PrimeEnergy Resources Corp. Reports Strong Q1 2024 Results
PrimeEnergy Resources Corp., a key player in the independent oil and natural gas sector, has announced its financial results for the first quarter of 2024, revealing significant growth in both revenue and net income. As the company continues to capitalize on its operational strengths in the Permian Basin and Oklahoma, its strategic investments and drilling activities are poised to drive future expansion.
1. Financial Highlights
In Q1 2024, PrimeEnergy reported a net income of $11.3 million, or $6.27 per share, a substantial increase compared to the $1.4 million or $0.75 per share recorded in the same period last year. This remarkable turnaround can be attributed to a 108.4% rise in oil, gas, and NGL sales, which surged to $39 million from $18.7 million year-over-year.
Revenue and Expenses
The company’s operating expenses increased by 51.2% to $12.1 million, largely driven by expanded drilling activities and operational costs. However, it is noteworthy that PrimeEnergy managed to control its general and administrative expenses, which decreased by 1.5% to $3.05 million.
The average prices for oil and gas during the quarter were favorable, with oil priced at $64.41 per barrel and gas at $3.14 per thousand cubic feet. These prices, alongside increased production levels, have positioned PrimeEnergy for solid performance in the competitive energy market.
| May 2023 | May 2024 | |
|---|---|---|
Net Income | 38.93M | 38.01M |
Profit | 38.93M | 38.01M |
Net Income Continuing | 38.93M | 38.01M |
Income Tax Expense | 7.56M | 8.76M |
Pretax Income | 46.49M | 46.78M |
Non-operating Income | -391K | 68K |
Operating Income | 46.88M | 3.72M |
Revenue | 121.5M | 110.1M |
Costs and Expenses | 92.48M | 106.3M |
Cost of Revenue | 11.26M | 11.37M |
Operating Expenses | 81.22M | 95.00M |
Depreciation, Depletion & Amortization | 27.31M | 24.55M |
Selling, General & Administrative | 16.66M | 12.54M |
Other Operating Expenses | 37.25M | 57.91M |
Cash Flow Insights
PrimeEnergy’s cash flow statement reveals a net change in cash of -$9.31 million for the quarter. The company’s cash flow from operating activities was strong at $43.20 million, driven by the operational profit of $11.31 million. However, cash outflows for investing activities reached $53.66 million, reflecting the company’s commitment to expanding its drilling operations.
| May 2023 | May 2024 | |
|---|---|---|
Net Change in Cash | 9.64M | -11.97M |
Net Cash from Operating Activities | 54.40M | 121.5M |
Operating Profit | 38.93M | 38.01M |
Adjustment to Operating Profit | 15.47M | 83.56M |
Net Cash from Investing Activities | -26.44M | -129.6M |
Productive Assets | 26.44M | 129.6M |
Net Cash from Financing Activities | -18.31M | -3.90M |
Debt | -9M | 3.70M |
Equity Issuance/Repurchase | -9.31M | -7.60M |
2. Operational Activities
In Q1 2024, PrimeEnergy continued its aggressive drilling strategy, completing 12 Studley CKO wells and 3 O'Bannon wells in Reagan County, Texas. Looking ahead, the company plans to complete 54 new horizontal wells throughout the year, with a projected investment of approximately $140 million. Furthermore, an additional $95 million is earmarked for the drilling of 23 more horizontal wells slated for completion in 2025.
Segment Performance
The company's operations are primarily divided into two segments: the Permian Basin and Oklahoma. As of December 31, 2023, the Permian Basin accounted for 90% of the company’s proved reserves, illustrating the region's critical role in PrimeEnergy's growth strategy. The focus on horizontal drilling in this prolific area is expected to yield substantial returns.
3. Balance Sheet Overview
PrimeEnergy maintains a robust balance sheet, reporting total assets of $35.42 million and total liabilities of $163.4 million as of March 31, 2024. The company’s equity stands at $169.4 million, indicating a solid capital structure to support its ongoing and future investments.
| May 2023 | May 2024 | |
|---|---|---|
Total Assets | 239.3M | 35.42M |
Total Current Assets | 41.42M | 32.11M |
Cash and Equivalents | 13.72M | 1.75M |
Accounts Receivable | 11.15M | 29.53M |
Prepaid Expenses | 16.13M | 791K |
Other Current Assets | 38K | 38K |
Total Non-current Assets | 197.9M | 3.31M |
Net PP&E | 196.9M | 3.31M |
Other Non-current Assets | 951K | 0 |
Total Liabilities and Equity | 239.3M | 332.8M |
Total Liabilities | 100.3M | 163.4M |
Total Current Liabilities | 44.24M | 88.47M |
Accounts Payable and Accrued Liabilities | 42.07M | 25.34M |
Other Current Liabilities | 2.17M | 63.12M |
Total Non-current Liabilities | 56.08M | 75M |
Long-term Debt | 1.98M | 4.82M |
Asset Retirement and Litigation Obligation | 13.70M | 14.64M |
Non-current Deferred Tax Liabilities | 0 | 55.52M |
Other Non-current Liabilities | 40.38M | 0 |
Total Equity and Non-controlling Interests | 139.0M | 169.4M |
Total Equity | 139.0M | 169.4M |
Liquidity Position
As of mid-May 2024, PrimeEnergy has a current borrowing base of $85 million, with outstanding borrowings of only $2 million. This strong liquidity position enables the company to pursue its capital expenditure plans without over-leveraging itself.
4. Future Outlook
Looking ahead, PrimeEnergy Resources Corp. is well-positioned for growth in the coming quarters. The company’s strategic investments in horizontal drilling and its focus on mature properties in Texas and Oklahoma provide a solid foundation for future production increases.
With plans to invest over $300 million in new horizontal wells by 2027, PrimeEnergy is committed to enhancing its production capacity while navigating the complexities of the energy market. The company’s strong financial performance in Q1 2024 reflects its operational efficiencies and strategic foresight, setting the stage for continued success in the months ahead.
In conclusion, PrimeEnergy’s Q1 2024 report showcases a compelling narrative of growth, operational excellence, and strategic investment, reflecting a promising outlook for both the company and its stakeholders in the energy sector.
