Categories: General Market Commentary- DPC
Topics: General Market Commentary- DPC

Is 'net zero' even possible by 2050?

Editor’s Note: My long-time friend and colleague John Carl and I just launched a new publication called Digital Dispatch. In it, we cover everything from AI to crypto while highlighting stocks we think will outperform in the months ahead. We’re so confident in our research that we’re giving out the first issue for free. You can read it here. 

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Dear Reader,

If you like what you see, you can subscribe at no risk for 60 days and get access to all of our research reports, including Big Oil’s Billion-Dollar Pivot. 

In an era where technological innovation is disrupting traditional industries, the 'Big Oil’s Billion-Dollar Pivot' report elucidates how the oil industry is adapting to change by heavily investing in Artificial Intelligence (AI). Big Oil companies, characterized by their vast resources and data-rich operations, are fertile grounds for AI applications to enhance decision-making and operational efficiency. 

This report spotlights the partnership between Big Oil and one small AI firm that has yielded significant advancements in predictive maintenance across the industry. Furthermore, the report details this company’s expansion into various sectors, including partnerships with Koch Industries and the U.S. Air Force, showcasing AI's transformative potential beyond oil and gas. 

I just returned from Miami to attend a presentation on fossil fuels and why, despite what you’ve heard in the media, they aren’t going anywhere.

I also met with the leadership of one small oil company that looks well positioned to grow as the oil market inevitably picks up steam again. 

Even though oil has been in a bearish trend for some time, demand will inevitably trigger a new bull market in the asset. Acquiring the right companies now will yield great returns in the months and years ahead. 

Overlooking Miami Beach, I had drinks with Gary Hanna, the president of Prairie Operating Company (NASDAQ: PROP). Gary is an energy industry veteran who has been at the helm of 14 different companies including, most recently, a CEO position at Rosehill Operating Co. (NASDAQ: ROSE). 

He told me that he wasn’t sure if he wanted to take on any new ventures at this point in his career but Prairie CEO Edward Kovalik managed to talk him into it with the promise of a lean, non-levered (no debt) oil company with solid fundamentals. 

Kovalik, a seasoned professional with over 16 years in the financial sector, is the co-founder, CEO, and managing partner at KLR Group. Since its establishment in 2012, Kovalik has been at the helm of the firm, specializing in tailored financing solutions for clients. His career previously included key roles such as Head of Capital Markets at Rodman & Renshaw spearheading their Energy Investment Banking team.

He gave an excellent presentation highlighting why “net zero” is a fantasy and that oil will be here for a long time regardless of what our current political leaders say. He also laid out a compelling case for Prairie Operating Company, which I summarize below:

Summary of Prairie Operating Company's Strategic and Operational Overview:

Prairie Operating Co. bolsters its operational strategy with approximately 45,000 acres in a prime US basin, projecting strong project returns with over 75% IRR and consistent well payback within a year. The inventory is both resilient and burgeoning, with a positioning enhanced by the proximity to high-caliber operators, which supports expansive development plans.

The growth trajectory is defined by a best-in-class cash flow and production growth, underpinned by strategic under-leveraging and plans to drill up to 60 wells annually. The company utilizes extensive experience in oil and gas management with a leadership composed of industry stalwarts.

Additionally, comprehensive analyses assert the robustness and profit-making capabilities of the acreage, backing it with an aggressive and shrewdly hedged development strategy aiming to capitalize on strong macroeconomic tailwinds to drive cash flow.
Prairie Operating Co. Secures Additional Reserves and Drilling Locations:

In a strategic effort to enhance its asset portfolio, Prairie Operating Co. has successfully acquired critical assets in the Denver-Julesburg Basin, positioning the company for continued growth. By purchasing an additional 1,280-acre drillable spacing unit (DSU) for $900,000, Prairie Operating Co. fortifies its stance in northern Weld County, Colorado.

This acquisition brings 2.6 million barrels of oil equivalent (MMBoe) to its reserves and augments its proven PV10 value by approximately $40 million. With this expansion, which includes eight drill-ready permitted proven undeveloped (PUD) locations, Prairie Operating Co.'s drilling inventory ascends to a total of 70 wells.

Kovalik affirms that this acquisition not only increases their proven reserves but also provides immediate shareholder value. Prairie Operating Co.'s calculated move underscores its commitment to a strategy of prudent and targeted growth within the oil and gas industry.

Prairie Operating Company's recent asset acquisition in the Denver-Julesburg Basin signifies a strategic expansion that suggests a firm foothold in one of the most resource-rich territories in North America. The company's foresight in securing additional reserves and strategically located drilling locations demonstrates a robust business model geared towards sustainable growth. 

All of this with no debt.

With the addition of proven undrilled locations and the subsequent increase in its drilling inventory, investors can anticipate a strong pipeline of development opportunities that will likely translate to steady production and revenue increases over time. Additionally, the enhancement of Prairie Operating Co.'s proven PV10 value fortifies the company's financial position, offering a compelling value proposition to shareholders.

These factors combined with a well-executed growth strategy make Prairie Operating Company (NASDAQ: PROP) an attractive stock purchase for those looking to invest in the energy sector. 

Speaking of attractive stocks, our new Digital Dispatch tech portfolio is full of them. Several are already up over 200%! We’re releasing a fresh round of new recommendations over the next few weeks — and we don’t expect them to sit still for long. Click here to gain access now. 

Keep coming back,

Chris Curl
Editor, Daily Profit Cycle