Prairie Operating Co.

Previous wording

The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2025 and 2024 should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included elsewhere in this report, as well as our audited consolidated financial statements and related notes and the related “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Additionally, refer to “Cautionary Statement Regarding Forward-looking Statements” at the beginning of this Quarterly Report on Form 10-Q. Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,” “our” or similar terms refer to Prairie Operating Co.

Current wording

The following discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2025 and 2024 should be read in conjunction with our condensed consolidated financial statements and related notes to those financial statements that are included elsewhere in this report, as well as our audited consolidated financial statements and related notes and the related “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Additionally, refer to “Cautionary Statement Regarding Forward-looking Statements” at the beginning of this Quarterly Report on Form 10-Q. Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,” “our” or similar terms refer to Prairie Operating Co.

Previous wording

As of June 30, 2025, our assets included approximately 50,000 net leasehold acres in, on and under approximately 70,000 gross acres. We strive to deliver energy in an environmentally efficient manner by deploying next-generation technology and techniques. In addition to growing production through our drilling operations, we intend to continue growing our business through accretive acquisitions, such as the NRO Acquisition, which closed in October 2024, and the Bayswater Acquisition, which closed in March 2025, 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.

Current wording

As of September 30, 2025, our assets included approximately 65,000 net leasehold acres in, on and under approximately 92,000 gross acres. We strive to deliver energy in an environmentally efficient manner by deploying next-generation technology and techniques. In addition to growing production through our drilling operations, we intend to continue growing our business through accretive acquisitions, such as the NRO Acquisition, which closed in October 2024, the Bayswater Acquisition, which closed in March 2025, and the Edge Acquisition, which closed in July 2025, 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.

Previous wording

On July 2, 2025, we entered into an agreement to acquire certain assets from Edge Energy for a purchase price of $12.5 million. The Edge Acquisition consists of 47 operated and non-operated wells on approximately 11,000 net acres. We expect to close the Edge Acquisition in the third quarter and plan to fund the closing by borrowing on our Credit Facility. Additionally, the Edge Acquisition assets include the fully permitted Simpson pad, which we expect to begin developing in August 2025, as well as 7 other fully permitted locations.

Current wording

On July 2, 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million, subject to certain closing price adjustments, payable in cash. Pursuant to the Edge Acquisition, we acquired 47 operated and non-operated wells on approximately 11,000 net acres. We closed the Edge Acquisition on July 3, 2025 and funded the transaction by borrowing on our Credit Facility. Additionally, the Edge Acquisition assets include the fully permitted Simpson pad, which we began developing in August 2025, as well as 7 other fully permitted locations.

Previous wording

On August 8, 2025, we completed the third portion of the original Exok Asset Purchase and acquired approximately 5,500 net acres from Exok for $1.3 million.

Current wording

On August 8, 2025, we completed the Third Exok Acquisition and acquired approximately 5,500 net acres from Exok for $1.6 million.

Previous wording

We closed the Bayswater Acquisition on March 26, 2025, paying approximately $482.5 million in cash to Bayswater, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and issuing 3,656,099 shares of our Common Stock to Bayswater. We funded the cash portion of the Bayswater Purchase Price with cash on hand, the proceeds from the issuance of Common Stock and the issuance of the Series F Preferred and borrowings under our Credit Facility. On June 6, 2025, we received an interim settlement payment from Bayswater of $30.7 million, $16.1 million of which related to the time period between the post effective date to the close date of the acquisition, which resulted in a decrease to the purchase price. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of issuance of the Series F Preferred Stock and Credit Facility.

Current wording

We closed the Bayswater Acquisition on March 26, 2025, paying approximately $482.5 million in cash to Bayswater, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and issuing 3,656,099 shares of our Common Stock to Bayswater. We funded the cash portion of the Bayswater Purchase Price with cash on hand, the proceeds from the issuance of Common Stock and the issuance of the Series F Preferred and borrowings under our Credit Facility. On June 6, 2025, we received an interim settlement payment from Bayswater of $30.7 million, $16.1 million of which related to the time period between the post effective date to the close date of the acquisition, which resulted in a decrease to the purchase price. We completed the final settlement with Bayswater on October 15, 2025, which resulted in Bayswater paying us $31.7 million, as such, we will finalize the purchase accounting for the Bayswater Acquisition in the fourth quarter of 2025. Refer to Liquidity and Capital Resources - Significant Sources of Liquidity below for a further discussion of issuance of the Series F Preferred Stock and Credit Facility.

Previous wording

On April 1, 2025, we launched the development program at our Rusch pad development in Weld County, which consists of 11 two-mile lateral wells. As of June 30, 2025, drilling operations have been completed at the Rusch pad and completion operations are underway. We anticipate initial production to come online in the third quarter of 2025.

Current wording

On April 1, 2025, we launched the development program at our Rusch pad development in Weld County, which consists of 11 two-mile lateral wells. The Rusch wells came online late in September 2025 and are expected to contribute meaningful production in the fourth quarter of 2025.

Previous wording

On April 28, 2025, we announced our plan to begin completions on nine previously drilled but uncompleted wells acquired in the recent Bayswater Acquisition. Completion activities at the Opal Coalbank pad began in May 2025, and the wells came online mid-July 2025.

Current wording

On April 28, 2025, we announced our plan to begin completions on nine previously drilled but uncompleted wells acquired in the recent Bayswater Acquisition. Completion activities at the Opal Coalbank pad began in May 2025, and the wells came online mid-July 2025 with initial average two-stream gross production of 525 Boe/d.

Previous wording

On June 1, 2025, after we completed drilling at our Rusch pad, we moved the drilling rig to our Noble pad development in Weld County, which consists of 7 wells. As of July 1, 2025, drilling operations have been completed at the Noble pad and initial production from the Noble pad is expected to come online late in the third quarter of 2025.

Current wording

On June 1, 2025, after we completed drilling at our Rusch pad, we moved the drilling rig to our Noble pad development in Weld County, which consists of 7 wells. As of September 30, 2025, the Noble pad is in the drill-out phase with first production expected in the fourth quarter of 2025.

Previous wording

Since oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can have a material impact on our financial results and capital expenditures. In an effort to reduce the impact of price volatility, and in compliance with requirements under our Amended & Restated Credit Agreement, we enter into derivative contracts to economically hedge a portion of our estimated production from our proved, developed, producing oil and natural gas properties against adverse fluctuations in commodity prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil, natural gas, and NGL prices on our cash flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil, natural gas, and NGL prices. Further, we could sustain losses to the extent our oil, natural gas, and NGL derivative contract prices are lower than market prices and, conversely, we could recognize gains to the extent our oil, natural gas, and NGL derivative contract prices are higher than market prices. Refer toResults of Operations - Other income and expenses below for a discussion of our recognized gains or losses on derivative contracts.

Current wording

Since oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can have a material impact on our financial results and capital expenditures. In an effort to reduce the impact of price volatility, and in compliance with requirements under our Amended & Restated Credit Agreement, we enter into derivative contracts to economically hedge a portion of our estimated production from our proved, developed, producing oil and natural gas properties against adverse fluctuations in commodity prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil, natural gas, and NGL prices on our cash flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil, natural gas, and NGL prices. Further, we could sustain losses to the extent our oil, natural gas, and NGL derivative contract prices are lower than market prices and, conversely, we could recognize gains to the extent our oil, natural gas, and NGL derivative contract prices are higher than market prices. Refer to Results of Operations - Other income and expenses below for a discussion of our recognized gains or losses on derivative contracts.

Previous wording

As discussed above, we closed the Bayswater Acquisition on March 26, 2025, for total cash consideration $482.5 million, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and we issued the Equity Consideration to Bayswater. On June 6, 2025, we received an interim settlement payment from Bayswater of $30.7 million, $16.1 million of which related to the time period between the post effective date to the close date of the acquisition, resulting in a decrease in the purchase price.

Current wording

As discussed above, we closed the Bayswater Acquisition on March 26, 2025, for total cash consideration $482.5 million, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and we issued the Equity Consideration to Bayswater. On June 6, 2025, we received an interim settlement payment from Bayswater of $30.7 million, $16.1 million of which related to the time period between the post effective date to the close date of the acquisition, resulting in a decrease in the purchase price. We completed the final settlement with Bayswater on October 15, 2025, which resulted in Bayswater paying us $31.7 million, as such, we will finalize the purchase accounting for the Bayswater Acquisition in the fourth quarter of 2025.

Previous wording

As previously discussed, we acquired our cryptocurrency mining operations in May 2023, concurrent with the Merger. On January 23, 2024, we sold all of our Mining Equipment for consideration consisting of (i) $1.0 million in cash and (ii) $1.0 million in deferred cash payments, to be paid out of (a) 20% of the monthly net revenues received by the buyer associated with or otherwise attributable to the Mining Equipment until the aggregate amount of such payments equals $250,000 and (b) thereafter, 50% of the monthly net revenues received by the buyer associated with or otherwise attributable to the Mining Equipment until the aggregate amount of such payments equals the Deferred Purchase Price, plus accrued interest. As of June 30, 2025, we have received $0.5 million of the Deferred Purchase Price.

Current wording

We acquired our cryptocurrency mining operations in May 2023, concurrent with the Merger. On January 23, 2024, we sold all of our Mining Equipment for consideration consisting of (i) $1.0 million in cash and (ii) $1.0 million in deferred cash payments, to be paid out of (a) 20% of the monthly net revenues received by the buyer associated with or otherwise attributable to the Mining Equipment until the aggregate amount of such payments equals $250,000 and (b) thereafter, 50% of the monthly net revenues received by the buyer associated with or otherwise attributable to the Mining Equipment until the aggregate amount of such payments equals the Deferred Purchase Price, plus accrued interest. In July 2025, we received $0.4 million to satisfy the remaining Deferred Purchase Price note receivable.

Previous wording

The following table presents the components of our revenue, production, and average realized sales price for the periods indicated:

Current wording

The following table presents the components of our revenue, production, and average realized price for the periods indicated:

Previous wording

For the three and six months ended June 30, 2025, the majority of our total production and revenues were attributable to properties acquired in the Bayswater Acquisition, which closed on March 26, 2025. As such, our production and revenues for the six months ended June 30, 2025 include the production and resulting revenue from the Bayswater Acquisition from March 26, 2025 through June 30, 2025. Additionally, we did not have any production or revenue prior to the NRO Acquisition, which closed in October 2024.

Current wording

For the three and nine months ended September 30, 2025, the majority of our total production volumes and revenues were attributable to properties acquired in the Bayswater Acquisition, which closed on March 26, 2025. As such, our production and revenues for the nine months ended September 30, 2025 include the production and resulting revenue from the Bayswater Acquisition from March 26, 2025 through September 30, 2025. Additionally, we did not have any production or revenue prior to the NRO Acquisition, which closed in October 2024.

Previous wording

Lease operating expenses. For the three and six months ended June 30, 2025, lease operating expenses (“LOE”) increased $11.3 million and $13.4 million, respectively, compared to the same periods of 2024. These increases in LOE were primarily driven by increased production as a result of our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not incur any LOE prior to the closing of the NRO Acquisition on October 1, 2024.

Current wording

Lease operating expenses. For the three and nine months ended September 30, 2025, lease operating expenses (“LOE”) increased $15.4 million and $28.7 million, respectively, compared to the same periods of 2024. These increases in LOE were primarily driven by increased production as a result of our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not incur any LOE prior to the closing of the NRO Acquisition on October 1, 2024.

Previous wording

Gathering, transportation, and processing expenses. For the three and six months ended June 30, 2025, gathering, transportation, and processing expenses increased $2.2 million and $2.4 million, respectively, compared to the same periods of 2024. These increases were mostly attributable to increased production driven by our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not incur any gathering, transportation, and processing expenses prior to the closing of the NRO Acquisition on October 1, 2024.

Current wording

Transportation and processing expenses. For the three and nine months ended September 30, 2025, transportation and processing expenses increased $2.2 million and $4.6 million, respectively, compared to the same periods of 2024. These increases were mostly attributable to increased production driven by our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not incur any transportation and processing expenses prior to the closing of the NRO Acquisition on October 1, 2024.

Previous wording

Ad valorem and production taxes. For the three and six months ended June 30, 2025, ad valorem and production taxes increased $6.4 million and $7.4 million, respectively, compared to the same periods of 2024. These increases in ad valorem and production taxes were mostly driven by increased production as a result of our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not incur any ad valorem and production taxes prior to the closing of the NRO Acquisition on October 1, 2024.

Current wording

Ad valorem and production taxes. For the three and nine months ended September 30, 2025, ad valorem and production taxes increased $4.7 million and $12.0 million, respectively, compared to the same periods of 2024. These increases in ad valorem and production taxes were mostly driven by increased production as a result of our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not incur any ad valorem and production taxes prior to the closing of the NRO Acquisition on October 1, 2024.

Previous wording

Depreciation, depletion, and amortization. For the three and six months ended June 30, 2025, depreciation, depletion, and amortization (“DD&A”) expenses increased $12.2 million and $14.3 million, respectively, compared to the same periods of 2024. These increases in DD&A were largely attributable to increased production as a result of our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not recognize any DD&A related to oil and natural gas properties prior to the closing of the NRO Acquisition on October 1, 2024.

Current wording

Depreciation, depletion, and amortization. For the three and nine months ended September 30, 2025, depreciation, depletion, and amortization (“DD&A”) expenses increased $16.0 million and $30.4 million, respectively, compared to the same periods of 2024. These increases in DD&A were largely attributable to increased production as a result of our Bayswater Acquisition and NRO Acquisition, which closed on March 26, 2025 and October 1, 2024, respectively. We did not recognize any DD&A related to oil and natural gas properties prior to the closing of the NRO Acquisition on October 1, 2024.

Previous wording

*General and administrative expenses.*For the three months ended June 30, 2025, general and administrative expenses increased $7.9 million compared to the three months ended June 30, 2024. This increase was partially driven by a $2.9 million increase in non-cash stock–based compensation and employee and benefit expenses and a $2.0 million increase in investor relations costs. Additionally, we incurred $1.1 million incremental professional services costs during the period, a portion of which relates to the transaction agreement service costs associated with the Bayswater Acquisition. For the six months ended June 30, 2025, general and administrative expenses increased $5.9 million compared to the six months ended June 30, 2024. This increase was partially driven by a $1.7 million increase in non-cash stock–based compensation and employee and benefit expenses and a $1.4 million increase in professional services costs, a portion of which relates to the transaction agreement service costs associated with the Bayswater Acquisition.

Current wording

General and administrative expenses. For the three months ended September 30, 2025, general and administrative expenses increased $3.5 million compared to the three months ended September 30, 2024. This increase was primarily driven by a $5.0 million increase in non-cash stock–based compensation and employee and benefit expenses and $1.4 million of litigation expenses incurred during the period, partially offset with a $2.3 million decrease in accounting, legal, and professional services costs. For the nine months ended September 30, 2025, general and administrative expenses increased $9.4 million compared to the nine months ended September 30, 2024. This increase was partially driven by a $6.7 million increase in non-cash stock–based compensation and employee and benefit expenses, $1.4 million of litigation expenses incurred during the period, and a $1.2 million increase in insurance, rent, and vehicle expense.

Previous wording

Interest expense.For the three and six months ended June 30, 2025, interest expense increased $9.1 million and $10.5 million compared to the same periods of 2024, respectively, mostly driven by interest on the Credit Facility incurred during the periods. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the Credit Facility.

Current wording

Interest expense. For the three and nine months ended September 30, 2025, interest expense increased $9.0 million and $19.5 million compared to the same periods of 2024, respectively, primarily driven by interest on the Credit Facility incurred during the periods. Refer to Liquidity and Capital Resources - Significant Sources of Liquidity below for a further discussion of the Credit Facility.

Previous wording

Realized gain on derivatives.For the three months ended June 30, 2025 and 2024, the realized gain on derivatives was $4.9 million and $4.2 million, respectively, driven by favorable changes in cash settlements during the period. We did not have any outstanding derivative contracts during the three and six months ended June 30, 2024; therefore, we did not recognize any realized gain or loss on derivatives for the period. Refer toFactors Affecting the Comparability of Financial Results – Commodity Prices above for a further discussion of our derivative contracts.

Current wording

Realized gain on derivatives. For the three and nine months ended September 30, 2025 and 2024, the realized gain on derivatives was $8.0 million and $12.2 million, respectively, driven by favorable changes in cash settlements during the period. We did not have any outstanding derivative contracts during the three and nine months ended September 30, 2024; therefore, we did not recognize any realized gain or loss on derivatives for the period. Refer to Factors Affecting the Comparability of Financial Results – Commodity Prices above for a further discussion of our derivative contracts.

Previous wording

Unrealized gain on derivatives. For the six months ended June 30, 2025 and 2024, the unrealized gain on derivatives was $23.2 million and $23.1 million, respectively, driven by favorable changes in the fair value of our open derivative contracts as of June 30, 2025. We did not have any outstanding derivative contracts during the three and six months ended June 30, 2024; therefore, we did not recognize any unrealized gain or loss on derivatives for the period. Refer toFactors Affecting the Comparability of Financial Results – Commodity Prices above for a further discussion of our derivative contracts.

Current wording

Unrealized gain on derivatives. For the three and nine months ended September 30, 2025 and 2024, the unrealized gain on derivatives was $1.0 million and $24.1 million, respectively, driven by favorable changes in the fair value of our open derivative contracts as of September 30, 2025. We did not have any outstanding derivative contracts during the three and nine months ended September 30, 2024; therefore, we did not recognize any unrealized gain or loss on derivatives for the period. Refer to Factors Affecting the Comparability of Financial Results – Commodity Prices above for a further discussion of our derivative contracts.

Previous wording

Loss on adjustment to fair value – embedded derivatives, debt, and warrants. We have several financial instruments that are or were previously valued at fair value on a recurring basis; therefore, we recognize the changes in fair value at each remeasurement period as a loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statements of operations for the period. For the three months ended June 30, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects a loss on fair value of $21.6 million for the Series F Preferred Stock warrants, partially offset with gains on fair value of $18.1 million for the Series F Preferred Stock embedded derivatives and $1.1 million for the Subordinated Note. For the six months ended June 30, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects losses on fair value of $21.6 million for the Series F Preferred warrants, $5.5 million for the Senior Convertible Note, and $0.1 million for the Subordinated Note which were partially offset by gains on fair value of $18.2 million for the Series F Preferred embedded derivatives, $3.6 million for the Subordinated Note Warrants, and $0.8 million for the SEPA recognized during the period. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the SEPA, the Senior Convertible Note, the Subordinated Note, and the Series F Preferred Stock embedded derivatives.

Current wording

Loss on adjustment to fair value – embedded derivatives, debt, and warrants. We have several financial instruments that are or were previously valued at fair value on a recurring basis; therefore, we recognize the changes in fair value at each remeasurement period as a loss on adjustment to fair value – embedded derivatives, debt, and warrants on our condensed consolidated statements of operations for the period. For the three months ended September 30, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects a loss on fair value of $19.1 million for the Series F Preferred Stock warrants and a loss on fair value of $7.0 million for the Series F Preferred Stock embedded derivatives partially offset with a gain on fair value of $0.2 million for the Subordinated Note. For the nine months ended September 30, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects losses on fair value of $40.7 million for the Series F Preferred warrants, $5.5 million for the Senior Convertible Note, and $0.1 million for the Subordinated Note which were partially offset by gains on fair value of $13.9 million for the Series F Preferred embedded derivatives, $3.9 million for the Subordinated Note Warrants, and $0.8 million for the SEPA recognized during the period. Refer to Liquidity and Capital Resources - Significant Sources of Liquidity below for a further discussion of the SEPA, the Senior Convertible Note, the Subordinated Note, and the Series F Preferred Stock warrants and embedded derivatives.

Previous wording

For the six months ended June 30, 2025, the net loss from discontinued operations decreased $1.0 million compared to the six months ended June 30, 2024. As discussed above, we completed the Crypto Sale in January 2024; therefore, we only had cryptocurrency mining revenue or related expenses during a portion of the six months ended June 30, 2024. However, we recognized a $1.1 million loss on the sale of cryptocurrency mining equipment. Refer toFactors Affecting the Comparability of Financial Results – Crypto Saleabove for a further discussion of the Crypto Sale.

Current wording

For the nine months ended September 30, 2025, the net loss from discontinued operations decreased $1.0 million compared to the nine months ended September 30, 2024. As discussed above, we completed the Crypto Sale in January 2024; therefore, we only had cryptocurrency mining revenue or related expenses during a portion of the nine months ended September 30, 2024. However, we recognized a $1.1 million loss on the sale of cryptocurrency mining equipment. Refer to Factors Affecting the Comparability of Financial Results – Crypto Sale above for a further discussion of the Crypto Sale.

Previous wording

Adjusted EBITDA is derived from net income (loss) from continuing operations and is adjusted for income tax expense, depreciation, depletion, and amortization, accretion of asset retirement obligations, non-cash stock-based compensation, interest expense (income), net, non-cash loss on adjustment to fair value – embedded derivatives, debt, and warrants, and unrealized gain on derivatives, all as applicable. We adjust net income (loss) from continuing operations for the items listed above to arrive at Adjusted EBITDA because these amounts can vary substantially between periods and companies within our industry depending upon accounting methods, book values of assets, capital structures, and the method by which assets were acquired. Adjusted EBITDA has limitations as an analytical tool, including that it excludes certain items that affect our reported financial results. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income calculated in accordance with GAAP or as an indicator of our operating performance or liquidity. Additionally, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Current wording

Adjusted EBITDA is derived from net income (loss) from continuing operations and is adjusted for income tax expense, depreciation, depletion, and amortization, accretion of asset retirement obligations, non-cash stock-based compensation, interest expense (income), net, non-cash loss on adjustment to fair value – embedded derivatives, debt, and warrants, loss on debt issuance, unrealized gain on derivatives, and litigation settlement expense, all as applicable. We adjust net income (loss) from continuing operations for the items listed above to arrive at Adjusted EBITDA because these amounts can vary substantially between periods and companies within our industry depending upon accounting methods, book values of assets, capital structures, and the method by which assets were acquired. Adjusted EBITDA has limitations as an analytical tool, including that it excludes certain items that affect our reported financial results. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income calculated in accordance with GAAP or as an indicator of our operating performance or liquidity. Additionally, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Previous wording

We define working capital as current assets less current liabilities. As of June 30, 2025, we had a working capital deficit of $64.2 million and cash and cash equivalents of $10.7 million and as of December 31, 2024, we had a working capital deficit of $44.7 million and cash and cash equivalents of $5.2 million.

Current wording

We define working capital as current assets less current liabilities. As of September 30, 2025, we had a working capital deficit of $24.0 million and cash and cash equivalents of $10.6 million and as of December 31, 2024, we had a working capital deficit of $44.7 million and cash and cash equivalents of $5.2 million.

Previous wording

*Operating activities.*Net cash provided by operating activities totaled $9.7 million during the six months ended June 30, 2025 and net cash used in operating activities totaled $8.4 million during the six months ended June 30, 2024, respectively. The $18.2 million increase in our net cash provided by operating activities was primarily attributable to increased revenue during the period, partially offset by increased operating expenses, largely driven by the Bayswater Acquisition, which closed on March 26, 2025. Additionally, we did not have any revenue prior to the NRO Acquisition, which closed in October 2024.

Current wording

Operating activities. Net cash provided by operating activities totaled $67.4 million during the nine months ended September 30, 2025 and net cash used in operating activities totaled $5.7 million during the nine months ended September 30, 2024, respectively. The $73.1 million increase in our net cash provided by operating activities was primarily attributable to increased revenue during the period, partially offset by increased operating expenses, largely driven by the Bayswater Acquisition, which closed on March 26, 2025. Additionally, we did not have any revenue prior to the NRO Acquisition, which closed in October 2024.

Previous wording

Investing activities. Net cash used in investing activities totaled $522.3 million and $11.8 million during the six months ended June 30, 2025 and 2024, respectively. The $510.4 million increase in our net cash used in investing activities was largely driven by cash paid for the Bayswater Acquisition of $467.5 million. Additionally, our expenditure for the development of oil and natural gas properties increased $50.4 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Current wording

Investing activities. Net cash used in investing activities totaled $608.5 million and $14.0 million during the nine months ended September 30, 2025 and 2024, respectively. The $594.5 million increase in our net cash used in investing activities was largely driven by cash paid for the Bayswater Acquisition of $467.5 million. Additionally, our expenditure for the development of oil and natural gas properties increased $117.5 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Previous wording

*Financing activities.*Net cash provided by financing activities totaled $518.0 million for the six months ended June 30, 2025, driven by $43.8 million from the issuance of Common Stock, net of related issuance costs of $3.3 million, $148.3 million from the issuance of the Series F Preferred Stock, net of related issuance costs of $11.1 million, $359.0 million from borrowings under the Credit Facility, net of related issuance costs of $15.7 million, and $0.6 million of cash received for option exercises during the period. These increases were slightly offset with a $3.2 million repayment of the Subordinated Note. Net cash provided by financing activities totaled $9.5 million for the six months ended June 30, 2024, which was fully comprised of the proceeds from the exercise of Series D B Warrants.

Current wording

Financing activities. Net cash provided by financing activities totaled $546.6 million for the nine months ended September 30, 2025, driven by $43.8 million from the issuance of Common Stock, net of related issuance costs of $3.6 million, $148.3 million from the issuance of the Series F Preferred Stock, net of related issuance costs of $12.2 million, $389.0 million from borrowings under the Credit Facility, net of related issuance costs of $15.7 million, and $0.6 million of cash received for option exercises during the period. These increases were slightly offset by a $3.2 million repayment of the Subordinated Note. Net cash provided by financing activities totaled $46.7 million for the nine months ended September 30, 2024, driven by proceeds of $33.5 million from the exercise of Series D B and Series E B warrants, $3.0 million of proceeds from the issuance of the Subordinated Note, and $15.0 million of proceeds from the issuance of Common Stock, partially offset by the related issuance costs of $4.9 million.

Previous wording

On March 26, 2025, we entered into the Amended & Restated Credit Agreement with Citi, as administrative agent, and the financial institutions party thereto, pursuant to which the Credit Facility Agreement was amended and restated. On June 6, 2025, we entered into the First Amendment to our Amended & Restated Credit Agreement, which added Bank of America N.A. and West Texas National Bank as lenders under the Credit Facility. The Credit Facility is scheduled to mature on March 26, 2029, and the Amended & Restated Credit Agreement provides for a maximum credit commitment of $1.0 billion under the Credit Facility. As of June 30, 2025, the Amended & Restated Credit Agreement had a borrowing base of $475.0 million and an aggregate elected commitment of $475.0 million. The Amended & Restated Credit Agreement includes a $47.5 million sublimit for the issuance of letters of credit. The borrowing base is subject to semi-annual redeterminations based upon the value of our oil and gas properties as determined in a reserve report dated as of January and July of each year, subject to certain interim redeterminations.

Current wording

Credit Facility. On December 16, 2024, we, as borrower, entered into the Credit Facility Agreement with Citi, as administrative agent and the financial institution party. On February 3, 2025, we entered into the first amendment to the Credit Facility Agreement, which among other things, increased the borrowing base and the aggregate elected commitments to $60.0 million. On March 26, 2025, we entered into the Amended & Restated Credit Agreement with Citi, as administrative agent, and the financial institutions party thereto, pursuant to which the Credit Facility Agreement was amended and restated. On June 6, 2025, we entered into the First Amendment to our Amended & Restated Credit Agreement, which added Bank of America N.A. and West Texas National Bank as lenders under the Credit Facility. The Credit Facility is scheduled to mature on March 26, 2029, and the Amended & Restated Credit Agreement provides for a maximum credit commitment of $1.0 billion under the Credit Facility. As of September 30, 2025, the Amended & Restated Credit Agreement had a borrowing base of $475.0 million and an aggregate elected commitment of $475.0 million. The Amended & Restated Credit Agreement includes a $47.5 million sublimit for the issuance of letters of credit. The borrowing base is subject to semi-annual redeterminations based upon the value of our oil and gas properties as determined in a reserve report dated as of January and July of each year, subject to certain interim redeterminations.

Previous wording

We are subject to certain financial covenants and customary restrictive covenants under the Credit Facility. The financial covenants require us to maintain, for each fiscal quarter commencing with the fiscal quarter ending March 31, 2025, a Net Leverage Ratio (as defined in the Amended & Restated Credit Agreement) of no greater than 3.00 to 1.00 and a Current Ratio (as defined in the Amended & Restated Credit Agreement) of at least 1.00 to 1.00.

Current wording

We are subject to certain financial covenants and customary restrictive covenants under the Credit Facility. The financial covenants require us to maintain, for each fiscal quarter commencing with the fiscal quarter ending March 31, 2025, a Net Leverage Ratio (as defined in the Amended & Restated Credit Agreement) of no greater than 3.00 to 1.00 and a Current Ratio (as defined in the Amended & Restated Credit Agreement) of at least 1.00 to 1.00. As of September 30, 2025, we are in compliance with all covenants under the Amended & Restated Credit Agreement.

Previous wording

As of June 30, 2025 and December 31, 2024, we had $387.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $88.0 million and $7.2 million, respectively, of availability for future borrowings and letters of credit. Additionally, as of June 30, 2025 and December 31, 2024, we had $14.5 million and $1.7 million, respectively, of unamortized deferred financing costs associated with our Credit Facility, which is presented as a non-current asset on the consolidated balance sheet. These costs will be amortized to interest expense on the accompanying statements of operations on a straight-line basis over the life of the Credit Facility.

Current wording

As of September 30, 2025 and December 31, 2024, we had $417.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $58.0 million and $7.2 million, respectively, of availability for future borrowings and letters of credit. Additionally, as of September 30, 2025 and December 31, 2024, we had $13.5 million and $1.7 million, respectively, of unamortized deferred financing costs associated with our Credit Facility, which is presented as a non-current asset on the condensed consolidated balance sheet. These costs will be amortized to interest expense on the accompanying condensed consolidated statements of operations on a straight-line basis over the life of the Credit Facility.

Previous wording

We have determined that the SEPA represents a derivative instrument pursuant to ASC 815, which should be recorded at fair value at inception and remeasured at fair value each reporting period with changes in the fair value recognized in earnings. As of December 31, 2024, we had recorded the SEPA at its fair value of $0.8 million and recorded the corresponding $0.8 million change in fair value as a component of loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statement of operations for the year ended December 31, 2024. Since we do not have the ability to request an Advance Notice on the SEPA if the Series F Preferred Stock is outstanding, we have determined that the fair value of the SEPA as of June 30, 2025 is $0, resulting in a gain of $0.8 million, which is presented in loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statement of operations for the six months ended June 30, 2025

Current wording

We have determined that the SEPA represents a derivative instrument pursuant to ASC 815, which should be recorded at fair value at inception and remeasured at fair value each reporting period with changes in the fair value recognized in earnings. As of December 31, 2024, we had recorded the SEPA at its fair value of $0.8 million and recorded the corresponding $0.8 million change in fair value as a component of loss on adjustment to fair value – embedded derivatives, debt, and warrants on our condensed consolidated statement of operations for the year ended December 31, 2024. Since we do not have the ability to request an Advance Notice on the SEPA if the Series F Preferred Stock is outstanding, we have determined that the fair value of the SEPA as of September 30, 2025 is $0, resulting in a gain of $0.8 million, which is presented in loss on adjustment to fair value – embedded derivatives, debt, and warrants on our condensed consolidated statement of operations for the nine months ended September 30, 2025.

Previous wording

In December 2024, and in conjunction with the Credit Facility Agreement, we made a $3.7 million payment on the Senior Convertible Note, resulting in a principal balance of $11.3 million as of December 31, 2024. However, due to the election of the fair value option, we reported the Senior Convertible Note at its fair value of $12.6 million on our consolidated balance sheet as of December 31, 2024.

Current wording

In December 2024, and in conjunction with the Credit Facility Agreement, we made a $3.7 million payment on the Senior Convertible Note, resulting in a principal balance of $11.3 million as of December 31, 2024. However, due to the election of the fair value option, we reported the Senior Convertible Note at its fair value of $12.6 million on our condensed consolidated balance sheet as of December 31, 2024.

Previous wording

During the first quarter of 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock, resulting in a principal balance of $0 as of June 30, 2025. As a result, we recognized loss on adjustment to fair value – embedded derivatives, debt, and warrants of $5.5 million on our consolidated statement of operations for the six months ended June 30, 2025.

Current wording

During the first quarter of 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock, resulting in a principal balance of $0 as of September 30, 2025. As a result, we recognized a loss on adjustment to fair value – embedded derivatives, debt, and warrants of $5.5 million on our condensed consolidated statement of operations for the nine months ended September 30, 2025.

Previous wording

*Subordinated Promissory Note and Subordinated Note Warrants.*On September 30, 2024, we entered into the Subordinated Note with the Noteholders in a principal amount of $5.0 million, which has a maturity date of March 17, 2027. The Noteholders are entities controlled by Jonathan H. Gray, who is a director of the Company, therefore the Subordinated Note and Subordinated Note Warrants are presented as related-party on our consolidated balance sheets as of June 30, 2025 and December 31, 2024. The Subordinated Note has an interest rate of 10.00% and the Noteholders are entitled to a minimum return on capital of up to 2.0x upon the repayment, prepayment or acceleration of the obligations, or the occurrence of certain other triggering events under the Subordinated Note. In December 2024, and in conjunction with the Credit Facility Agreement, we made a $1.8 million payment on the Subordinated Note, resulting in a principal balance of $3.2 million as of December 31, 2024.

Current wording

Subordinated Promissory Note and Subordinated Note Warrants. On September 30, 2024, we entered into the Subordinated Note with the Noteholders in a principal amount of $5.0 million, which has a maturity date of March 17, 2027. The Noteholders are entities controlled by Jonathan H. Gray, who is a director of the Company, therefore the Subordinated Note and Subordinated Note Warrants are presented as related-party on our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. The Subordinated Note has an interest rate of 10.00% and the Noteholders are entitled to a minimum return on capital of up to 2.0x upon the repayment, prepayment or acceleration of the obligations, or the occurrence of certain other triggering events under the Subordinated Note. In December 2024, and in conjunction with the Credit Facility Agreement, we made a $1.8 million payment on the Subordinated Note, resulting in a principal balance of $3.2 million as of December 31, 2024.

Previous wording

On March 26, 2025, in connection with the closing and financing of the Bayswater Acquisition, we paid $3.2 million of the outstanding balance under the Subordinated Note. Pursuant to the terms of the payoff letter, we and the Noteholders agreed that the remaining $1.5 million outstanding Subordinated Note balance would be converted to principal, will accrue interest at a rate of 15% of per annum, and all principal and other amounts owed (other than interest) pursuant to the Subordinated Note will not be redeemable for any reason so long as the any Series F Preferred Stock remains outstanding. Therefore, we have determined that changes to the Subordinated Note included in the payoff letter qualify as an extinguishment of debt and therefore elected to forgo the previous fair value option election. As such, we now present the Subordinated Note at its face value of $1.5 million as of June 30, 2025.

Current wording

On March 26, 2025, in connection with the closing and financing of the Bayswater Acquisition, we paid $3.2 million of the outstanding balance under the Subordinated Note. Pursuant to the terms of the payoff letter, we and the Noteholders agreed that the remaining $1.5 million outstanding Subordinated Note balance would be converted to principal, will accrue interest at a rate of 15% of per annum, and all principal and other amounts owed (other than interest) pursuant to the Subordinated Note will not be redeemable for any reason while any of the Series F Preferred Stock remain outstanding. Therefore, we have determined that changes to the Subordinated Note included in the payoff letter qualify as an extinguishment of debt and therefore elected to forgo the previous fair value option election. As such, we now present the Subordinated Note at its face value of $1.5 million as of September 30, 2025.

Previous wording

The Series F Preferred Stockholder is entitled to receive, on a cumulative basis, dividends on each share of Series F Preferred Stock at a rate per annum equal to 12%, payable in cash on March 1, June 1, September 1 and December 1 of each calendar year, beginning on June 1, 2025. Alternatively, according to the Series F Certificate of Designation, we may elect to pay the dividends entirely or partially in shares of Common Stock. Additionally, the Series F Certificate of Designation states that six months after the anniversary date of the maturity of our Amended & Restated Credit Agreement the dividend rate will increase to 25%. We elected to pay the June 1, 2025 dividend by issuing the Series F Preferred Stockholder 1,305,000 shares of Common Stock.

Current wording

The Series F Preferred Stockholder is entitled to receive, on a cumulative basis, dividends on each share of Series F Preferred Stock at a rate per annum equal to 12%, payable in cash on March 1, June 1, September 1 and December 1 of each calendar year, beginning on June 1, 2025. Alternatively, according to the Series F Certificate of Designation, we may elect to pay the dividends entirely or partially in shares of Common Stock. Additionally, the Series F Certificate of Designation states that six months after the anniversary date of the maturity of our Amended & Restated Credit Agreement the dividend rate will increase to 25%. We elected to pay the June 1 and September 1, 2025 dividends by issuing the Series F Preferred Stockholder 1,305,000 and 1,806,000 shares, respectively, of Common Stock.

Previous wording

The Series F Preferred Stockholder may convert all or a portion its shares of Series F Preferred Stock into shares of Common Stock at any time at a Standard Conversion rate of 202.0202 shares of Common Stock per share of Series F Preferred Stock, subject to certain adjustments as described in the Series F Certificate of Designation. The Series F Preferred Stockholder also has the option to convert all or a portion of its shares of Series F Preferred Stock using an Alternative Conversion Rate (as defined in the Series F Certificate of Designation) in lieu of the conversion rate, subject to an Alternative Conversion Cap (as defined in the Series F Certificate of Designation) for each quarter. During the three and six months ended June 30, 2025, 2,250 and 3,250 shares of Series F Preferred Stock, respectively, were converted into 774,000 and 1,026,000 shares of Common Stock, respectively, using the Alternative Conversion.

Current wording

The Series F Preferred Stockholder may convert all or a portion its shares of Series F Preferred Stock into shares of Common Stock at any time at a Standard Conversion rate of 202.0202 shares of Common Stock per share of Series F Preferred Stock, subject to certain adjustments as described in the Series F Certificate of Designation. The Series F Preferred Stockholder also has the option to convert all or a portion of its shares of Series F Preferred Stock using an Alternative Conversion Rate (as defined in the Series F Certificate of Designation) in lieu of the conversion rate, subject to an Alternative Conversion Cap (as defined in the Series F Certificate of Designation) for each quarter. During the three and nine months ended September 30, 2025, 16,000 and 19,250 shares of Series F Preferred Stock, respectively, were converted into 6,364,000 and 7,390,000 shares of Common Stock, respectively, using the Alternative Conversion.

Previous wording

We have determined that the Series F Preferred Stock should be classified as mezzanine equity because it is currently redeemable at the Series F Preferred Stockholder’s option. Additionally, we determined that certain features of the Series F Preferred Stock require bifurcation and separate accounting as embedded derivatives and that the Series F Preferred Stock Warrants should be accounted for as liabilities because they are not considered indexed to our stock since the potential number of common shares to be issued upon the exercise of such warrants will vary based on the amount of Series F Preferred Stock outstanding on March 26, 2026. On the date of issuance, in accordance with ASC 815, we recorded a liability of $19.4 million for the fair value of the Series F Preferred Stock embedded derivatives and a liability of $22.1 million for the fair value of the Series F Preferred Stock. As a result, on March 26, 2025, we recognized the Series F Preferred Stock in mezzanine equity based on its relative fair value of $98.8 million, after allocating $41.5 million of the proceeds to the embedded derivative features and the Series F Preferred Stock Warrants. Additionally, we recorded issuance costs of $12.2 million as a reduction to the allocated proceeds.

Current wording

We have determined that the Series F Preferred Stock should be classified as mezzanine equity because it is currently redeemable at the Series F Preferred Stockholder’s option. Additionally, we determined that certain features of the Series F Preferred Stock require bifurcation and separate accounting as embedded derivatives and that the Series F Preferred Stock Warrants should be accounted for as liabilities because they are not considered indexed to our stock since the potential number of common shares to be issued upon the exercise of such warrants will vary based on the amount of Series F Preferred Stock outstanding on March 26, 2026. On the date of issuance, in accordance with ASC 815, we recorded a liability of $25.5 million for the fair value of the Series F Preferred Stock embedded derivatives and a liability of $22.1 million for the fair value of the Series F Preferred Stock. As a result, on March 26, 2025, we recognized the Series F Preferred Stock in mezzanine equity based on its relative fair value of $92.6 million, after allocating $47.6 million of the proceeds to the embedded derivative features and the Series F Preferred Stock Warrants. Additionally, we recorded issuance costs of $12.2 million as a reduction to the allocated proceeds.

Previous wording

As of June 30, 2025, in accordance with ASC 480, we adjusted the value of the Series F Preferred Stock to reflect its maximum redemption amount of $164.6 million resulting in a $17.5 million decretion of the remeasurement of Series F Preferred Stock presented on the consolidated statement of operations for the three months ended June 30, 2025 and a $73.1 million accretion of the remeasurement of Series F Preferred Stock presented on the consolidated statement of operations for the six months ended June 30, 2025.

Current wording

As of September 30, 2025, in accordance with ASC 480, we adjusted the value of the Series F Preferred Stock to reflect its maximum redemption amount of $158.7 million resulting in a remeasurement of Series F Preferred Stock of $20.0 million and $93.1 million accretion of the presented on the condensed consolidated statement of operations for the three and nine months ended September 30, 2025, respectively.