Prairie Operating Co. 10-Q 季度報告摘要（截至2026年3月31日）

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

 

 FORM 10-Q

 

 

 (Mark One)

 

 

 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 

 

 For the quarterly period ended: March 31, 2026

 

 

 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 

 

 For the transition period from _____________ to _____________

 

 

 Commission File No. 001-41895

 

 

 Prairie Operating Co.

 (Exact name of registrant as specified in its charter)

 

 

 Delaware
   98-0357690
 
 (State or other jurisdiction of incorporation or organization)
   (I.R.S. Employer Identification No.)
 
 
 

 

 55 Waugh Drive
 Suite 400
 Houston, TX
   77007
 
 (Address of principal executive offices)
   (Zip Code)
 
 
 

 

 (713) 716-1200

 (Registrant’s telephone number, including area code)

 

 

 N/A

 (Former name, former address, and former fiscal year, if changed since last report)

 

 

 Securities registered pursuant to Section 12(b) of the Act:

 

 

 Title of each Class
   Trading Symbol(s)
   Name of each Exchange on which 
 registered
 
 Common stock, $0.01 par value
   PROP
   The Nasdaq Stock Market LLC
 
 
 

 

 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

 

 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S–T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

 

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large
 accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

 

 

 Large accelerated filer ☐
 Accelerated filer ☐
 
 Non-accelerated filer ☒
 Smaller reporting company ☒
 
   Emerging growth company ☐
 
 
 

 

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
 Section 13(a) of the Exchange Act. ☐

 

 

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes ☐ No ☒

 

 

 Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

 

 

 Title of Class
   Number of Shares Outstanding on May 12, 2026
 
 Common Stock, $0.01 par value
   97,732,173
 
 
 
 

 

 
 

 
 
 

 

 
 TABLE OF CONTENTS

 

 

 

 
 
 PART I

 
 
 FINANCIAL INFORMATION

 
 
 4

 
 

 
 
 Item 1.

 
 
 Condensed Consolidated Financial Statements (unaudited)

 
 
 4

 
 

 
 
 Item 2.

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

 
 
 34

 
 

 
 
 Item 3.

 
 
 Quantitative and Qualitative Disclosures About Market Risk

 
 
 42

 
 

 
 
 Item 4.

 
 
 Controls and Procedures

 
 
 43

 
 

 
  
  
  
 

 
 
 PART II

 
 
 OTHER INFORMATION

 
 
 43

 
 

 
 
 Item 1.

 
 
 Legal Proceedings

 
 
 43

 
 

 
 
 Item 1A.

 
 
 Risk Factors

 
 
 43

 
 

 
 
 Item 2.

 
 
 Unregistered Sales of Equity Securities and Use of Proceeds

 
 
 43

 
 

 
 
 Item 3.

 
 
 Defaults Upon Senior Securities

 
 
 43

 
 

 
 
 Item 4.

 
 
 Mine Safety Disclosures

 
 
 43

 
 

 
 
 Item 5.

 
 
 Other Information

 
 
 43

 
 

 
 
 Item 6.

 
 
 Exhibits

 
 
 44

 
 

 
  
  
  
 

 
 
 SIGNATURES

 
 
 45

 
 

 
 

 

 
 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 integration of acquisitions;

 
 

 
 

 
 

 
 ●
 
 changes or developments in applicable laws or regulations, including with respect to taxes; and

 
 

 
 

 
 

 
 ●
 
 actions taken or not taken by third-parties, including our contractors and competitors.

 
 

 
 

 

 The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no
 assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual
 results or performance to be materially different from those expressed or implied by these forward-looking statements.

 

 

 These risks include, but are not limited to:

 

 

 

 
 

 
 ●
 
 the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025;

 
 

 
 

 
 

 
 ●
 
 our ability to fund our development and drilling plan;

 
 

 
 

 
 

 
 ●
 
 our ability to grow our operations, and to fund such operations, on the anticipated timeline or at all;

 
 

 
 

 
 

 
 ●
 
 uncertainties inherent in estimating quantities of oil, natural gas, and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;

 
 

 
 

 
 

 
 ●
 
 commodity price and cost volatility and inflation;

 
 

 
 

 
 

 
 ●
 
 our ability to obtain and maintain necessary permits and approvals to develop our assets;

 
 

 
 

 
 

 
 ●
 
 safety and environmental requirements that may subject us to unanticipated liabilities;

 
 

 
 

 
 

 
 ●
 
 changes in the regulations governing our business and operations, including the businesses, assets, and operations we have acquired or may acquire in the future, such as, but not limited to, those pertaining to the environment, our
 drilling program, and the pricing of our future production;

 
 

 
 

 
 

 
 ●
 
 our success in retaining or recruiting, or changes required in, our officers, key employees, or directors;

 
 

 
 

 
 

 
 ●
 
 general economic, financial, legal, political, and business conditions and changes in domestic and foreign markets;

 
 

 
 

 
 

 
 ●
 
 the risks related to the growth of our business, including our ability to successfully integrate, and recognize the anticipated benefits of, our recent acquisitions and any future acquisitions;

 
 

 
 

 
 

 
 ●
 
 the effects of competition on our future business;

 
 

 
 
 
 

 
 

 
 ●
 changes in U.S. energy, environmental, monetary and trade policies, including with respect to tariffs and other trade barriers, and any resulting trade tensions; and
 

 
 

 

 

 
 

 
 ●
 
 other factors detailed under the section entitled “Risk Factors” and in our periodic filings with the Securities and Exchange Commission (“SEC”).

 
 

 
 

 

 These risks are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very
 competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the effects of all factors on our business or the extent to which any
 factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.

 

 

 Our SEC filings are available publicly on the SEC website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove
 incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Accordingly, forward-looking statements in this Quarterly Report on Form 10-Q should not be relied upon as representing our views as of
 any subsequent date, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

 

 All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement.

 

 

 
 3

 
 

 
 Table of Contents

 

 

 

 PART I — FINANCIAL INFORMATION

 

 

 Item 1. Condensed Consolidated Financial Statements (unaudited)

 

 

 

 
 
 Table of Contents

 
  
 
 Page

 
 

 
 
 Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025

 
  
 
 5

 
 

 
 
 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025

 
  
 
 6

 
 

 
 
 Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025

 
  
 
 7

 
 

 
 
 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025

 
  
 
 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

 
  
 
 11

 
 

 
 
 Note 3 – Acquisitions

 
  
 
 13

 
 

 
 
 Note 4 – Derivative Instruments

 
  
 
 14

 
 

 
 
 Note 5 – Fair Value Measurements

 
  
 
 16

 
 

 
 
 Note 6 – Property and Equipment, net

 
  
 
 19

 
 

 
 
 Note 7 – Asset Retirement Obligation

 
  
 
 19

 
 

 
 
 Note 8 – Accounts Payable and Accrued Expenses

 
  
 
 20

 
 

 
 
 Note 9 – Debt

 
  
 
 20

 
 

 
 
 Note 10 – Leases

 
  
 
 21

 
 

 
 
 Note 11 – Commitments and Contingencies

 
  
 
 23

 
 

 
 
 Note 12 – Mezzanine Equity

 
  
 
 23

 
 

 
 
 Note 13 – Stockholders’ Equity

 
  
 
 25

 
 

 
 
 Note 14 – Common Stock Options and Warrants

 
  
 
 26

 
 

 
 
 Note 15 – Long–Term Incentive Compensation

 
  
 
 29

 
 

 
 
 Note 16 – Earnings per Share

 
  
 
 30

 
 

 
 
 Note 17 – Related Party Transactions

 
  
 
 32

 
 

 
 
 Note 18 – Subsequent Events

 
  
 
 33

 
 

 
 

 

 
 4

 
 

 
 Table of Contents

 

 

 

 Prairie Operating Co. and Subsidiaries

 Condensed Consolidated Balance Sheets

 (Unaudited)

 (In thousands, except share amounts)

 

 

 

 
  
  
 
 March 31, 2026

 
  
  
 
 December 31, 

 2025

 
  
 

 
 
 Assets

 
  
  
  
  
  
  
 

 
 
 Current assets:

 
  
  
  
  
  
  
 

 
 
 Cash and cash equivalents

 
  
 
 $

 
 263
 
  
  
 
 $

 
 20
 
  
 

 
 
 Oil, natural gas, and NGL accrued revenue

 
  
  
 27,095
 
  
  
  
 22,728
 
  
 

 
 
 Joint interest and other receivables

 
  
  
 26,683
 
  
  
  
 23,106
 
  
 

 
 
 Derivative assets, net

 
  
  
 —
 
  
  
  
 28,812
 
  
 

 
 
 Inventory

 
  
  
 2,653
 
  
  
  
 3,604
 
  
 

 
 
 Prepaid expenses and other current assets

 
  
  
 1,655
 
  
  
  
 1,452
 
  
 

 
 
 Total current assets

 
  
  
 58,349
 
  
  
  
 79,722
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Property and equipment:

 
  
  
  
  
  
  
  
  
 

 
 Oil and natural gas properties, successful efforts method of accounting including $115,613 and $57,897 excluded from depletable base as of March 31, 2026 and December 31, 2025, respectively
 
  
  
 912,615
 
  
  
  
 852,732
 
  
 

 
 
 Other property and equipment

 
  
  
 21,349
 
  
  
  
 21,067
 
  
 

 
 
 Less: Accumulated depreciation, depletion, and amortization

 
  
  
 (65,110
 
 
 )

 
  
  
 (49,343
 
 
 )

 
 

 
 
 Total property and equipment, net

 
  
  
 868,854
 
  
  
  
 824,456
 
  
 

 
 
 Deferred tax asset

 
  
  
 16,742
 
  
  
  
 —
 
  
 

 
 
 Derivative assets, net

 
  
  
 —
 
  
  
  
 24,627
 
  
 

 
 
 Debt issuance costs, net

 
  
  
 11,679
 
  
  
  
 12,642
 
  
 

 
 
 Operating lease assets

 
  
  
 2,997
 
  
  
  
 2,966
 
  
 

 
 
 Other non–current assets

 
  
  
 133
 
  
  
  
 133
 
  
 

 
 
 Total assets

 
  
 
 $

 
 958,754
 
  
  
 
 $

 
 944,546
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Liabilities, Mezzanine Equity, and Stockholders’ Equity

 
  
  
  
  
  
  
  
  
 

 
 
 Current liabilities:

 
  
  
  
  
  
  
  
  
 

 
 
 Accounts payable and accrued expenses

 
  
 
 $

 
 104,642
 
  
  
 
 $

 
 62,792
 
  
 

 
 
 Oil, natural gas, and NGL revenue payable

 
  
  
 34,026
 
  
  
  
 30,300
 
  
 

 
 
 Ad valorem and production taxes payable

 
  
  
 30,352
 
  
  
  
 31,385
 
  
 

 
 
 Derivative liabilities, net

 
  
  
 68,988
 
  
  
  
 —
 
  
 

 
 
 Operating lease liabilities

 
  
  
 1,363
 
  
  
  
 1,300
 
  
 

 
 
 Total current liabilities

 
  
  
 239,371
 
  
  
  
 125,777
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Long–term liabilities:

 
  
  
  
  
  
  
  
  
 

 
 
 Credit facility

 
  
  
 361,500
 
  
  
  
 366,000
 
  
 

 
 
 Subordinated note – related party

 
  
  
 1,458
 
  
  
  
 1,458
 
  
 

 
 
 Subordinated note warrants, at fair value – related party

 
  
  
 725
 
  
  
  
 316
 
  
 

 
 
 Series F convertible preferred stock embedded derivatives, at fair value

 
  
  
 15,806
 
  
  
  
 15,853
 
  
 

 
 
 Series F convertible preferred stock warrants, at fair value

 
  
  
 114,433
 
  
  
  
 90,134
 
  
 

 
 
 Derivative liabilities, net

 
  
  
 40,457
 
  
  
  
 —
 
  
 

 
 
 Oil, natural gas, and NGL revenue payable

 
  
  
 24,831
 
 
  
  
  
 27,402
 
  
 

 
 
 Ad valorem and production taxes payable

 
  
  
 31,259
 
  
  
  
 22,751
 
  
 

 
 
 Deferred tax liability

 
  
  
 —
 
  
  
  
 21,652
 
  
 

 
 
 Asset retirement obligation

 
  
  
 3,657
 
  
  
  
 4,019
 
  
 

 
 
 Operating lease liabilities

 
  
  
 1,756
 
  
  
  
 1,792
 
  
 

 
 
 Other long-term liabilities

 
  
  
 1,042
 
  
  
  
 1,082
 
  
 

 
 
 Total long–term liabilities

 
  
  
 596,924
 
  
  
  
 552,459
 
  
 

 
 
 Total liabilities

 
  
  
 836,295
 
  
  
  
 678,236
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Commitments and contingencies (Note 11)

 
  
  
  

  
  
  
  

  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Mezzanine equity:

 
  
  
  
  
  
  
  
  
 

 
 Series F convertible preferred stock; $0.01 par value; 50,000,000 shares authorized, and 98,000 and 121,500 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively
 
 
  
  
 122,059
 
  
  
  
 136,146
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Stockholders’ equity:

 
  
  
  
  
  
  
  
  
 

 
 Series D convertible preferred stock; $0.01 par value; 50,000 shares authorized, and 5,982 shares issued and outstanding as of March 31, 2026 and December 31, 2025
 
  
  
 —
 
  
  
  
 —
 
  
 

 
 Common stock; $0.01 par value; 500,000,000 shares authorized, and 85,331,304 and 62,499,375 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively
 
  
  
 854
 
  
  
  
 625
 
  
 

 
 Treasury stock, at cost; 659,096 and 111,357 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively
 
  
  
 (1,719
 
 )
 
  
  
 (531
 
 )
 
 

 
 
 Additional paid–in capital

 
  
  
 241,653
 
  
  
  
 217,785
 
  
 

 
 
 Accumulated deficit

 
  
  
 (240,388
 
 
 )

 
  
  
 (87,715
 
 
 )

 
 

 
 
 Total stockholders’ equity

 
  
  
 400
 
 
 
 

 

 
  
  
 130,164
 
  
 

 
 
 Total liabilities, mezzanine equity, and stockholders’ equity

 
  
 
 $

 
 958,754
 
 
  
  
 
 $

 
 944,546
 
  
 

 
 

 

 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 
 5

 
 

 
 Table of Contents

 

 

 

 Prairie Operating Co. and Subsidiaries

 Condensed Consolidated Statements of Operations

 (Unaudited)

 (In thousands, except share amounts)

 

 

 

 
  
  
 
 Three Months Ended March 31,

 
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
 
 Revenues:

 
  
  
  
  
  
  
 

 
 
 Crude oil sales

 
  
 
 $

 
 67,838
 
  
  
 
 $

 
 10,788
 
  
 

 
 
 Natural gas sales

 
  
  
 8,956
 
  
  
  
 1,223
 
  
 

 
 
 NGL sales

 
  
  
 6,623
 
  
  
  
 1,579
 
  
 

 
 
 Total revenues

 
  
  
 83,417
 
  
  
  
 13,590
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Operating expenses:

 
  
  
  
  
  
  
  
  
 

 
 
 Lease operating expenses

 
  
  
 14,841
 
  
  
  
 2,012
 
  
 

 
 
 Transportation and processing expenses

 
  
  
 2,496
 
  
  
  
 907
 
  
 

 
 
 Ad valorem and production taxes

 
  
  
 6,792
 
  
  
  
 957
 
  
 

 
 
 Depreciation, depletion, and amortization

 
  
  
 15,844
 
  
  
  
 2,123
 
  
 

 
 
 Exploration expenses

 
  
  
 298
 
  
  
  
 287
 
  
 

 
 
 Abandonment and impairment of unproved properties

 
  
  
 412
 
  
  
  
 —
 
  
 

 
 
 General and administrative expenses

 
  
  
 16,886
 
  
  
  
 5,551
 
  
 

 
 
 Total operating expenses

 
  
  
 57,569
 
  
  
  
 11,837
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Other (expenses) income:

 
  
  
  
  
  
  
  
  
 

 
 
 Interest expense

 
  
  
 (8,197
 
 
 )

 
  
  
 (1,378
 
 
 )

 
 

 
 
 Loss on derivatives, net

 
  
  
 (177,060
 
 
 )

 
  
  
 (898
 
 
 )

 
 

 
 
 Loss on adjustment to fair value – embedded derivatives, debt, and warrants

 
  
  
 (31,851
 
 
 )

 
  
  
 (2,164
 
 
 )

 
 

 
 
 Interest income and other

 
  
  
 193
 
  
  
  
 70
 
  
 

 
 
 Total other expenses

 
  
  
 (216,915
 
 
 )

 
  
  
 (4,370
 
 
 )

 
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Loss from operations before income taxes

 
  
  
 (191,067
 
 
 )

 
  
  
 (2,617
 
 
 )

 
 

 
 
 Income tax benefit

 
  
  
 38,394
 
 
 
 

 

 
  
  
 —
 
  
 

 
 
 Net loss attributable to Prairie Operating Co.

 
  
  
 (152,673
 
 
 )

 
  
  
 (2,617
 
 
 )

 
 

 
 
 Series F preferred stock declared dividends

 
  
  
 (3,670
 
 
 )

 
  
  
 —
 
 
 )

 
 

 
 
 Series F preferred stock undeclared dividends

 
  
  
 (966
 
 
 )

 
  
  
 (245
 
 )

 
 

 
 
 Remeasurement of Series F preferred stock

 
  
  
 (17,088
 
 
 )

 
  
  
 (90,612
 
 
 )

 
 

 
 
 Net loss attributable to Prairie Operating Co. common stockholders

 
  
 
 $

 
 (174,397
 
 
 
 )

 
  
 
 $

 
 (93,474
 
 
 )

 
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Loss per common share:

 
  
  
  
  
  
  
  
  
 

 
 
 Loss per share, basic and diluted

 
  
 
 $

 
 (2.16
 
 
 )

 
  
 
 $

 
 (3.49
 
 
 )

 
 

 
 
 Weighted average common shares outstanding, basic and diluted

 
  
  
 80,585,148
 
  
  
  
 26,796,704
 
  
 

 
 

 

 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 
 6

 
 

 
 Table of Contents

 

 

 

 Prairie Operating Co. and Subsidiaries

 Condensed Consolidated Statement of Stockholders’ Equity 

 

 (Unaudited)

 (In thousands, except share amounts)

 

 

 

 
  
  
 Series D Preferred 
 Stock
 Par value $0.01
 
  
  
 Common Stock
 Par value $0.01
 
  
  
 Treasury Stock
 
  
  
 Additional
 Paid In
 
  
  
 Accumulated
 
  
  
 Stockholders’ 
 
  
 

 
  
  
 Shares
 
  
  
 Amount
 
  
  
 Shares
 
  
  
 Amount
 
  
  
 Shares
 
  
  
 Amount
 
  
  
 Capital
 
  
  
 Deficit
 
  
  
 Equity
 
  
 

 
 
 December 31, 2025

 
  
  
 5,982
 
  
  
 
 $

 
 —
 
  
  
  
 62,499,375
 
  
  
 
 $

 
 625
 
  
  
  
 111,357
 
  
  
 
 $

 
 (531
 
 
 )

 
  
 
 $

 
 217,785
 
  
  
 
 $

 
 (87,715
 
 
 )

 
  
 
 $

 
 130,164
 
  
 

 
 
 Conversion of Series F Preferred Stock

 
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 18,102,300
 
  
  
  
 181
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 36,005
 
  
  
  
 —
 
  
  
  
 36,186
 
  
 

 
 
 Issuance of Common Stock for Series F Preferred Stock dividends

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 2,352,000
 
  
  
  
 24
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 3,463
 
  
  
  
 —
 
  
  
  
 3,487
 
  
 

 
 
 Issuance of Common Stock related to stock–based compensation

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 2,925,368
 
  
  
  
 29
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (29
 
 
 )

 
  
  
 —
 
  
  
  
 —
 
  
 

 
 
 Purchase of treasury stock

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 (547,739
 
 
 )

 
  
  
 (5
 
 
 )

 
  
  
 547,739
 
  
  
  
 (1,188
 
 
 )

 
  
  
 5
 
  
  
  
 —
 
  
  
  
 (1,188
 
 
 )

 
 

 
 
 Equity restricted stock unit vesting

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 415
 
  
  
  
 —
 
  
  
  
 415
 
  
 

 
 
 Stock–based compensation

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 5,733
 
  
  
  
 —
 
  
  
  
 5,733
 
  
 

 
 
 
 Series F Preferred Stock declared dividends

 

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (3,670
 
 
 )

 
  
  
 —
 
  
  
  
 (3,670
 
 
 )

 
 

 
 
 
 Series F Preferred Stock undeclared dividends

 

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (966
 
 
 )

 
  
  
 —
 
  
  
  
 (966
 
 
 )

 
 

 
 
 Remeasurement of Series F Preferred Stock

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (17,088
 
 
 )

 
  
  
 —
 
  
  
  
 (17,088
 
 
 )

 
 

 
 
 Net loss attributable to Prairie Operating Co.

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 —
 
  
  
  
 (152,673
 
 
 )

 
  
  
 (152,673
 
 
 )

 
 

 
 
 March 31, 2026

 
  
  
 5,982
 
  
  
 
 $

 
 —
 
  
  
  
 85,331,304
 
  
  
 
 $

 
 854
 
  
  
  
 659,096
 
  
  
 
 $

 
 (1,719
 
 
 )

 
  
 
 $

 
 241,653
 
  
  
 
 $

 
 (240,388
 
 
 )

 
  
 
 $

 
 400
 
 
 

 

 
 

 
 

 

 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 
 7

 
 

 
 Table of Contents

 

 

 

 Prairie Operating Co. and Subsidiaries

 Condensed Consolidated Statement of Stockholders’ Equity

 (Unaudited)

 (In thousands, except share amounts)

 

 

 

 
 
  

 
  
 Series D Preferred 
 Stock
 Par value $0.01
 
  
  
 Common Stock
 Par value $0.01
 
  
  
 Treasury Stock
 
  
  
 Additional
 Paid In
 
  
  
 Accumulated
 
  
  
 Stockholders’
 
  
 

 
 
  

 
  
 Shares
 
  
  
 Amount
 
  
  
 Shares
 
  
  
 Amount
 
  
  
 Shares
 
  
  
 Amount
 
  
  
 Capital
 
  
  
 Deficit
 
  
  
 Equity
 
  
 

 
 
 December 31, 2024

 
  
  
 14,457
 
  
  
 
 $

 
 —
 
  
  
  
 23,045,209
 
  
  
 
 $

 
 230
 
  
  
  
 —
 
  
  
 
 $

 
 —
 
  
  
 
 $

 
 172,304
 
  
  
 
 $

 
 (119,766
 
 
 )

 
  
 
 $

 
 52,768
 
  
 

 
 
 Conversion of Series D Preferred Stock

 
  
  
 (8,475
 
 
 )

 
  
  
 —
 
  
  
  
 1,695,000
 
  
  
  
 17
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (17
 
 
 )

 
  
  
 —
 
  
  
  
 —
 
  
 

 
 
 Conversion of Series F Preferred Stock

 
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 252,000
 
  
  
  
 3
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 1,348
 
  
  
  
 —
 
  
  
  
 1,351
 
  
 

 
 
 Issuance of Common Stock upon option exercise

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 2,333,334
 
  
  
  
 23
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 560
 
  
  
  
 —
 
  
  
  
 583
 
  
 

 
 
 Issuance of Common Stock upon Senior Convertible Note conversion

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 2,118,862
 
  
  
  
 21
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 18,143
 
  
  
  
 —
 
  
  
  
 18,164
 
  
 

 
 
 Issuance of Common Stock to fund Bayswater Acquisition, net of issuance costs

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 9,736,904
 
  
  
  
 97
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 37,565
 
  
  
  
 —
 
  
  
  
 37,662
 
  
 

 
 
 Issuance of common stock to seller as part of Bayswater Acquisition

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 3,656,099
 
  
  
  
 37
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 15,963
 
  
  
  
 —
 
  
  
  
 16,000
 
  
 

 
 
 Issuance of Common Stock related to stock–based compensation

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 144,915
 
  
  
  
 1
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (1
 
 
 )

 
  
  
 —
 
  
  
  
 —
 
  
 

 
 
 Purchase of treasury stock

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 (40,196
 
 
 )

 
  
  
 —
 
  
  
  
 40,196
 
  
  
  
 (336
 
 
 )

 
  
  
 —
 
  
  
  
 —
 
  
  
  
 (336
 
 
 )

 
 

 
 
 Stock–based compensation

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 1,324
 
  
  
  
 —
 
  
  
  
 1,324
 
  
 

 
 
 Series F Preferred Stock undeclared dividends

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (245
 
 
 )

 
  
  
 —
 
  
  
  
 (245
 
 
 )

 
 

 
 
 
 Remeasurement of Series F Preferred Stock

 

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 (90,612
 
 
 )

 
  
  
 —
 
  
  
  
 (90,612
 
 
 )

 
 

 
 
 
 Net loss attributable to Prairie Operating Co.

 

 
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 
 —

 
  
  
  
 —
 
  
  
  
 —
 
  
  
  
 (2,617
 
 
 )

 
  
  
 (2,617
 
 
 )

 
 

 
 
 March 31, 2025

 
  
  
 5,982
 
  
  
 
 $

 
 —
 
  
  
  
 42,942,127
 
  
  
 
 $

 
 429
 
  
  
  
 40,196
 
  
  
 
 $

 
 (336
 
 
 )

 
  
 
 $

 
 156,332
 
  
  
 
 $

 
 (122,382
 
 
 )

 
  
 
 $

 
 34,043
 
  
 

 
 

 

 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 
 8

 
 

 
 Table of Contents

 

 

 

 Prairie Operating Co. and Subsidiaries

 Condensed Consolidated Statements of Cash Flows

 (Unaudited)

 (In thousands)

 

 

 

 
  
  
 
 Three Months Ended March 31,

 
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
 
 Cash flows from operating activities:

 
  
  
  
  
  
  
 

 
 
 
 Net loss attributable to Prairie Operating Co.

 

 
  
 
 $

 
 (152,673
 
 
 
 )

 
  
 
 $

 
 (2,617
 
 
 )

 
 

 
 
 
 Adjustments to reconcile net loss to net cash provided by operating activities:

 

 
  
  
  
  
  
  
  
  
 

 
 
 Depreciation, depletion, and amortization

 
  
  
 15,844
 
  
  
  
 2,123
 
  
 

 
 
 Abandonment and impairment of unproved properties

 
  
  
 412
 
  
  
  
 —
 
  
 

 
 
 Stock–based compensation

 
  
  
 5,733
 
  
  
  
 1,324
 
  
 

 
 
 Unrealized loss on derivatives

 
  
  
 162,883
 
  
  
  
 898
 
  
 

 
 
 Loss on adjustment to fair value – embedded derivatives, debt, and warrants

 
  
  
 31,851
 
  
  
  
 2,164
 
  
 

 
 
 Deferred income taxes

 
  
  
 (38,394
 
 
 )

 
  
  
 —
 
  
 

 
 
 Amortization of deferred financing costs

 
  
  
 963
 
  
  
  
 270
 
  
 

 
 
 Changes in operating assets and liabilities:

 
  
  
  
  
  
  
  
  
 

 
 
 Oil, natural gas, and NGL accrued revenue

 
  
  
 (4,368
 
 
 )

 
  
  
 (6,528
 
 
 )

 
 

 
 
 Joint interest and other receivables

 
  
  
 (3,576
 
 
 )

 
  
  
 1,914
 
  
 

 
 
 Inventory, prepaid expenses, and other current assets

 
  
  
 1,062
 
  
  
  
 (1,471
 
 
 )

 
 

 
 
 Accounts payable, accrued expenses, and other current liabilities

 
  
  
 13,901
 
  
  
  
 20,756
 
  
 

 
 
 Revenue, ad valorem, and production taxes payable

 
  
  
 8,630
 
  
  
  
 (1,901
 
 
 )

 
 

 
 
 Net cash provided by operating activities

 
  
  
 42,268
 
  
  
  
 16,932
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Cash flows from investing activities:

 
  
  
  
  
  
  
  
  
 

 
 
 Cash paid for Bayswater asset purchase, net of cash received

 
  
  
 —
 
  
  
  
 (474,581
 
 
 )

 
 

 
 
 Deposit on other oil and natural gas properties

 
  
  
 —
 
  
  
  
 (15,000
 
 
 )

 
 

 
 
 Development of oil and natural gas properties

 
  
  
 (34,074
 
 
 )

 
  
  
 (38,999
 
 
 )

 
 

 
 
 Other asset and leasehold purchases

 
  
  
 (2,263
 
 
 )

 
  
  
 —
 
  
 

 
 
 Cash received from payment on note receivable

 
  
  
 —
 
  
  
  
 149
 
  
 

 
 
 Net cash used in investing activities

 
  
  
 (36,337
 
 
 )

 
  
  
 (528,431
 
 
 )

 
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Cash flows from financing activities:

 
  
  
  
  
  
  
  
  
 

 
 
 Borrowings on the Credit Facility

 
  
  
 56,000
 
  
  
  
 349,000
 
  
 

 
 
 Repayment on the Credit Facility

 
  
  
 (60,500
 
 
 )

 
  
  
 —
 
  
 

 
 
 Debt issuance costs associated with the Credit Facility

 
  
  
 —
 
  
  
  
 (12,511
 
 
 )

 
 

 
 
 Proceeds from the issuance of Common Stock

 
  
  
 —
 
  
  
  
 43,817
 
  
 

 
 
 Financing costs associated with issuance of Common Stock

 
  
  
 —
 
  
  
  
 (3,077
 
 
 )

 
 

 
 
 Proceeds from the issuance of Series F Preferred Stock

 
  
  
 —
 
  
  
  
 148,250
 
  
 

 
 
 Financing costs associated with the issuance of Series F Preferred Stock

 
  
  
 —
 
  
  
  
 (1,233
 
 
 )

 
 

 
 
 Payments of the Subordinated Note – related party

 
  
  
 —
 
  
  
  
 (3,214
 
 
 )

 
 

 
 
 Proceeds from option exercise

 
  
  
 —
 
  
  
  
 583
 
  
 

 
 
 Treasury stock repurchased

 
  
  
 (1,188
 
 
 )

 
  
  
 (336
 
 
 )

 
 

 
 
 Net cash (used in) provided by financing activities

 
  
  
 (5,688
 
 
 )

 
  
  
 521,279
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Net increase in cash and cash equivalents

 
  
  
 243
 
  
  
  
 9,780
 
  
 

 
 
 Cash and cash equivalents, beginning of the period

 
  
  
 20
 
  
  
  
 5,192
 
  
 

 
 
 Cash and cash equivalents, end of the period

 
  
 
 $

 
 263
 
  
  
 
 $

 
 14,972
 
  
 

 
 

 

 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 Refer to Note 2 – Summary of Significant Accounting Policies for supplemental cash flow disclosures.

 

 

 
 9

 
 

 
 Table of Contents

 

 

 

 Prairie Operating Co. and Subsidiaries

 Notes to Condensed Consolidated Financial Statements

 (Unaudited)

 

 

 Note 1 – Organization, Description of Business, and Basis of Presentation

 

 

 Organization and Description of Business

 

 

 Prairie Operating Co. (individually or together with its subsidiaries, the “Company”) is an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and natural gas liquids
 (“NGLs”). The Company’s assets and operations are strategically located in the oil region of rural Weld County, Colorado, within the Denver–Julesburg Basin (the “DJ Basin”).

 

 

 As of March 31, 2026, the Company’s assets included approximately 68,700 net leasehold acres in, on and under approximately 99,500 gross acres. In addition to growing production through its drilling operations, the Company intends to continue growing its business through accretive acquisitions, focusing on assets with the following criteria: (i) producing reserves, with opportunities to add accretive, undeveloped bolt–on acreage; (ii) ample, high rate–of–return inventory of drilling locations that can be developed with cash flow reinvestment; (iii) strong well–level economics; (iv) liquids–rich assets; and (v) accretive valuation. Refer to Note 3 – Acquisitions for a discussion of the Company’s recent acquisitions.

 

 

 Basis of Presentation and Consolidation

 

 

 The accompanying condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present the Company’s financial position, results of operations, and cash flows for the periods presented in accordance with U.S. generally accepted accounting principles (“GAAP”) and the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company owns 100% of the equity interest of Prairie Operating Co., LLC, a Delaware limited liability company (“Prairie LLC”), which is considered a variable interest entity for which the Company is the primary beneficiary, as the Company is the sole managing member of Prairie LLC and has the power to direct the activities most significant to Prairie LLC’s economic performance, as well as the obligation to absorb losses and receive benefits that are potentially significant.

 

 

 The condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 are unaudited. The condensed consolidated financial statements as of December 31, 2025 were
 derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10–K for the fiscal year ended December 31, 2025.

 

 

 Certain disclosures have been condensed or omitted from these condensed financial statements; however, the interim financial statements reflect all normal recurring adjustments which are, in the opinion of management,
 necessary for a fair presentation of the financial results for the interim periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related
 note disclosures included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

 

 

 Use of Estimates

 

 

 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and
 liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

 

 

 These estimates and assumptions include estimates for reserve quantities and estimated future cash flows associated with proved reserves, depletion of proved developed oil and natural gas reserves, asset retirement obligations, accruals for the Company’s oil, natural gas, and NGL revenues and any potential liabilities, the valuation of the Company’s Series F Convertible Preferred Stock, $0.01 par value per share (“Series F Preferred Stock”), Series F Preferred Stock Warrants (as defined herein), and stock–based compensation, including performance based awards, the fair value of commodity derivative instruments, the realization of deferred tax assets, and any acquisition–related purchase price allocations.

 

 

 Segment Information

 

 

 The Company operates in one business segment: the acquisition, development, and production of crude oil, natural gas, and NGLs (the “Reportable Segment”), primarily in the DJ Basin. This is consistent with the internal reporting provided to the Company’s executive team, made up of the Interim President and Chief Executive Officer and the Executive Vice President – Chief Financial Officer, who are considered the chief operating decision makers (“CODM”).

 

 

 
 10

 
 

 
 Table of Contents

 

 

 

 The Company’s Reportable Segment produces and sells crude oil, natural gas, and NGL volumes, which is reported as oil, natural gas, and NGL revenue on its condensed consolidated statements of operations for the three
 months ended March 31, 2026 and 2025. The Company’s revenue recognition policy and other accounting policies for its Reportable Segment are the same as its company–wide accounting policies discussed below in Note 2
 – Summary of Significant Accounting Policies. The Reportable Segment’s major customers during the three months ended March 31, 2026 and 2025 are also discussed below in Note 2 – Summary of Significant
 Accounting Policies. Additionally, the Company did not have any intra–entity sales or transfers during the three months ended March 31, 2026 and 2025, and the Reportable Segment’s significant expenses are the same as those reported on the
 condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025. Additionally, the CODM does not receive additional information regarding expenses other than what is reported on the condensed consolidated statements
 of operations for the three months ended March 31, 2026 and 2025.

 

 

 The CODM assesses the performance of the Reportable Segment and decides how to allocate resources based on the Company’s net income (loss), as reported on the condensed consolidated statements of operations.
 Additionally, net income (loss) on the condensed consolidated statements of operations is used to monitor budget versus actual results of the Reportable Segment and to benchmark against the Company’s competitors. The CODM’s measure of the Reportable
 Segment assets are reported as total assets on the condensed consolidated balance sheets.

 

 

 Note 2 – Summary of Significant Accounting Policies

 

 

 The Company has provided a full discussion of its significant accounting policies, estimates, and judgments in Note 2 – Summary of Significant Accounting Policies in its Annual
 Report on Form 10–K for the fiscal year ended December 31, 2025. The Company has not changed any of its significant accounting policies during the three months ended March 31, 2026.

 

 

 Revenue Recognition

 

 

 The following table presents the Company’s oil, natural gas, and NGL revenues disaggregated by revenue stream:

 

 

 

 
  
  
 
 Three Months Ended March 31,

 
  
 

 
  
  
 
 2026

 
  
  
 
 2025

 
  
 

 
  
  
 
 (In thousands)

 
  
 

 
 
 Crude oil sales

 
  
 
 $

 
 67,838
 
  
  
 
 $

 
 10,788
 
  
 

 
 
 Natural gas sales

 
  
  
 8,956
 
  
  
  
 1,223
 
  
 

 
 
 NGL sales

 
  
  
 6,623
 
  
  
  
 1,579
 
  
 

 
 
 Total revenues

 
  
 
 $

 
 83,417
 
  
  
 
 $

 
 13,590
 
  
 

 
 

 

 The Company recognizes revenue from the sales of crude oil, natural gas, and NGLs at the point that control of the produced crude oil, natural gas, and NGL volumes are transferred to the purchaser, which may differ
 depending on the applicable contractual terms.

 

 

 The Company considers the transfer of control to have occurred when the production is delivered to the purchaser because at that time, the purchaser has the ability to direct the use of, and obtain substantially all of
 the remaining benefits from, the crude oil, natural gas, or NGL production. Transfer of control dictates the presentation of the Company’s transportation and processing expenses within its condensed consolidated statements of operations.
 Transportation and processing expenses incurred prior to the transfer of control are recorded gross within transportation and processing expenses in the accompanying condensed consolidated statements of operations. Gathering, transportation, and
 processing expenses incurred subsequent to the transfer of control are recorded net within crude oil, natural gas, and NGL sales revenues.

 

 

 Additionally, the Company has made an accounting election to exclude certain qualifying taxes collected from customers and remitted to governmental authorities from its reported revenues and is presenting those amounts as a component of operating expense in the accompanying condensed consolidated statements of operations. The amounts due from purchasers are reflected in oil, natural gas, and NGL accrued revenue on the accompanying condensed consolidated balance sheets and consists of uncollateralized accrued crude oil, natural gas, and NGL revenue due under normal trade terms, generally requiring payment within 30 days of production. The Company records the differences between its estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. Additionally, the Company has determined that product returns or refunds are very rare and therefore, the Company accounts for them as they occur, and it generally provides no warranty.

 

 

 
 11

 
 

 
 Table of Contents

 

 

 

 Income Taxes

 

 

 
 For the three months ended March 31, 2026, the Company recognized an income tax benefit of $38.4 million, resulting in an effective income tax rate of 20.1%. The Company did not recognize any income tax benefit or expense for the three months ended March 31, 2025.

 

 

 

 Supplemental Disclosures of Cash Flow Information

 

 

 The following table presents non–cash investing and financing activities and supplemental cash flow disclosures relating to the cash paid for interest for the periods presented:

 

 

 

 
  
  
 Three Months Ended March 31,
 
  
 

 
  
  
 2026
 
  
  
 2025
 
  
 

 
  
  
 (In thousands)
 
  
 

 
 
 Non–cash investing activities:

 
  
  
  
  
  
  
 

 
 
 Increase in capital expenditure accrued liabilities and accounts payable

 
  
 
 $

 
 24,183
 
  
  
 
 $

 
 25,939
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Non–cash financing activities:

 
  
  
  
  
  
  
  
  
 

 
 
 Common Stock issued upon conversion of Series F Preferred Stock

 
  
 
 $

 
 36,186
 
  
  
 
 $

 
 1,351
 
  
 

 
 
 Common Stock issued for Series F Preferred Stock dividends (1)

 
  
 
 $

 
 3,487
 
  
  
 
 $

 
 —
 
  
 

 
 
 Common Stock issued to Bayswater as part of Bayswater Acquisition purchase price (2)

 
  
 
 $

 
 —
 
  
  
 
 $

 
 16,000
 
  
 

 
 
 Common Stock issuance costs included in accrued liabilities 

 
  
 
 $

 
 —
 
  
  
 
 $

 
 3,078
 
  
 

 
 
 Series F Preferred Stock agreement amendment fees and issuance costs included in accrued liabilities and accounts payable 

 
  
 
 $

 
 3,327
 
  
  
 
 $

 
 6,778
 
  
 

 
 
 Common Stock issued upon conversion of Senior Convertible Note (3)

 
  
 
 $

 
 —
 
  
  
 
 $

 
 18,164
 
  
 

 
 
 Common Stock issued upon conversion of Series D Preferred Stock

 
  
 
 $

 
 —
 
  
  
 
 $

 
 8,475
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 
 Supplemental disclosure:

 
  
  
  
  
  
  
  
  
 

 
 
 Cash paid for interest

 
  
 
 $

 
 6,903
 
  
  
 
 $

 
 915
 
  
 

 
 

 

 (1) The Company elected to issue shares of Common Stock for the Series F Preferred Stock dividends payable on March 1, 2026. Refer to Note 12 – Mezzanine Equity for a discussion of the Series F Preferred Stock.
 
 
 (2) The Company issued approximately 3.7 million shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) to Bayswater (as defined herein) as part of the Bayswater Purchase Price (as defined herein). Refer to Note 3 – Acquisitions for a discussion of the Bayswater Acquisition (as defined herein).
 
 
 (3) During the three months ended March 31, 2025, YA II PN, LTD., a Cayman Islands exempt limited company (“Yorkville”), converted the remaining $11.3 million of the initial $15.0 million convertible promissory note (the “Senior Convertible Note”) in exchange for 2.1 million shares of Common Stock. Refer to Note 9 – Debt for a discussion of the Senior Convertible Note.
 
 
 

 

 Recently Issued Accounting Pronouncements

 

 

 In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2024–03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220–40):
 Disaggregation of Income Statement Expenses (“ASU 2024–03”), which requires the disclosure of specific information about certain costs and expenses. ASU 2024–03 is effective for annual periods beginning January 1, 2027, with early adoption permitted.
 The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

 

 

 
 12

 
 

 
 Table of Contents

 

 

 

 Note 3 – Acquisitions

 

 

 Bayswater Acquisition

 

 

 On February 6, 2025, the Company and certain of its subsidiaries entered into a Purchase and Sale Agreement (the “Bayswater PSA”) with Bayswater Resources, LLC, Bayswater Fund III–A, LLC, Bayswater Fund III–B, LLC, Bayswater Fund IV–A, LP, Bayswater Fund IV–B, LP, Bayswater Fund IV–Annex, LP, and Bayswater Exploration & Production, LLC (collectively, “Bayswater”), pursuant to which the Company agreed to acquire certain oil and natural gas assets (the “Bayswater Assets”) from Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments, payable in cash and 3,656,099 shares of Common Stock (the “Equity Consideration” and collectively, the “Bayswater Acquisition”).

 

 

 The Company closed the Bayswater Acquisition on March 26, 2025 and paid Bayswater cash for the as–adjusted closing purchase price of approximately $482.5 million, $15.0 million of which was deposited in escrow pending the Company’s acquisition of additional working interest (the “Additional Working Interest Acquisition”), which Bayswater acquired and assigned to the Company on April 11, 2025, and issued the Equity Consideration to Bayswater (collectively, the “Bayswater Purchase Price”). The Company funded the cash portion of the Bayswater Purchase Price with cash on hand, the proceeds from the issuance of Common Stock in a public offering, the proceeds from the issuance of the Series F Preferred Stock, and borrowings under its Credit Facility. Refer to Note 13 – Stockholders’ Equity for a discussion of the issuance of Common Stock, Note 12 – Mezzanine Equity for a discussion of the issuance of Series F Preferred Stock, and Note 9 – Debt for a discussion of the Credit Facility. On June 6, 2025, the Company received an interim settlement payment from Bayswater of $30.7 million, $16.1 million of which related to the time period between the effective date of the Bayswater PSA and the closing of the Bayswater Acquisition, resulting in a decrease to the purchase price. The Company completed the final settlement with Bayswater on October 15, 2025, resulting in a final purchase price allocation of $475.6 million.

 

 

 The Bayswater Acquisition has been accounted for as an asset acquisition in accordance with ASC Topic 805, Accounting for Business Combinations (“ASC 805”). The estimated fair
 value of the consideration paid by the Company and the allocation of that amount to the underlying assets acquired and liabilities assumed, on a relative fair value basis, are recorded on the Company’s books as of March 26, 2025, the closing date of
 the Bayswater Acquisition. Additionally, costs directly related to the Bayswater Acquisition are capitalized as a component of the Bayswater Purchase Price. The allocation of the total Bayswater Purchase Price, on a relative fair value basis, is
 based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed as of the closing date using currently available information.

 

 

 The following table presents the allocation of the Bayswater Purchase Price, as adjusted for the closing of the Additional Working Interest Acquisition and the final settlement with Bayswater on October 15, 2025 to the net assets acquired on March 26, 2025, the closing date of the Bayswater Acquisition:

 

 

 

 
 Purchase Price Allocation:
 
  
 (In thousands)
 
  
 

 
 
 Consideration:

 
  
  
  
 

 
 
 Cash consideration (1)

 
  
 
 $

 
 452,499
 
  
 

 
 
 Common stock issued to the sellers (2)

 
  
  
 16,000
 
  
 

 
 
 Direct transaction costs (3)

 
  
  
 7,094
 
  
 

 
 
 Total consideration

 
  
 
 $

 
 475,593
 
  
 

 
  
  
  
  
  
 

 
 
 Assets acquired:

 
  
  
  
  
 

 
 
 Oil and natural gas properties (4)

 
  
 
 $

 
 515,619
 
  
 

 
 
 Other (5)

 
  
  
 19,857
 
  
 

 
 
 Joint interest receivable

 
  
  
 8,788
 
  
 

 
  
  
 
 $

 
 544,264
 
  
 

 
 
 Liabilities assumed:

 
  
  
  
  
 

 
 
 Ad valorem taxes

 
  
 
 $

 
 (29