Prairie Operating (NASDAQ:PROP) reported a 31% increase in third-quarter revenue as new wells lifted production, while executives said lower capital spending and strong output should improve the company’s liquidity by year-end.
Revenue rose to $129.5 million from the prior quarter, including $114 million in oil revenue, Chief Financial Officer Michael Shelly said on the company’s third-quarter 2026 earnings call. Adjusted EBITDA increased 92% sequentially to $65.3 million.
Average daily sales volumes climbed 19% to 26,117 barrels of oil equivalent per day, or BOE per day. The company exited the quarter at 30,229 BOE per day, and production reached approximately 32,287 BOE per day in early October, Chief Executive Officer Greg Patton said.
Prairie posted a net loss attributable to the company of $48.9 million. After preferred stock dividends and remeasurement adjustments, the loss attributable to common stockholders was $34 million, or $0.26 per basic share. Shelly said the GAAP result included $105.7 million in unrealized derivative losses.
New Wells Support Production Growth
Third-quarter sales totaled approximately 2.4 million BOE, up 21% from the preceding quarter. Liquids represented 77% of sales, including 56% oil.
Patton said Prairie had completed 37 wells across five pads to date, including 27 in the Niobrara formation and 10 in the Codell formation. The last three new pads came online during the third quarter, all above the company’s type curve, he said. Six wells at the Castor pad began producing at the end of September and were expected to contribute predominantly in the fourth quarter.
At the four-well Burnett development, which came online at the end of August, wells achieved an average maximum initial production rate of approximately 722 BOE per day per well. Patton said the wells generated cumulative gross production of 131,490 BOE through Oct. 20.
Patton said the Burnett results exceeded Prairie’s internal type curve for both initial and cumulative production and supported the conversion of 30 gross possible locations to proved undeveloped locations. He added that some nearby operators were seeing equal or better results, and that Prairie was watching their techniques as it develops the area.
Production has declined from the early October level as wells naturally decline, Patton told analysts. He declined to provide a fourth-quarter forecast or year-end exit rate, but reaffirmed the company’s full-year average production guidance of 23,000 to 25,000 BOE per day.
Capital Spending and Cost Pressures
In response to an analyst’s question about capital spending, Patton distinguished the approximately $185 million of cash outflows shown on the cash flow statement from roughly $165 million of year-to-date drilling and completion capital spending. He said Prairie remained confident in its previously stated full-year capital guidance range of $180 million to $195 million.
Prairie is drilling or preparing to drill four additional wells intended to come online in 2027. Patton said drilling those wells would cost under roughly $8 million on a gross basis, including rig moves. He also noted that some costs from third-quarter completions and other projects remained to be paid.
Inflation is adding an estimated $300,000 to $500,000 to previously discussed drilling and completion costs of $5.3 million to $5.5 million for a typical two-mile lateral, Patton said. He cautioned that future costs could be higher or lower depending on market conditions.
Lease operating expense was $5.71 per BOE in the third quarter. General and administrative expense was $4.56 per BOE, down 24% from the prior quarter, Shelly said. Patton said Prairie established Stagecoach Logistics LLC during the quarter to bring field maintenance, logistics and operational support in-house.
Liquidity and Preferred Stock
At Sept. 30, Prairie had $7.8 million in cash and $3 million available under its reserve-based credit facility. The facility had a $475 million borrowing base and elected commitments, with $472 million outstanding.
Shelly said strong production and limited fourth-quarter capital spending should improve liquidity “fairly dramatically” by year-end. He said the company expects to pay down both payables and credit facility debt as cash becomes available.
The company extended the issuance date for its Series F anniversary warrant to Dec. 1, 2026, and continues to pursue refinancing of the remaining Series F preferred stock. Patton said Prairie was in discussions with High Trail and expected to discuss an outcome as part of its year-end results.
Shelly added that the credit facility was undergoing a scheduled redetermination, with an update expected in December. He said no incremental development was required in the near term to meet the facility’s production targets.
About Prairie Operating (NASDAQ:PROP)
Prairie Operating Co. is a Houston-based publicly traded independent energy company engaged in the development and acquisition of oil, natural gas, and natural gas liquid resources in the United States. The Company’s assets and operations are concentrated in the oil and liquids-rich regions of the Denver-Julesburg (DJ) Basin, with a primary focus on the Niobrara and Codell formations. The Company is committed to the responsible development of its oil natural gas, and natural gas liquid resources and is focused on maximizing returns through consistent growth, capital discipline, and sustainable cash flow generation.
