Prairie Operating (PROP) FY2025 10-K Risk Factors: 12 New, 18 Dropped

What the changes say

Prairie Operating Co. faces intense capital needs, geographic concentration in the DJ Basin, and heavy dilution risks from preferred stock and warrants.

What changed since the prior 10-K

New

NewRisks Related to our E&P Assets
There is no assurance that we will be able to successfully drill producing wells. If any of our assets are not commercially productive of crude oil or natural gas, any funds spent on exploration and production may be lost
Uncertainty in obtaining permits, electrical grid and transportation connections, and economic service providers could cause total loss of invested funds in non-productive assets.
NewRisks Related to our E&P Assets
the effects of competition by larger companies operating in the oil and natural gas industry
Competition from larger oil and gas companies, dilution from equity financing, and hedging losses could severely impact financial condition.
NewRisks Related to our E&P Assets
compliance with environmental and other regulatory requirements; and
Environmental hazards like gas leaks, oil spills, and regulatory compliance failures could cause drilling curtailments and financial losses.
NewRisks Related to our E&P Assets
designing and maintaining efficient forms of artificial lift throughout the life of the well
Inefficient artificial lift techniques or capital constraints could lower investment returns and lead to material property impairments.
NewRisks Related to our E&P Assets
Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operations
U.S. trade policies and tariffs could cause commodity market volatility, inflation, and reduced demand for oil and natural gas.
NewRisks Related to the Company
involve and retain outside counsel and accountants in the above activities
Compliance with Sarbanes-Oxley Section 404 internal control attestations may strain financial resources and distract management.
NewRisks Related to the Ownership of our Common Stock
Additionally, in 2023 Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust (the “O’Neill Trust received Series A warrants (“Series E A Warrants”) to purchase 4,000,000 shares of Common Stock
Issuance of Series F Preferred Stock in March 2025 and related warrant amendments may dilute existing stockholders significantly.
NewRisks Related to the Ownership of our Common Stock
In addition, there are also options outstanding to purchase an aggregate of 4,966,666 shares of Common Stock for $0.25 per share (the “Merger Options”), which are currently exercisable
Outstanding merger options and potential Series F Preferred Stock Warrants exercisable if stock price is low will cause significant dilution.
NewRisks Related to the Ownership of our Common Stock
Our stock price has fluctuated and been volatile in the past and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial losses
Historical stock price volatility, trading between $1.57 and $9.50 per share in 2025, and a net loss of $1.35 per share could lead to investor losses.
NewRisks Related to the Ownership of our Common Stock
the other factors described under “Risk Factors” and “Cautionary Statement Regarding Forward–Looking Statements” included in this Annual Report
Stock price volatility increases the risk of costly securities class-action litigation against the company.
NewRisks Related to the Ownership of our Common Stock
The Series F Preferred Stock may adversely affect the market price of our Common Stock
The existence and potential conversion of Series F Preferred Stock and warrants may depress and increase volatility in our Common Stock market price.
NewRisks Related to the Ownership of our Common Stock
Our Common Stock ranks junior to our outstanding preferred stock, including the Series F Preferred Stock, with respect to dividends and amounts payable in the event of our liquidation, dissolution or winding–up of our affairs
Common stock ranks junior to the Series F Preferred Stock regarding dividends and liquidation preferences, preventing common dividends if preferred dividends are unpaid.

Dropped

DroppedRisks Related to our E&P Assets
We 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
DroppedRisks Related to our E&P Assets
Since 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
Limited history of drilling and producing oil and natural gas wells.
DroppedRisks Related to the Bayswater Acquisition
We may not consummate the Bayswater Acquisition on the terms currently contemplated, or at all
Limited operating history as an exploration and production business following crypto sale.
DroppedRisks Related to the Bayswater Acquisition
We do not currently have sufficient funds or committed financing necessary to consummate the Bayswater Acquisition
DroppedRisks Related to the Bayswater Acquisition
We may be unsuccessful in integrating the Bayswater Assets or in realizing all or any part of the anticipated benefits of the Bayswater Acquisition
DroppedRisks Related to the Bayswater Acquisition
If 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
DroppedRisks Related to the Bayswater Acquisition
Misrepresentations made to us by Bayswater in the Bayswater PSA could cause us to incur substantial financial obligations and harm our business
DroppedRisks Related to the Bayswater Acquisition
We may not achieve the perceived benefits of the Bayswater Acquisition and the market price of our Common Stock following such transaction may decline
DroppedRisks Related to the Bayswater Acquisition
The 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
DroppedRisks Related to the Bayswater Acquisition
We expect to incur significant transaction costs in connection with the Bayswater Acquisition, which may be in excess of those currently anticipated
DroppedRisks Related to the Bayswater Acquisition
The Bayswater Acquisition may be completed on different terms from those contained in the Bayswater PSA
DroppedRisks Related to the Bayswater Acquisition
The 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
DroppedRisks Related to the Bayswater Acquisition
Securities class action and derivative lawsuits may be brought against us in connection with the Bayswater Acquisition, which could result in substantial costs
DroppedRisks Related to the Company
We 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
DroppedRisks Related to the Company
There may be conflicts of interest between certain of our officers and directors and our non-management stockholders
DroppedRisks Related to the Ownership of our Common Stock
The 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
DroppedRisks Related to the Ownership of our Common Stock
The 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
DroppedRisks Related to the Ownership of our Common Stock
Furthermore, 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

Reworded

100% rewrittenRisks Related to the Ownership of our Common Stock
Our 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
Replaced detailed environmental regulations (EPA, CDPHE, CECMC) with a broad summary of historical losses and capital-raising dependency.
100% rewrittenRisks Related to the Ownership of our Common Stock
We 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
Replaced general capital shortage warnings with specific operational growth management, key personnel loss, strategic acquisition, and internal control risks.
82% rewrittenRisks Related to the Company
We have historically incurred significant losses, and may be unable to continuously 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
Updated 2024 and 2023 net loss figures ($40.9M and $79.1M) to 2025 and 2024 net loss figures ($60.9M and $40.9M) and accumulated deficits.
Was: We 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
77% rewrittenRisks Related to the Ownership of our Common Stock
Future sales of our Common Stock, or the perception that such future sales may occur, may cause our stock price to decline
Added specific mention of substantial shares issuable upon conversion or dividend of Series F Preferred Stock and warrants.
68% rewrittenRisks Related to our E&P Assets
All 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
Updated past bottlenecks in the Wattenberg Field in the DJ Basin from present tense to past tense.
65% rewrittenRisks Related to our E&P Assets
Our 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
Retained core risk regarding substantial additional capital requirements for E&P asset development without major substantive changes.
59% rewrittenRisks Related to the Company
We 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, including as a result of recent leadership changes
Added specific March 3, 2026 resignation of CEO Edward Kovalik and retirement of President Gary C. Hanna.
Was: We 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
48% rewrittenRisks Related to our E&P Assets
Certain 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
Updated expiring net acreage figures: 14,300 net acres expiring in 2026, 4,200 in 2027, and 8,200 in 2028 and thereafter.
45% rewrittenRisks Related to our E&P Assets
We 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
44% rewrittenRisks Related to our E&P Assets
The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not ultimately be developed or produced
Was: The 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
35% rewrittenRisks Related to the Ownership of our Common Stock
Our 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
30% rewrittenRisks Related to our E&P Assets
Drilling 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
26% rewrittenRisks Related to the Ownership of our Common Stock
Insiders 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
26% rewrittenRisks Related to our E&P Assets
Our 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

All 50 risk factors

Headings as the filing states them, in filing order.

Risks Related to the Ownership of our Common Stock

01Our 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 delays100% rewritten
02We 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 operations100% rewritten
40Additionally, in 2023 Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust (the “O’Neill Trust received Series A warrants (“Series E A Warrants”) to purchase 4,000,000 shares of Common StockNew
41In addition, there are also options outstanding to purchase an aggregate of 4,966,666 shares of Common Stock for $0.25 per share (the “Merger Options”), which are currently exercisableNew
42Our stock price has fluctuated and been volatile in the past and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial lossesNew
43the other factors described under “Risk Factors” and “Cautionary Statement Regarding Forward–Looking Statements” included in this Annual ReportNew
44The Series F Preferred Stock may adversely affect the market price of our Common StockNew
45Our Common Stock ranks junior to our outstanding preferred stock, including the Series F Preferred Stock, with respect to dividends and amounts payable in the event of our liquidation, dissolution or winding–up of our affairsNew
46Future sales of our Common Stock, or the perception that such future sales may occur, may cause our stock price to decline77% rewritten
47Our 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 stockholders35% rewritten
48If 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
49Insiders 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 occur26% rewritten
50We 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

Risks Related to our E&P Assets

03There is no assurance that we will be able to successfully drill producing wells. If any of our assets are not commercially productive of crude oil or natural gas, any funds spent on exploration and production may be lostNew
04The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not ultimately be developed or produced44% rewritten
05Oil, 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
06Our 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 future65% rewritten
07the effects of competition by larger companies operating in the oil and natural gas industryNew
08Drilling 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 operations30% rewritten
09compliance with environmental and other regulatory requirements; andNew
10We 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 operations45% rewritten
11designing and maintaining efficient forms of artificial lift throughout the life of the wellNew
12Multi–well pad drilling and project development may result in volatility in our operating results
13Drilling locations that we decide to drill may not yield oil or natural gas in commercially viable quantities
14Certain 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 acreage48% rewritten
15Our future results of operations are highly dependent on our ability to find, develop, or acquire additional reserves
16Our 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
17We will face strong competition from other oil and natural gas companies
18Government regulation and liability for oil and natural gas operations may adversely affect our business and results of operations
19All of our E&P assets are located in the DJ Basin, making us vulnerable to risks associated with operating primarily in a single geographic area68% rewritten
20Our oil and natural gas exploration, production, and development activities may be subject to a series of risks related to climate change and energy transition initiatives26% rewritten
21Our oil and natural gas exploration, production, and development activities may be subject to physical risks related to potential climate change impacts
22Our business and ability to secure financing may be adversely impacted by increasing stakeholder and market attention to ESG matters
23Restrictions 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
24Our 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
25Laws 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
26Certain 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
27Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operationsNew

Risks Related to the Company

28We have historically incurred significant losses, and may be unable to continuously 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 assets82% rewritten
29We 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
30We 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, including as a result of recent leadership changes59% rewritten
31Past performance by members of the Company’s management team may not be indicative of the future performance of the Company
32Terrorist attacks, cyberattacks and threats could have a material adverse effect on our business, financial condition and results of operations
33The terms of our indebtedness and our Series F Preferred Stock may restrict our future business and operations
34Acquisitions, joint ventures or similar strategic relationships may disrupt or otherwise have a material adverse effect on our business and financial results
35Our 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
36Future litigation or governmental proceedings could result in material adverse consequences to us, including judgments or settlements
37involve and retain outside counsel and accountants in the above activitiesNew
38We are a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make our Common Stock less attractive to investors
39We 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

Other Prairie Operating 10-Ks

FY2024 10-K risk factors
56 risks
Prairie Operating Co. faces intense concentration risks in the DJ Basin, heavy reliance on the Bayswater Acquisition, and capital scarcity for its undeveloped reserves.
Filed Mar 06, 2025

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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.