributable to common stockholders for the quarter was 22.5 million , representing a loss per share of $0.44 . As mentioned , adjusted EBITDA totaled $56.3 million , underscoring the operational and financial progress we continue to make .
Speaker #2: Net cash provided by operating activities was $57.7 million for the quarter . Looking at our results on a per barrel of oil equivalent basis , total operating expenses were $23.92 per boe .
Speaker #2: This includes lease operating expenses of $7.25 per boe . Transportation and costs of processing $1.04 per boe , and production and ad valorem taxes of boe $2.21 per .
Speaker #2: Depreciation . Depletion and amortization expense came in at $7.57 per boe , and general and administrative expenses were $5.79 per boe . These reflect metrics integration and system implementation costs associated with post-closing of the Bayswater transaction , of which a significant are related to portion one time expenses .
Speaker #2: As we move forward , we will continue focus on operational efficiency , cost control , and the benefits of increased scale from current and potential future acquisitions .
Speaker #2: CapEx came in at $69.6 million, consistent with our development plan and reflective of the continued drilling execution of our program and targeted AF costs.
Speaker #2: Turning to our financial position, as of September 30, 2025, our total liquidity was approximately $68.6 million, consisting of $58 million of availability under our revolving credit facility and $10.6 million in unrestricted cash.
Speaker #2: As a reminder, the borrowing base and aggregated elected commitment is currently $475 million, with an overall facility size of $1 billion and a maturity date of March 26, 2029.
Speaker #2: Our credit facility and associated banking syndicate continue to provide us ample financial flexibility to development support our program and evaluate strategic opportunities as they arise .
Speaker #2: Our hedging program is central to our risk management approach, as we maintain a comprehensive hedge portfolio to protect our expected production commodity from price fluctuations and volatility.
Speaker #2: These hedges secure pricing of $66.16 per barrel of oil and $4.32 per MMBtu of natural gas through the remainder of 2025, and $62.07 per barrel and $4.06 per MMBtu through the first quarter of 2028.
Speaker #2: By locking in pricing for the majority of our production , we effectively insulate ourselves from near-term commodity price volatility and position the company to more reliably forecast cash flows and capital expenditures .
Speaker #2: This proactive approach demonstrates our continued commitment to capital discipline, long-term, and fiscal responsibility. Turning to reserves, Prairie ended the quarter with total proved reserves of approximately 106.6 million barrels of oil equivalent.
Speaker #2: Of this total , 63.6 million boe is classified as proved developed , producing PDP , with the remaining 43 million boe in the proved undeveloped PUD category .
Speaker #2: Our current development inventory includes over 600 gross drilling locations. These reserves reflect the quality of our asset base, the depth of our inventory, and the long-term value we are building through disciplined investment and operational execution.
Speaker #2: integration , On the transition of the recently acquired assets has been seamless with our transition service period coming to an end . We've aligned streamlined systems , processes and attracted and brought on board key personnel from industry leading companies .
Speaker #2: As mentioned earlier by the editor, we would like to thank the Bayswater team for their professionalism and collaboration throughout the transition period. Prairie is now running at full capacity and is well positioned for continued growth.
Speaker #2: We've also taken key steps to ensure continuity and efficiency across our supply chain . We have focused significant a effort on building relationships with midstream providers , ensuring guaranteed takeaway optionality for our development programs for the foreseeable future .
Speaker #2: Additionally, we have secured contracts with both Precision Drilling, supporting our development plans for 2026. These contracts collectively help manage costs and mitigate potential service disruptions.
Speaker #2: With that , I'll turn the call over to Gary Hanna , our president and co-founder , to provide a detailed operational update .
Speaker #1: Thank you, Greg, and good morning to everyone. Operationally, the third quarter marked another important step forward for Prairie, as we completed the transition service period following the Bayswater acquisition and assumed full operational control of these assets. With the transition service period now concluded, we are executing against our development schedule as planned.
Speaker #1: Our operations and field teams have done an outstanding job managing the integration process , but we continue to deliver meaningful production growth and efficiency gains .
Speaker #1: As of today , Prairie's current production stands at rate approximately 27,000 boe per day , reflecting the combined impact of our legacy operations .
Speaker #1: The Bayswater assets and new drills coming online have executed our growth roadmap through the third quarter. As Ed mentioned, flowback operations are now complete on seven new wells in our Noble pad.
Speaker #1: We're early indications are encouraging. We are also finalizing completions on six newly drilled wells on the pad and anticipate beginning flowback in the next week.
Speaker #1: The Noble Pad is currently online , and we expect the pads will be fully online in the fourth quarter . At the rush pad .
Speaker #1: Drilling and completions and drill out operations for all 11 wells were finalized turned to and These sales . wells targeted multiple horizons across the Niobrara A , B , and C zones , and the Codell formation , and we expect them to be meaningfully contribute to our production growth through the remainder of 2025 .
Speaker #1: In addition , we successfully completed and turned a sales nine wells on the Opal cold Bank pad that were acquired as ducts in the Bayswater transaction .
Speaker #1: Initial results have exceeded our expectations , with an average IP 30 of roughly 525 barrels of oil equivalent per day per well on a two stream gross basis .
Speaker #1: Our precision rig is currently drilling a ten well occupation at our blim pad , which expect to be turned is to line in the first quarter of 2026 .
Speaker #1: Beyond new drilling , prairie remains focused on optimizing its existing asset base . The company has launched a robust Workover program targeting 32 wells across the third and fourth quarters , with 31 Workovers completed to date , including 18 in the third quarter .
Speaker #1: Additionally , Prairie has installed plungers across 183 wells , resulting in an average oil production increase of 12.6% per well . These optimization initiatives , along with ongoing improvements to the gas lift system and pad efficiencies , underscore Prairie's commitment to maximizing pur well productivity .
Speaker #1: Overall , I'm incredibly proud of what our operations and field teams have accomplished this quarter . We've managed multiple integrations , brought new wells online , and expanded our acreage footprint , all while maintaining a strong balance sheet and operational discipline .
Speaker #1: with that , And I'll turn it back to Ed for closing comments . Eddy .
Speaker #2: Thanks , Gary . We are reaffirming our full year production guidance range of 24,000 to 26,000 boe per day , along with our full year capital expenditure guidance range of 260 to $280 million .
Speaker #2: Lastly, we are reaffirming our full-year adjusted EBITDA guidance range of $240 million to $260 million, based on a WTI price range of $60 to $70.
Speaker #2: operational execution and performance year to date , along with the momentum across our portfolio , remains strong and we continue to benefit from improved capital efficiency and the integration of recent acquisitions .
Speaker #2: We continue to take a disciplined and deliberate approach to growth , and we're encouraged by the opportunities ahead for Prairie . Our strategy remains focused on driving sustainable double digit organic growth through the drill bit , while selectively pursuing accretive M&A that strengthens our position and enhances long term value creation .
Speaker #2: I want to extend my appreciation to the entire Prairie team for their exceptional effort and dedication throughout this transformative period . The company's foundation has never been stronger , and we're finishing the year with solid momentum , increased scale , and a clear path forward .
Speaker #2: Charlie's next chapter is shaping up to be our most yet , and exciting we're for the continued trust and grateful support of our shareholders .
Speaker #2: With that , I'll turn the call back over to the operator to the line for open questions .
Speaker #3: Thank you . Ladies and gentlemen , if you'd like to ask a question , please press Star One on your telephone keypad and a confirmation tone will indicate your line is in the question queue may .
Speaker #3: Press star, you two, if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker #3: And our first question comes from the line of Leo Mariani with Roth. Please proceed.
Speaker #4: Good morning, guys. Could you maybe just talk about what you see in the current kind of M&A environment? You know, at this point in time?
Speaker #4: And then additionally, I know you made some comments that your bank group was kind of supportive of looking at deals. I don't know if you guys have had your fall base borrowing redetermination yet.
Speaker #4: Maybe that's in So just process . kind of any update in terms of how you kind of see the bank funding market for M&A deals as well ?
Speaker #5: Leo: Good morning. This is Ed. I can speak to M&A and hand it over to Greg to discuss the redetermination process with the bank group.
Speaker #5: look we've You know , this company on the back of M&A . It's a core principle of our company . But at the same time , we're really focused on remaining disciplined , whether it's a larger potential deal or a strategic bolt .
Speaker #5: We're always on focused on inventory , quality , capital efficiency and cash flow . We're not really chasing valuations . We're looking for opportunities that really strategically strengthen Prairie .
Speaker #5: There has been more attention on the basin as a result of the . SM city transaction . I think that's a good thing .
Speaker #5: are But there opportunities ahead of us . Thanks , editor . And to just kind of briefly brush on on the RBL . Yes , we are in the middle of the process to redetermine for the fall Redetermination .
Speaker #5: We're not seeing any outside the normal items occur. There is potentially a slight uplift, but we're absolutely holding a flat outlook on a forward basis.
Speaker #5: And the borrowing group remains consistent and strong in and around the facts of utilizing paying down the RBL as well as utilizing it for future proceeds for M&A.
Speaker #5: Of course, if there's potential, there's a PDP associated with it. So all in process, a very strong bank group going into the fall.
Speaker #5: Redetermination and looking forward to the quarter to come.
Speaker #4: Okay. And then just on the operational side, guys, you spoke of kind of locking in a precision rig and a pro frack crew. Provide a little bit more color around that.
Speaker #4: Those kind of locked in for the balance of 2026 . And , you know , maybe just to dovetail around that , where are you seeing leading edge two mile .
Speaker #4: Well costs right now... we know what we and the guys are locked in for next year. But what does that kind of potentially imply for well costs as we get into '26?
Speaker #5: Yeah, sure, sure. Leo, happy to touch on those again. Greg Patton here. Ultimately, our contractual date for the precision rig extends through April.
Speaker #5: of In terms pro frack , we are contractually locked in on a month by month basis with them with no rate escalations at the current time .
Speaker #5: Ultimately , we've they've been a for great partner us as we've kind of developed through the basin . We've we've cut in half our cycle times with them from the first inception .
Speaker #5: So , you know , pleased we're very with the with the pro frack process . There . And precision is equally it's a CNG electrified rig .
Speaker #5: It meets all the criteria of Colorado. We're very happy with that rig, so we would look to extend that come April.
Speaker #5: But everything is going well between those two companies as we kind of look at a go forward basis in terms of AF costs , you know , those two , those the rig and frack crew provide incremental aspects in large of that components AF .
Speaker #5: we've As delivered AFS throughout the year , we've continued to bring those down as we kind of average them out on a 1800 foot pound , frack equivalent basis .
Speaker #5: We're right in 5.2, that $5.3 million average. We have incrementally added additional sand loading as the reservoir deems necessary in certain places.
Speaker #5: And we've seen some 5.4 $5.5 million results . But that's not an equivalent basis . That's just because we are trying to put away the best wellbores and the right porosity rock and the right formations in the basin .
Speaker #5: And so we're very excited about the fact that we've been able to reduce the costs and ultimately we will continue to strive towards that $5 million marker we've previously talked about .
Speaker #5: And if we were putting away 1,800 foot-pounds fracks on a regular basis, we would be very, very close to basis, with that number at the time being.
Speaker #4: Okay. Thank you. Very thorough.
Speaker #3: The next question comes from the line of John Davenport with Johnson Rice . Please proceed .
Speaker #6: Hey . Good morning and thanks for taking my question today . I wanted to focus on the Workover program that you guys highlighted with the third quarter results .
Speaker #6: You're basically at of the end that , you know , being 31 of those 32 wells completed . And I'm curious , when will see I guess the the results from that .
Speaker #6: What the impact is on the production line . And what the magnitude of that will be , along with , is there runway for additional workovers , you know , at the existing assets might look and what that like in the future ?
Speaker #7: Yeah . This is Gary . I'll take that . Yeah . The Workover program , as I set forth in the early time , was 32 wells for the year .
Speaker #7: We got about half of those done in Q3. The rest of those will be completed in Q4. That is an ongoing process.
Speaker #7: It's it's it ends , really . I mean , never you're always needing as we to evaluate Wells and look at Wellbores and do certain work , we identify those opportunities .
Speaker #7: It's it's it ends , really . I mean , never you're always needing as we to evaluate Wells and look at Wellbores and do certain work , we identify those opportunities . So we'll continue to do that going forward other part of your .
Speaker #7: question was The the adds about 300 barrels , 400 barrels addition of those per day . We've seen a pretty significant uplift on those wells , and they're holding for 30 , 60 days we're monitoring that as we go .
Speaker #7: But out . And we're very pleased with the results . The return on that , that capital expenditure is just , you know , it's great .
Speaker #7: So you can continue that program. It's going to be something we do continuously ongoing in the future.
Speaker #6: All right . Perfect . I think that that is it for me . Thank you .
Speaker #8: you Thank .
Speaker #3: The next question is from Tim Moore with Clear Street. Please proceed.
Speaker #9: I just have two questions . What other improvements Thanks . maybe have you taking full made since operational control of mean , I know Gary's mentioned twice work now .
Speaker #9: The account get the pro factor proficiencies . Just like to hear about just hear elaborating on any or tactics or optimization plan any low hanging fruit you work on the next couple think you'll quarters .
Speaker #5: Yeah , you know , in in the of process through the workovers , you know , we're finding other improvements in the wells that are quick and inexpensive .
Speaker #5: And so , you know , that program is sort of , you know , the tip of the spear for us in terms of optimizing all of the assets terms of in other optimization opportunity , you know , we're looking at things like , you optimizing compression , optimizing , you know , some other facets of our facilities design , repairing some some facilities and so forth .
Speaker #5: So , you know , we're we're trying to recognize most of the opportunity in that arena before the end of the year . And are pretty much well on our way to doing so .
Speaker #9: Thanks . That's helpful . The only other question I have for you , or even Greg . How should we really think about the capital expenditure budget for next year ?
Speaker #9: Let's just assume that maybe a tiny bit of your high end of the range CapEx shifts into early next year. I mean, is $300 million CapEx next year?
Speaker #9: Feasible from what you're seeing?
Speaker #5: You know , we're not prepared yet to guide on next year . But , you know , I think there's a lot of opportunity for us and , you know , at the right time , we'll let you know what that number looks like .
Speaker #9: Thanks. That's it for my questions.
Speaker #3: The next question comes of Chris from the line with Please W2 . proceed .
Speaker #9: morning Sure . Good . everyone . Just wanted .
Speaker #10: Back and see if you guys can give us an overview on how you've been able to step up your production from the acquisition.
Speaker #10: kind of And taken over the assets now you've .
Speaker #5: Good morning Chris . Happy to that . address Yeah . So , you know , we've pretty much been on with the guidance that we've spot provided in development terms of our program .
Speaker #5: As you know, there is quite a bit of delay in the DJ in terms of recognizing the production ramp from wells drilled, completed, and tilled.
Speaker #5: We're starting to see the benefit of that . So , you know , again , as previously stated , we've optimized the production that we purchased after , you know , getting the transition service period completed in August and September .
Speaker #5: We brought all of our tiles online as planned . And we're no longer impacted by offset fracs as we were in Q2 . And so , you know , really that's driven production to the levels that we've guided previously .
Speaker #10: Okay, excellent. And I think you mentioned in your remarks that you got a couple of bolt-on acreage deals at, I think you said, $680 per acre.
Speaker #10: Is that right , or did I hear that correctly ? Or and can you add any color as to , you know . Roughly like what part of the basin it was in .
Speaker #5: , you know , I can't tell you exactly where it is . That's our that's our secret sauce . But , , what I'll say is that , you know yeah .
Speaker #5: What I'll say , though , is that we love the little deals . You know , it's sort of our version of Moneyball in the basin Force .
Speaker #5: You know , the big deals grab all the headlines , but , you know , all of these bolt ons of reserves , locations and permits really are core to our strategy .
Speaker #5: And there's still a lot of sort of orphaned assets like this throughout the we're able basin that to take advantage of . And Chris , I'll just add to that in terms of these acquisitions , that particular one , we reference is in and amongst available takeaway systems , offsetting other production from other operators .
Speaker #5: And so we're very happy to keep targeting, as Ed said, those individual opportunistic bolt-ons.
Speaker #10: Okay . Is it close to your like some of your acreage ? I mean , or is it and can you cut characterize it .
Speaker #10: It could be more rural versus some of the suburban.
Speaker #8: Yeah .
Speaker #5: not It's a step out away from our acreage , Chris . It's it's contiguous to to our positions .
Speaker #10: Okay. Perfect. So I've got guys. Thank you.
Speaker #8: Thank you Chris .
Speaker #3: Thank you. This concludes the question and answer session, and this will conclude today's conference. You may disconnect your lines at this time.