Is PrimeEnergy Still Worth Buying After Surging 82% in 6 Months?

Core Insights - PrimeEnergy Resources Corporation (PNRG) stock increased by 81.8% over the last six months, significantly outperforming the industry growth of 14.1% [1] - The company has shown strong operational performance with substantial production growth in oil and natural gas [13] - PNRG's strategic focus on horizontal drilling and asset optimization positions it well for future growth [10][9] Company Overview - Established in 1973 and headquartered in Houston, TX, PNRG is an independent oil and natural gas producer with a diversified portfolio [3] - The company emphasizes financial flexibility, partnerships with leading operators, and a variety of drilling projects [3] - PNRG owns a 60-mile offshore pipeline in Texas and has interests in a retail shopping center in Alabama, enhancing its portfolio diversification [3] Operational Strategy - PNRG holds significant assets in the Permian Basin, focusing on horizontal drilling to enhance production while minimizing surface disruption [4] - In 2023, the company drilled 35 horizontal wells and completed 56 by the end of Q3 2024, indicating a commitment to increasing production [5] - PNRG has identified 28 potential drilling sites in West Texas for 2026-2027, with an estimated investment of $67 million [8] Financial Performance - For the nine months ending Sept. 30, 2024, PNRG's oil production increased by 131% year over year to 1.88 million barrels, while natural gas production rose by 82% to 5.03 million Mcf [13] - The company is currently trading at a trailing 12-month EV/EBITDA ratio of 2.86X, significantly lower than the industry average of 7.52X, indicating potential undervaluation [14] Growth Catalysts - PNRG's investments in horizontal drilling are expected to yield higher production rates and faster returns compared to traditional methods [10] - The U.S. Energy Information Administration projects record crude oil production levels of 13.5 million barrels per day by 2025, benefiting PNRG's operations in the Permian Basin [11] - Natural gas prices are forecasted to rise, supporting higher revenue potential for PNRG's natural gas operations [12] Strategic Transactions - PNRG is optimizing its asset portfolio through acquisitions and divestitures, recently acquiring 100 net acres in Reagan County for$ 1.11 million and selling non-core assets for $2.8 million [9] - The company allocated$ 140 million for new horizontal well projects in 2024 and plans to invest an additional $95 million in 2025 [7]