Prairie Closes DJ Basin Acquisitions from NRO

Prairie Operating Co. has closed its $84.5 million acquisition of the oil-weighted assets of Nickel Road Operating, LLC (NRO), a portfolio company of Vortus Investment Advisors, LLC.

Located in Weld County, Colorado, the acquired assets will add 5,592 net leasehold acres, 89 approved well permits, and 26 operated horizontal wells providing accretive cashflow to Prairie’s existing Denver-Julesburg (DJ) Basin operations, the company said in a news release.

The NRO acquisition was funded with proceeds from a private placement of common stock, an equity facility, and cash on hand, Prairie said.

“This transaction is a major step forward in our growth strategy and an example of delivering long-term value for our shareholders,” Prairie Chairman and CEO Edward Kovalik said. “With our Shelduck South development now drilling well four of the eight-well pad, we expect the production from both these assets, combined with our permitted Genesis locations, to provide a significant cashflow engine for growth through 2025 and beyond”.

Prairie said it remains committed to “aggressively expanding production and well inventory, through both organic drilling and accretive strategic acquisitions”.

The company also plans to integrate the acquired assets into its existing operations and focus on developing its extensive inventory of drilling locations across its DJ Basin acreage position.

Prairie announced the NRO acquisition in January.

According to an earlier statement, the weighted assets, consisting of 84 percent liquids, produce approximately 3,370 net barrels of oil equivalent (boepd) and add third-party engineered proven reserves estimated at 22.2 million barrels of oil equivalent (MMboe) and $254 million in PV10 value, according to an independent, third-party reserve report cited by the company.

The assets include 62 fully permitted proven undeveloped (PUD) drilling locations. The permitted PUDs are expected to payout in approximately one year from the onset of production and are economic in a low commodity price environment. Further, existing infrastructure provides takeaway capacity and opportunities to improve efficiencies, Prairie noted.

Prairie said the acquisition is expected to be accretive to its shareholders across key financial metrics including production, reserves, and free cash flow. Furthermore, the addition of NRO's assets strategically expands its core operating area, increases inventory of high rate-of-return drilling locations, and provides additional flexibility to the 2024 drill schedule.

"This acquisition increases and strengthens our overall position within a top-tier U.S. shale basin and aligns with our strategy of creating value through accretive acquisitions", Kovalik said. "Furthermore, the transaction positions us to accelerate our development program within free cash flow, supporting the company's stated goal of debt-free, long-term growth”.

Last month, Prairie announced the spud of Shelduck South 8E5NCM with Precision E-Drilling Rig 461 in Weld County, Colorado.

According to a separate news release, the Shelduck South development will encompass eight two-mile lateral wells alternating between the Niobrara B and C Chalks.

The drilling of all eight wells is expected to be completed by late October. Hydraulic fracturing is anticipated to begin in early November, with production beginning in late December, the company stated.

Prairie is using Precision's E-rig 461, powered by natural gas generators with battery backup, and expects to fully electrify the Shelduck South production facilities by line power.

The Shelduck South development, part of Prairie’s Genesis Bolt-on Assets, encompasses approximately 1,280 mineral acres. The project marks the start of Prairie’s development program and expected production growth, it said.

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