Prairie Operating (PROP) risk factors, FY2024 10-K

Risks Related to our E&P Assets

1. 01The development of our estimated PUD reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUD reserves may not ultimately be developed or produced
2. 02We have a limited history of drilling producing oil and natural gas wells and there can be no assurance that we will successfully establish oil and natural gas operations or profitably produce oil, natural gas or NGLs
3. 03Since we have a limited operating history related to the exploration and production of oil and natural gas assets, investors have no basis to evaluate our ability to operate profitably as an E&P business
4. 04Oil, natural gas and NGLs prices are highly volatile. An extended decline in commodity prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments
5. 05Our plan to develop and operate our existing and future E&P assets will require substantial additional capital, which we may be unable to raise on acceptable terms or at all in the future
6. 06Drilling for and producing oil and natural gas wells is a high-risk activity with many uncertainties that could adversely affect our business, financial condition or results of operations
7. 07We intend to pursue the development of our properties in the DJ Basin through horizontal drilling and completion. Horizontal development operations can be more operationally challenging and costly relative to vertical drilling operations
8. 08Multi-well pad drilling and project development may result in volatility in our operating results
9. 09Drilling locations that we decide to drill may not yield oil or natural gas in commercially viable quantities
10. 10Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage
11. 11Our future results of operations are highly dependent on our ability to find, develop or acquire additional reserves
12. 12Our estimated oil, natural gas and NGLs reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in the reserve estimates or the underlying assumptions will materially affect the quantities and present value of our reserves
13. 13We will face strong competition from other oil and natural gas companies
14. 14Government regulation and liability for oil and natural gas operations may adversely affect our business and results of operations
15. 15All of our E&P assets are located in the DJ Basin, making us vulnerable to risks associated with operating primarily in a single geographic area
16. 16Our operations are subject to federal, state and local laws and regulations related to environmental and natural resources protection and occupational health and safety, which may expose us to significant costs and liabilities and result in increased costs and additional operating restrictions or delays
17. 17Our oil and natural gas exploration, production, and development activities may be subject to a series of risks related to climate change and energy transition initiatives
18. 18Our oil and natural gas exploration, production, and development activities may be subject to physical risks related to potential climate change impacts
19. 19Our business and ability to secure financing may be adversely impacted by increasing stakeholder and market attention to ESG matters
20. 20Restrictions and regulations regarding hydraulic fracturing could result in increased costs, delays and cancellations in our planned oil, natural gas and NGLs exploration, production and development activities
21. 21Our planned oil, natural gas and NGLs exploration and production activities could be adversely impacted by restrictions on our ability to obtain water or dispose of produced water
22. 22Laws and regulations pertaining to the protection of threatened and endangered species and their habitats could delay, restrict or prohibit our planned oil, natural gas and NGLs exploration and production operations and adversely affect the development and production of our reserves
23. 23Certain U.S. federal income tax deductions currently available with respect to natural gas and oil exploration and development may be eliminated as a result of future legislation

Risks Related to the Bayswater Acquisition

1. 24We may not consummate the Bayswater Acquisition on the terms currently contemplated, or at all
2. 25We do not currently have sufficient funds or committed financing necessary to consummate the Bayswater Acquisition
3. 26We may be unsuccessful in integrating the Bayswater Assets or in realizing all or any part of the anticipated benefits of the Bayswater Acquisition
4. 27If we are successful in completing the Bayswater Acquisition, our level of indebtedness could adversely affect our business and financial condition and prevent us from fulfilling our debt obligations
5. 28Misrepresentations made to us by Bayswater in the Bayswater PSA could cause us to incur substantial financial obligations and harm our business
6. 29We may not achieve the perceived benefits of the Bayswater Acquisition and the market price of our Common Stock following such transaction may decline
7. 30The reserve, production and other data and estimates with respect to the Bayswater Assets are based primarily on information provided by Bayswater. We have not yet verified these data and estimates and cannot assure you that actual results will not differ materially
8. 31We expect to incur significant transaction costs in connection with the Bayswater Acquisition, which may be in excess of those currently anticipated
9. 32The Bayswater Acquisition may be completed on different terms from those contained in the Bayswater PSA
10. 33The market price for our Common Stock following the Bayswater Acquisition, if consummated, may be affected by factors different from those that historically have affected or currently affect our Common Stock
11. 34Securities class action and derivative lawsuits may be brought against us in connection with the Bayswater Acquisition, which could result in substantial costs

Risks Related to the Company

1. 35We have historically incurred significant losses, and may be unable to generate profitability. Our ability to successfully operate and expand our business is dependent our ability to raise additional capital to support our drilling program on our existing assets
2. 36We will require significant additional capital to fund our growing operations; we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations
3. 37We need to manage growth in operations to maximize our potential growth and achieve our expected revenues. Our failure to manage growth can cause a disruption of our operations that may result in the failure to generate revenues at levels we expect
4. 38We depend on the services of a small number of key personnel, and may not be able to operate and grow our business effectively if we lose their services or are unable to attract qualified personnel in the future
5. 39Past performance by members of the Company’s management team may not be indicative of the future performance of the Company
6. 40Terrorist attacks, cyberattacks and threats could have a material adverse effect on our business, financial condition and results of operations
7. 41The terms of our indebtedness may restrict our future business and operations
8. 42Acquisitions, joint ventures or similar strategic relationships may disrupt or otherwise have a material adverse effect on our business and financial results
9. 43We may not realize the full benefit of the Crypto Sale for a variety of reasons, including the inability of the Crypto Purchaser to pay the Deferred Purchase Price due to a decrease in the price of Bitcoin or the actions of third parties
10. 44Our Charter provides for indemnification of officers and directors at our expense and limits their liability, which may result in a major cost to us and harm the interests of our stockholders because corporate resources may be expended for the benefit of officers and/or directors
11. 45There may be conflicts of interest between certain of our officers and directors and our non-management stockholders
12. 46Future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements
13. 47We are a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors
14. 48We may not be able to use a portion of our net operating loss carryforwards and other tax attributes to reduce our future U.S. federal and state income tax obligations, which could adversely affect our cash flows

Risks Related to the Ownership of our Common Stock

1. 49The conversion or exercise, as applicable, of the outstanding Series D Preferred Stock, Series D PIPE Warrants, Series E PIPE Warrants, Exok Warrants, Subordinated Note Warrants, and Merger Options could substantially dilute your investment and adversely affect the market price of our Common Stock
2. 50Our Board of Directors has broad discretion to issue additional securities, and in order to raise sufficient funds to expand our operations, we may have to issue securities at prices which may result in substantial dilution to our stockholders
3. 51If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our Common Stock or if our operating results do not meet their expectations, our stock price could decline
4. 52Insiders have substantial control over the Company, and they could delay or prevent a change in our corporate control even if our other stockholders want it to occur
5. 53The trading price of our Common Stock has been, and is likely to continue to be, volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control
6. 54Furthermore, from time to time, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies
7. 55Future sales of our Common Stock, or the perception that such future sales may occur, may cause our stock price to decline
8. 56We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on your investment may be limited to increases in the market price of our Common Stock