Prairie Operating (NASDAQ:PROP) CEO Greg Patton said the company is focused on building scale in Colorado’s oil-rich DJ Basin through development, acquisitions and organic leasing, while working to simplify a capital structure he described as a barrier to market valuation.
Speaking at a Water Tower Research conference, Patton said Prairie closed its roughly $600 million acquisition of Bayswater assets in the DJ Basin in March 2025 and has completed nine acquisitions since its formation. The company’s 2026 production guidance is 23,000 to 25,000 barrels of oil equivalent per day, according to Water Tower Managing Director for Natural Resources Jeff Robertson.
DJ Basin Focus and Development Strategy
The company is concentrated in the northeastern portion of the basin, including the Northeast Extension, Hereford and Greater Wattenberg areas. Prairie has sought to assemble contiguous acreage blocks near existing infrastructure, Patton said, in an effort to reduce the costs and time associated with moving drilling rigs and other equipment.
Prairie generally targets more rural areas, though Patton said the company also holds some acreage near residential or rural-residential communities. When geologic quality and expected returns are comparable, the company would favor less populated areas, he said, provided infrastructure and economics support development.
Its future development program is primarily focused on one or two benches of the Niobrara formation and, where available, the Codell formation. Some acquired producing areas contain all five development horizons across the Niobrara and Codell, Patton said. While Prairie continues to evaluate drilling results and completion designs, he said the company views the reservoir risk across its footprint as limited.
Permitting, Operations and Infrastructure
Colorado’s regulatory framework has become more defined over time, Patton said, following rulemakings that began around 2018. He said the company has built internal expertise to work with state agencies and expects to maintain the ability to obtain permits in time to support operations.
Prairie seeks to maintain a two- to three-year rolling inventory of permits. New permits can take from six to 18 months, depending on factors including location, population density, nearby operators and municipal involvement, according to Patton. Permits generally have a three-year life, making the company’s planning cycle effectively about four years when the permitting lead time is included.
The company’s capital plan is designed around slightly less than one drilling rig and slightly less than one hydraulic fracturing crew, Patton said. In the DJ Basin, a rig can drill roughly 55 to 60 wellbores annually, while a frac crew completes about 10% fewer wells. Prairie’s approach is intended to support production growth of 10% or less while keeping the business cash-flow positive, he said.
Pad development can require existing wells to be shut in during offset completion activity. Patton said Prairie attempts to time those shut-ins to avoid periods when wells are at their strongest production levels, though the company may also need to respond to work conducted by neighboring operators. He said DJ Basin operators coordinate with one another ahead of drilling and frac activity to minimize shut-in periods.
Infrastructure availability is also a central consideration in Prairie’s acreage strategy. Patton said the company seeks pipeline access for hydrocarbons and water disposal, noting that Colorado does not allow routine flaring and therefore requires gas takeaway. Prairie works with midstream providers including Williams, DCP Phillips and Summit, he said, while using trucking where pipeline connections are not economical or where regulatory approvals allow it.
Growth Plans and Capital Structure
Patton said Prairie expects to use acquisitions, mergers and organic leasing to expand its inventory, but emphasized that the company first intends to develop its existing asset base. He described the organic leasing program as productive and said Prairie has used smaller acreage additions to assemble new drilling spacing units.
At the same time, Patton said simplifying Prairie’s capital structure is a top priority. He said the company would prefer a structure built around common stock, a reserve-based lending facility and potentially unsecured high-yield debt as the business grows. That would require addressing the company’s preferred equity and warrants, he said.
“Complexity creates a lot of confusion in the market and makes it hard to be investable,” Patton said.
Robertson noted that Prairie’s June 30, 2026, PV-10 value of proved reserves was nearly $1.5 billion, compared with an enterprise value of about $550 million when preferred equity is included at liquidation preference. Patton said the preferred securities complicate the calculation of share count, debt and enterprise value, and that resolving those securities could be accretive to common shareholders.
Patton said Prairie has reduced the outstanding preferred balance and generated cash flow to pay down its reserve-based lending facility, but acknowledged that a broader refinancing or capital-structure solution will take time.
