Q4 2025 Prairie Operating Co Earnings Call

March 31, 2026

Operator: Good morning, and welcome to the Prairie Operating Co. year-end 2025 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Wobbe Ploegsma, Vice President of Investor Relations and Capital Markets. Please go ahead.

Speaker #1: Good morning, and welcome to the Prairie Operating Co. Year-End 2025 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Wabi Plugsma, Vice President of Investor Relations and Capital Markets.

Wobbe Ploegsma: Thank you, operator, and good morning, everyone. Thank you for joining Prairie Operating Co.'s full year-end 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 which are subject to certain risks, uncertainties, and assumptions. Actual results could differ materially from those in any forward-looking statements.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Operator, and good morning, everyone. Thank you for joining Prairie Operating Co.'s full year-end 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, which are subject to certain risks, uncertainties, and assumptions.

Speaker #2: Actual results could differ materially from those in any forward-looking statements. Additionally, we may refer to non-GAAP measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially, from any forward-looking.

Wobbe Ploegsma: Additionally, we may refer to non-GAAP measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, as well as the reconciliations of any non-GAAP financial measures, please see the company's public filings, including the Form 8-K filed Monday, March 30, 2026.

Speaker #2: Statements, as well as the reconciliations of any non-GAAP financial measures, please see the company's public filings, including the Form 8K filed Monday, March 30th, 2026.

Wobbe Ploegsma: We have also posted an updated investor presentation to our website. Joining me today are Richard Frommer, Interim CEO and President, and Greg Patton, Executive Vice President and Chief Financial Officer. With that, I'll turn the call over to our Interim CEO and President, Richard Frommer.

Speaker #2: We have also posted an updated investor presentation to our website. Joining me today are Rich Fromer, Interim CEO and President, and Greg Patton, Executive Vice President and Chief Financial Officer.

Speaker #2: With that, I'll turn the call over to our Interim CEO and President, Rich Fromer.

Richard Frommer: Thanks, Wobbe, and good morning, everyone. 2025 was a transformative year for Prairie. We successfully completed the full integration of the assets acquired from Bayswater Exploration & Production while further expanding our inventory at attractive economics. In addition to our acquisitions, we delivered strong operational execution, meaningful production growth, and strengthens our balance sheet.

Speaker #3: Thanks, Wabi. And good morning, everyone.

Speaker #2: 2025 was a transformative year for Prairie. We successfully completed the full integration of the assets acquired from Bayswater Exploration and Production, while further expanding our inventory at attractive economics.

Speaker #2: In addition to our acquisitions, we delivered strong operational execution, meaningful production growth, and strengthened our balance sheet. For the full year, Prairie generated total production of approximately 6.75 million BOE, or 18,500 BOE on average.

Richard Frommer: For the full year, Prairie generated total production of approximately 6.75 million BOE, or 18,500 BOE on average, and exited the year at a production rate of approximately 28,000 net BOE per day, reflecting the strong ramp in activity and execution of our development program. It's important to note that the reported 18,500 BOE per day does not include the pro forma Q1 production from the Bayswater assets, which was incorporated into our original guidance.

Speaker #2: And exited the year at a production rate of approximately 28,000 net BOE per day, reflecting the strong ramp in activity and execution of our development program.

Speaker #2: It's important to note that the reported $18,500 BOE per day does not include the pro forma first-quarter production from the Bayswater assets. Which was incorporated into our original guidance.

Richard Frommer: By including those volumes, our full-year production would've been approximately 24,000 BOE per day, representing almost a 4 times increase in production year-over-year and in line with our guidance range. Throughout 2025, we executed a series of bolt-on acquisitions that further strengthened our core DJ Basin position.

Speaker #2: By including those volumes, our full-year production would have been approximately $24,000 BOE per day. Representing almost a four-times increase in production year over year and in line with our guidance range.

Speaker #2: Throughout 2025, we executed a series of bolt-on acquisitions that further strengthened our core DJ base and position. In total, we completed six transactions, adding approximately 44,000 net acres inclusive of the Bayswater, and expanded our portfolio with high-quality proved inventory, all while maintaining accretive balance sheet metrics and a disciplined approach to capital allocation.

Richard Frommer: In total, we completed 6 transactions, adding approximately 44,000 net acres, inclusive of the Bayswater, and expanded our portfolio with high-quality proved inventory, all while maintaining accretive balance sheet metrics and a disciplined approach to our capital allocation. Operationally, we brought on multiple pads online during the year, including the Noble, Simpson, Rauch, and the Opal Cove Bay, while advancing development across our broader asset base. These projects contributed meaningfully to our production growth and position us well for continued momentum into 2026.

Speaker #2: Operationally, we brought on multiple paths online during the year, including the Noble Simpson Roush and the Opal Cobank, while advancing development across our broader asset base.

Speaker #2: These projects contributed meaningfully to our production growth and position us well for continued momentum into 2026. From a financial standpoint, Prairie significantly strengthened its foundation in 2025, generating approximately $242 million in revenue and $156 million in adjusted EBITDA.

Richard Frommer: From the financial standpoint, Prairie significantly strengthened its foundation in 2025, generating approximately $242 million in revenue and $156 million in adjusted EBITDA, highlighting the scale and the earnings power of the platform. Similar to the production, this revenue and EBITDA figure does not include the pro forma contribution from Bayswater's assets for Q1.

Speaker #2: Highlighting the scale and the earnings power of the platform. But similar to the production, this revenue and EBITDA figure does not include the pro forma contribution from Bayswater's assets for the first quarter.

Richard Frommer: When included, full year revenue and EBITDA would have been approximately $315 million and $220 million, respectively, modestly below our EBITDA guidance of $240 million. Subsequent to year-end, the company received an extension on the anniversary warrant date from 26 March 2026 to 7 April 2026, providing us additional time as we continue discussions related to our capital structure. Looking ahead, our strategy remains unchanged.

Speaker #2: When included, full-year revenue and EBITDA would have been approximately $315 million and $220 million, respectively. This is modestly below our EBITDA guidance of $240 million. Subsequent to year-end, the company received an extension on the anniversary warrant date from March 26, 2026, to April 7, 2026.

Speaker #2: Providing us additional time as we continue discussions related to our capital structure. Looking ahead, our strategy remains unchanged. The board, and management are aligned.

Richard Frommer: The board and management are aligned and focused on disciplined capital allocation, operational execution, and delivering sustainable growth and long-term shareholder value. With that, I'll turn the call over to Greg.

Speaker #2: And focused on disciplined capital allocation, operational execution, and delivering sustainable growth and long-term shareholder value. With that, I'll turn the call over to Greg.

Greg Patton: Thanks, Richard Frommer, and good morning, everyone. I'll review Prairie's full year 2025 financial results, as well as highlights regarding our liquidity, hedging, and balance sheet. For the full year, Prairie generated total revenue of approximately $242 million, or $315 million inclusive of Bayswater. Driven by realized prices of $63.87 per barrel of oil, $17.93 per barrel of NGL, and $1.65 per Mcf of natural gas, including the impact of derivatives, representing almost a 3,000% increase in revenues year-over-year.

Speaker #3: Thanks, Rich. And good morning, everyone. I'll review Prairie's full-year 2025 financial results, as well as highlights regarding our liquidity, hedging, and balance sheet. For the full year, Prairie generated total revenue of approximately $242 million.

Speaker #3: Or $315 million, inclusive of Bayswater. Driven by realized prices of $63.87 per barrel of oil, $17.93 per barrel of NGL, and $1.65 per MCF of natural gas.

Speaker #3: Including the impact of derivatives, representing almost a 3,000% increase in revenues year over year. Net loss attributable to common stockholders was $60.9 million, or $1.35 per share.

Greg Patton: Net loss attributable to common stockholders was $60.9 million, or $1.35 per share, primarily reflecting non-cash expenses associated with a Series F preferred and other financial instruments. Adjusted EBITDA totaled approximately $156 million, a significant improvement from the prior year and a clear reflection of the company's strong operational and financial performance. As Rich noted, this figure does not include the pro forma contribution from the Bayswater assets for Q1.

Speaker #3: Primarily reflecting non-cash expenses associated with a Series F preferred in other financial instruments. Adjusted EBITDA totaled approximately $156 million. A significant improvement from the prior year and a clear reflection of the company's strong operational and financial performance.

Speaker #3: As Rich noted, this figure does not include the pro forma contribution from the Bayswater assets for the first quarter. Including those amounts, full-year adjusted EBITDA would have been approximately $220 million.

Greg Patton: Including those amounts, full year adjusted EBITDA would have been approximately $220 million, modestly below our guidance of $240 million. Notably, we achieved our production guidance while deploying significantly less capital than originally planned, approximately 35% below our stated CapEx guidance, underscoring the capital efficiency and strength of our operational execution. Net cash provided by operating activities was $153.9 million, and capital expenditures totaled approximately $183.4 million, coming in approximately $90 million below the midpoint of our guidance.

Speaker #3: Modestly below our guidance of $240 million. Notably, we achieved our production guidance while deploying significantly less capital than originally planned—approximately 35% below our stated CapEx guidance.

Speaker #3: Underscoring the capital efficiency and strength of our operational execution, net cash provided by operating activities was $153.9 million, and capital expenditures totaled approximately $183.4 million.

Greg Patton: On a per BOE basis, lease operating expense was $6.14. Transportation and processing was $1.32. Production and ad valorem taxes were $3.15, and G&A was $7.50 per BOE, of which $5.29 was attributable to cash G&A, reflecting our continued focus on cost control and increased efficiencies. As of 31 December 2025, Prairie had approximately $109 million of liquidity, with a borrowing base and elected commitment of $475 million under its credit facility.

Speaker #3: Coming in approximately $90 million below the midpoint of our guidance. On a per BOE basis, lease operating expense was $6.14. Transportation and processing was $1.32.

Speaker #3: Production and ad valorem taxes were $3.15. G&A was $7.50 per BOE, of which $5.29 was attributable to cash G&A, reflecting our continued focus on cost control and increased efficiencies.

Speaker #3: As of December 31, 2025, Prairie had approximately $109 million of liquidity, with a borrowing base and elected commitment of $475 million under its credit facility.

Greg Patton: Our hedging program remains a key component of our strategy, with a significant portion of expected production hedged at attractive prices through 2029, providing strong cash flow visibility and downside protection. Prairie ended the year with 121.1 million BOE of proved reserves, including a balanced mix of proved, developed, and undeveloped reserves, with a PV-10 value of approximately $1.2 billion, underscoring the significant value of our assets.

Speaker #3: Our hedging program remains a key component of our strategy, with a significant portion of expected production hedged at attractive prices through 2029, providing strong cash flow visibility and downside protection.

Speaker #3: Prairie ended the year with 121.1 million BOE of proved reserves, including a balanced mix of proved developed and undeveloped reserves, with a PV10 value of approximately $1.2 billion.

Greg Patton: Overall, 2025 marked a transformative step forward in strengthening Prairie's financial position, scaling the business, and positioning the company for continued growth. I will now go over an operational overview. Operationally, 2025 was a defining year for Prairie. We successfully completed the integration of acquired assets, assumed full operational control, and executed a multiple pad development program across our DJ Basin footprint.

Speaker #3: Underscoring the significant value of our assets. Overall, 2025 marks a transformative step forward in strengthening Prairie's financial position. Scaling the business and positioning the company for continued growth.

Speaker #3: I will now go over an operational overview. Operationally, 2025 was a defining year for Prairie. We successfully completed the integration of acquired assets assumed full operational control and executed a multiple pad development program across our DJ Basin footprint.

Greg Patton: Importantly, we achieved a 0.0 safety record for the year, reflecting a perfect safety performance with 0 incidents, an outcome that underscores the dedication, discipline, and operational excellence of our field team. As previously mentioned, during the year, we completed and turned to sales wells across multiple pads, including Noble, Simpson, Rush, and Opelika Bank.

Speaker #3: Importantly, we achieved a 0.0 safety record for the year, reflecting a perfect safety performance with zero incidents—an outcome that underscores the dedication, discipline, and operational excellence of our field team.

Speaker #3: As previously mentioned, during the year, we completed and turned to sales wells across multiple pads, including Noble, Simpson, Rush, and Opal Colebank. Results to date have met or exceeded expectations and continue to validate the quality of our inventory and execution.

Greg Patton: Results to date have met or exceeded expectations and continue to validate the quality of our inventory and execution. In addition to new development, Prairie remained focused on optimization initiatives, including workovers and artificial lift enhancements, which contributed to improved base production, performance, and efficiency. We also secured key agreements for services and infrastructure in 2026, ensuring operational continuity and supporting our future development.

Speaker #3: In addition to new development, Prairie remained focused on optimization initiatives. Including workovers and artificial lift enhancements. Which contributed to improved base production performance and efficiency.

Speaker #3: We also secured key agreements for services and infrastructure in 2026, ensuring operational continuity and supporting our future development. The team executed at a high level throughout the year.

Greg Patton: The team executed at a high level throughout the year, delivering strong results while managing integration and maintaining capital discipline. Management and the board of directors remain closely aligned around a shared commitment to disciplined capital allocation, continued optimization of the company's capital structure, and the delivery of sustainable long-term value for shareholders.

Speaker #3: Delivering strong results while managing integration and maintaining capital discipline. Management and the board of directors remain closely aligned around a shared commitment to disciplined capital allocation.

Greg Patton: The leadership team is focused on enhancing financial strength, driving operational excellence, and executing with integrity across all aspects of the business. With that, I'll hand it back to Rich for closing remarks.

Speaker #3: Continued optimization of the company's capital structure and the delivery of sustainable, long-term value for shareholders. The leadership team is focused on enhancing financial strength, driving operational excellence, and executing with integrity across all aspects of the business.

Richard Frommer: Thanks, Greg. As we look ahead to 2026, we are initiating full-year guidance reflecting the strength of our asset base and the momentum exiting 2025. We expect average production of approximately 25,500 to 27,500 BOE per day, with capital expenditures of $200 to $220 million, and adjusted EBITDA expected to range between $240 and $260 million, assuming a weighted average WTI price of $60 to $64, including our hedges.

Speaker #3: With that, I'll hand it back to Rich for closing remarks.

Speaker #2: Thanks, Greg. So as we look ahead to 2026, we are initiating full-year guidance reflecting the strength of our asset base and the momentum exiting 2025.

Speaker #2: We expect average production of approximately 25,500 to 27,500 BOE per day, with capital expenditures of $200 to $220 million, and adjusted EBITDA expected to range between $240 and $260 million.

Speaker #2: Assuming a weighted average WTI price of $60 to $64, including our hedges. Our approach remains consistent: prioritizing high-return organic growth and maintaining balance sheet strength.

Richard Frommer: Our approach remains consistent, prioritizing high return organic growth, maintaining balance sheet strength, and preserving flexibility to pursue accretive opportunities. Prairie exits 2025 with significantly greater scale, a deep inventory of high-quality locations, and a proven operating platform. We believe we are well-positioned to deliver continued operational and financial success into 2026 and beyond.

Speaker #2: And preserving flexibility to pursue accretive opportunities. Prairie exits 2025 with significantly greater scale: a deep inventory of high-quality locations, and a proven operating platform.

Speaker #2: We believe we are well positioned to deliver continued operational and financial success into 2026 and beyond. So, on behalf of our board, I want to thank the entire Prairie team for their dedication and execution throughout 2025.

Richard Frommer: On behalf of our board, I want to thank the entire Prairie team for their dedication and execution throughout 2025. I wanna thank our shareholders for their continued trust and support as we enter the next phase of growth. With that, I'll turn the call back over to the operator to open the line for questions.

Speaker #2: And I want to thank our shareholders for their continued trust and support as we enter the next phase of growth. And with that, I'll turn the call back over to the operator to open the line for questions.

Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. Again, that's star one to register a question at this time. Our first question is coming from Leo Mariani of Roth. Please go ahead.

Speaker #1: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. Again, that's star one to register a question at this time.

Leo Mariani: Yeah. Hi, guys. I was hoping you could shed a little bit more color on production. You know, you guys had a 28,000 barrel a day exit rate. Your guide for the year is a little bit, you know, lower than that. Could you maybe just talk us through, like, roughly where you think we're gonna be in Q1 on production and what do you think the kinda cadence is throughout the year? Has production been going down recently? Is it expected to go back up, you know, at some point throughout the year? Just any color on cadence and production would be very helpful.

Speaker #1: Our first question is coming from Leo Marriott, of Roth. Please go ahead.

Speaker #3: Yeah, hi guys. I was hoping you could shed a little bit more color on production. You guys had a 28,000 barrel-a-day exit rate.

Speaker #3: Your guide for the year is a little bit lower than that. Can you maybe just talk us through roughly where you think we're going to be in the first quarter on production and what do you think the kind of cadence is throughout the year?

Speaker #3: Has production been going down recently? Is it expected to go back up at some point throughout the year? Just any color on cadence of production would be very helpful.

Greg Patton: Yeah. Good morning, Leo. Greg Patton here. Happy to talk about our plan a little bit for 2026. As you mentioned, we exited the year on a highlight for the year, ultimately developing new locations. We are reoccupying pads that have incremental additional locations available to them in Q1. I define that as not infilling wells, but more so utilizing that pad to drill other pads. Our Blem Schneider is a key example, for those of you on the phone, where we did have to go in and shut down the entire Blem facility and operations. Our Q1 production number is down. That number, you're going to see an average of Q1 more in the 23-ish range.

Speaker #4: Yeah, good morning, Leo. Greg Patton here. Happy to talk about our plan a little bit for 2026. As you mentioned, we exited the year on a highlight for the year, ultimately.

Speaker #4: Developing new locations. We are reoccupying pads that have incremental additional locations available to them in the first quarter. I define that as not infilling wells, but more so utilizing that pad to drill other pads.

Speaker #4: Our blem Schneider is a key example for those of you on the phone. And where we did have to go in and shut down the entire blem facility and operations.

Greg Patton: Our Q1 production number is down. That number, you're going to see an average of Q1 more in the 23-ish range. Ultimately, that's just because of that shut-in production, not necessarily normal declines as we would all anticipate exiting the year from 28,000 barrels a day, but because we had to shut in incremental pads. Same scenario on our Elder pad where we drilled three different DSUs from the Elder pad, that we've gone and reoccupied.

Speaker #4: So our Q1 production number is down. That number you're going to see an average of Q1 more in the 23-ish range. And ultimately, that's just because of that shut-in production.

Greg Patton: Ultimately, that's just because of that shut-in production, not necessarily normal declines as we would all anticipate exiting the year from 28,000 barrels a day, but because we had to shut in incremental pads. Same scenario on our Elder pad where we drilled three different DSUs from the Elder pad, that we've gone and reoccupied. In that Q1 of the year, the Blem, the Elder, as we've drilled those incremental locations in our drill plan for the year, is going to have the lowest production. Bringing those all back online, plus the new flush production on those two pads as we get into the Q2 here, will continue to ramp up and act as a continual gradual increase throughout the year to exit the year again. That's a little bit of color in and around Q1 moving into Q2.

Speaker #4: Not necessarily normal declines, as we would all anticipate exiting the year from 28,000 barrels a day, but because we had to shut in incremental pads.

Greg Patton: In that Q1 of the year, the Blem, the Elder, as we've drilled those incremental locations in our drill plan for the year, is going to have the lowest production. Bringing those all back online, plus the new flush production on those two pads as we get into the Q2 here, will continue to ramp up and act as a continual gradual increase throughout the year to exit the year again. That's a little bit of color in and around Q1 moving into Q2.

Speaker #4: Same scenario on our elder pad where we drilled three different DSUs from the elder pad that we've gone and reoccupied. And so in that first quarter of the year, the blem, the elder, as we've drilled those incremental locations in our drill plan for the year is going to have the lowest production.

Speaker #4: Bringing those all back online, plus the new flush production on those two pads, as we get into the second quarter here, we'll continue to ramp up and act as a continual gradual increase throughout the year to exit the year again.

Greg Patton: There will be, at the end of Q2, some offset fracs that we anticipate. They don't seem to be significant at this point in time, depending on how far away ultimately those fracs propagate. We believe that it's ultimately a gradual incline from this point forward to the end of the year.

Speaker #4: So, that's a little bit of color in and around Q1, moving into Q2. There will be, at the end of Q2, some offset fracs that we anticipate.

Speaker #4: They don't seem to be significant at this point in time. Depending on how far away ultimately those fracts perpetrate. But we believe that it's ultimately a gradual incline from this point forward to the end of the year.

Leo Mariani: Okay. That was helpful. I hope you could maybe just talk a little about some of the well performance that the company has seen here. Just looking at, you know, some of the details in your release, the Opal Coal Bank wells were around 725 BOE per day. Noble with sort of subsequent wells were lower at 550, and the Simpson, kind of your latest wells, were even lower at 500. Are you guys doing anything differently on the wells here? It seems like the performance has been declining a bit in the more recent wells versus some prior wells. Maybe just talk to that a bit and kind of what you're seeing there.

Speaker #3: Okay, that was helpful. And I hope you can maybe just talk a little bit about some of the well-performance that the company has seen here.

Speaker #3: Just looking at some of the details in your release, the Opal Cobank wells were around 725 BOE per day. Noble—sort of subsequent wells—were lower at 550.

Speaker #3: And the Simpson kind of your latest wells were even lower at $500. Are you guys doing anything differently on the wells here? It seems like the performance has been declining a bit and the more recent wells versus some prior wells.

Greg Patton: Yeah. Opal Coal Bank was definitely an above performer for us in how it flowed back. Very happy with the results of Opal Coal Bank. Noble has done well, but has been impacted by some offset operators, Chevron predominantly, in terms of their frac program. We've been fighting those wells with those offset fracs over the last several months. Hopefully we get that a little bit more stabilized here as we move into Q2 of the year. The Simpson wells have, you know, in our minds, performed quite well. In terms of getting them online, they took longer than anticipated. We had some trouble with equipment getting there on time, predominantly our gas lift systems.

Speaker #3: Maybe just talk to that a bit and kind of what you're seeing there.

Speaker #4: Yeah, so Opal Cobank was definitely above performer for us in how it flowed back. Very happy with the results of Opal Cobank. Noble has done well, but has been impacted by some offset operators.

Speaker #4: Chevron predominantly, in terms of their frac program. And so we've been fighting those wells with those offset fracs over the last several months. Hopefully, we get that a little bit more stabilized here as we move into the second quarter of the year.

Greg Patton: The Simpson wells have, you know, in our minds, performed quite well. In terms of getting them online, they took longer than anticipated. We had some trouble with equipment getting there on time, predominantly our gas lift systems. As those gas lift systems got there on time and we were able to bring those wells online more in accordance with how we'd like to flow them back, they've been performing at type curve.

Speaker #4: The Simpson wells have, in our minds, performed quite well in terms of getting them online. They took longer than anticipated. We had some trouble with equipment getting there on time, predominantly our gas lift systems.

Greg Patton: As those gas lift systems got there on time and we were able to bring those wells online more in accordance with how we'd like to flow them back, they've been performing at type curve. As we kind of look forward, we believe that they're gonna stay on that kind of trend line, albeit it has taken significantly longer to get them there than we originally anticipated. We're still very optimistic of what those wells can perform based off of, you know, just dynamics and pressures that we're seeing on site, feedback we're getting on our daily route reviews from our operators, et cetera.

Speaker #4: As those gas lift systems got there on time and we were able to bring those wells online more in accordance with how we would like to flow them back, they've been performing at type curve.

Greg Patton: As we kind of look forward, we believe that they're gonna stay on that kind of trend line, albeit it has taken significantly longer to get them there than we originally anticipated. We're still very optimistic of what those wells can perform based off of, you know, just dynamics and pressures that we're seeing on site, feedback we're getting on our daily route reviews from our operators, et cetera.

Speaker #4: And as we kind of look forward, we believe that they're going to stay on that kind of trend line albeit it has taken significantly longer to get them there than we originally anticipated.

Speaker #4: But we're still very optimistic of what those wells can perform based off of just dynamics and pressures that we're seeing on site, feedback we're getting on our daily route reviews from our operators, etc.

Leo Mariani: Okay. That, that's helpful. And I was also hoping you could just kinda speak to what roughly the current share count is of the company. I know the share count's been going up, you know, for y'all for a bit of time here. Where is it roughly here today? And can you provide some more color on kind of where you are in the process on the preferred refinancing, you know, restructuring? I know you bought the extension on the time here, which I guess will be coming up in about a week. Any color on that would be great.

Speaker #3: Okay, that's helpful. And I was also hoping you could just kind of speak to roughly the current share count is of the company. I know the share count's been going up for y'all for a bit of time here.

Speaker #3: So, where is it roughly here today? And can you provide some more color on kind of where you are in the process on the preferred refinancing restructuring?

Greg Patton: Absolutely, always appreciate the transparency there and questions in and around the pref. We know ultimately, it's been highly accretive to us to be able to secure these assets, operate as we have, but it does have some dilutive qualities to it, as we're all aware of. Obviously, the waiver, I think, clearly indicates that we're in good communication with that pref holder, being High Trail/Hudson Bay. They've been a great partner with us as we've continued to grow and expand. They've utilized that pref in the manners that it was set forth to do and convert it. I'll kind of transition the two questions or blend them together here, Leo. Ultimately, as that pref is converted, our share count has increased.

Speaker #3: I know you bought the extension on the time here, which I guess will be coming up in about a week. So, any color on that would be great.

Speaker #4: Yeah, absolutely. And always appreciate the transparency there and questions in and around the prep. We know that, ultimately, it's been highly accretive to us to be able to secure these assets and operate as we have.

Speaker #4: But it does have some dilute of qualities to it as we're all aware of. Obviously, the waiver I think clearly indicates that we're in good communication with that prep holder being Hytrail/Hudson Bay.

Greg Patton: They've utilized that pref in the manners that it was set forth to do and convert it. I'll kind of transition the two questions or blend them together here, Leo. Ultimately, as that pref is converted, our share count has increased. As that share count has increased, you know, as we exited the year, we were in the low sixties in terms of what I'd say is the issued and outstanding share count. They've continued to convert. We've had some really good volume trading in our stock.

Speaker #4: They've been a great partner with us as we've continued to grow and expand. They've utilized that prep in the manners that it was set forth to do and convert it.

Greg Patton: As that share count has increased, you know, as we exited the year, we were in the low sixties in terms of what I'd say is the issued and outstanding share count. They've continued to convert. We've had some really good volume trading in our stock. We're appreciative of the shareholder base that we have out there today. As we continue to execute, deliver results, et cetera and so forth, High Trail has taken advantage of the market and been able to convert more of that outstanding. You know, giving those numbers exactly, we haven't concluded Q1 yet, so I'll refrain from doing that. At this time, I'll tell you that the number has increased from that low sixties number at the end of the year.

Speaker #4: So I'll kind of transition the two questions or blend them together here. Leo, but ultimately as that prep is converted, our share count has increased.

Speaker #4: As that share count has increased, as we exited the year, we were in the low 60s in terms of what I'd say is the issued and outstanding share count.

Greg Patton: We're appreciative of the shareholder base that we have out there today. As we continue to execute, deliver results, et cetera and so forth, High Trail has taken advantage of the market and been able to convert more of that outstanding. You know, giving those numbers exactly, we haven't concluded Q1 yet, so I'll refrain from doing that. At this time, I'll tell you that the number has increased from that low sixties number at the end of the year.

Speaker #4: They've continued to convert. We've had some really good volume trading in our stock. We're appreciative of the shareholder base that we have out there today.

Speaker #4: And as we continue to execute, deliver results, and so forth, Hytrail has taken advantage of the market and been able to convert more of that outstanding.

Speaker #4: Given those numbers exactly, we haven't concluded Q1 yet, so I'll refrain from doing that. But at this time, I'll tell you that the number has increased from that low-60s number at the end of the year.

Leo Mariani: Okay, thanks.

Operator: Thank you. Our next question is coming from Chris Begner of Water Tower Research. Please go ahead.

Speaker #3: Okay. Thanks.

Chris Begner: Hi. Good morning, everyone. I was curious about your cash flow priorities in 2026. It looks like you're guiding to modest free cash flow generation. How do you think about using the available free cash flow? You can target debt reduction or potential acquisitions. If you were to look at acquisitions, how would you think about financing them?

Speaker #1: Thank you. Our next question is coming from Chris Beckner of Water Tower Research. Please go ahead.

Speaker #5: Hi, good morning, everyone. I just wanted to—I was curious about your cash flow priorities in 2026. It looks like you're guiding to modest free cash flow generation.

Speaker #5: How do you think about using the available free cash flow? Are you going to target debt reduction or potential acquisitions? And if you were to look at acquisitions, how would you think about financing them?

Greg Patton: Thanks, Chris, and good morning. Good to hear from you. You know, yes, I think you read the guidance correctly in modest free cash flow generation through the year. Again, you know, that's based on a mid-sixties price deck on average with our hedges. As we look at the current market, that could be more accretive to the company. Ultimately, you know, we don't know what the year will hold, and so we've held a very conservative model and plan for the year. As we think about that cash flow generation and its uses, per your question, it would be to build out the rest of the asset base in terms of our financials. We wanna build a robust financial balance sheet, which we have worked for and developed to this date.

Speaker #4: Thanks, Chris. And good morning. Good to hear from you. Yes, I think you read the guidance correctly and modest free cash flow generation through the year.

Speaker #4: Again, that's based on a mid-60s price deck on average with our hedges. As we look at the current market, that could be more accretive to the company.

Greg Patton: Ultimately, you know, we don't know what the year will hold, and so we've held a very conservative model and plan for the year. As we think about that cash flow generation and its uses, per your question, it would be to build out the rest of the asset base in terms of our financials. We wanna build a robust financial balance sheet, which we have worked for and developed to this date.

Speaker #4: But ultimately, we don't know what the year will hold. And so we've held a very conservative model. And planned for the year. As we think about that cash flow generation and its uses per your question, it would be to build out the rest of the asset base in terms of our financials.

Greg Patton: Increasing the liquidity of the company, deleveraging the balance sheet further from what we did at the end of the year, are all imperative goals of the board. You know, that's the alignment that we have with the board and with management. As we kind of progress this all forward, you know, asset acquisitions are the key of our kind of aspirations. We've done nine acquisitions to date that have bolstered and built the significance of our balance sheet and our reserves to date. We've done all of those at very accretive metrics. We'll continue to look at acquisitions. If they're accretive, we'll think about bolting them on or tacking them on to our contiguous acreage blocks. We've done that predominantly through cash flow and small draws on the RBL to support PDP as we've acquired it.

Speaker #4: We want to build a robust financial balance sheet, which we have worked for and developed to this date, but also focus on increasing the liquidity of the company.

Speaker #4: D-leveraging the balance sheet further from what we did at the end of the year. We're all imperative goals of the board. And that's the alignment that we have with the board and with management.

Speaker #4: So as we kind of progress this all forward, asset acquisitions are the key of our kind of aspirations. We've done nine acquisitions to date.

Greg Patton: We've done nine acquisitions to date that have bolstered and built the significance of our balance sheet and our reserves to date. We've done all of those at very accretive metrics. We'll continue to look at acquisitions. If they're accretive, we'll think about bolting them on or tacking them on to our contiguous acreage blocks. We've done that predominantly through cash flow and small draws on the RBL to support PDP as we've acquired it.

Speaker #4: That have bolstered and built the significance of our balance sheet and our reserves today. But we've done all of those at very accretive metrics.

Speaker #4: So, we'll continue to look at acquisitions. If they're accretive, we'll think about bolting them on or tacking them onto our contiguous acreage blocks. We've done that predominantly through cash flow and small draws on the RBL to support PDP as we've acquired it.

Greg Patton: I would think that we continue to do that, those same type of acquisitions and growth perspectives with the company, not over-leveraging the balance sheet, not growing just to grow, maintaining a cash flow metric, albeit growing accretively where possible.

Speaker #4: And I would think that we continue to do that, those same type of acquisitions and growth perspectives with the company. Not over-leveraging the balance sheet.

Speaker #4: Not growing just to grow. Maintaining a cash flow metric, albeit growing accretively where possible.

Chris Begner: Excellent. One other question that I've got, and then I'll let you go. Are there any anticipated constraints that you see from any of the midstream systems or gathering systems?

Speaker #3: Excellent. One other question that I've got, and then I'll let you go. Are there any anticipated constraints that you see from any of the midstream systems or gathering systems?

Greg Patton: Great question. The DJ's obviously been plagued with constraints throughout the years as fluctuation in production grows and expands. That's one of the benefits of how we built our acreage position and how we've engineered our midstream contracts. Ultimately, foundational basis started with NGL and growing an expandable basis with them to be able to carry our oil hydrocarbons to Cushing for sale, number one. Number two, we have great partners with Williams and DCP on the gas contracts. As they've continued to grow in the basin and expand, you know, we have ensured that our development plan aligns with their expansion profiles, and availability on their plants. There are some locations we have split connects in, which provides an even better optionality use for us as we continue forward.

Speaker #4: Great, great question. The DJ is obviously been plagued with constraints throughout the years as fluctuation in production grows and expands. That's one of the benefits of how we built our acreage position and how we've engineered our midstream contracts.

Speaker #4: Ultimately, foundation basis started with NGL and growing and expandable basis with them to be able to carry our oil hydrocarbons to Cushing for sale.

Greg Patton: As they've continued to grow in the basin and expand, you know, we have ensured that our development plan aligns with their expansion profiles, and availability on their plants. There are some locations we have split connects in, which provides an even better optionality use for us as we continue forward. We do not anticipate any constraints on our plan through 2026 or 2027. We continue to monitor that on a regular basis, and you know, be prepared for potential offset additional production coming online, as well as our expansion potential and how we can continue to grow with those systems.

Speaker #4: Number one. Number two, we have great partners with Williams and DCP on the gas contracts. As they've continued to grow in the basin and expand, we have ensured that our development plan aligns with their expansion profiles.

Speaker #4: And availability on their plants. There are some locations we have split connects in, which provides an even better optionality use for us as we continue forward.

Greg Patton: We do not anticipate any constraints on our plan through 2026 or 2027. We continue to monitor that on a regular basis, and you know, be prepared for potential offset additional production coming online, as well as our expansion potential and how we can continue to grow with those systems.

Speaker #4: So, we do not anticipate any constraints on our plan through '26 or '27. But we continue to monitor that on a regular basis, and be prepared for potential offset additional production coming online.

Speaker #4: As well as our expansion potential and how we continue to grow with those systems.

Operator: Thank you. The next question is coming from John Davenport of Johnson Rice. Please go ahead.

John Davenport: Hi, good morning, and thanks for taking our question today. I wanted to focus on, I guess, more the 2026 production and CapEx guidance and maybe some flexibility around that, as the year goes on. You know, we're in a different price environment than, say, a month ago or two months ago, and I'd be curious how long of elevated prices would it take for you guys to up the dial on activity or if you guys remain flat even if prices were to remain elevated throughout the year.

Speaker #1: Thank you. The next question is coming from John Davenport of Johnson Rice. Please go ahead.

Speaker #5: Hi, good morning, and thanks for taking our question today. I wanted to focus on, I guess, more the 2026 production and CapEx guidance, and maybe some flexibility around that as the year goes on.

Speaker #5: We're in a different price environment than, say, a month ago or two months ago. And I'd be curious if how long of elevated prices would it take for you guys to up the dial on activity?

Greg Patton: John, thanks for the question, and thanks for joining us this morning. Yeah. You know, the goal, as I mentioned in some of our prior questions here, is to bolster the robustness of our balance sheet by continuing to create liquidity, and to pay down debt. That ultimately creates more value to our shareholders and our stakeholders based off of the assets that we're able to have on our balance sheet, the reserves we're able to grow. The one rig, one frack crew program that we have in place this year, albeit the rig outpaces the frack crew, so we'll be taking a hiatus from the rig for roughly a month throughout the year.

Speaker #5: Or if you guys remain flat, even if prices were to remain elevated throughout the year.

Speaker #4: John, thanks for the question and thanks for joining us this morning. Yeah. The goal, as I mentioned in some of our prior questions here, is to bolster the robustness of our balance sheet.

Speaker #4: By continuing to create liquidity and to pay down debt. That ultimately creates more value to our shareholders and our stakeholders based off of the assets that we're able to have.

Greg Patton: The one rig, one frack crew program that we have in place this year, albeit the rig outpaces the frack crew, so we'll be taking a hiatus from the rig for roughly a month throughout the year. That ultimately is our plan, and our plan is to generate as much free cash flow and hopefully some more with the market prices, to your question, by the end of the year. As we get to Q4, and that rig is potentially moving quicker, you know, there's the chance that we have a couple of extra DUCs, you know, 1 to 3, maybe 5 extra DUCs, depending on how much faster it moves.

Speaker #4: On our balance sheet, the reserves we're able to grow. So the one rig, one frac program that we have in place this year, albeit the rig outpaces the frac crew.

Greg Patton: That ultimately is our plan, and our plan is to generate as much free cash flow and hopefully some more with the market prices, to your question, by the end of the year. As we get to Q4, and that rig is potentially moving quicker, you know, there's the chance that we have a couple of extra DUCs, you know, 1 to 3, maybe 5 extra DUCs, depending on how much faster it moves. There's only so much that frack crew can keep up with. Our goal is not to really step into a second frack crew.

Speaker #4: So, we'll be taking a hiatus from the rig for roughly a month throughout the year. That ultimately is our plan. And our plan is to generate as much free cash flow—and hopefully some more with the market prices—to your question.

Speaker #4: By the end of the year, as we get to the fourth quarter, that rig is potentially moving quicker. There's the chance that we have a couple of extra ducks—one to three, maybe five extra ducks—depending on how much faster it moves.

Greg Patton: There's only so much that frack crew can keep up with. Our goal is not to really step into a second frack crew. The goal there is really to, again, just bolster the balance sheet, continue operational efficiencies across our capital structure, maintain our accretive AFEs and our cost basis within those AFEs, as I think we've exhibited throughout the end of the year, delivering accretive AFE results, and focus on our LOE and our operations of north of 500 wellbores.

Greg Patton: The goal there is really to, again, just bolster the balance sheet, continue operational efficiencies across our capital structure, maintain our accretive AFEs and our cost basis within those AFEs, as I think we've exhibited throughout the end of the year, delivering accretive AFE results, and focus on our LOE and our operations of north of 500 wellbores. Ultimately, the team has done a phenomenal job of that. Really narrowing in, focusing on the LOE, continued delivery of that CapEx on the AFEs, that's our true goal for the year. You know, we'll look and see what 2027 brings and what sustained pricing brings in 2027. I think delivering those free cash flow results and focusing on that one rig, one frack crew is our priority.

Speaker #4: But there's only so much that the frac crew can keep up with. And our goal is not to really step into a second frac crew.

Speaker #4: And the goal there is really to, again, just bolster the balance sheet, continue operational efficiencies across our capital structure, and maintain our accretive AFEs and our cost basis within those AFEs, as I think we've exhibited throughout the end of the year.

Greg Patton: Ultimately, the team has done a phenomenal job of that. Really narrowing in, focusing on the LOE, continued delivery of that CapEx on the AFEs, that's our true goal for the year. You know, we'll look and see what 2027 brings and what sustained pricing brings in 2027. I think delivering those free cash flow results and focusing on that one rig, one frack crew is our priority.

Speaker #4: Delivering accretive AFE results, and focusing on our LOE and our operations of north of 500 wellbores. Ultimately, the team has done a phenomenal job of that.

Speaker #4: But really, narrowing in, focusing on the LOE, continuing delivery of that CapEx on the AFEs. That's our true goal for the year. And we'll look and see what '27 brings and what sustained pricing brings in '27.

John Davenport: Got it. Well, I think that's all from me. Thank you, guys.

Speaker #4: But I think delivering those free cash flow results and focusing on that one rig, one frac crew is our priority.

Operator: Thank you. Our next question is coming from Tim Moore of Clear Street. Please go ahead.

Speaker #3: Got it. Well, I think that's all from me. Thank you, guys.

Tim Moore: Thanks. Yeah, I mean, it seems like you have a good tailwind, maybe starting a month or two ago on AFE costs. I mean, you probably have better sand, water, steel costs maybe locked in. Like you mentioned, you don't need a second frack crew. I was wondering, you know, if your rig can drill about 60 wells a year, but your completion crew might be closer to low 40s pace, do you help claw back some of those costs by maybe leasing the rig during down periods of spring or early summer to adjacent owners, and then you get a sneak peek maybe of what they're doing to possibly become an acquisition target for you?

Speaker #1: Thank you. Our next question is coming from Tim Moore of Clear Street. Please go ahead.

Speaker #6: Thanks. Yeah, I mean, it seems like you have a good tailwind, maybe starting a month or two ago on AFE costs. I mean, you probably have better sand, water, steel costs—maybe locked in.

Speaker #6: And like you mentioned, you don't need a second fract crew. So I was wondering, if your rig can drill about 60 wells a year, but your completion crew might be closer to low 40s pace, can you help claw back some of those costs by maybe leasing the rig during down periods of spring or early summer to adjacent owners?

Greg Patton: I mean, that sounds like a great strategy there. You know, I think we would take that or use that or maybe say that is our playbook. As we look at what that rig can do, it's amazing what drill times have done in the basin, as we've all witnessed over the past 10 years, and they continue to get better and better and more and more defined. Utilizing that rig opportunistically while we have it contracted to be able to sub it out to maybe a potential acquisition target, I think is a great plan and something that we will probably focus on the year. As we think about the frack crew, you know, we're partnered with Halliburton for the year, and their technologies and designs continue to get better and better.

Speaker #6: And then you get a sneak peek, maybe, of what they're doing to possibly become an acquisition target for you?

Speaker #4: I mean, that sounds like a great strategy there. I think we would take that, or use that, or maybe say that is our playbook.

Speaker #4: So, as we look at what that rig can do, it's amazing what drill times have done in the basin, as we've all witnessed over the past 10 years.

Greg Patton: Utilizing that rig opportunistically while we have it contracted to be able to sub it out to maybe a potential acquisition target, I think is a great plan and something that we will probably focus on the year. As we think about the frack crew, you know, we're partnered with Halliburton for the year, and their technologies and designs continue to get better and better.

Speaker #4: And they continue to get better and better and more and more defined. Utilizing that rig opportunistically, while we have it contracted to be able to sub it out to maybe a potential acquisition target, I think is a great plan and something that we will probably focus on in the year.

Speaker #4: As we think about the fract crew, we're partnered with Halliburton for the year. And their technologies and designs continue to get better and better.

Greg Patton: Their sand loading and their hot swaps and things that they're able to do on the fracture side continue to increase time and add to stages a day. You know, we're hoping that we get more aligned on a one-for-one basis by the end of the year. Some of that's our team getting symbiotic with the Halliburton team, and some of that's just technologies continuing to increase. We look forward to what those things and optimization we can bring through technology, and through the utilization of multiple teams, Halliburton ourselves, Precision ourselves, and developing that on a go-forward basis. Yes, absolutely.

Speaker #4: Their sand loading and their hot swaps and things that they're able to do on the fracture side continue to increase time and add the stages a day.

Speaker #4: And so we're hoping that we get more aligned on a one-for-one basis by the end of the year. Some of that's our team. Getting symbiotic with the Halliburton team.

Speaker #4: And some of that's just technologies continuing to increase. And so, we look forward to what those things and optimization we can bring through technology.

Greg Patton: Utilizing that rig to sub it out to someone who may be of interest to us to add to our balance sheet later in time and keep good relationships, share in some of the, maybe those technology upliftings, is definitely on our minds.

Speaker #4: And through the utilization of multiple teams, Halliburton, ourselves, Precision, ourselves, and developing that on a go-forward basis. But yes, absolutely. Utilizing that rig to sub it out to someone who may be of interest to us to add to our balance sheet later in time.

Speaker #4: And keep good relationships. Sharing some of them, maybe those technology upliftings, is definitely on our minds.

Tim Moore: That's terrific color. I enjoyed seeing the E-rig and meeting the Precision Drilling team when I was out there on the site a year and a half ago. Good luck with the refinancing for the convertible and the warrants, and that's it for my questions.

Speaker #6: That's terrific, Holler. And I enjoyed seeing the e-rig and meeting the Precision Drilling team when I was out there on the site a year and a half ago.

Greg Patton: Thank you, sir.

Operator: Thank you. Our next question is a follow-up coming from Chris Begner of Water Tower Research. Please go ahead.

Speaker #6: So I'll good luck with the refinancing for the convertible on the Warrens. And that's it for my questions.

Chris Begner: Hello again. Just wanted to ask, now that you've gone through a management transition here, as you look forward, do you see any changes in strategy or ways that you might run the company differently? Thanks.

Speaker #4: Thank you, sir.

Speaker #1: Thank you. Our next question is a follow-up coming from Chris Begner of Water Tower Research. Please go ahead.

Speaker #5: Oh, hello again. I just wanted to ask now that we've gone through a management transition here, should you look forward? Do you see any changes in strategy or ways that you might run the company differently?

Richard Frommer: I'll take that one, Chris. Chris, good to hear from you. This is Rich. Yeah, no, the board and the management has been aligned since the change. I really, I've been actively involved with the operations since the first of March. I can tell you clearly that the team is coordinated, focused, and really operating at a very high level without a hitch. We don't foresee any changes in our operations with the current team in place.

Speaker #5: Thanks.

Speaker #4: I'll take that one, Chris. Chris, good to hear from you. This is Rich. Yeah, no, the board and the management has been aligned since the change.

Speaker #4: I really have been active involved with the operations since the first of March. I can tell you clearly that the team is coordinated, focused, and really operating at a very high level without a hitch.

Speaker #4: So, I don't foresee any changes in our operations with the current team in place.

Operator: Thank you. Ladies and gentlemen, this brings us to the end of today's question-and-answer session. We would like to thank you for your interest and participation in today's event. You may disconnect your lines at this time or log off the webcast and enjoy the rest of your day.

Speaker #1: Thank you. Ladies and gentlemen, this brings us to the end of today's question-and-answer session. We would like to thank you for your interest and participation in today's event.

Q4 2025 Prairie Operating Co Earnings Call

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