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Prairie Operating(PROP) - 2024 Q4 - Annual Report
PROPPrairie Operating(PROP)2025-03-06 22:22

Production and Sales - Production volumes for 2024 include 96 MBbls of oil, 245 MMcf of natural gas, and 33 MBbls of NGL, totaling 170 MBoe[92] - Average sales prices for 2024 are 68.60perMBblforoil,68.60 per MBbl for oil, 2.25 per MMcf for natural gas, and 24.03perMBblforNGL,withanaveragepriceof24.03 per MBbl for NGL, with an average price of 46.70 per MBoe[92] - The company completed 8 development wells in 2024, with a net of 6.33 wells[95] - As of December 31, 2024, the company has 8 productive wells, all of which are operated[98] Land and Acreage - The company owns 36,895 gross acres and 23,769 net acres, with 15,810 net acres (66%) potentially expiring in the next three years if production is not established[100] Customer Concentration - The company’s two largest customers accounted for approximately 80% and 15% of oil, natural gas, and NGL revenues in Q4 2024[106] Delivery Commitments - The company has no delivery commitments as of December 31, 2024[107] Risk Management - The company engages in derivative contracts to hedge against price volatility in oil and natural gas, aiming to mitigate cash flow impacts[105] - International events have contributed to price volatility in oil and natural gas, affecting the company's operations and cash flows[109] Regulatory Compliance - The company believes it is in substantial compliance with applicable laws and regulations, although future changes could impact operations and costs[112] - The production of oil, natural gas, and NGLs is regulated by various local, state, and federal statutes, which include requirements for permits, bonding, and operational reports[115] Taxes and Fees - Colorado imposes a production or severance tax on the production and sale of oil, natural gas, and NGLs, which can affect overall profitability[115] Transportation Regulation - The Federal Energy Regulatory Commission (FERC) regulates interstate transportation rates for crude oil and natural gas, ensuring that tariff rates are just and reasonable[118] - FERC has the authority to impose civil penalties of up to 1,000,000perdayforviolationsoftheNaturalGasAct,withadjustmentsforinflation[126]WasteManagementandEnvironmentalRegulations−TheResourceConservationandRecoveryAct(RCRA)regulatesthemanagementofhazardousandnonhazardouswastes,whichmayimpactoperationalcosts[137]−TheComprehensiveEnvironmentalResponse,Compensation,andLiabilityAct(CERCLA)imposesjointandseveralliabilityforhazardoussubstancereleases,potentiallyleadingtosignificantcleanupcosts[138]−TheCleanWaterAct(CWA)imposesstrictcontrolsonpollutantdischargesintoU.S.waters,requiringpermitsfromtheEPAorstateagencies[140]−TheOilPollutionActof1990establishesliabilityforoilspills,mandatingresponsiblepartiestodevelopresponseplansandconductannualspilltraining[142]−UndergroundInjectionControl(UIC)programregulatesthedisposalofproducedwater,withpotentialchangesinregulationsaffectingoperationalcosts[143]−TheCleanAirAct(CAA)requirescompliancewithairemissionsstandards,whichmaydelayprojectdevelopmentduetopermittingrequirements[145]−NewSourcePerformanceStandards(NSPS)formethaneandVOCemissionswerefinalized,requiringstatestodevelopplansforexistingsourceswithintwoyears[146]ClimateandEmissionsRegulations−TheSEC′sfinalrulemandatesclimate−relatedriskdisclosuresforpubliccompanies,withlargeacceleratedfilersrequiredtoreportGHGemissionsstartinginfiscalyear2025[151]−TheInflationReductionActof2022includesamethaneemissionscharge,startingat1,000,000 per day for violations of the Natural Gas Act, with adjustments for inflation[126] Waste Management and Environmental Regulations - The Resource Conservation and Recovery Act (RCRA) regulates the management of hazardous and nonhazardous wastes, which may impact operational costs[137] - The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) imposes joint and several liability for hazardous substance releases, potentially leading to significant cleanup costs[138] - The Clean Water Act (CWA) imposes strict controls on pollutant discharges into U.S. waters, requiring permits from the EPA or state agencies[140] - The Oil Pollution Act of 1990 establishes liability for oil spills, mandating responsible parties to develop response plans and conduct annual spill training[142] - Underground Injection Control (UIC) program regulates the disposal of produced water, with potential changes in regulations affecting operational costs[143] - The Clean Air Act (CAA) requires compliance with air emissions standards, which may delay project development due to permitting requirements[145] - New Source Performance Standards (NSPS) for methane and VOC emissions were finalized, requiring states to develop plans for existing sources within two years[146] Climate and Emissions Regulations - The SEC's final rule mandates climate-related risk disclosures for public companies, with large accelerated filers required to report GHG emissions starting in fiscal year 2025[151] - The Inflation Reduction Act of 2022 includes a methane emissions charge, starting at 900 per metric ton in 2024, potentially increasing operational costs[153] - Recent regulations may lead to increased costs for compliance with GHG emissions reporting and permitting obligations, affecting profitability[154] State-Specific Regulations - The Colorado Energy Commission has approved new rules affecting wellbore integrity and waste management, which may impact operational practices[163] - Colorado Senate Bill 19-181 (SB 181) significantly changed regulations, requiring more than 45% consent from mineral interest owners for pooling, and instituting a 16% royalty on oil and a 13% royalty on gas production[164] - Local governments now have greater control over oil and gas facility siting, which may lead to stricter regulations and increased operational costs[165] - The CECMC has implemented new rules affecting facility siting, cumulative impacts, and wellbore integrity, potentially increasing well costs and delaying drilling permits[167] - New rules adopted by the CDPHE aim to minimize methane and other emissions, increasing inspection frequencies and regulatory authority over oil and gas facilities[168] - On December 20, 2024, the CDPHE introduced rules requiring midstream operators to capture hydrocarbon emissions, which may raise costs for the industry[169] Operational Efficiency - The permit approval process for new multi-well pads can take between 90 to 150 days, followed by a 30-day public comment period[171] Employment and Office Space - As of December 31, 2024, the company employed 19 full-time employees and has not experienced any work stoppages[177] - The company has leased office space in Houston, Texas, and Denver, Colorado, for its operations[178] Stock Information - The company's common stock is listed on the Nasdaq Capital Market under the symbol "PROP"[182]