Prairie Operating Co. Announces Warrant Exercise Resulting in $24 Million of Proceeds

Rhea-AI Summary

Prairie Operating Co. (Nasdaq: PROP) announced that Watermill Capital Partners exercised Series E B Warrants to purchase 4,000,000 shares of common stock, generating $24 million in proceeds. This follows Watermill's $12 million warrant exercise in November 2023, demonstrating continued support for Prairie's growth strategy. All Series E B Warrants have now been fully exercised, and all Series E preferred stock was converted into common stock, simplifying Prairie's capital structure.

Ed Kovalik, Chairman and CEO, stated that the proceeds will fuel growth plans, particularly the new Shelduck South project. This development involves an eight-well pad targeting the Niobrara B and C formations across 1,260 mineral acres, with production expected to begin in Q4 2024.

Positive

• Generated $24 million in proceeds from warrant exercise
• All Series E B Warrants fully exercised
• Conversion of Series E preferred stock to common stock
• Simplified capital structure
• New Shelduck South project development underway

Negative

• None.

Insights

Financial Analyst

The $24 million warrant exercise by Watermill Capital Partners is a significant positive for Prairie Operating Co. This cash injection strengthens the company's balance sheet and demonstrates investor confidence in Prairie's growth strategy. The simplification of the capital structure through the conversion of Series E preferred stock is also noteworthy, as it can potentially improve the company's financial flexibility and appeal to a broader range of investors.

The $24 million proceeds, combined with the previous $12 million exercise, provide Prairie with a substantial $36 million in additional capital over the past year. This funding is important for executing the company's growth plans, particularly the Shelduck South development. The eight-well pad project targeting the Niobrara formation could significantly boost Prairie's production and revenue streams when it comes online in Q4 2024.

Investors should monitor Prairie's ability to effectively deploy this capital and the progress of the Shelduck South project, as these factors will be key determinants of the company's future financial performance and stock valuation.

Oil & Gas Industry Expert

The Shelduck South development represents a strategic move for Prairie Operating Co. in the competitive oil and gas sector. Targeting the Niobrara B and C formations is a smart play, as these are known for their potential in unconventional oil production. The 1,260 mineral acres provide a substantial footprint for the eight-well pad, suggesting significant production potential.

The timing of production start in Q4 2024 aligns well with current market dynamics. With global energy demand remaining robust and geopolitical uncertainties affecting supply, Prairie could benefit from favorable pricing environments. However, investors should be aware of the inherent risks in oil and gas exploration and production, including potential regulatory changes and price volatility.

The company's ability to secure funding and investor support for this project is a positive indicator. It suggests that Prairie has a compelling business case and the technical expertise to execute complex drilling operations. As the project progresses, key metrics to watch will be initial production rates, decline curves and overall operational efficiency.

Corporate Governance Specialist

The recent developments at Prairie Operating Co. highlight positive trends in corporate governance and investor relations. The full exercise of Series E B Warrants and conversion of Series E preferred stock into common stock represent a significant simplification of the company's capital structure. This move enhances transparency and potentially aligns shareholder interests more closely.

Watermill Capital Partners' continued investment through warrant exercises signals strong investor confidence in Prairie's management and strategy. This vote of confidence is particularly valuable in the often volatile oil and gas sector. The simplified capital structure could make Prairie more attractive to a broader range of investors and potentially improve liquidity in the stock.

From a governance perspective, the company's clear communication about its capital structure changes and strategic plans is commendable. However, investors should continue to monitor the company's board composition, executive compensation structures and overall corporate governance practices to ensure ongoing alignment with shareholder interests as Prairie embarks on its growth initiatives.

HOUSTON, Texas, Aug. 19, 2024 (GLOBE NEWSWIRE) -- Prairie Operating Co. (Nasdaq: PROP) (the “Company” or “Prairie”) today announced that Watermill Capital Partners and its affiliates exercised Series E B Warrants (the “Warrants”) to purchase 4,000,000 shares of common stock of the Company, generating $24 million in proceeds.

This exercise follows Watermill Capital Partners’ $12 million warrant exercise in November 2023, highlighting their continued confidence and support for Prairie’s growth strategy.  With the exercise of these Warrants, all Series E B Warrants have now been fully exercised. Additionally, all of the Company’s Series E preferred stock was converted into common stock of the Company. This conversion of the Company’s Series E preferred stock and the exercise of the Company’s Series E B Warrants simplifies its capital structure, further enhancing Prairie’s position for long-term growth.

“We appreciate the confidence and support of Watermill Capital Partners as we continue to execute our strategy. The warrant exercise and associated cash proceeds provide additional fuel to our growth plans, particularly as we embark on our new project at Shelduck South.” stated Ed Kovalik, Chairman and CEO of the Company.

The Shelduck South development (part of the Genesis Bolt-on Assets) involves an eight-well pad targeting the Niobrara B and C formations across 1,260 mineral acres, with production expected to begin in the fourth quarter of 2024.

About Prairie Operating Co.

Prairie Operating Co. is a Houston-based publicly traded independent energy company engaged in the development and acquisition of oil and natural gas resources in the United States. The Company’s assets and operations are concentrated in the oil and liquids-rich regions of the Denver-Julesburg (DJ) Basin, with a primary focus on the Niobrara and Codell formations. The Company is committed to the responsible development of its oil and natural gas resources and is focused on maximizing returns through consistent growth, capital discipline, and sustainable cash flow generation. 

More information about the Company can be found at www.prairieopco.com.

Warrant Overview

The Warrants were originally issued in connection with a private offering of units completed by Prairie in August 2023. The Warrants featured a one-year duration with a $6.00 per share exercise price. The issuance of the shares of common stock issued upon exercise of the Warrants has not been registered under the Securities Act of 1933, as amended (the "Securities Act") or applicable state securities laws. Accordingly, the shares of common stock may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statement

The information included herein and in any oral statements made in connection herewith include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included herein, are forward-looking statements. When used herein, including any oral statements made in connection herewith, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on the Company’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date hereof. The Company cautions you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company. There may be additional risks not currently known by the Company or that the Company currently believes are immaterial that could cause actual results to differ from those contained in the forward-looking statements. Additional information concerning these and other factors that may impact the Company’s expectations can be found in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K/A filed with the SEC on March 20, 2024, and any subsequently filed Quarterly Report and Current Report on Form 8-K. The Company’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Investor Relations Contact:
Wobbe Ploegsma
wp@prairieopco.com
832.274.3449

FAQ

How much did Prairie Operating Co. (PROP) raise from the recent warrant exercise?

Prairie Operating Co. (PROP) raised $24 million from the recent warrant exercise by Watermill Capital Partners and its affiliates.

When is production expected to begin for Prairie Operating Co.'s (PROP) Shelduck South project?

Production for Prairie Operating Co.'s (PROP) Shelduck South project is expected to begin in the fourth quarter of 2024.

What formations is Prairie Operating Co. (PROP) targeting in the Shelduck South project?

Prairie Operating Co. (PROP) is targeting the Niobrara B and C formations in the Shelduck South project.

How has Prairie Operating Co.'s (PROP) capital structure changed after the warrant exercise?

Prairie Operating Co.'s (PROP) capital structure has been simplified after the full exercise of Series E B Warrants and conversion of all Series E preferred stock into common stock.