Prairie Operating Co.
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
PROP$0.39-4.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-06.
0001493152-25-009423
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsFinancial Statements and Supplementary DataCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001140361-26-012036
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 135 previous paragraphs and 130 current paragraphs.
28 unchanged; 50 reworded; 52 added; 49 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
Recent Acquisitions
Current report
In July 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million, payable in cash subject to certain closing price adjustments. We closed the Edge Acquisition on July 3, 2025, which included 13 operated wells on approximately 11,300 net acres. We funded the transaction by borrowing under our Credit Facility with Citi. Additionally, the assets we acquired in the Edge Acquisition include the fully permitted Simpson pad, which we began developing in August 2025, as well as seven other fully permitted locations.
Current report
In August 2025, we completed the Third Exok Acquisition, acquiring approximately 5,000 net acres from Exok for $1.6 million.
Current report
In October 2025, we entered into agreements to acquire certain assets from Summit and Crown for a total purchase price of $2.3 million payable in cash, subject to certain closing adjustments. The Summit and Crown Acquisitions included the acquisition of five operated wells on approximately 3,400 net acres.
Current report
Bayswater Acquisition and Funding Transactions
Current report
On March 26, 2025, we entered into our Credit Facility, which amended and restated our existing reserve–based credit agreement with Citi. The Credit Facility provides for a maximum credit commitment of $1.0 billion and is scheduled to mature on March 26, 2029. Further, on March 26, 2025, we issued Common Stock in a public offering, resulting in proceeds of $41.4 million, net of $2.4 million of underwriting discounts and commissions and $3.7 million in issuance fees. Concurrently with the public offering, we issued the Series F Preferred Stock, resulting in approximately $136.1 million of net proceeds, after deducting the advisor fees and offering expenses.
Current report
At the closing of the Bayswater Acquisition on March 26, 2025, we (i) paid approximately $482.5 million in cash to Bayswater, $15.0 million of which was deposited in escrow pending the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and (ii) issued 3,656,099 shares of our Common Stock to Bayswater. We funded the cash portion of the purchase price for the Bayswater Acquisition with cash on hand, the proceeds from the issuance of Common Stock and the issuance of the Series F Preferred Stock, and borrowings under our Credit Facility. We completed the final settlement with Bayswater on October 15, 2025, resulting in a final consideration of $475.6 million. 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.
Current report
Drilling and Completion Activities
Current report
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 with initial production measured before any deductions for fuel, flare, or vented volumes (“Two–stream”) gross production per well of 475 Boe/d.
Current report
On April 28, 2025, we announced our plan to begin completions on nine previously drilled but uncompleted wells acquired in the 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 per well of 725 Boe/d.
Current report
On June 1, 2025, we moved the drilling rig to our Noble pad development in Weld County, which consists of seven wells. The Noble wells came online in November 2025 with initial average Two–stream gross production per well of 550 Boe/d.
Current report
In September 2025, we moved the drilling rig to our then–recently acquired Simpson pad development in Weld County, which consists of six wells. Three of the Simpson pad wells came online in December 2025 and the remainder came online in January 2026 with initial average Two–stream gross production per well of 500 Boe/d.
Current report
In December 2025, we moved the drilling rig to our Blehm pad and then our Schneider pad, both of which are in Weld County and consist of five wells each. Completion activities at the Blehm and Schneider pads are ongoing and first production is expected early in the second quarter of 2026. At the end of 2025, we moved the drilling rig to our Elder East and West pad, which consists of nine wells. Drilling at the Elder East and West pad is expected to be completed early in the second quarter of 2026.
Current report
At–the–Market Offering
Current report
On June 20, 2025, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Citigroup Global Markets Inc. and Truist Securities, Inc., as managers (together, the “Managers”). Pursuant to the agreement, we have the option to sell shares of Common Stock up to an aggregate offering price of $75.0 million through the Managers (the “ATM Offering”). The Common Stock sold under the ATM Offering, if any, will be made under our Registration Statement on Form S–3, which was declared effective on May 2, 2025, and the prospectus supplement dated June 20, 2025 relating to the ATM Offering filed with the SEC, in each case, as may be amended or supplemented from time to time.
Current report
We anticipate the net proceeds from the ATM Offering will be used for general corporate purposes, which may include, among other things, advancing our development and drilling program, repayment of existing indebtedness, or financing potential acquisition opportunities. Additionally, per the Series F Certificate of Designation, the Series F Preferred Stockholder can require us to use a portion of the net proceeds from sales of the ATM Offering to redeem a number of shares of the Series F Preferred Stock. As of December 31, 2025, we have not issued any shares under the ATM Offering.
Current report
On March 25, 2026, we and the Series F Preferred Stockholder entered into the Series F Preferred Stock Warrant Amendment, which, among other things, changes the issuance of the Series F Preferred Stock Warrants from the first anniversary of the issuance date of the Series F Preferred Stock to April 7, 2026. Additionally, the Series F Preferred Stock Warrant Amendment provides that we will pay the Series F Preferred Stockholder an aggregate amount equal to $3.0 million on April 6, 2026, unless the obligation to pay such fee has been waived by the Series F Preferred Stockholder in their sole discretion.
Current report
Recent Acquisitions
Current report
In July 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million payable in cash, subject to certain closing price adjustments. We closed the Edge Acquisition on July 3, 2025, which included 13 operated wells on approximately 11,300 net acres and funded the transaction by borrowing under our Credit Facility.
Current report
In August 2025, we completed the Third Exok Acquisition, acquiring approximately 5,000 net acres for $1.6 million.
Current report
In October 2025, we entered into agreements to acquire certain assets from Summit and Crown for a total purchase price of $2.3 million, subject to certain closing adjustments, payable in cash. The Summit and Crown Acquisitions included the acquisition of five operated wells on approximately 3,400 net acres.
Current report
Bayswater Acquisition
Current report
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. We completed the final settlement with Bayswater on October 15, 2025, which resulted in total consideration of $475.6 million.
Current report
NRO Acquisition
Current report
Revenue and Production. For the year ended December 31, 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 year ended December 31, 2025 includes the production and resulting revenue from the Bayswater Acquisition from March 26, 2025 through December 31, 2025. All of our production volumes and revenues for the year ended December 31, 2024 were derived from the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any oil revenue prior to the NRO Acquisition.
Current report
Depreciation, depletion, and amortization. For the year ended December 31, 2025, depreciation, depletion, and amortization (“DD&A”) expenses increased $48.5 million, compared to the year ended December 31, 2024. The increase in DD&A was largely attributable to increased production as a result of the Bayswater Acquisition, which closed on March 26, 2025, and our new drills which came online in the second half of 2025. 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 report
Abandonment and impairment of unproved properties. For the year ended December 31, 2025, we recorded $3.4 million of abandonment and impairment related to unproved properties, which reflects unproved locations that we have deemed non–core and allowed to expire. We did not record any abandonment and impairment related to unproved properties for the year ended December 31, 2024.
Current report
General and administrative expenses. For the year ended December 31, 2025, general and administrative expenses increased $20.0 million compared to the year ended December 31, 2024. This increase was partially attributable to incremental payroll expenses of $8.2 million and non–cash stock–based compensation expenses of $6.3 million, driven by increased headcount following the Bayswater Acquisition. Additionally, insurance, rent, and vehicle expense increased by $2.3 million following the Bayswater Acquisition and we incurred $1.6 million of transition service agreement costs for the 6–month period following the close of the Bayswater Acquisition.
Current report
Interest expense. For the year ended December 31, 2025, interest expense increased $27.4 million compared to the year ended December 31, 2024, primarily driven by interest on the Credit Facility, the outstanding borrowing of which increased to fund the Bayswater Acquisition in March 2025. Refer to Liquidity and Capital Resources – Significant Sources of Liquidity below for a further discussion of the Credit Facility.
Current report
Gain (loss) on derivatives, net. For the year ended December 31, 2025, gain on derivatives, net was $79.2 million compared to a loss on derivatives, net of $4.4 million for the year ended December 31, 2024. The change in gain (loss) on derivatives, net was primarily due to a $62.2 million increase in unrealized gain on derivatives driven by favourable changes in the fair value of our open derivative contracts as of December 31, 2025. Additionally, our realized gain on derivatives increased by $21.4 million for the year ended December 31, 2025 due to favourable changes in cash settlements during the period compared to the year ended December 31, 2024. Refer to Factors Affecting the Comparability of Financial Results – Commodity Prices above for a further discussion of our derivative contracts.
Current report
Income tax expense
Current report
For the year ended December 31, 2025, we recognized deferred income tax expense of $21.7 million, resulting in an effective tax rate of 40.3%. We did not recognize any income tax expense for the year ended December 31, 2024. The overall change in our effective tax rate for the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily driven by the removal of a previously recorded valuation allowance resulting from cumulative income and positive evidence that these tax attributes are now more–likely–than–not realized.
Current report
Our E&P activities will require us to make significant operating and capital expenditures. In 2024, our primary sources of liquidity were proceeds from the issuances of Common Stock, the Senior Convertible Note, and the Subordinated Note, which were primarily used to fund the NRO Acquisition in October 2024. Additionally, in December 2024, our Form S–3 registration statement became effective, and we entered into a reserve–based Credit Facility with Citi. Early in 2025, we amended and restated our existing reserve–based credit agreement with Citi, which now has a maximum credit commitment of $1.0 billion and is scheduled to mature on March 26, 2029. Further, in March 2025, we issued Common Stock in a public offering, resulting in proceeds of $41.4 million, net of $2.4 million of underwriting discounts and commissions and $3.7 million in issuance fees. Concurrently with the public offering, we issued the Series F Preferred Stock, resulting in approximately $136.1 million of net proceeds, after deducting the advisor fees and offering expenses. We used cash on hand, the proceeds from the Common Stock and Series F Preferred Stock issuances, and borrowings under the Credit Facility to close the Bayswater Acquisition on March 26, 2025. At the closing of the Bayswater Acquisition, we paid Bayswater approximately $482.5 million in cash, $15.0 million of which was deposited in escrow pending the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and issued 3,656,099 shares of Common Stock to Bayswater.
Current report
Additionally, on June 20, 2025, we entered into the ATM Offering, which allows us to sell shares of our Common Stock up to an aggregate offering price of $75.0 million through the Managers. Sales of the shares of Common Stock sold under the ATM Offering, if any, will be made under our Registration Statement on Form S–3, which was declared effective by the SEC on May 2, 2025, and the prospectus supplement dated June 20, 2025 relating to the ATM Offering filed with the SEC, in each case, as may be amended or supplemented from time to time. As of December 31, 2025, we have not issued any shares under the ATM Offering.
Current report
As of December 31, 2025 and 2024, we had $366.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $109.0 million and $7.2 million, respectively, of availability for future borrowings and letters of credit. Additionally, as of December 31, 2025 and 2024, we had $12.6 million and $1.7 million, respectively, of unamortized deferred financing costs associated with our Credit Facility, which are presented as debt issuance costs, net on the consolidated balance sheets. These costs will be amortized to interest expense on the accompanying consolidated statements of operations on a straight–line basis over the life of the Credit Facility.
Current report
In December 2024, 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 report
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 December 31, 2025. As a result, we recognized a loss on adjustment to fair value – embedded derivatives, debt, and warrants of $5.5 million on our consolidated statement of operations for the year ended December 31, 2025.
Current report
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 determined that changes to the Subordinated Note included in the payoff letter qualify as an extinguishment of debt and 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 December 31, 2025.
Current report
Series F Preferred Stock and Series F Preferred Stock Warrants. On March 24, 2025, we entered into a securities purchase agreement with the Series F Preferred Stockholder, pursuant to which the Series F Preferred Stockholder agreed to purchase for an aggregate of $148.3 million (i) 148,250 shares of Series F Preferred Stock, with a stated value of $1,000 per share (the “Stated Value”), convertible into shares of Common Stock and (ii) the Series F Preferred Stock Warrants to purchase shares of Common Stock, subject to the satisfaction of certain conditions. The Series F Preferred Offering closed on March 26, 2025, and we received approximately $136.1 million of net proceeds, after deducting advisor fees and offering expenses. We used the proceeds from the Series F Preferred Offering to fund a portion of the Bayswater Acquisition, which closed on March 26, 2025. On March 25, 2026, we and the Series F Preferred Stockholder entered into the Series F Preferred Stock Warrant Amendment, which, among other things, changes the issuance date of the Series F Preferred Stock Warrants from the first anniversary of the issuance date of the Series F Preferred Stock to April 7, 2026.
Current report
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, which began 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 Credit Facility the dividend rate will increase to 25%. We elected to pay the June 1, September 1, and December 1, 2025 dividends by issuing the Series F Preferred Stockholder 1,305,000, 1,806,000, and 2,421,000 shares, respectively, of Common Stock.
Showing the first 40 of 52 passages. Open the source sections for the rest.
Removed paragraphs (49)
Previous report
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report
Overview
Previous report
As of December 31, 2024, our E&P assets consist of our Central Weld Assets, Genesis and Genesis Bolt–on Assets, and the Exok Option Purchase assets. Our Central Weld Assets were acquired from NRO in October 2024 and included 26 revenue producing oil and natural gas wells. Our total Genesis Assets include approximately 18,100 net leasehold acres in, on and under approximately 31,000 gross acres and our Central Weld Assets include approximately 5,640 net leasehold acres, on and under approximately 6,000 gross acres. We commenced drilling wells on our Genesis Bolt-on Assets in the third quarter of 2024 and all eight wells began producing in February 2025.
Previous report
The Bayswater Acquisition has an outside closing date of March 15, 2025, subject to customary closing conditions, with an economic effective date of December 1, 2024. However, there can be no assurance that a closing will occur. The Bayswater PSA contains customary representations, warranties and covenants of us and Bayswater for a transaction of this nature.
Previous report
Development Program Launch
Previous report
During the third quarter of 2024, we commenced our initial drilling program, starting with an 8-well pad on Shelduck South, part of the Genesis Bolt–on Assets acquired in February 2024. The Shelduck South development consists of eight two-mile lateral wells across 1,115 gross leasehold acres, targeting the Niobrara B and C formations. We spud our first well on September 5, 2024 and all eight wells began producing in February 2025.
Previous report
On January 11, 2024, we entered into the NRO Agreement to acquire the Central Weld Assets, located in the DJ Basin in Weld County, Colorado for total consideration of $94.5 million, subject to certain closing price adjustments and other customary closing conditions. The Purchase Price consisted of $83.0 million in cash and $11.5 million in deferred cash payments. Pursuant to the NRO Agreement, we deposited $9.0 million of the Purchase Price into an escrow account on January 11, 2024.
Previous report
On August 15, 2024, we and NRO agreed to amend certain terms of the NRO Agreement, pursuant to which, total consideration of the NRO Acquisition was reduced to $84.5 million in cash, subject to certain closing price adjustments and other customary closing conditions, and the parties agreed to remove the deferred cash payments. Additionally on August 15, 2024, $6.0 million of the Deposit was released to NRO and the remaining $3.0 million was returned to us.
Previous report
Credit Facility
Previous report
As of December 31, 2024, we had $28.0 million of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $7.2 million of availability for future borrowings and letters of credit. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the Credit Facility. On February 3, 2025, we entered into the First Amendment to the Credit Facility Agreement (the “First Amendment”), which among other things, increased the borrowing base and the aggregate elected commitments to $60.0 million.
Previous report
Standby Equity Purchase Agreement
Previous report
Senior Convertible Note
Previous report
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. Additionally, in January and February 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the Senior Convertible Note.
Previous report
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. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the Subordinated Note and Subordinated Note Warrants.
Previous report
As discussed above, on January 11, 2024, we entered into the NRO Agreement to acquire the Central Weld Assets, located in the DJ Basin in Weld County, Colorado for total consideration of $94.5 million, subject to certain closing price adjustments and other customary closing conditions. Pursuant to the NRO Agreement, we deposited $9.0 million of the Purchase Price into an escrow account on January 11, 2024.
Previous report
On August 15, 2024, we and NRO agreed to amend certain terms of the NRO Agreement, pursuant to which, total consideration of the NRO Acquisition was reduced to $84.5 million in cash, subject to certain closing price adjustments and other customary closing conditions. Additionally on August 15, 2024, $6.0 million of the Deposit was released to NRO and the remaining $3.0 million was returned to us.
Previous report
On October 1, 2024, we closed the NRO Acquisition and paid $49.6 million to the sellers in cash, using cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance of the Senior Convertible Note. We completed the final settlement with NRO in December 2024, which resulted in a final purchase price of $55.5 million.
Previous report
Oil revenue and production. For the year ended December 31, 2024, our oil production was 96.1 MBbls resulting in oil revenue of $6.6 million and an average realized price of $68.60 per barrel. All of our oil revenue for the year ended December 31, 2024 was derived from the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any oil revenue prior to the NRO Acquisition.
Previous report
Natural gas revenue and production. For the year ended December 31, 2024, our natural gas production was 245.1 MMcf resulting in natural gas revenue of $0.6 million and an average realized price of $2.25 per MMcf. All of our natural gas revenue for the year ended December 31, 2024 was derived from the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any natural gas revenue prior to the NRO Acquisition.
Previous report
NGL revenue and production. For the year ended December 31, 2024, our NGL production was 33.0 MBbls resulting in NGL revenue of $0.8 million and an average realized price of $24.03 per MBbl. All of our NGL revenue for the year ended December 31, 2024 was derived from the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any NGL revenue prior to the NRO Acquisition.
Previous report
NM: A per Boe calculation is not meaningful due to a zero-value denominator.
Previous report
Depreciation, depletion, and amortization. For the year ended December 31, 2024, depreciation, depletion, and amortization (“DD&A”) expenses were $0.4 million, the majority of which related to DD&A for the NRO Acquisition wells.
Previous report
Exploration expenses. For the year ended December 31, 2024, exploration expenses increased $0.5 million compared to the year ended December 31, 2023. These increases were driven by delay rental costs incurred on oil and gas leases during the year ended December 31, 2024, which were not incurred during the same periods of 2023.
Previous report
*General and administrative expenses.*For the year ended December 31, 2024, general and administrative expenses increased $14.3 million compared to the year ended December 31, 2023. This increase aligns with the growth of our E&P business during the year ended December 31, 2024 and was primarily driven by incremental stock–based compensation of $5.7 million, employee and benefit expenses of $4.0 million, legal and accounting costs of $2.4 million, financing commitment fees of $0.6 million, investor relations costs of $0.4 million, and insurance and rent costs of $0.4 million.
Previous report
Interest expense.For the year ended December 31, 2024, interest expense increased $1.0 million compared to the year ended December 31, 2023, primarily driven by the interest and premium paid for the partial redemption of the Senior Convertible Note and the interest and premium paid for the partial redemption of the Subordinated Note. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the Senior Convertible Note and the Subordinated Note.
Previous report
Loss on derivatives, net.For the year ended December 31, 2024, we recognized a $4.4 million unrealized loss, net on derivatives related to the change in fair value of our derivative contracts, which we entered into in December 2024 pursuant to our Credit Facility Agreement. We did not have any outstanding derivative contracts during the year ended December 31, 2023, therefore, we did not recognize a 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.
Previous report
For the year ended December 31, 2023, the loss on adjustment to fair value – debt and warrants reflects the fair value adjustments of $39.8 million for the portion of the Series D A Warrants, $3.8 million for the senior secured convertible debentures, which were converted into Common Stock in October 2023, and $1.5 million for the shares of Common Stock which we were obligated to issue as a result of the Merger and related transactions, which were fully issued in September 2023.
Previous report
Liquidated damages. For the year ended December 31, 2023, we recognized liquidated damages expense of $0.5 million due to the registration statement registering the resale of certain shares of our Common Stock and the shares of Common Stock underlying the Series D Preferred Stock and Series D PIPE Warrants not being declared effective within the timeframe required under the related registration rights agreement. We did not recognize any liquidated damage expense during the year ended December 31, 2024.
Previous report
Overview
Previous report
Our E&P activities will require us to make significant operating and capital expenditures. In 2023, our primary sources of liquidity were the proceeds from the Series D PIPE and the Series E PIPE, which funded the purchase of the initial Genesis Assets and working capital, as well as proceeds from the exercise of warrants, which funded, among other things, working capital and the deposit for the NRO Acquisition in 2024. We commenced drilling wells on our Genesis Bolt-on Assets in the third quarter of 2024 and those wells began producing in February 2025.
Previous report
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. Additionally, in January and February 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock.
Previous report
Our proved oil, natural gas, and NGL reserve estimates as of December 31, 2024 and associated future net cash flows included in this Annual Report have been prepared by CG&A, independent third-party reserve engineers, in accordance with the rules and regulations of the SEC in Regulation S-X, Rule 4-10.
Previous report
As discussed further below, our estimates of proved reserves materially impact calculated depletion expense each period; therefore, if our estimates of total proved reserves decrease, the rate at which we record depletion expense will increase, reducing earnings.
Previous report
In successful efforts accounting, exploratory drilling costs are initially capitalized, or suspended, pending the determination of proved reserves. If proved reserves are found, drilling costs remain capitalized and are classified as proved properties. If proved reserves are not found, the costs related to unsuccessful wells are charged to exploration expense. For exploratory wells that find reserves that cannot be classified as proved when drilling is completed, costs continue to be capitalized as suspended exploratory drilling costs if there have been sufficient reserves found to justify completion as a producing well and sufficient progress is being made in assessing the reserves and the economic and operational viability of the project. If we determine that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some instances, this determination may take longer than one year. We review the status of all suspended exploratory drilling costs quarterly. Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of natural gas and oil, are capitalized.
Previous report
Proceeds from the sales of individual oil and natural gas properties and the capitalized costs of individual properties sold or abandoned are credited and charged, respectively, to accumulated depreciation, depletion and amortization, if doing so does not materially impact the depletion rate of an amortization base. Generally, no gain or loss is recognized until an entire amortization base is sold. However, a gain or loss is recognized from the sale of less than an entire amortization base if the disposition is significant enough to materially impact the depletion rate of the remaining properties in the amortization base.
Previous report
Derivative Instruments
Previous report
We utilize commodity derivative instruments to reduce our exposure to crude oil and natural gas price volatility for a portion of our estimated production from its proved, developed, producing oil and natural gas properties. The fair values of our derivative instruments are measured on a recurring basis using a third-party industry-standard pricing model.
Previous report
We have not designated any of its derivative instruments as hedges for accounting purposes; therefore, the aggregate net gains and losses resulting from changes in the fair values of its outstanding derivatives, the settlement of derivative instruments, and any net proceeds or payments related to the early termination of derivative contracts during the period are recognized as net gain or loss on derivatives, as applicable, in the consolidated statements of operations.
Previous report
Asset Retirement Obligations
Previous report
Our oil and natural gas properties include estimates of future expenditures to P&A wells, pipelines, platforms, and other related facilities after the reserves have been depleted. We recognize the present value of the asset retirement obligation costs as a liability when it is incurred or assumed (acquired) and an increase to its capitalized oil and natural gas properties. The capitalized asset retirement obligation costs are depleted over the productive lives of the oil and natural gas properties while the asset retirement obligation liability is accreted to the expected settlement value over the productive lives of the oil and natural gas properties. Upon settlement, the difference between the recorded liability amount and the amount of costs incurred will be recognized as an adjustment to the capitalized cost of oil and natural gas properties.
Showing the first 40 of 49 passages. Open the source sections for the rest.
Reworded paragraphs (50)
Previous wording
We are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets and operations are strategically located in the oil region of rural Weld County, within the DJ Basin. We believe the DJ Basin to be one of the premier resource plays in the U.S. Weld County boasts some of the lowest break-even prices in the U.S., and has a long production history that has proven and consistent results. The productivity of this resource is demonstrated by the integral role that Weld County holds in Colorado’s energy economy, having produced 82% of Colorado’s oil production as of December 2024.
Current wording
We are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets and operations are strategically located in the oil region of rural Weld County, Colorado, within the DJ Basin. We believe the DJ Basin to be one of the premier resource plays in the U.S., as Weld County boasts some of the lowest break–even prices in the U.S., and has a long production history which has proven and consistent results. The productivity of this resource is demonstrated by the integral role that Weld County holds in Colorado’s energy economy, having produced approximately 83% of Colorado’s oil production to date.
Previous wording
We seek 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 also seek to grow our 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.
Current wording
As of December 31, 2025, our assets included approximately 68,000 net leasehold acres in, on and under approximately 98,200 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, the Edge Acquisition, which closed in July 2025, and the Summit and Crown acquisitions, which closed in October 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 February 6, 2025, we and certain of our subsidiaries entered into the Bayswater PSA with Bayswater, pursuant to which we agreed to acquire the Bayswater Assets from Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments.
Current wording
On February 6, 2025, we and certain of our subsidiaries entered into a purchase and sale agreement with Bayswater, pursuant to which we and certain of our subsidiaries agreed to acquire the Bayswater Assets from Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments.
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 Credit Facility 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 and natural gas prices on our cash flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil and natural gas prices. Further, we could sustain losses to the extent our oil and natural gas derivative contract prices are lower than market prices and, conversely, we could recognize gains to the extent our oil and natural gas 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 Credit Facility, 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 hedge 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 of December 31, 2024, we had the following outstanding crude oil and natural gas derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate and NYMEX Henry Hub, respectively:
Current wording
As of December 31, 2025, we had the following outstanding crude oil, natural gas, and NGL derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate, NYMEX Henry Hub, and Mount Belvieu OPIS, respectively:
Previous wording
On October 1, 2024, we closed the NRO Acquisition and paid $49.6 million to the sellers in cash, using cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance of the Senior Convertible Note. We completed the final settlement with NRO in December 2024, which resulted in a final purchase price of $55.5 million.
Current wording
On January 11, 2024, we and one of our subsidiaries entered into the NRO Agreement to acquire the assets of NRO. On October 1, 2024, we closed the NRO Acquisition and paid $49.6 million to NRO in cash, using cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance of a $15.0 million convertible promissory note (the “Senior Convertible Note”) to YA II PN, LTD., a Cayman Islands exempt limited company (“Yorkville”).
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 December 31, 2024, we have received $0.3 million of the Deferred Purchase Price.
Current wording
We acquired cryptocurrency mining operations in May 2023. On January 23, 2024, we sold all of our cryptocurrency miners for consideration consisting of (i) $1.0 million in cash and (ii) $1.0 million in deferred cash payments (the “Deferred Purchase Price”), to be paid out of (a) 20% of the monthly net revenues received by the buyer associated with or otherwise attributable to the cryptocurrency miners 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 cryptocurrency miners until the aggregate amount of such payments equals the Deferred Purchase Price, plus accrued interest (collectively, the “Crypto Sale”). 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 sales price for the years indicated:
Previous wording
The following table presents the components of our operating expenses for the periods indicated:
Current wording
The following table presents the components of our operating expenses for the years indicated:
Previous wording
Lease operating expenses. For the year ended December 31, 2024, lease operating expenses (“LOE”) increased $1.3 million compared to the year ended December 31, 2023, fully driven by LOE recognized for the properties acquired in the NRO Acquisition, which closed on October 1, 2024.
Current wording
Lease operating expenses. For the year ended December 31, 2025, lease operating expenses (“LOE”) increased $40.1 million compared to the year ended December 31, 2024. The increase in LOE was primarily driven by increased production as a result of the Bayswater Acquisition, which closed on March 26, 2025. 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 year ended December 31, 2024, gathering, transportation, and processing expenses increased $0.9 million compared to the year ended December 31, 2023, fully driven by the gathering, transportation, and processing expenses recognized for the properties acquired in the NRO Acquisition, which closed on October 1, 2024.
Current wording
Transportation and processing expenses. For the year ended December 31, 2025, transportation and processing expenses increased $8.0 million compared to the year ended December 31, 2024. This increase was primarily attributable to increased production driven by the Bayswater Acquisition, which closed on March 26, 2025. 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 year ended December 31, 2024, ad valorem and production taxes increased $0.6 million compared to the year ended December 31, 2023, fully driven by the ad valorem and production taxes recognized for the properties acquired in the NRO Acquisition, which closed on October 1, 2024.
Current wording
Ad valorem and production taxes. For the year ended December 31, 2025, ad valorem and production taxes increased $20.6 million compared to the year ended December 31, 2024. The increase in ad valorem and production taxes was primarily driven by increased production as a result of the Bayswater Acquisition, which closed on March 26, 2025. We did not incur any ad valorem and production taxes prior to the closing of the NRO Acquisition on October 1, 2024.
Previous wording
The following table presents the components of our other expenses for the periods indicated:
Current wording
The following table presents the components of our other expenses for the years indicated:
Previous wording
Loss on adjustment to fair value – debt and warrants. We have multiple financial instruments that are 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 – debt and warrants on our consolidated statement of operations for the period. For the year ended December 31, 2024, the loss on adjustment to fair value – debt and warrants reflects the fair value adjustments of $0.8 million for the SEPA, $2.1 million for the Senior Convertible Note, $1.1 million for the Subordinated Note, and $1.4 million for the Subordinated Note Warrants recognized during the period. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the SEPA, the Senior Convertible Note and the Subordinated Note.
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 consolidated statements of operations for the period. For the year ended December 31, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects losses on fair value of $68.0 million for the Series F Preferred Stock Warrants, $5.5 million for the Senior Convertible Note, and $0.1 million for the subordinated promissory note (the “Subordinated Note”) held by First Idea Ventures LLC and The Hideaway Entertainment LLC (together, the “Noteholders”), which were partially offset by gains on fair value of $9.6 million for the Series F Preferred embedded derivatives, $3.9 million for the warrants issued by the Company to the Noteholders (the “Subordinated Note Warrants”), and $0.8 million for the Standby Equity Purchase Agreement (the “SEPA”) recognized during the period. For the year ended December 31, 2024, the loss on adjustment to fair value – debt and warrants reflects the fair value adjustments of $0.8 million for the SEPA, $2.1 million for the Senior Convertible Note, $1.1 million for the Subordinated Note, and $1.4 million for the Subordinated Note Warrants 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, the Series F Preferred Stock embedded derivatives, and the Series F Preferred Stock Warrants.
Previous wording
*Loss on debt issuance.*For the year ended December 31, 2024, the loss on debt issuance of $3.0 million reflects the loss recognized for the issuance of the Subordinated Note and the Subordinated Note Warrants. As discussed above, we have elected the fair value option to account for both the Subordinated Note and the Subordinated Note Warrants and engaged a third-party to determine the fair value of both instruments at issuance. As of December 31, 2024, the total fair value of the Subordinated Note and the Subordinated Note Warrants exceeded the proceeds of $5.0 million, as a result, we have recognized a loss on debt issuance of $3.0 million on our consolidated statements of operations for the year ended December 31, 2024.
Current wording
Loss on debt issuance. At the time of issuance, we elected the fair value option to account for both the Subordinated Note and the Subordinated Note Warrants and engaged a third–party valuation expert to assist in preparing the fair value of both instruments at issuance. As of December 31, 2024, the total fair value of the Subordinated Note and the Subordinated Note Warrants exceeded the proceeds of $5.0 million, as a result, we have recognized a loss on debt issuance of $3.0 million on our consolidated statements of operations for the year ended December 31, 2024. We did not recognize a loss on debt issuance during the year ended December 31, 2025.
Previous wording
Interest income and other. For the year ended December 31, 2024, interest income and other increased $0.3 million compared to the year ended December 31, 2023, primarily driven by higher average cash balances in the current period.
Current wording
Interest income and other. For the year ended December 31, 2025, interest income and other increased $0.2 million compared to the year ended December 31, 2024, primarily driven by higher average cash balances in the current period.
Previous wording
The following table presents the components of our net loss from discontinued operations for the periods indicated:
Current wording
The following table presents the components of our net loss from discontinued operations for the years indicated:
Previous wording
For the year ended December 31, 2024, the net loss from discontinued operations decreased $16.0 million compared to the year ended December 31, 2023. As discussed above, we completed the Crypto Sale in January 2024; therefore, we did not have any cryptocurrency mining revenue or related expenses during the majority of the year ended December 31, 2024. However, we did recognize a $1.1 million loss on the sale of cryptocurrency mining equipment. Additionally, during the year ended December 31, 2023, we recognized $17.1 million of impairment of cryptocurrency mining equipment to write off the excess of the allocated purchase price to the cryptocurrency assets which were over the fair value of the acquired net assets and to subsequently write off shipping and customs fees incurred on miners after the Merger. Refer toFactors Affecting the Comparability of Financial Results – Crypto Sale above for a further discussion of the Crypto Sale.
Current wording
For the year ended December 31, 2025, the net loss from discontinued operations decreased $1.0 million compared to the year ended December 31, 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 year ended December 31, 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 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 issuance of debt, non-cash loss on adjustment to fair value – debt and warrants, and loss on unrealized derivatives, all as applicable. We adjust net 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, abandonment and impairment of unproved properties, non–cash stock–based compensation, interest expense, 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
The following table presents the reconciliation of Net loss from continuing operations to Adjusted EBITDA for the periods indicated:
Current wording
The following table presents the reconciliation of Net income (loss) from continuing operations to Adjusted EBITDA for the years indicated:
Previous wording
We believe that the presentation of PV-10 is relevant and useful to our investors as a supplemental disclosure to the Standardized Measure, or after-tax amount, because it presents the discounted future net cash flows attributable to our reserves before considering future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV-10 is based on prices and discount factors that are consistent for all companies.
Current wording
We believe that the presentation of PV–10 is relevant and useful to our investors as a supplemental disclosure to the Standardized Measure, or after–tax amount, because it presents the discounted future net cash flows attributable to our reserves before considering future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV–10 is based on prices and discount factors that are consistent for all companies. PV–10 has limitations as a financial measure since it excludes future income taxes and should not be considered as an alternative to, or more meaningful than, Standardized Measure calculated in accordance with GAAP.
Previous wording
The following table presents the reconciliation of the Standardized Measure to the PV-10 of our estimated proved reserves for the periods indicated:
Current wording
The following table presents the reconciliation of the Standardized Measure to the PV–10 of our estimated proved reserves for the years indicated:
Previous wording
Additionally, during the third quarter of 2024, we raised approximately $35.0 million in cash by issuing Common Stock, the Senior Convertible Note, and the Subordinated Note. On October 1, 2024, we used cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance of the Senior Convertible Note to fund the closing of the NRO Acquisition. On December 16, 2024, we entered into a reserve-based Credit Facility with Citi and borrowed $28.0 million to help fund our working capital needs. Management expects that our cash balance, expected revenues from the producing NRO wells and newly producing Shelduck wells, and liquidity available under the SEPA and Credit Facility and potential offerings under the effective Form S-3 registration statement will be sufficient to fund our development program and operations.
Current wording
Management expects that our cash balance, expected revenues from the producing Bayswater wells, and liquidity available under the Credit Facility, proceeds from the ATM Offering, and potential offerings under our effective Form S–3 registration statement will be sufficient to fund our development program and operations.
Previous wording
Our development program is dependent upon our cash flow from operations generated from our assets and our ability to obtain additional financing through our SEPA and Credit Facility. Additionally, we could obtain additional financing through public and private capital markets; however, the availability of additional capital would be subject to numerous factors outside of our control including prices of oil and natural gas and the overall health of the U.S. and global economic environments. There can be no assurance that we will be able to obtain such additional capital. The amount and allocation of future capital expenditures will depend upon a number of factors, including the amount and timing of cash flows from operations, investing and financing activities, and the timing and cost of additional capital sources.
Current wording
Our development program is dependent upon our cash flow from operations generated from our assets and our ability to obtain additional financing through our Credit Facility. Additionally, we could obtain additional financing through public and private capital markets; however, the availability of additional capital would be subject to numerous factors outside of our control including prices of oil and natural gas and the overall health of the U.S. and global economic environments. There can be no assurance that we will be able to obtain such additional capital. The amount and allocation of future capital expenditures will depend upon a number of factors, including the amount and timing of cash flows from operations, investing and financing activities, and the timing and cost of additional capital sources.
Previous wording
We currently plan to be the operator on substantially all of our acreage. As a result, we anticipate that the timing and level of our capital spending will largely be discretionary and within our control. We could choose to defer a portion of our planned capital expenditures depending on a variety of factors, including, but not limited to, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs, the level of participation by other working interest owners, the success of our drilling activities, prevailing and anticipated prices for oil, natural gas, and NGLs, the availability of necessary equipment, infrastructure and capital.
Current wording
We currently plan to be the operator on substantially all of our acreage. As a result, we anticipate that the timing and level of our capital spending will largely be discretionary and within our control. We could choose to defer a portion of our planned capital expenditures depending on a variety of factors, including, but not limited to, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs, the level of participation by other working interest owners, the success of our drilling activities, prevailing and anticipated prices for oil, natural gas, and NGLs, and the availability of necessary equipment, infrastructure and capital.
Previous wording
We define working capital as current assets less current liabilities. As of December 31, 2024, we had a working capital deficit of $44.7 million and cash and cash equivalents of $5.2 million and as of December 31, 2023, we had working capital of $8.1 million and cash and cash equivalents of $13.0 million.
Current wording
We define working capital as current assets less current liabilities. As of December 31, 2025, we had a working capital deficit of $46.1 million and cash and cash equivalents of less than $0.1 million. 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 used in operating activities totaled $9.3 million and $11.9 million during the years ended December 31, 2024 and 2023, respectively. The $2.6 million change in our net cash used in operating activities was largely due to an increase in revenue recognized during the current period, partially offset by increased operating costs during the current period.
Current wording
Operating activities. Net cash provided by operating activities totalled $153.9 million for the year ended December 31, 2025, compared to cash used in operating activities of $9.3 million for the year ended December 31, 2024. The $163.3 million change in our net cash provided in operating activities was largely due to an increase in revenue recognized during the current period, partially offset by increased operating costs during the current period.
Previous wording
*Investing activities.*Net cash used in investing activities totaled $83.4 million and $23.7 million during the years ended December 31, 2024 and 2023, respectively. The $59.7 million increase in our net cash used in investing activities was largely driven by the NRO Acquisition, with a final purchase price of $55.5 million, and a $28.3 million increase in capital investments in oil and natural gas properties during the year ended December 31, 2024. These increases were partially offset by the $21.2 million invested in connection with the Exok Option Purchase during the year ended December 31, 2023.
Current wording
Investing activities. Net cash used in investing activities totalled $655.9 million and $83.4 million during the years ended December 31, 2025 and 2024, respectively. The $572.5 million increase in our net cash used in investing activities was largely driven by cash paid for the Bayswater Acquisition of $459.6 million. Additionally, our expenditures for the development of oil and natural gas properties increased $149.2 million during year ended December 31, 2025 compared to the year ended December 31, 2024.
Previous wording
*Financing activities.*Net cash provided by financing activities totaled $84.9 million for the year ended December 31, 2024, driven by proceeds of $33.5 million from the exercise of Series D B and Series E B Warrants, $28.0 million from borrowings under the Credit Facility, net of related issuance costs of $0.3 million, $15.0 million of proceeds from the issuance of Common Stock, net of related issuance costs of $5.0 million, $14.3 million of proceeds from the issuance of the Senior Convertible Note, partially offset by a repayment of $3.8 million, and $5.0 million of proceeds from the issuance of the Subordinated Note, partially offset by a repayment of $1.8 million. Net cash provided by financing activities totaled $48.6 million for the year ended December 31, 2023, which was comprised of proceeds from the issuance of the Series D PIPE of $17.4 million, net of related financing costs of $0.9 million, the issuance of the Series E PIPE of $20.0 million, net of related financing costs of $0.2 million, and proceeds of $12.5 million from the exercise of Series D B Warrants.
Current wording
Financing activities. Net cash provided by financing activities totalled $496.8 million for the year ended December 31, 2025, driven by $43.8 million from the issuance of Common Stock, net of related issuance costs of $3.9 million, $148.3 million from the issuance of the Series F Preferred Stock, net of related issuance costs of $12.2 million, $390.0 million from borrowings under the Credit Facility, net of related issuance costs of $14.1 million, offset with $52.0 million in repayments, and $0.6 million of cash received for option exercises during the period. These increases were partially offset by a $3.2 million repayment of the Subordinated Note. Net cash provided by financing activities totalled $84.9 million for the year ended December 31, 2024, driven by proceeds of $33.5 million from the exercise of Series D B and Series E B Warrants (as defined herein) throughout the year, $28.0 million from borrowings under the Credit Facility, net of related issuance costs of $0.3 million, $15.0 million of proceeds from the issuance of Common Stock, net of related issuance costs of $5.0 million, $14.3 million of proceeds from the issuance of the Senior Convertible Note, partially offset by a repayment of $3.8 million, and $5.0 million of proceeds from the issuance of the Subordinated Note, partially offset by a repayment of $1.8 million.
Previous wording
On December 16, 2024, we, as borrower, entered into a reserve-based credit agreement with Citibank, N.A. (“Citi”), as administrative agent and the financial institutions party thereto (the “Credit Facility Agreement”), which has a maximum credit commitment of $1.0 billion and is set to mature on December 16, 2026 (collectively, the “Credit Facility”). The Credit Facility is guaranteed by all of our restricted subsidiaries and is secured by a first-priority security interest on substantially all of our oil and natural gas properties and substantially all of our personal property assets, subject to customary exceptions. As of December 31, 2024, the Credit Facility had a borrowing base and an aggregate elected commitment of $44.0 million and a $5.0 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 a reserve–based credit agreement with Citi, as administrative agent and the financial institution party. On February 3, 2025, we entered into the first amendment to our reserve–based credit agreement with Citi, 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 Credit Facility, which amended and restated our existing reserve–based credit agreement with Citi. On June 6, 2025, we entered into the first amendment to our Credit Facility, 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 provides for a maximum credit commitment of $1.0 billion. As of December 31, 2025, the Credit Facility had a borrowing base of $475.0 million and an aggregate elected commitment of $475.0 million. The Credit Facility 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 immediately preceding January 1st and July 1st of each year, subject to certain interim redeterminations. The borrowing base of $475.0 million was reaffirmed with the mid–year 2025 redetermination.
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 Credit Facility Agreement) of no greater than 2.50 to 1.00 and a Current Ratio (as defined in the Credit Facility 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 Credit Facility agreement) of no greater than 3.00 to 1.00 and a Current Ratio (as defined in the Credit Facility agreement) of at least 1.00 to 1.00. As of December 31, 2025, we are in compliance with all covenants under the Credit Facility.
Previous wording
As of December 31, 2024, the Credit Facility had a borrowing base and an aggregate elected commitment of $44.0 million and a $5.0 million sublimit for the issuance of letters of credit. As of December 31, 2024, we had $28.0 million of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $7.2 million of availability for future borrowings and letters of credit. 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.
Current wording
As of December 31, 2025 and 2024, we had $366.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $109.0 million and $7.2 million, respectively, of availability for future borrowings and letters of credit. Additionally, as of December 31, 2025 and 2024, we had $12.6 million and $1.7 million, respectively, of unamortized deferred financing costs associated with our Credit Facility, which are presented as debt issuance costs, net on the consolidated balance sheets. These costs will be amortized to interest expense on the accompanying consolidated statements of operations on a straight–line basis over the life of the Credit Facility.
Previous wording
*Standby Equity Purchase Agreement.*On September 30, 2024, we entered into the SEPA with Yorkville, whereby, subject to certain conditions, we have the right, not the obligation, to sell to Yorkville up to $40.0 million shares of Common Stock, at any time and in an amount as specified in the applicable Advance Notice, during the commitment period commencing on the SEPA Effective Date and terminating on September 30, 2026. Each Advance by us under the SEPA is subject to a maximum limit equal to 100% of the aggregate volume traded of our Common Stock on the Nasdaq Stock Market during the five trading days immediately prior to the date of the Advance Notice. The shares will be issued and sold to Yorkville at a per share price equal to 97% of the lowest daily volume weighted average price of Common Stock for three consecutive trading days commencing on the trading day immediately following the Yorkville’s receipt of an Advance Notice. On September 30, 2024, pursuant to the SEPA, we paid Yorkville a structuring fee of $25,000 and a Commitment Fee by issuing Yorkville 100,000 shares of Common Stock.
Current wording
Standby Equity Purchase Agreement. On September 30, 2024, we entered into the SEPA with Yorkville, whereby, subject to certain conditions, we have the right, but not the obligation, to sell to Yorkville up to $40.0 million shares of Common Stock, at any time and in an amount as specified in the Company’s request (“Advance Notice”), during the commitment period commencing on September 30, 2024 (the “SEPA Effective Date”) and terminating on September 30, 2026. Each issuance and sale by us under the SEPA (each, an “Advance”) is subject to a maximum limit equal to 100% of the aggregate volume traded of our Common Stock on the Nasdaq Stock Market during the five trading days immediately prior to the date of the Advance Notice. The shares will be issued and sold to Yorkville at a per share price equal to 97% of the lowest daily volume weighted average price of Common Stock for three consecutive trading days commencing on the trading day immediately following Yorkville’s receipt of an Advance Notice. On September 30, 2024, pursuant to the SEPA, we paid Yorkville a structuring fee of $25,000 and a commitment fee of 100,000 shares of Common Stock.
Previous wording
Our right to sell shares to Yorkville under the SEPA was contingent upon us having an effective registration statement, which was declared effective by the SEC on December 20, 2024. Pursuant to the SEPA, we may issue up to a total of 4,198,343 shares of Common Stock within the cap of 19.99% of our issued and outstanding Common Stock as of the SEPA Effective Date through Advances under the SEPA, upon conversion of the Senior Convertible Note or through any other issuances of Common Stock thereunder. However, per the SEPA, we do not have access to issue an Advance Notice until the Pre-Paid Advance of $15.0 million (the Senior Convertible Note) is fully repaid. 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. Additionally, in January and February 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock.
Current wording
Pursuant to the SEPA, we may issue up to a total of 4,198,343 shares of Common Stock within the cap of 19.99% of our issued and outstanding Common Stock as of the SEPA Effective Date through Advances under the SEPA, upon conversion of the Senior Convertible Note or through any other issuances of Common Stock thereunder. However, per the Series F Certificate of Designation, we may only request an Advance Notice on the SEPA if the Series F Preferred Stock is fully converted or redeemed.
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. Additionally, the Commitment Fees and any issuance costs associated with the SEPA have been expensed to general and administrative expenses. As such, we have recorded the SEPA at its fair value of $0.8 million as of December 31, 2024 and recorded the corresponding $0.8 million loss on adjustment to fair value – debt and warrants for the year ended December 31, 2024.
Current wording
We have determined that the SEPA represents a derivative instrument pursuant to ASC Topic 815, Derivatives and Hedging(“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 cannot request an Advance Notice on the SEPA while the Series F Preferred Stock is outstanding, we have determined that the fair value of the SEPA as of December 31, 2025 is $0 million, resulting in a gain of $0.8 million, which is presented as part of loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statement of operations for the year ended December 31, 2025.
Previous wording
*Senior Convertible Note.*On September 30, 2024, Yorkville advanced the Pre-Paid Advance of $15.0 million to us and we issued the Senior Convertible Note, with an interest rate of 8.00% and a maturity date of September 30, 2025. Yorkville may convert the Pre-Paid Advance into shares of Common Stock at any time at the Conversion Price. We may, at any time, redeem all or a portion of the amounts outstanding under the Senior Convertible Note at 105% of the principal amount thereof, plus accrued and unpaid interest. Additionally, we may also convert the Pre-Paid Advance into shares of Common Stock at any time at the Conversion Price, however, a conversion requested by us would not result in us receiving cash but instead would be applied towards reducing the outstanding balance of the Senior Convertible Note.
Current wording
Senior Convertible Note. On September 30, 2024, Yorkville advanced an initial of $15.0 million (the “Pre–Paid Advance”) to us, and we issued the Senior Convertible Note to Yorkville, with an interest rate of 8.00% and a maturity date of September 30, 2025. Yorkville had the option to convert the Pre–Paid Advance into shares of Common Stock at any time at the conversion price set forth in the Senior Convertible Note agreement. We had the option, at any time, to redeem all or a portion of the amounts outstanding under the Senior Convertible Note at 105% of the principal amount thereof, plus accrued and unpaid interest. Additionally, we had the option to convert the Pre–Paid Advance into shares of Common Stock at any time at the conversion price set forth in the Senior Convertible Note agreement, however, a conversion requested by us would not result in us receiving cash but instead would be applied towards reducing the outstanding balance of the Senior Convertible Note.
Previous wording
We have determined that certain features of the Senior Convertible Note require bifurcation and separate accounting as embedded derivatives and have elected the fair value option to account for the Senior Convertible Note; therefore, in accordance with ASC 815, we have recorded the Senior Convertible Note at fair value. As of December 31, 2024, the fair value of the Senior Convertible Note was $12.6 million, which resulted in a loss on adjustment to fair value – debt and warrants of $2.1 million for the year ended December 31, 2024.
Current wording
On the issuance date of the Senior Convertible Note, we determined that certain features of the Senior Convertible Note required bifurcation and separate accounting as embedded derivatives and elected the fair value option to account for the Senior Convertible Note; therefore, in accordance with ASC 815, we recorded the Senior Convertible Note at fair value.
Previous wording
*Subordinated Promissory Note and Subordinated Note Warrants.*On September 30, 2024, we entered into the Subordinated Note with the Noteholders, First Idea Ventures LLC and The Hideaway Entertainment LLC, in a principal amount of $5.0 million, with a maturity of December 31, 2025. 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 sheet as of 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 consolidated balance sheets as of December 31, 2025 and 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, 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
Pursuant to the terms of the Subordinated Note, we issued the Subordinated Note Warrants to purchase up to 1,141,552 shares of Common Stock to the Noteholders, vesting in tranches based on the date of repayment of the Subordinated Note. As of December 31, 2024, Subordinated Note Warrants providing the right to purchase 570,778 shares of Common Stock had vested and were outstanding.
Current wording
Pursuant to the terms of the Subordinated Note, we issued the Subordinated Note Warrants to purchase up to 1,141,552 shares of Common Stock to the Noteholders, which vest in tranches based on the date of repayment of the Subordinated Note. As of December 31, 2025 and 2024, Subordinated Note Warrants providing the right to purchase 856,165 shares and 570,778 shares, respectively, of Common Stock had vested and were outstanding.
Previous wording
We have determined that certain features of the Subordinated Note require bifurcation and separate accounting as embedded derivatives and have elected the fair value option to account for the Subordinated Note; therefore, in accordance with ASC 815, we have recorded the Subordinated Note at fair value and will remeasure the fair value each reporting period with changes in fair value recognized in earnings. As of December 31, 2024, the fair value of the Subordinated Note is $4.6 million, which resulted in a loss on adjustment to fair value – debt and warrants of $1.1 million for the year ended December 31, 2024.
Current wording
At the time of issuance, we determined that certain features of the Subordinated Note and the Subordinated Note Warrants required bifurcation and separate accounting as embedded derivatives and elected the fair value option to account for the Subordinated Note and the Subordinated Note Warrants; therefore, in accordance with ASC 815, we recorded the Subordinated Note and the Subordinated Note Warrants at fair value and remeasured the fair value each reporting period with changes in fair value recognized in earnings. As of December 31, 2024, the fair value of the Subordinated Note was $4.6 million.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
On September 30, 2024, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD., a Cayman Islands exempt limited company (“Yorkville”), whereby, subject to certain conditions, we have the right, not the obligation, to sell to Yorkville up to $40.0 million shares of Common Stock, at any time and in the amount as specified in the Company’s request (“Advance Notice”), during the commitment period commencing on September 30, 2024 (the “SEPA Effective Date”) and terminating on September 30, 2026. Each issuance and sale of shares by us to Yorkville pursuant to the SEPA (“Advance”) is subject to a maximum limit equal to 100% of the aggregate volume traded of our Common Stock on the Nasdaq Stock Market during the five trading days immediately prior to the date of the Advance Notice. The shares will be issued and sold to Yorkville at a per share price equal to 97% of the lowest daily volume weighted average price of Common Stock for three consecutive trading days commencing on the trading day immediately following Yorkville’s receipt of an Advance Notice. On September 30, 2024, pursuant to the SEPA, we paid Yorkville a structuring fee of $25,000 and a Commitment Fee by issuing Yorkville 100,000 shares of Common Stock. Our right to sell shares to Yorkville under the SEPA was contingent upon us having an effective registration statement, which was declared effective by the SEC on December 20, 2024. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow for a further discussion of the SEPA.
Previous report — wording carried elsewhere
On September 30, 2024, Yorkville advanced an initial $15.0 million (the “Pre-Paid Advance”) to us and we issued a convertible promissory note (the “Senior Convertible Note”), with an interest rate of 8.00% and a maturity date of September 30, 2025. Our obligations with respect to the Pre-Paid Advance and under the Senior Convertible Note are guaranteed by Prairie LLC, a subsidiary of the Company, and Prairie Holdco, a subsidiary of the Company, pursuant to a global guaranty agreement entered into by Prairie LLC and Prairie Holdco in favor of Yorkville on September 30, 2024. Yorkville may convert the Pre-Paid Advance into shares of Common Stock at any time at the Conversion Price. We may, at any time, redeem all or a portion of the amounts outstanding under the Senior Convertible Note at 105% of the principal amount thereof, plus accrued and unpaid interest.
Previous report — wording carried elsewhere
Subordinated Promissory Note and Subordinated Note Warrants
Previous report — wording carried elsewhere
On September 30, 2024, we entered into a subordinated promissory note (the “Subordinated Note”) with First Idea Ventures LLC and The Hideaway Entertainment LLC (together, the “Noteholders”), in a principal amount of $5.0 million, with a maturity of December 31, 2025. 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. Pursuant to the terms of the Subordinated Note, we issued to the Noteholders warrants (the “Subordinated Note Warrants”) to purchase up to 1,141,552 shares of Common Stock, vesting in tranches based on the date of repayment of the Subordinated Note.
Previous report — wording carried elsewhere
*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, which has a maximum credit commitment of $1.0 billion and is set to mature on December 16, 2026. The Credit Facility is guaranteed by all of our restricted subsidiaries and is secured by a first-priority security interest on substantially all of our oil and natural gas properties and substantially all of our personal property assets, subject to customary exceptions. 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 report — wording carried elsewhere
Oil, Natural Gas, and NGL Reserves and the Standardized Measure of Discounted Net Future Cash Flows
Previous report — wording carried elsewhere
We follow the successful efforts method of accounting for our oil and natural gas properties. Under this method, exploration costs such as exploratory geological and geophysical costs, expiration of unproved leasehold, delay rentals, and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead, and similar activities are also expensed as incurred. All property acquisition costs and development costs are capitalized when incurred.
Previous report — wording carried elsewhere
Item 8. Financial Statements and Supplementary Data