PROP Swings to Profit on Soaring Oil & Gas Sales, Assets Surge

Ticker: PROP · Form: 10-Q · Filed: Nov 14, 2025 · CIK: 1162896

Sentiment: mixed

Topics: OilAndGas, EnergySector, 10QAnalysis, FinancialPerformance, DebtFinancing, DerivativeLosses, AssetGrowth

Related Tickers: PROP

TL;DR

**PROP's massive asset and revenue growth is a game-changer, but watch the debt and derivative losses closely – it's a high-stakes play.**

AI Summary

Prairie Operating Co. (PROP) reported a significant turnaround for the nine months ended September 30, 2025, achieving a net income from continuing operations of $34.35 million, a substantial improvement from a net loss of $27.93 million in the same period of 2024. This was driven by the commencement of crude oil, natural gas, and NGL sales, totaling $158.64 million in revenue for the nine months ended September 30, 2025, compared to zero revenue in the prior year. The company's total assets surged to $939.79 million as of September 30, 2025, from $156.55 million at December 31, 2024, primarily due to a massive increase in oil and natural gas properties to $806.96 million from $134.95 million. However, total liabilities also increased significantly to $679.26 million from $103.79 million, largely due to a new credit facility of $417.00 million and increased accounts payable and accrued expenses to $81.95 million. The company also recognized a substantial loss on adjustment to fair value for embedded derivatives, debt, and warrants of $30.45 million for the nine months ended September 30, 2025. Despite the net income, net loss attributable to common stockholders was $(67.48) million due to Series F preferred stock dividends and remeasurement.

Why It Matters

This 10-Q reveals a dramatic shift for Prairie Operating Co., moving from a pre-revenue exploration phase to active production and significant revenue generation. For investors, the substantial increase in oil and natural gas properties to $806.96 million and the $158.64 million in sales indicate successful asset development and monetization, potentially signaling future growth. However, the concurrent rise in debt to $417.00 million and the $30.45 million loss on fair value adjustments for derivatives introduce financial complexity and risk, which could impact profitability and shareholder value. The competitive landscape in the energy sector means PROP must continue to optimize operations and manage its financial structure effectively to sustain this positive momentum.

Risk Assessment

Risk Level: high — The company's risk level is high due to a significant increase in long-term liabilities, primarily a new credit facility of $417.00 million, up from $28.00 million at December 31, 2024. Additionally, Prairie Operating Co. incurred a substantial loss on adjustment to fair value for embedded derivatives, debt, and warrants of $30.45 million for the nine months ended September 30, 2025, indicating volatility and potential financial exposure from complex financial instruments.

Analyst Insight

Investors should conduct thorough due diligence on Prairie Operating Co.'s debt structure and derivative positions, as these represent significant financial risks despite the revenue growth. Monitor future filings for sustained profitability and effective management of these liabilities and fair value adjustments before considering a long-term position.

Financial Highlights

debt To Equity
0.92
revenue
$158.64M
operating Margin
N/A
total Assets
$939.79M
total Debt
$417.00M
net Income
$34.35M
eps
N/A
gross Margin
N/A
cash Position
$10.64M
revenue Growth
N/A

Revenue Breakdown

SegmentRevenueGrowth
Crude oil, natural gas, and NGL sales$158.64MN/A

Key Numbers

Key Players & Entities

FAQ

What were Prairie Operating Co.'s total revenues for the nine months ended September 30, 2025?

Prairie Operating Co. reported total revenues of $158,638,000 for the nine months ended September 30, 2025, primarily from crude oil, natural gas, and NGL sales. This is a substantial increase from zero revenue in the same period of 2024.

How did Prairie Operating Co.'s net income change from 2024 to 2025 for the nine-month period?

For the nine months ended September 30, 2025, Prairie Operating Co. achieved a net income from continuing operations of $34,353,000. This represents a significant improvement from a net loss of $27,930,000 reported for the same period in 2024.

What was the primary driver of the increase in Prairie Operating Co.'s total assets?

The primary driver for the increase in Prairie Operating Co.'s total assets to $939,788,000 as of September 30, 2025, from $156,554,000 at December 31, 2024, was the growth in oil and natural gas properties, which increased to $806,955,000 from $134,953,000.

What is the current level of Prairie Operating Co.'s long-term debt?

As of September 30, 2025, Prairie Operating Co.'s long-term liabilities include a credit facility of $417,000,000. This is a significant increase from $28,000,000 at December 31, 2024.

Did Prairie Operating Co. experience any significant losses related to financial instruments?

Yes, Prairie Operating Co. reported a loss on adjustment to fair value for embedded derivatives, debt, and warrants of $30,451,000 for the nine months ended September 30, 2025. This indicates significant volatility and potential exposure from these financial instruments.

How many common shares of Prairie Operating Co. were outstanding as of November 11, 2025?

As of November 11, 2025, Prairie Operating Co. had 59,646,610 shares of common stock, $0.01 par value, outstanding. This figure is important for calculating per-share metrics.

What impact did Series F preferred stock have on net income attributable to common stockholders for Prairie Operating Co.?

Despite reporting a net income from continuing operations of $34,353,000, Prairie Operating Co. reported a net loss attributable to common stockholders of $(67,478,000) for the nine months ended September 30, 2025. This was primarily due to Series F preferred stock declared dividends of $(7,540,000) and a remeasurement of Series F preferred stock of $(93,087,000).

What were Prairie Operating Co.'s total operating expenses for the nine months ended September 30, 2025?

Prairie Operating Co.'s total operating expenses for the nine months ended September 30, 2025, amounted to $110,901,000. Key components included lease operating expenses of $28,732,000, depreciation, depletion, and amortization of $30,353,000, and general and administrative expenses of $34,268,000.

What is the significance of the Bayswater Acquisition mentioned in Prairie Operating Co.'s 10-Q?

The 10-Q mentions the Bayswater Acquisition as a key factor influencing Prairie Operating Co.'s financial performance and growth strategy. The company's ability to recognize anticipated benefits and integrate this acquisition is highlighted as a forward-looking statement and a risk factor, suggesting it's a material event for their business expansion.

How has Prairie Operating Co.'s cash position changed over the nine months ended September 30, 2025?

Prairie Operating Co.'s cash and cash equivalents increased to $10,640,000 as of September 30, 2025, from $5,192,000 at December 31, 2024. This change reflects the company's operating, investing, and financing activities during the period.

Risk Factors

Industry Context

The oil and gas industry is characterized by significant capital intensity, commodity price volatility, and extensive regulatory oversight. Prairie Operating Co. has recently entered production, facing competition from established players and the need to manage exploration, development, and production costs effectively. Trends include a focus on energy transition, but also continued demand for traditional hydrocarbons.

Regulatory Implications

Prairie Operating Co. faces stringent environmental regulations related to drilling, production, and emissions. Compliance with these regulations, including potential changes or new mandates, is critical to avoid fines, operational disruptions, and reputational damage. The company's significant asset base in oil and gas properties makes it particularly susceptible to these regulatory risks.

What Investors Should Do

  1. Monitor the company's ability to service its increased debt load ($417.00M credit facility) through consistent operational performance and revenue generation.
  2. Analyze the impact of commodity price fluctuations on future revenues and profitability, given the company's reliance on crude oil, natural gas, and NGL sales.
  3. Evaluate the long-term value creation from the substantial investment in oil and natural gas properties ($806.96M), assessing development progress and reserve potential.
  4. Understand the ongoing impact of preferred stock dividends and remeasurement on net income attributable to common stockholders, as evidenced by the $(67.48)M loss.
  5. Assess the company's strategy for managing fair value adjustments on derivatives, debt, and warrants, which resulted in a $30.45M loss.

Key Dates

Glossary

Successful efforts method of accounting
An accounting method for oil and gas companies where exploration costs are capitalized only if they lead to the discovery of oil or gas reserves. Costs that do not result in discovery are expensed. (Indicates how the company accounts for its significant oil and natural gas properties, impacting reported asset values and expenses.)
Depletable base
The portion of the cost of oil and gas properties that can be depleted (expensed) over the productive life of the reserves. Certain costs, like those for unproved properties, may be excluded until proved. (Affects the calculation of depletion expense and the net book value of the company's core assets.)
Embedded derivatives
Financial instruments that are included within a host contract, such as debt or equity instruments, and whose value is linked to an underlying variable (e.g., interest rates, commodity prices). (The company recognized a significant loss related to these, indicating potential financial complexity and volatility.)
Remeasurement
The process of re-evaluating the value of an asset or liability based on current market conditions or accounting standards, often leading to gains or losses. (Contributed to the net loss attributable to common stockholders, highlighting its impact on reported earnings for common shareholders.)
Mezzanine Equity
A hybrid form of financing that blends debt and equity features, often subordinate to senior debt but senior to common equity. (The balance sheet includes a line item for Mezzanine Equity, indicating a layer of financing between debt and common stock.)

Year-Over-Year Comparison

Prairie Operating Co. has undergone a dramatic transformation from its prior filing. Revenue has surged from $0 to $158.64 million due to the commencement of oil and gas sales. Total assets have grown from $156.55 million to $939.79 million, primarily driven by a significant increase in oil and natural gas properties. However, this growth has been financed by a substantial increase in liabilities, from $103.79 million to $679.26 million, including a new $417.00 million credit facility, leading to a much higher debt-to-equity ratio.

Filing Stats: 4,606 words · 18 min read · ~15 pages · Grade level 20 · Accepted 2025-11-14 16:42:34

Key Financial Figures

Filing Documents

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 46 Item 4.

Controls and Procedures

Controls and Procedures 47 PART II OTHER INFORMATION 47 Item 1.

Legal Proceedings

Legal Proceedings 47 Item 1A.

Risk Factors

Risk Factors 47 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3. Defaults Upon Senior Securities 47 Item 4. Mine Safety Disclosures 47 Item 5. Other Information 47 Item 6. Exhibits 48

SIGNATURES

SIGNATURES 51 2 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. These forward-looking statements include, without limitation, statements regarding future financial performance, business strategies, expansion plans, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on our management's current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as "may," "should," "could," "would," "expect," "plan," "anticipate," "intend," "believe," "estimate," "continue," "project" or the negative of such terms or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: estimates of our oil, natural gas, and natural gas liquids ("NGLs") reserves; drilling prospects, inventories, projects, and programs; estimates of our future oil and natural gas production, including estimates of any increases or decreases in our production; financial strategy, liquidity, and capital required for our development program and other capital expenditures; the availability and adequacy of cash flow to meet our requirements; the availability of additional capital for our operations; changes in our business and growth strategy, including our ability to successfully operate and expand our business; our financial performance following the Bayswater Acquisition (as

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Condensed Consolidated Financial Statements (unaudited)

Item 1. Condensed Consolidated Financial Statements (unaudited) Table of Contents Page Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 5 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 6 Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 7 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 9 Notes to Condensed Consolidated Financial Statements 10 Note 1 – Organization, Description of Business, and Basis of Presentation 10 Note 2 – Summary of Significant Accounting Policies 12 Note 3 – Acquisitions 14 Note 4 – Discontinued Operations 16 Note 5 – Derivative Instruments 17 Note 6 – Fair Value Measurements 18 Note 7 – Property and Equipment, net 23 Note 8 – Asset Retirement Obligation 23 Note 9 – Accounts Payable and Accrued Expenses 23 Note 10 – Debt 24 Note 11 – Leases 27 Note 12 – Commitments and Contingencies 28 Note 13 – Mezzanine Equity 28 Note 14 – Stockholders' Equity 29 Note 15 – Common Stock Options and Warrants 31 Note 16 – Long–Term Incentive Compensation 33 Note 17 – Earnings per Share 35 Note 18 – Related Party Transactions 36 Note 19 – Subsequent Events 36 4 Table of Contents Prairie Operating Co. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share amounts) September 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 10,640 $ 5,192 Accounts receivable: Oil, natural gas, and NGL revenue 48,716 3,024 Joint interest and other 24,130 9,275 Acquisition receivable 17,452 — Derivative assets 13,134 — Inventory 4,890 5 Prepaid expenses and other current assets 2,015 312 Note receivable — 494 Total current assets 120,977 18,302 Property and eq

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