Prairie Operating Co.

Previous wording

The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 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 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.

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, Colorado, 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. As of December 31, 2024, our E&P assets included approximately 23,740 net leasehold acres in, on and under approximately 37,000 gross acres.

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 that the DJ Basin is 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 85% 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, such as the NRO Acquisition (as defined herein), which closed in October 2024, and the Bayswater Acquisition (as defined herein), 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 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.

Previous wording

On March 26, 2025, we amended and restated our Credit Facility Agreement. 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 March 31, 2025, the Amended & Restated Credit Agreement had a borrowing base of $475.0 million and an aggregate elected commitment of $475.0 million. 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 issued the Series F Preferred Stock, resulting in approximately $139.1 million of net proceeds, after deducting the advisor fees and estimated offering expenses.

Current wording

On March 26, 2025, we amended and restated our Credit Facility Agreement. 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. 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 issued the Series F Preferred Stock, resulting in approximately $137.2 million of net proceeds, after deducting the advisor fees and offering expenses.

Previous wording

We closed the Bayswater Acquisition on March 26, 2025, paying approximately $482.5 million in cash, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition, which Bayswater acquired and assign 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. 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. Refer toLiquidity and Capital Resources - Significant Sources of Liquiditybelow 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. We expect drilling operations to be completed early in the second quarter of 2025 and anticipate initial production to come online early 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. 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.

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 we anticipate these wells to come online by the end of the second quarter of 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.

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 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 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.

Previous wording

As of March 31, 2025, 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 June 30, 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

As discussed above, we closed the Bayswater Acquisition on March 26, 2025, for total cash consideration $482.5 million in cash, $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.

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.

Previous wording

For the three months ended March 31, 2025, the majority of our total production and revenues was attributable to properties acquired in the NRO Acquisition, which closed in October 2024, as well as incremental production and revenue from our recently completed capital projects. Additionally, our total production and revenues for the three months ended March 31, 2025 includes 6 days of revenue from the assets acquired from Bayswater on March 26, 2025. We did not have any production or revenue prior to the NRO Acquisition.

Current 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.

Previous wording

Lease operating expenses. For the three months ended March 31, 2025, lease operating expenses (“LOE”) increased $2.0 million compared to the same period of 2024. The increase in LOE was primarily driven by increased production as a result of our NRO Acquisition and Bayswater Acquisition, which closed on October 1, 2024 and March 26, 2025, 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 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.

Previous wording

Gathering, transportation, and processing expenses. For the three months ended March 31, 2025, gathering, transportation, and processing expenses increased $0.9 million compared to the same period of 2024. This increase was mostly attributable to increased production driven by our NRO Acquisition and Bayswater Acquisition, which closed on October 1, 2024 and March 26, 2025, 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

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.

Previous wording

Ad valorem and production taxes. For the three months ended March 31, 2025, ad valorem and production taxes increased $1.0 million compared to the same period of 2024. The increase in ad valorem and production taxes was mostly driven by increased production as a result of our NRO Acquisition and Bayswater Acquisition, which closed on October 1, 2024 and March 26, 2025, 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 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.

Previous wording

Depreciation, depletion, and amortization. For the three months ended March 31, 2025, depreciation, depletion, and amortization (“DD&A”) expenses increased $2.1 million compared to the same period of 2024. The increase in DD&A was largely attributable to increased production as a result of our NRO Acquisition and Bayswater Acquisition, which closed on October 1, 2024 and March 26, 2025, 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 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.

Previous wording

Exploration expenses. For the three months ended March 31, 2025, exploration expenses decreased $0.2 million compared to the three months ended March 31, 2024, primarily driven by decreased delay rental costs incurred on oil and gas leases during period.

Current wording

Exploration expenses. For the three and six months ended June 30, 2025 exploration expenses increased $0.4 million and $0.2 million, respectively, compared to the same periods of 2024, primarily driven by increased seismic costs incurred during the period.

Previous wording

Interest expense.For the three months ended March 31, 2025, interest expense increased $1.4 million compared to the three months ended March 31, 2024, mostly driven by interest on the Credit Facility incurred during the period. 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 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.

Previous wording

Loss on derivatives, net.For the three months ended March 31, 2025, the loss on derivatives, net was $0.9 million, largely attributable to an $0.8 million unfavourable change in cash settlements during the period, as well as a $0.1 million unfavourable change in the fair value of our open derivative contracts as of March 31, 2025. We did not have any outstanding derivative contracts during the three months ended March 31, 2024; 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.

Current 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.

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 March 31, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects losses on fair value of $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 $2.4 million for the Subordinated Note Warrants, $0.8 million for the SEPA, and $0.1 million for the Series F Preferred Stock embedded derivatives 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 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.

Previous wording

For the three months ended March 31, 2025, the net loss from discontinued operations decreased $1.0 million compared to the three months ended March 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 three months ended March 31, 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 Sale above for a further discussion of the Crypto Sale.

Current 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.

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 – embedded derivatives, 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, 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.

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 periods indicated:

Previous wording

Additionally, as discussed above, on March 26, 2025, we amended and restated our Credit Facility, which now has a maximum credit commitment of $1.0 billion and is scheduled to mature on March 26, 2029. As of March 31, 2025, the Amended & Restated Credit Agreement had a borrowing base of $475.0 million and an aggregate elected commitment of $475.0 million. Further, 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 issued the Series F Preferred Stock, resulting in approximately $139.1 million of net proceeds, after deducting the advisor fees and estimated offering expenses. We used cash on hand, the proceeds from the Common Stock and Series F Preferred Stock issuances, and borrowings under the Amended & Restated Credit Agreement to close the Bayswater Acquisition on March 26, 2025, paying Bayswater approximately $482.5 million in cash, $15.0 million of which was deposited in escrow pending our acquisition of the Additional Working Interest, which closed on April 11, 2025, and issuing 3,656,099 shares of Common Stock to Bayswater.

Current wording

Additionally, as discussed above, on March 26, 2025, we amended and restated our Credit Facility, which now has a maximum credit commitment of $1.0 billion and is scheduled to mature on March 26, 2029. 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. Further, 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 issued the Series F Preferred Stock, resulting in approximately $137.2 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 Amended & Restated Credit Agreement 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.

Previous wording

Management expects that our cash balance, expected revenues from the producing Bayswater wells, and liquidity available under the Amended & Restated Credit Agreement and potential offerings under our 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 Amended & Restated Credit Agreement, 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

We define working capital as current assets less current liabilities. As of March 31, 2025, we had a working capital deficit of $54.7 million and cash and cash equivalents of $15.0 million and as 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 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.

Previous wording

*Operating activities.*Net cash provided by operating activities totaled $16.9 million during the three months ended March 31, 2025 and net cash used in operating activities totaled $3.3 million during the three months ended March 31, 2024, respectively. The $20.6 million increase 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 three months ended March 31, 2025.

Current 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.

Previous wording

*Investing activities.*Net cash used in investing activities totaled $528.4 million and $10.1 million during the three months ended March 31, 2025 and 2024, respectively. The $518.3 million increase in our net cash used in investing activities was largely driven by cash paid for the Bayswater Acquisition of $489.6 million, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition, which closed on April 11, 2025. Additionally, our expenditure for the development of oil and natural gas properties increased $37.0 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Current 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.

Previous wording

*Financing activities.*Net cash provided by financing activities totaled $521.3 million for the three months ended March 31, 2025, driven by $43.8 million from the issuance of Common Stock, net of related issuance costs of $3.1 million, $148.3 million from the issuance of the Series F Preferred Stock, net of related issuance costs of $1.2 million, $349.0 million from borrowings under the Credit Facility, net of related issuance costs of $12.5 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 $4.5 million for the three months ended March 31, 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 $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.

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. 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 March 31, 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

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.

Previous wording

As of March 31, 2025 and December 31, 2024, we had $377.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $98.0 million and $7.2 million, respectively, of availability for future borrowings and letters of credit. Additionally, as of March 31, 2025 and December 31, 2024, we have $14.1 million and $1.7 million, respectively, of unamortized deferred financing costs associated with our Credit Facility, which is presented in 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 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.

Previous wording

Our right to sell shares to Yorkville under the SEPA was contingent upon us having an effective registration statement, with respect to the shares issuable pursuant to or in connection with the SEPA, which was declared effective by the SEC on December 20, 2024 and upon the conversion of the Senior Convertible Note. 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, during the three months ended March 31, 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock. 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.

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. As of December 31, 2024, we have recorded the SEPA at its fair value of $0.8 million and recorded the corresponding $0.8 million loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statement of operations and consolidated statement of cash flows for the year ended December 31, 2024.

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 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

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 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 (as defined in the Senior Convertible Note agreement). We had the option to, 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, had the option to convert the Pre-Paid Advance into shares of Common Stock at any time at the conversion price (as defined 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.

Current 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 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 (as defined in the Senior Convertible Note agreement). We had the option to, 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 had the option to convert the Pre-Paid Advance into shares of Common Stock at any time at the conversion price (as defined 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

During the three months ended March 31, 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 March 31, 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 and consolidated statement of cash flows for the three months ended March 31, 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 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.

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 sheets as of March 31, 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 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.

Previous wording

*Series F Preferred Stock and Series F Preferred Stock Warrants.*On March 24, 2025, weentered 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, convertible into shares of Common Stock and (ii) upon the one-year anniversary of the issue date of the Series F Preferred Stock, subject to the satisfaction of certain conditions, the Series F Preferred Stock Warrants to purchase shares of common stock. The Series F Preferred Offering closed on March 26, 2025, and we received approximately $139.1 million of net proceeds, after deducting advisor fees and estimated offering expenses payable. We used the proceeds from the Series F Preferred Offering to fund a portion of the Bayswater Acquisition, which closed on March 26, 2025.

Current wording

*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, convertible into shares of Common Stock and (ii) upon the one-year anniversary of the issue date of the Series F Preferred Stock, subject to the satisfaction of certain conditions, the Series F Preferred Stock Warrants to purchase shares of common stock. The Series F Preferred Offering closed on March 26, 2025, and we received approximately $137.2 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.

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%.

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, 2025 dividend by issuing the Series F Preferred Stockholder 1,305,000 shares 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 months ended March 31, 2025, 1,000 shares of Series F Preferred Stock were converted into 252,000 shares of Common Stock 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 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.

Previous wording

We have determined that the Series F Preferred Stock should be classified in mezzanine equity because it is currently redeemable at the Holder’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. 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 $8.1 million of issuance costs as a reduction to the allocated proceeds. As of March 31, 2025, in accordance with ASC 480, we adjusted the Series F Preferred Stock to reflect its maximum redemption amount of $188.3 million, resulting in a deemed dividend of $90.2 million, which is presented on the consolidated statement of operations for the three months ended March 31, 2025

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 $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.

Previous wording

For the three months ended March 31, 2025, we had a net loss of $2.6 million. We cannot predict if or when we will be profitable, and we may continue to incur losses for an indeterminate period of time. Additionally, we may be unable to achieve or sustain profitability on a quarterly or annual basis and extended periods of losses and negative cash flow may prevent us from successfully operating and expanding our business. As of March 31, 2025, we had cash and cash equivalents of $15.0 million, a working capital deficit of $54.7 million, and an accumulated deficit of $122.4 million.

Current wording

For the three and six months ended June 30, 2025, we had net income attributable to Prairie Operating Co.’s common stockholders of $48.5 million and a net loss attributable to Prairie Operating Co.’s common stockholders of $45.0 million, respectively. We cannot predict if we will be able to sustain profitability on a quarterly or annual basis and extended periods of losses and negative cash flow may prevent us from successfully operating and expanding our business. As of June 30, 2025, we had cash and cash equivalents of $10.7 million, a working capital deficit of $64.2 million, and an accumulated deficit of $86.7 million.