Prairie Operating Posts $109.0 Million Net Income; a Series F Remeasurement Lifts the Common-Stockholder Subtotal to $193.8 Million

by Henry Nakamura · August 17, 2026

Earnings Reporter, Earnings Dispatch

Prairie Operating Co. released second-quarter results on Monday, and the largest number in the release's statement of operations is not the company's net income. The Houston-based DJ Basin producer reported net income of $109.0 million on crude oil, natural gas and NGL revenues of $98.9 million for the quarter ended June 30, 2026. Below that line, after three adjustments relating to its Series F preferred stock, the release reports net income attributable to common stockholders of $193.8 million. That subtotal is not a measure of how much the company earned; it is what the release allocates to one class of shareholders after preferred-stock items are applied, and those items can add as well as subtract.

This article is built on the condensed consolidated statements of operations and the Adjusted EBITDA reconciliation printed at the foot of Prairie's August 17 earnings release, plus one separately filed Form 8-K. It does not draw on the Form 10-Q itself, and it does not address the company's reserves, its share price or its acreage. The release prints dollar amounts; the percentage changes below are this publication's arithmetic on those amounts.

The $84.8 million between the two lines is built from three named rows that sit between them. Series F preferred stock declared dividends subtract $2,598 thousand. Series F preferred stock undeclared dividends add back $186 thousand. And a line called "Remeasurement of Series F preferred stock" adds $87,189 thousand. Start at $109,017 thousand, subtract 2,598, add 186, add 87,189, and the result is $193,794 thousand — the subtotal as printed. The sign on the remeasurement is not read from the figure in isolation; it is read from the fact that the column foots to the number the release calls net income attributable to common stockholders.

The arrangement is neither new nor one-directional, and Prairie's own comparative columns show both. The same structure ran the same way a year ago: in the second quarter of 2025 the remeasurement was a positive $17,511 thousand, which, applied to $35,683 thousand of net income less $3,289 thousand of declared and $1,402 thousand of undeclared Series F dividends, produced $48,503 thousand attributable to common stockholders — again above net income. Over a longer window it ran the other way. For the six months ended June 30, 2025, the remeasurement was a negative $73,101 thousand. Applied to $33,066 thousand of net income, less $3,289 thousand of declared and $1,647 thousand of undeclared Series F dividends, it produced a loss attributable to common stockholders of $44,971 thousand. A company with positive net income reported a loss to common. Across the four columns the release prints, the remeasurement is positive in three and negative in one.

The 2026 half-year runs in reverse of that 2025 half-year. Prairie recorded a net loss attributable to the company of $43,656 thousand for the six months. Subtract $6,268 thousand of declared dividends and $780 thousand of undeclared dividends, add the $70,101 thousand remeasurement, and the release reports income attributable to common stockholders of $19,397 thousand. All four columns foot exactly. What the release does not do is say what the remeasurement is. The tables carry no footnote defining it, and the narrative sections name no accounting basis for it — no reference to a deemed dividend, an accretion to redemption value, or a fair-value remeasurement under a stated standard. Prairie's Form 10-Q for the period may explain it; this article was unable to reach that filing and does not rely on it. On the release alone, the basis of the largest single reconciling item between the two lines is undisclosed.

The per-share lines carry the same split. For the quarter, Prairie printed basic earnings per common share of $1.75 and diluted earnings per common share of $0.23. For the six months, basic was $0.21 and diluted was $(0.41) — positive on one line, negative on the next. The weighted average share counts behind them are 107,141,123 basic and 185,590,890 diluted for the quarter. The printed basic figure is not the common-stockholder subtotal divided by the basic share count: $193,794 thousand over 107,141,123 shares is about $1.81, not $1.75. The same gap appears in the prior-year quarter, where $48,503 thousand over 44,063,281 shares is about $1.10 against a printed $1.04. The consistency points to an allocation between share classes rather than an error, but the release prints the results without printing the allocation, so the per-share figures are reported here as published and not reconstructed. One movement in the share counts runs in the company's favour and belongs next to the rest: Prairie's weighted average diluted share count for the second quarter of 2026, 185,590,890, is lower than the 198,365,207 it reported for the second quarter of 2025, while the basic count went the other way, from 44,063,281 to 107,141,123.

Below those lines, the release's non-GAAP measure moved against the revenue line. Adjusted EBITDA for the quarter was $34,010 thousand, against $38,564 thousand in the same quarter last year — a decline of about 11.8 percent in a quarter when revenue rose about 45.2 percent. For the six months the same measure went the other way, rising about 65.4 percent to $71,142 thousand from $43,021 thousand, and six-month revenue rose about 125.3 percent.

The reconciliation explains where the quarter's Adjusted EBITDA went. It starts at the $109,017 thousand net income figure and applies eight adjustments. Six are additions: depreciation, depletion and amortization of $17,075 thousand; abandonment and impairment of unproved properties of $196 thousand; non-cash stock-based compensation of $3,307 thousand; interest expense, net, of $9,805 thousand; litigation and severance settlement expense of $808 thousand; and income tax expense of $19,814 thousand. Two are subtractions, and they are the two largest single adjustments in the table: unrealized gains on derivatives of $77,779 thousand and a non-cash gain on adjustment to fair value of financial instrument liabilities of $48,233 thousand.

Setting the derivative lines side by side is where the quarter's economics show up. The income statement reports a net gain on derivatives of $45,079 thousand for the quarter. The reconciliation strips out $77,779 thousand of that as unrealized. The remainder — total less unrealized — is a realized loss of about $32,700 thousand. Run the same subtraction on the prior-year quarter: $28,150 thousand of net derivative gains less $23,206 thousand unrealized leaves a realized gain of about $4,944 thousand. Year over year, the realized side of Prairie's hedge book swung by roughly $37,644 thousand.

Against that, the operating result improved. Revenues less total operating expenses were $45,356 thousand in the quarter, against $18,936 thousand a year earlier, an improvement of $26,420 thousand. The non-cash and one-off charges sitting inside operating expenses that the reconciliation adds back — DD&A, unproved-property impairment, stock compensation and the litigation and severance item — grew from $14,684 thousand to $21,386 thousand, a further $6,702 thousand. Add those two and subtract the $37,644 thousand realized-derivative swing and the arithmetic lands at negative $4,522 thousand, against the $4,554 thousand actual decline in Adjusted EBITDA. The $32 thousand residual is the gap between the $9,805 thousand of "interest expense, net" used in the reconciliation and the $9,837 thousand implied by the income statement's $10,033 thousand of interest expense less $196 thousand of interest income and other; the same two figures agreed exactly in the prior-year quarter. That decomposition is a rearrangement of Prairie's own reconciliation rather than an independent test of it, and it ties by construction. What it does show is which term moved: the realized hedge swing is larger than the improvement in revenues less operating expenses, and it is why a 45 percent revenue quarter produced a smaller Adjusted EBITDA than last year's.

Individual cost lines moved in both directions. Lease operating expenses rose to $13,628 thousand from $11,348 thousand and depreciation, depletion and amortization to $17,075 thousand from $12,265 thousand, while general and administrative expenses fell to $11,952 thousand from $16,443 thousand. Total operating expenses were $53,503 thousand against $49,164 thousand, an increase of about 8.8 percent on a revenue increase of about 45 percent. Production averaged 21,866 Boe/d, which the release puts at roughly 4 percent above the prior-year quarter and 50 percent oil.

The balance-sheet lines in the release are unusual enough to state plainly, with their offsets. Prairie reported cash and cash equivalents of $21 thousand at June 30, 2026, and $436.0 million drawn under its reserve-based credit agreement. The release puts the borrowing base and elected commitments at $475.0 million and availability at $39.0 million, which is what $475.0 million less $436.0 million comes to. It also reports a working capital deficit of approximately $125.5 million. Capital expenditures for the quarter were $98.5 million against $52.0 million of operating cash flow.

Michael Shelly, executive vice president and chief financial officer, said in the release: "Prairie continued to strengthen its financial position and generated meaningful operating cash flow while continuing to fund an active capital program, expanded our commodity hedge portfolio to provide greater visibility and coverage of our future cash flows and made important progress simplifying our capital structure and reducing potential shareholder dilution. As we move through the remainder of the year, our financial priorities remain centered on disciplined capital allocation, building liquidity and strengthening the balance sheet. We will continue to align capital spending with operating performance, pursue opportunities to enhance financial flexibility and support the Company's development program in a manner designed to generate sustainable free cash flow through a range of commodity-price environments."

The release also carries 2026 full-year guidance of 23,000 to 25,000 Boe/d of average daily production, $185.0 million to $195.0 million of capital expenditures and $180.0 million to $190.0 million of Adjusted EBITDA. Measured against the $71,142 thousand of Adjusted EBITDA already booked in the first half, the range implies roughly $108.9 million to $118.9 million in the second half.

Separately, in a Form 8-K with a date of report of Thursday, July 2, 2026, and filed July 9, Prairie disclosed that it had received notice from Nasdaq that its common stock — which is listed on the Nasdaq Capital Market — had fallen below the $1.00 minimum bid price required by Nasdaq Listing Rule 5550(a)(2), and that it has until Tuesday, December 29, 2026, to regain compliance by closing at or above $1.00 for a minimum of ten consecutive trading days. The filing states the company may be eligible for a further 180-day period if it meets the other applicable listing standards and notifies Nasdaq in writing of its intent to cure the deficiency, and notes the exchange's provision for an immediate delisting determination if the stock trades at or below $0.10 for ten consecutive trading days. Both the additional period and the outcome are conditional in the filing's own terms; neither is assured.

The scope of this piece is the arithmetic printed in Prairie's second-quarter earnings release and the one 8-K described above. It does not extend to the company's Form 10-Q, to how the market has priced any of it, or to what any of these figures imply about future quarters.