This article first appeared on GuruFocus .
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Total Revenue:$98.9 million, up approximately 45% year-over-year.
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Oil Revenue:$93.5 million.
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Production:Averaged 21,866 BOE per day, with liquids representing approximately 72% (including 50% oil).
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Average Realized Prices (ex-derivatives):$94.21 per barrel for oil, $21.64 per barrel for NGLs, and negative $1.30 per MCF for natural gas.
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GAAP Net Income:$109 million attributable to Prairie; $193.8 million or $1.75 per basic share and $0.23 per diluted share attributable to common stockholders.
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Adjusted EBITDA:$34 million for the quarter.
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Operating Cash Flow:Net cash provided by operating activities of approximately $52 million.
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Capital Expenditures:Cash capital expenditures of approximately $98.5 million.
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Per BOE Costs:Lease operating expense of $6.85, transportation and processing of $1.22, ad valorem and production taxes of $4.01, and G&A expense of $6.01.
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First-Half 2026 Revenue:$182.3 million, up approximately 125% year-over-year.
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First-Half 2026 Adjusted EBITDA:$71.1 million, up approximately 65%.
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First-Half 2026 Operating Cash Flow:Net cash provided by operating activities of $94.3 million.
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First-Half 2026 Capital Expenditures:Cash capital expenditures of $132.6 million.
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Liquidity:$39 million availability under the reserve-based credit facility at quarter end.
Release Date: August 17, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Production increased 4% year-over-year to 21,866 BOE per day in Q2 2026, with August month-to-date production rising to approximately 27,000 BOE per day.
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Drilling efficiency improved, with 8 of 12 wells drilled in a single run, all completed below AFE, and a successful three-mile lateral drilled in a single run.
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Implemented a smaller 7-7/8-inch hole design that saved over $40,000 per well without compromising well design, planned for broader application.
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Revenue grew 45% year-over-year to $98.9 million in Q2, and adjusted EBITDA increased 65% in the first half of 2026.
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Reduced Series F preferred stock balance from $148.5 million to $78 million and lowered warrant coverage, improving capital structure and reducing dilution.
Negative Points
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Natural gas realizations were negative at -$1.30 per MCF due to weak CIG pricing, impacting overall revenue.
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Q2 production was limited by the timing of new well completions and a planned pause due to Colorado Parks and Wildlife seasonal restrictions.
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Cash capital expenditures of $98.5 million in Q2 exceeded operating cash flow of $52 million, increasing reliance on credit facility.
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Liquidity remains tight with only $39 million available under the credit facility as of June 30, 2026.
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Full-year 2026 guidance was revised downward for production and adjusted EBITDA, reflecting CIG pricing impacts and TIL timing.
Q & A Highlights
Q: Can you provide an update on the Burnett and Castor pads, and how should we expect production to trend for the rest of the quarter and into Q4? A: Greg Patton (CEO): The Burnett pad is in the flowback stage and interconnected to infrastructure, but we have not cut hydrocarbons as of this morning. The Castor pad is in the middle of completion stages. Neither is factored into our approximate 27,000 net BOE per day August rate. We expect production to fluctuate around the 26,000-28,000 BOE per day range through Q3, with a small decline expected as we exit the year in early Q4.
Q: Can you elaborate on the progress and strategy regarding the Series F preferred stock refinancing and the recent extension of the anniversary warrant date? A: Greg Patton (CEO): We have made significant progress, reducing the outstanding preferred balance from $148.5 million at inception to $78 million as of the end of Q2. We have also decreased the anniversary warrant coverage from 1.25x to 0.65x. We are actively pursuing multiple avenues to refinance the remaining balance and are working with the preferred holder. While extending to year-end is an option, we are focused on redeeming the preferred as soon as possible and will continue to evaluate all solutions.
Q: What are the current well costs for two-mile laterals, and how are the new operational efficiencies impacting these costs? A: Greg Patton (CEO): For standalone pads, two-mile laterals are in the $5.2 to $5.5 million range, depending on formation and frac design. For step-outs using existing permits to develop offset DSUs, costs are in the $5.4 to $5.6 million range, reflecting an extra $100,000 to $200,000 for additional pipe. The single-trip drilling and smaller wellbore designs have helped offset these costs and improve overall capital efficiency.
Q: Can you provide more detail on the new production threshold requirement in the credit facility and its implications? A: Greg Patton (CEO): The production hurdle in the modified credit facility is designed to balance our development growth with maintaining liquidity. It ensures we don't over-grow too quickly or shut down to a blowdown case. The modification allows us to keep liquidity available to continue developing and producing our wells while progressing our development plan.
Q: What would success look like for the Burnett Pad in the Hereford and eastern extension areas, given the recent activity by offset operators like Bison? A: Greg Patton (CEO): Bison has done an excellent job de-risking areas immediately offset to our acreage. The type curves for the Burnett pad are direct correlations from the Critter Creek pad and other offset Bison pads like JAWS. While we are not 100% sure of initial IPs yet, we expect the Burnett Pad's performance to be similar in representation to those correlating offset type curves.
Q: Can you explain the rationale behind the revised full-year 2026 guidance? A: Greg Patton (CEO): We are adjusting guidance to preserve and increase liquidity while maintaining a disciplined approach to development. The revision accounts for first-half 2026 results, including the impact of CIG pricing from April to June and TIL timings. The revised plan emphasizes capital efficiency, incorporates additional planning around Colorado Parks and Wildlife seasonal restrictions, and allows us to better align the pace of investment with operating performance and available capital.
Q: What were the key drivers behind the strong financial performance in Q2 2026? A: Michael Shelly (CFO): Total revenue increased approximately 45% year-over-year to $98.9 million, driven by higher production and strong oil prices. Adjusted EBITDA totaled $34 million, and net cash provided by operating activities was approximately $52 million. The improvement in G&A per BOE reflects increased scale and continued cost discipline.
Q: Can you provide details on the company's hedging program and its impact on cash flow visibility? A: Michael Shelly (CFO): Our commodity hedge portfolio extends to Q2 2029 and provides meaningful downside protection. For the second half of 2026, oil swaps cover approximately 2.7 million barrels at a weighted average price of $63.09 per barrel, and natural gas swaps cover approximately 7.6 million MMBtu at a weighted average price of $4.08 per MMBtu. This provides improved visibility into future cash flows.
Q: What were the key operational milestones achieved during Q2 2026? A: Greg Patton (CEO): We drilled 12 wells during the quarter, all completed below AFE, with 8 drilled in a single run. We successfully drilled our first three-mile lateral, a Niobrara B well, in a single run. We also completed trials using a smaller 7-7/8-inch hole design, generating savings of more than $40,000 per well. We plan to apply this design across a significant portion of our upcoming Niobrara development program.
Q: How is the company positioned for the remainder of 2026 and into 2027? A: Greg Patton (CEO): We are focused on safe and consistent execution, disciplined capital allocation, strengthening the balance sheet, and converting our high-quality DJ Basin inventory into sustainable production and cash flow. The investments made during the first half of the year position us to benefit from the contribution of recently completed wells during the remainder of 2026, providing a solid foundation for durable growth and long-term shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
