Prairie Operating Co. Q1 FY2026 earnings call

Strategic and Capital Structure Priorities

• The company delivered a strong start to 2026, with consistent operational execution, meaningful production growth, and progress strengthening its capital structure.
• A partial refinancing of the Series F preferred stock was completed immediately after quarter-end, which reduced the outstanding balance, lowered associated warrant coverage, and decreased potential dilution to common shareholders.
• Management's top near-term priority is fully refinancing the remaining Series F preferred balance and simplifying the company's capital structure, with active engagement ongoing on multiple refinancing pathways.
• Core long-term priorities are disciplined capital allocation, operational execution, balance sheet strengthening, and long-term shareholder value creation, with a current focus on organic growth from the company's 63,000 net acre DJ Basin position.

Operational Execution Highlights

• Since the start of 2026, the company has drilled 17 total wells across two core development pads: 9 wells at the Elder pad (average 6.2 days stud-to-rig release, 18,435 feet average measured depth) and 8 wells at the Opal Coal Bank pad (average 5.5 days spud-to-rig release, 18,373 feet average measured depth).
• 13 of the 17 drilled wells were completed in a single drilling run, and all wells were delivered below the approved AFE cost estimate, with average cost savings exceeding $100,000 per well. For two-mile laterals, actual average costs came in 0.1 to 0.2 million below the 5.2 to 5.6 million AFE range.
• The development program included 13 Niobrara wells and 4 Codel wells, expanding the depth and diversity of the company's development inventory.
• The company achieved a 0.0 safety record in the first quarter, reflecting strong operational discipline from field teams.
• The company completed optimization work (workovers, artificial lift upgrades) that improved base production performance and overall asset efficiency.

Prairie Operating Company is a single-segment oil and gas exploration and production company focused on the DJ Basin. For the first quarter of 2026, the company generated total revenue of $83.4 million. Adjusted EBITDA for the quarter was $37.2 million, while net loss attributable to common shareholders was $174.4 million ($2.16 per share), driven primarily by non-cash derivative market-to-market and fair value adjustments on Series F preferred stock warrants. Total quarterly production was approximately 2.1 million BOE (23,200 BOE per day), with liquids representing 72% of total production and crude oil accounting for 48% of production. Net cash provided by operating activities totaled $42.3 million, and capital expenditures for the quarter were $34.1 million, with an additional $47.3 million in accrued capital expenditures as of quarter-end. Per BOE operating costs were: lease operating expense $7.11, transportation and processing $1.20, production and ad valorem taxes $3.26, and total G&A $8.09 (cash G&A $5.31 per BOE). Total liquidity as of March 31, 2026 was $113.5 million, backed by a $475 million credit facility borrowing base.

Management reaffirmed its full-year 2026 guidance with no upward or downward revisions from prior guidance:

• Average daily production guidance is maintained at 25,500 to 27,500 BOE per day.
• Full-year capital expenditure guidance is maintained at $200 million to $220 million, with capital spending expected to follow a bell-curve distribution through the year, starting lower in 1Q and peaking in the middle and latter half of the year, consistent with the current accrued capital carry-over from 1Q.
• Full-year adjusted EBITDA guidance is maintained at $240 million to $260 million.
• Management targeted an average full-year lease operating expense of ~$6.25 per BOE or lower, down from the 1Q 2026 level of $7.11 per BOE that was elevated by temporary shut-ins and bad weather.

• Forward-looking statements and guidance are subject to material risks and uncertainties that could cause actual results to differ materially, including commodity price volatility, geopolitical risks (such as ongoing conflict affecting the Strait of Hormuz), and unexpected changes to credit facility redeterminations.
• The partial refinancing of Series F preferred is complete, but full refinancing of the remaining balance is not yet finalized, and there is uncertainty around the timing and structure of a final deal that could impact shareholder dilution and the company's financial flexibility.
• While the company has hedging downside protection, unhedged production remains exposed to sudden commodity price declines.
• Scheduling and operational disruptions from development activities (such as required temporary shut-ins of existing production to drill new wells from shared pads) can impact quarterly production results.

Q: Leo Mariani (Roth Capital Partners) asked about current production levels after 1Q temporary shut-ins, expected oil cut for the rest of 2026, the timing of new well bring-ons, 2Q drilling activity, actual well cost results, and capital spending trajectory for the rest of the year.

A: Management noted current production is very close to the 1Q average of ~23,200 BOE per day, as most shut-in production has been brought back online, with production expected to increase throughout 2Q as additional new pads come online. All new blend pad wells are online, the 9 new Elder pad wells are scheduled to start flow back imminently, and Opal Coal Bank wells are currently in fracking, expected to be completed by the end of 2Q; the company is currently drilling the new Burnett pad with a new advanced rig, and is beating AFE on this activity. Two-mile lateral wells came in at an average actual cost of $5.4 to $5.5 million, below their $5.6 million AFE targets. 1Q capex was lower than a straight-line run rate, but the full-year 200-220 million capex range remains on track, with spending peaking mid-year and dipping at year-end per the normal seasonal schedule.

Q: Charles Mead (Johnson Rice) asked for updated optimism on completing full refinancing of the remaining Series F preferred by the end of 2Q, and how the opportunity set for acquisitions looks once the capital structure is simplified.

A: Management confirmed it is actively evaluating multiple pathways (equity, structured equity, and debt options) on a daily basis with the board, to find a solution that maximizes value for common shareholders, and expects to provide more updates after further progress in 2Q. Currently, the company remains focused on organic growth across its existing 63,000 net acre DJ Basin position, and is on the sidelines of the M&A market until the Series F refinancing is fully completed.

Q: Chris Degner (Water Tower Research) asked about upcoming credit facility borrowing base redetermination, hedging policy targets, midstream capital needs, and the recent uptick in drilling permits in Colorado.

A: The next redetermination will occur shortly, and bank commodity price decks have not moved significantly as of the current date, with potential upward adjustments expected in the fall redetermination. The company is required to hedge ~85% of proved developed producing production over the next 24 months under the credit agreement; as of quarter-end, ~80% of 2026 total production is hedged, and the company will opportunistically add hedges as commodity prices rise. Additional midstream gathering/takeaway capital is needed to support expanded organic development, but all such needs for 2026 are already included in current guidance, with additional spending expected in 2027 and 2028. The recent uptick in permits is the result of a more systematic review process from the state, and may also reflect regulators recognizing that increased drilling activity boosts state revenue to address projected budget shortfalls.

Q: Tim Moore (Clear Street) asked if sequential production growth will occur in 2Q, and what incremental EBITDA upside could come from current elevated oil prices relative to guidance.

A: Production will not be flat sequentially, with most of the uptick occurring in the final month of 2Q as shut-in and new wells come fully online. Management noted that ~20% of 2026 production is unhedged, so a $10 million EBITDA uplift from current higher prices is a conservative estimate, but the company is not adjusting guidance at this time given ongoing uncertainty around geopolitical effects on commodity prices.