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Presidio Production Co. 10-Q Summary: Q1 2026

Business Context and Reporting Period

Presidio Production Co. (Presidio) is an independent oil and natural gas company operating in the Western Anadarko Basin (Texas, Oklahoma, Kansas). The filing covers the quarter ended March 31, 2026. The period is bifurcated due to a Business Combination consummated on March 4, 2026, between EQV Ventures Acquisition Corp. and Presidio Investment Holdings LLC (PIH). The "Predecessor" period (Jan 1–Mar 3, 2026) reflects PIH operations, while the "Successor" period (Mar 4–Mar 31, 2026) reflects the new corporate structure. The company also acquired EQV Resources LLC (EQVR) on the closing date.

Key Financial Metrics

Note: Combined Q1 2026 figures are the sum of Successor and Predecessor columns. Net Loss includes significant non-cash charges related to the Business Combination.

Material Changes vs. Prior Period

• Revenue: Combined Q1 2026 revenue ($51.2M) was flat compared to Q1 2025 ($51.9M). This stability was driven by a 2% increase in average realized sales prices offsetting a 3% decline in production volumes.
• Net Loss: The reported net loss widened significantly to $(98.3) million combined for Q1 2026 compared to $(17.6) million in Q1 2025. This deterioration is primarily due to:
  • Derivative Losses: Total commodity derivative losses were $61.1 million in Q1 2026 (vs. $18.5 million in Q1 2025), driven by higher market prices relative to hedge strike prices and a $60 million cash payment to modify natural gas swap contracts.
  • Transaction Costs: G&A expenses included $47.0 million in share-based compensation related to the vesting of PIH Class B units and $7.2 million in transaction costs associated with the Business Combination.
• Debt Structure: The company entered a new $65 million Citizens Bank Revolving Credit Facility (Citizens RBL) and repaid the previous WAB RBL. Total debt increased due to the new facility draw ($37M) and acquisition accounting adjustments.

Guidance, Outlook, and Risks

• Outlook: Management expects liquidity sources (operating cash flow, ABS II notes, and Citizens RBL) to be sufficient for the next 12 months. The company maintains a hedging strategy covering 85% of projected production for 5-8 years (per ABS II) and 75% for 36 months (per Citizens RBL) to mitigate downside risk.
• Subsequent Events:
  • Declared a special cash dividend of $0.10125 per share of Class A Common Stock (payable May 18, 2026).
  • Executed an agreement to acquire Canyon Creek assets for approx. $83 million (expected to close Q3 2026).
• Risks: Key risks include commodity price volatility, the accuracy of reserve estimates, and the ability to execute the hedging strategy. The company faces potential exposure if unhedged production volumes decline or if commodity prices drop significantly below hedge levels.

Investor Verification Checklist

• Derivative Impact: Verify the extent of the $60 million cash outflow for derivative modifications and its impact on future cash flows.
• Non-GAAP Reconciliation: Review the reconciliation of Net Loss to Adjusted EBITDA to understand the magnitude of non-cash transaction costs ($47M share-based comp) obscuring operational performance.
• Debt Covenants: Confirm compliance with the new Citizens RBL covenants (Current Ratio ≥ 1.00, Net Leverage ≤ 3.00) and ABS II production metrics.
• Preferred Stock Terms: Review the terms of the Series A and Series B Preferred Stock, specifically the dividend rates (12% for Series A) and redemption triggers.
• Acquisition Integration: Assess the integration progress of the EQVR acquisition and the status of the Canyon Creek deal announced in May 2026.