Prairie Operating Co. Announces Public Offering of Common Stock

Rhea-AI Summary

Prairie Operating Co. (NASDAQ: PROP) has announced an underwritten public offering of $35.00 million in common stock, with underwriters having a 30-day option to purchase up to an additional $5.25 million in shares.

Concurrent with this offering, the company is launching a registered offering of 150,000 shares of new Series F Convertible Preferred Stock, which includes warrants for additional common stock shares under specific conditions.

The proceeds will primarily fund the company's proposed Bayswater Acquisition of oil and gas assets. Any remaining funds will support general corporate purposes, including development and drilling programs, debt repayment, or other acquisition opportunities.

The offering is led by Citigroup as the lead book-running manager, with KeyBanc Capital Markets, Truist Securities, MUFG Securities Americas, and Piper Sandler & Co. serving as joint book-running managers.

Positive

• Multiple financing options through common stock and preferred stock offerings provide flexibility
• Proceeds will fund strategic acquisition of Bayswater oil and gas assets
• Strong underwriting syndicate led by major financial institutions

Negative

• Potential dilution for existing shareholders through $35 million common stock offering
• Additional dilution risk from convertible preferred stock and potential warrant issuance
• Increased debt if proceeds are used for debt repayment instead of growth initiatives

Insights

Financial Analyst

Prairie Operating's $35 million common stock offering represents significant dilution for existing shareholders at approximately 24.5% of their current $142.6 million market cap. Including the underwriter's option for an additional $5.25 million and the 150,000 share Series F Preferred offering, this capital raise could substantially alter Prairie's capital structure.

The strategic rationale—funding the Bayswater Acquisition—suggests Prairie is pursuing inorganic growth to expand its oil and gas asset portfolio. This approach is common among smaller E&P companies looking to reach operational scale. However, the convertible preferred stock structure with attached warrants (conditional on share price performance) indicates potential concerns about raising sufficient capital solely through common equity.

Prairie's disclosure that proceeds might also be used for debt repayment signals possible balance sheet improvement motives. The involvement of multiple underwriters (Citigroup as lead book-runner with KeyBanc, Truist, MUFG, and Piper Sandler) suggests broad institutional support for the offering.

For investors, this financing introduces significant near-term dilution uncertainty. Without disclosure of the offering price or specific acquisition metrics, it's impossible to assess whether the Bayswater Acquisition will be accretive on a per-share basis. The creation of conditional warrants linked to potential share price underperformance adds another layer of potential future dilution if the acquisition fails to deliver expected value.

HOUSTON, March 24, 2025 (GLOBE NEWSWIRE) -- Prairie Operating Co. (“Prairie,” the “Company,” “we,” or “our”) (Nasdaq: PROP), an independent oil and gas company focused on the acquisition and development of crude oil, natural gas and natural gas liquids, announced today that it has commenced an underwritten public offering of $35.00 million (the “Common Stock Offering”) of shares of its common stock, par value $0.01 (“Common Stock”). The Company expects to grant the underwriters a 30-day option to purchase up to an aggregate value of $5.25 million of additional shares of Common Stock.

In addition, the Company also announced today its concurrent registered offering of 150,000 shares of new Series F Convertible Preferred Stock (“Series F Preferred Stock”) pursuant to a separate prospectus supplement (the “Concurrent Preferred Stock Offering”). In connection with the Concurrent Preferred Stock Offering, the Company is also offering the holder of the Series F Preferred Stock to be issued in the Concurrent Preferred Stock Offering warrants (which will be registered together with the Series F Preferred Stock) to purchase additional shares of Common Stock (the “Series F Warrant”) that will be issuable if, on the first anniversary of the date the Series F Preferred Stock is issued by the Company, (i) any of the Series F Preferred Stock is outstanding and (ii) the last reported sale price during any trading day in the 20 trading day period ending on such date was less than 115% of the conversion price of the Series F Preferred Stock.

The Company intends to use the net proceeds from the Common Stock Offering, together with the net proceeds from the Concurrent Preferred Stock Offering, to fund a portion of the purchase price for the Company’s proposed acquisition of certain oil and gas assets from Bayswater Exploration and Production and certain of its affiliates (the “Bayswater Acquisition”). The Company intends to use any remaining net proceeds from the Common Stock Offering and the Concurrent Preferred Stock Offering, including any net proceeds from the underwriters’ exercise of their option to purchase additional shares, for other general corporate purposes, which may include advancing the Company’s development and drilling program, repayment of existing indebtedness or financing other potential acquisition opportunities.

Citigroup is acting as lead book-running manager for the Common Stock Offering. KeyBanc Capital Markets Inc., Truist Securities, Inc., MUFG Securities Americas Inc., and Piper Sandler & Co. are also acting as joint book-running managers. Roth Capital Partners, Clear Street LLC, Johnson Rice & Company L.L.C., and Pickering Energy Partners are acting as co-managers.

The Common Stock Offering is being made pursuant to a shelf registration statement on Form S-3, including a base prospectus, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) and became effective on December 20, 2024. The preliminary prospectus supplement, and accompanying base prospectus, relating to the offering, and a final prospectus supplement, when available, will be filed with the SEC and will be available on the SEC’s website at www.sec.gov. Copies of the preliminary prospectus supplement, and accompanying base prospectus, relating to the Common Stock Offering, and the final prospectus supplement, when available, may be obtained by sending a request to: Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, telephone: 1-800-831-9146; KeyBanc Capital Markets Inc., Attn: Equity Syndicate, 127 Public Square, 7th Floor, Cleveland, OH 44114, telephone: 1-800-859-1783; Truist Securities, Inc., Attention: Prospectus Department, 3333 Peachtree Road NE, 9th floor, Atlanta, Georgia 30326, by telephone at (800) 685-4786, or by email at TruistSecurities.prospectus@Truist.com; MUFG Securities Americas Inc., Attention: Equity Capital Markets, 1221 Avenue of the Americas, 6th Floor, New York, New York 10020, telephone: 212-405-7440, email: ECM@us.sc.mufg.jp; Piper Sandler & Co., Attention: Prospectus Department, 800 Nicollet Mall, J12S03, Minneapolis, Minnesota 55402, by telephone at (800) 747-3924, or by email at prospectus@psc.com; or by accessing the SEC’s website at www.sec.gov.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the shares of Common Stock or any other securities, nor shall there be any sale of such shares of Common Stock or any other securities, in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

About Prairie

Houston-based Prairie Operating Co. is an independent oil and gas company focused on the acquisition and development of crude oil, natural gas and natural gas liquids. 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.

For more information, visit www.prairieopco.com.

Forward-Looking Statements

This press release contains “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 historical fact, included in this press release, regarding our strategy, future operations, financial position, estimated reserves, revenues and income or losses, projected costs and capital expenditures, prospects, acquisition opportunities, plans and objectives of management are forward-looking statements. When used in this press release, the words “plan,” “may,” “endeavor,” “will,” “would,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are (or were when made) based on current expectations and assumptions about future events and are (or were when made) based on currently available information as to the outcome and timing of future events. Forward-looking statements in this press release may include, for example, statements about: the Company’s ability to successfully finance and consummate the Bayswater Acquisition, including the risk that the Company may fail to complete the Bayswater Acquisition on the terms and timing currently contemplated or at all, fail to enter into the New Credit Agreement on expected terms and/or fail to realize the expected benefits of the Bayswater Acquisition; the Company’s financial performance following the Bayswater Acquisition; this public offering, the Concurrent Private Offering, the timing thereof and the use of proceeds therefrom; estimates of the Company’s oil, natural gas and NGLs reserves; drilling prospects, inventories, projects and programs; estimates of future oil and natural gas production from our oil and gas assets, including estimates of any increases or decreases in production; the availability and adequacy of cash flow to meet the Company’s requirements; financial strategy, liquidity and capital required for the Company’s development program and other capital expenditures; the availability of additional capital for the Company’s operations; changes in the Company’s business and growth strategy, including the Company’s ability to successfully operate and expand its business; the Company’s integration of acquisitions, including the Bayswater Acquisition; changes or developments in applicable laws or regulations, including with respect to taxes; and actions taken or not taken by third-parties, including the Company’s contractors and competitors. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” in the prospectus supplement, the accompanying base prospectus, the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, our Quarterly Reports on Forms 10-Q filed with the SEC and our other filings with the SEC, all of which can be accessed on the SEC’s website at www.sec.gov. The Company cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. These risks include, but are not limited to: the Company’s and Bayswater’s ability to satisfy the conditions of the Bayswater Acquisition in a timely manner or at all, including the Company’s ability to successfully finance the Bayswater Acquisition; the Company’s ability to complete the Concurrent Preferred Stock Offering in a timely manner and on acceptable terms, if at all; the Company’s ability to recognize the anticipated benefits of the Bayswater Acquisition, which may be affected by, among other things, competition and the Company’s ability to grow and manage growth profitably following the Bayswater Acquisition; the Company’s ability to fund its development and drilling plan; the possibility that the Company may be unable to achieve expected cash flow, production levels, drilling, operational efficiencies and other anticipated benefits within the expected time-frames, or at all, and to successfully integrate the Bayswater Assets, and/or any other assets or operations the Company has acquired or may acquire in the future with those of the Company; the Company’s integration of the Bayswater Assets with those of the Company may be more difficult, time-consuming or costly than expected; the Company’s operating costs, customer loss and business disruption may be greater than expected following the Bayswater Acquisition or the public announcements of the Bayswater Acquisition; the Company’s ability to grow its operations, and to fund such operations, on the anticipated timeline or at all; uncertainties inherent in estimating quantities of oil, natural gas and NGL reserves and projecting future rates of production and the amount and timing of development expenditures; commodity price and cost volatility and inflation; the ability to maintain necessary permits and approvals to develop our assets; safety and environmental requirements that may subject the Company to unanticipated liabilities; changes in the regulations governing our business and operations, including the businesses and operations we have acquired or may acquire in the future, such as, but not limited to, those pertaining to the environment, our drilling program and the pricing of our future production; the Company’s success in retaining or recruiting, or changes required in, the Company’s officers, key employees or directors; general economic, financial, legal, political, and business conditions and changes in domestic and foreign markets; the risks related to the growth of the Company’s business; the effects of competition on the Company’s future business; and other factors detailed under the section entitled “Risk Factors” in the prospectus supplement and, accompanying base prospectus related to the offering and the periodic filings with the SEC. Reserve engineering is a process of estimating underground accumulations of oil, natural gas and NGLs that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify upward or downward revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered. Should one or more of the risks or uncertainties described herein or should underlying assumptions prove incorrect, the Company’s actual results and plans could differ materially from those express in any forward-looking statements. All forward-looking statements, expressed or implied, in this press release, are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company’s behalf may issue.

Contact: Investor Relations

Wobbe Ploegsma
info@prairieopco.com
832.274.3449

FAQ

What is the size of Prairie Operating's (PROP) common stock offering announced in March 2025?

Prairie Operating announced a $35 million common stock offering, with underwriters having a 30-day option for an additional $5.25 million in shares.

How many Series F Convertible Preferred Stock shares is PROP offering in the concurrent offering?

Prairie Operating is offering 150,000 shares of Series F Convertible Preferred Stock in the concurrent offering.

What is the primary purpose of Prairie Operating's (PROP) stock offerings in March 2025?

The primary purpose is to fund the Bayswater Acquisition, which involves purchasing certain oil and gas assets from Bayswater Exploration and Production.

What are the conditions for the Series F Warrant issuance in PROP's preferred stock offering?

Warrants will be issued if after one year any Series F Preferred Stock remains outstanding and the stock price falls below 115% of the conversion price during any trading day in a 20-day period.