PRAIRIE OPERATING CO 2026 Q2
Earnings Overview & AI Insights

Earnings Performance

Summary of Financial Performance: Prairie Operating generated Q2 2026 revenue of $98.9 million, up about 45% year over year, driven by stronger production and oil sales. Oil revenue was $93.5 million. GAAP net income attributable to Prairie was $109 million, while net income attributable to common stockholders was $193.8 million, or $1.75 per basic share. Adjusted EBITDA was $34 million. For the first half of 2026, revenue reached $182.3 million, up about 125% year over year, and adjusted EBITDA was $71.1 million, up about 65%. Q2 production averaged 21,866 BOE/d, with about 72% liquids and 50% oil. Cash capital expenditures were $98.5 million in Q2 and $132.6 million year to date. Operating costs per BOE included LOE of $6.85, transportation and processing of $1.22, production taxes of $4.01, and G&A of $6.01.

Company Outlook & Strategy: Management raised and narrowed 2026 guidance to 23,000-25,000 BOE/d of average production, $185 million-$195 million of capex, and $180 million-$190 million of adjusted EBITDA. The revised plan is intended to preserve liquidity, align spending with operating performance, and reflect first-half results, CIG pricing weakness, and Colorado seasonal restrictions. Leadership emphasized disciplined capital allocation, balance sheet strengthening, and converting DJ Basin inventory into durable production and cash flow. They said August production was around 27,000 BOE/d and expect production to average roughly 26,000-28,000 BOE/d through the quarter before a modest year-end decline.

Key Industry Trends: The company highlighted weaker CIG natural gas pricing as a drag on realized gas prices and cash flow. Colorado Parks and Wildlife seasonal restrictions affected timing of development and completions. The DJ Basin remains competitive and actively developed, with nearby operators like Bison, Oxy, and Chevron helping to further de-risk Prairie’s acreage.

Operational Highlights: Prairie drilled 12 wells in Q2, including 2 Codell and 10 Niobrara wells; all were completed below AFE, and 8 were drilled in a single run. Year to date, it drilled 27 wells, with 19 in a single run and all below AFE on average. The company achieved its first 3-mile lateral and tested a smaller 7 7/8-inch hole design, saving more than $40,000 per well; management plans to roll this design out across a meaningful portion of the Niobrara program. Q2 production benefited from new wells coming online late in the quarter, especially Opal Coalbank, Burnett, Elder, and Castor pads, with August production stepping up to about 27,000 BOE/d. The company also said 2-mile laterals are now running in the $5.2 million-$5.6 million cost range depending on complexity.

Challenges & Risks: Main risks included weaker gas pricing, completion and production timing, seasonal operating restrictions in Colorado, and the need to manage liquidity carefully while carrying a large revolver balance. Prairie also continued negotiating the remaining Series F Preferred balance and related warrant dilution, underscoring ongoing capital structure complexity. Management noted that production could fluctuate in the near term and expected a modest decline exiting the year.

Key Analyst Questions & Responses: Analysts focused on near-term production trends, the timing of the Burnett and Castor pads, revolver covenant/prodution threshold language, the preferred stock refinancing process, and well cost trends. Management said Burnett had not yet started cutting hydrocarbons but should soon, and that August 27,000 BOE/d production did not include Burnett or Castor contributions. They guided to a 26,000-28,000 BOE/d range through the quarter. On the revolver, they explained the production threshold was added to balance liquidity and prevent either overgrowth or aggressive blowdown. On the Series F preferred, they said negotiations are ongoing and the balance has already been reduced materially from $148.5 million to $78 million, with warrants reduced from 1.25x to 0.65x coverage. On well costs, they said 2-mile lateral costs are generally $5.2 million-$5.5 million on standalone pads and $5.4 million-$5.6 million on step-out wells.