Prairie Operating Co. 2025 Annual Report (10-K) Summary
Business Context and Reporting Period
Company: Prairie Operating Co. (PROP)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: An independent oil and natural gas company focused on the acquisition and development of crude oil, natural gas, and NGLs in the Denver-Julesburg (DJ) Basin in Weld County, Colorado. The company operates primarily through two asset groups: Central Weld Assets and Genesis Assets.
Key Developments: The year was defined by significant growth via acquisitions, most notably the Bayswater Acquisition (closed March 2025), which substantially increased production volumes and reserves. The company also completed the NRO Acquisition (Oct 2024), Edge Acquisition (July 2025), and Summit/Crown Acquisitions (Oct 2025).
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Total Revenues | $241.6 million | $7.9 million |
| Net Income (Loss) from Continuing Ops | $32.1 million | ($39.9 million) |
| Net Loss Attributable to Common Stockholders | ($60.9 million) | ($40.9 million) |
| Adjusted EBITDA | $155.5 million | ($17.7 million) |
| Operating Cash Flow | $153.9 million | ($9.3 million) |
| Capital Expenditures (Investing Cash Flow) | ($655.9 million) | ($83.4 million) |
| Proved Reserves (Total) | 121.1 MMBoe | 26.1 MMBoe |
| Production (Total) | 6.7 MMBoe | 0.2 MMBoe |
| Debt (Credit Facility Borrowings) | $366.0 million | $28.0 million |
| Cash and Equivalents | $0.02 million | $5.2 million |
Material Changes vs. Prior Period
- Revenue Surge: Total revenues increased from $7.9 million in 2024 to $241.6 million in 2025, driven primarily by the inclusion of Bayswater assets from March 26, 2025, through year-end.
- Production Growth: Total production jumped from 170 MBoe in 2024 to 6,748 MBoe in 2025. Average daily production increased from 464 Boe/d to 18,487 Boe/d.
- Reserve Expansion: Proved reserves grew from 26.1 MMBoe to 121.1 MMBoe, with 95.3 MMBoe added through acquisitions and 6.4 MMBoe from revisions.
- Profitability Shift: The company moved from a net loss from continuing operations of $39.9 million in 2024 to a net income of $32.1 million in 2025. However, net loss attributable to common stockholders increased to $60.9 million due to significant non-cash charges related to the Series F Preferred Stock (remeasurement and dividends) and fair value adjustments on embedded derivatives.
- Capital Structure: Revolving borrowings under the Credit Facility increased to $366.0 million from $28.0 million to fund acquisitions and development. The company issued Series F Preferred Stock ($148.3 million gross) and Common Stock ($41.4 million net) in 2025.
Guidance, Outlook, and Risks
Outlook and Strategy: Management plans to fund the 2026 drilling program (approx. 40 gross wells) using cash flow from operations and liquidity from the Credit Facility ($109.0 million availability as of Dec 31, 2025). The company maintains an At-the-Market (ATM) offering program for up to $75.0 million. Management expects sufficient liquidity to meet obligations for the next 12 months.
Management Commentary: The company emphasizes capital efficiency, low break-even prices in the DJ Basin, and the use of next-generation technology. Significant leadership changes occurred in March 2026 (subsequent to year-end), with the resignation of the CEO and Chairman and the appointment of an Interim CEO.
Risks and Contingencies:
- Commodity Price Volatility: Revenues are highly sensitive to oil and gas prices. The company hedges a significant portion of production (80%+ required by credit facility).
- Capital Requirements: Development of proved undeveloped reserves (43% of total reserves) requires an estimated $689.6 million in future investment.
- Regulatory Environment: Operations in Colorado are subject to stringent regulations (SB 181), including cumulative impact rules, setback requirements, and methane emission controls, which could increase costs and delay permitting.
- Financial Instrument Volatility: Significant non-cash losses were recognized due to fair value adjustments on Series F Preferred Stock warrants and embedded derivatives, impacting net income attributable to common stockholders.
- Lease Expirations: Approximately 14,300 net acres may expire in 2026 if production is not established or leases are not extended.
Key Facts for Investor Verification
- Liquidity Position: Verify the company's ability to service $366 million in debt and fund $690 million in future development costs with only $20,000 in cash on hand, relying heavily on operating cash flow and credit facility availability.
- Series F Preferred Stock Impact: Review the terms of the Series F Preferred Stock, including the 12% cumulative dividend (payable in cash or stock), the potential for significant dilution upon conversion, and the $90.1 million liability recorded for associated warrants.
- Acquisition Integration: Assess the integration progress of the Bayswater Acquisition, which accounts for the majority of 2025 production and revenue, and the associated transportation commitments (minimum volume fees).
- Reserve Quality: Confirm the independent reserve report (CG&A) regarding the 121.1 MMBoe proved reserves, specifically the 52.6 MMBoe classified as proved undeveloped and the timeline for their conversion.
- Leadership Transition: Monitor the search for a permanent CEO following the March 2026 departure of Edward Kovalik and Gary Hanna, and the associated severance costs ($2.5 million lump sum for Kovalik).