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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13
or 15(d)
of the Securities Exchange
Act of 1934
Date of Report (Date
of earliest event reported): August 11, 2026
PRESIDIO PRODUCTION COMPANY
(Exact name of registrant
as specified in its charter)
| Delaware |
|
001-43179 |
|
39-3528250 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
500
W. 7th Street
Suite 1500
Fort Worth, Texas |
|
76102 |
| (Address of Principal
Executive Offices) |
|
(Zip Code) |
Registrant’s Telephone Number, Including
Area Code: (817) 382-3664
(Former Name or Former Address, if Changed
Since Last Report): Not Applicable
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ |
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered, pursuant to Section 12(b)
of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Class A Common Stock, par
value $0.0001 per share |
|
FTW |
|
New York Stock Exchange |
| Warrants, each whole warrant
exercisable for one share of Class A common stock at an exercise price of $11.50 per share |
|
FTW WS |
|
New York Stock Exchange |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition
On August 11, 2026, Presidio Production Company
(the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2026. A copy of the
Company’s press release and the earnings call transcript are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and
are incorporated herein by reference.
The information included herein and in
Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as
expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit
No. |
|
Description |
| 99.1 |
|
Press Release, dated August 11, 2026 |
| 99.2 |
|
2Q 2026 Earnings Call Transcript, dated August 12, 2026 |
| 104 |
|
Cover Page Interactive Data File (embedded within Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 13, 2026
| |
PRESIDIO
PRODUCTION COMPANY |
| |
|
| |
By: |
/s/
Brett Barnes |
| |
Name: |
Brett Barnes |
| |
Title: |
Executive Vice President
and General Counsel |
Exhibit 99.1
PRESIDIO PRODUCTION COMPANY ANNOUNCES SECOND
QUARTER 2026 RESULTS
Aug 11, 2026 4:01 PM Eastern Daylight Time
Declares 2Q 2026 dividend of $0.3375 per share
($1.35 per share per year)
FORT WORTH, Texas—(BUSINESS WIRE)—Presidio
Production Company (NYSE: FTW) (“Presidio” or the “Company”), today announced recent highlights and results for
the second quarter ended June 30, 2026.
Recent Highlights
| ● | Averaged approximately 22.8 MBoe/d of production for the second quarter, comprising approximately 16%
oil, 57% natural gas, and 27% NGLs |
| ● | Reported net income attributable to Presidio Production Company of $14.4 million, or $0.34 per Class A
share, for the second quarter of 2026 |
| ● | Generated approximately $33.2 million of Adjusted EBITDA for the second quarter of 2026 |
| ● | Closed $350 million investment grade ABS refinancing at a weighted average coupon of 6.38% |
| ● | Appointed Jason Hudak as Chief Technology Officer and established a dedicated engineering team focused
on developing and deploying Presidio’s AI platform |
| ● | Closed Canyon Creek acquisition in July 2026, after the quarter-end, marking the Company’s second
acquisition as a public company and its first in the Arkoma Basin |
| ● | Declared 2Q 2026 dividend of $0.3375 per share ($1.35 per share per year) |
Management Commentary
“Our second quarter results reflect continued
execution across the business,” said Will Ulrich, Chairman and Co-CEO. “Adjusted EBITDA exceeded guidance, we completed an
investment-grade ABS refinancing that lowered our cost of capital, and we closed our second acquisition as a public company. Together,
these milestones strengthen our capital structure, support a higher dividend, and reinforce the acquisition model we are building to consolidate
producing oil and gas assets.”
Chris Hammack, Co-CEO and Director, added: “Our
team had a strong quarter in the field. We continued advancing the EQVR asset integration and assumed responsibility for Canyon Creek
operations on day one. At both assets, our focus is straightforward: deploy our optimization strategy and implement AI workflows to enhance
cash flow.”
Second Quarter 2026 Financial and Operating
Results
All financial metrics in this release reflect
the successor period for the three months ended June 30, 2026 and exclude the Canyon Creek acquisition, which closed after the quarter-end.
Second-quarter production averaged approximately
22.8 MBoe/d, or 2,071 MBoe for the quarter, comprising approximately 16% oil, 57% natural gas and 27% NGLs.
Total revenue was $54.0 million. The Company’s
average realized price was $25.93 per Boe excluding derivatives and $29.24 per Boe including derivatives, reflecting a realized derivative
gain of $3.31 per Boe.
Lease operating expense was $9.39 per Boe. Production
taxes were $1.42 per Boe and Ad valorem taxes were $0.41 per Boe, resulting in total operating expense of $11.22 per Boe.
The Company reported income from operations of
$6.1 million, net income of $15.5 million, and net income attributable to Presidio Production Company of $14.4 million, or $0.34 per Class
A share.
Adjusted EBITDA was $33.2 million. Results benefited
from the first full quarter of the restructured hedge portfolio, together with continued operating efficiencies across the asset base.
Capital expenditures remained minimal during the
quarter, consistent with the Company’s low-reinvestment model.
Return of Capital
The Board approved a quarterly cash dividend of
$0.3375 per share ($1.35 per share per year).
The Q2 2026 cash dividend will be payable on September
14, 2026 to stockholders of record as of August 31, 2026.
Future dividends, including the amount and timing
thereof, will be declared at the discretion of the Board of Directors and will depend on the Company’s financial condition, results
of operations, capital requirements, and other factors the Board deems relevant.
AI and Asset Intelligence
Presidio applies a disciplined, data-driven playbook
to modernize acquired oilfield operations, transforming oil and gas assets into high-efficiency operations through repeatable systems
and empowered field execution.
The next phase of this strategy is the development
and deployment of new AI workflows to enhance operations.
During the quarter, Presidio appointed Jason Hudak
as Chief Technology Officer and established a dedicated engineering team under his leadership. Mr. Hudak is a technology executive whose
career spans nearly three decades across several of Silicon Valley’s leading platform and infrastructure companies, most recently
as Vice President of Engineering at Aerospike, with prior senior roles at Twilio, RapidAPI, Foursquare, and Yahoo. Under his leadership,
the team is developing Presidio’s AI platform, which the Company is deploying first across its own operations, where Presidio already
applies data and analytics to acquire and optimize producing oil and natural gas wells.
The Asset Intelligence Group carries a target
of three to five percent production growth in 2026 across Presidio’s existing asset base, without any capital expenditure, and has
achieved approximately one percent of production uplift to date.
Acquisitions and Growth
In July 2026, the Company closed its acquisition
of the Canyon Creek assets from companies controlled by Vortus Investments and additional sellers. Canyon Creek is the Company’s
second acquisition as a public company and marks Presidio’s entry into the Arkoma Basin, following the EQVR acquisition completed
in connection with the March 2026 business combination. The closing marked the first use of the Company’s ABS Warehouse Facility,
which is led by Goldman Sachs and provides for borrowings of up to $1.0 billion. The Company funded the transaction with its initial $55
million draw under the facility. Citizens Bank, N.A., the Company’s RBL lender, joined the facility with a 40% participation, broadening
the lender base and enhancing capacity to scale for future acquisitions.
In connection with the transaction, the Company
issued 1,962,240 shares of Class A common stock to the sellers.
The acquired position generates approximately
21 MMcfe/d (3.5 MBoe/d) of net PDP production as of May 2026, weighted approximately 70% to natural gas and 30% to natural gas liquids,
with an estimated base decline of approximately 11% per year, and expected levered returns in excess of 20%.
The acquisition market remains active. The Company’s
broader acquisition pipeline totals approximately $17 billion. The Company remains focused on opportunities that meet its strategic and
return criteria.
Capital Structure
As of June 30, 2026, the Company had total debt
principal outstanding of $343.1 million and Net Debt of $296.5 million. Giving pro forma effect to the $55 million draw
under the ABS Warehouse Facility used to fund the Canyon Creek acquisition subsequent to quarter-end, pro-forma Net Debt was $351.5 million.
Based on $351.5 million of Net Debt and annualized
second-quarter Adjusted EBITDA of approximately $132.7 million, Leverage was approximately 2.7x.
Liquidity
As of June 30, 2026, the Company had $42.3 million
of unrestricted cash and no borrowings outstanding under its RBL.
Subsequent to quarter-end, the Company’s
borrowing base was redetermined in the ordinary course from $65 million to $60 million. The reduction reflects the realization of production
and hedges since the prior borrowing base redetermination.
Therefore, liquidity pro forma for the borrowing
base adjustment is currently approximately $102.3 million, consisting of $42.3 million of unrestricted cash and $60.0 million of available
capacity under the RBL.
Refinancing
On June 9, 2026, the Company closed a $350 million
investment-grade refinancing of its prior asset-backed securitization at a weighted average coupon of 6.38%, issued in two investment
grade tranches consisting of $175 million of 5.902% Class A-1 notes and $175 million of 6.717% Class A-2 notes, each due in 2041.
The coupon was 184 basis points below the weighted
average coupon of the prior ABS (a reduction from 8.22% to 6.38%). The refinancing implemented an Anticipated Repayment Date structure
that lowers scheduled amortization over the first five years, reducing the Company’s cost of capital and increasing cash flow available
for dividends.
The refinancing also includes a flexible call
structure and make-whole provisions designed to support asset acquisitions and efficient refinancing as the Company grows. The notes are
redeemable at the Company’s option at 102% of par prior to the first anniversary, 101% prior to the second anniversary, and par
thereafter.
Equity Capitalization
As of June 30, 2026, the Company had 27,686,745
shares of Class A common stock and 1,676,830 shares of Class B common stock outstanding, together with 125,375 shares of Series A preferred
stock (with a $125 million aggregate stated value) and 27,173 shares of Series B convertible preferred stock (convertible into 2,717,300
shares of Class A common stock).
In connection with the closing of the Canyon Creek
acquisition in July 2026, the Company issued an additional 1,962,240 shares of Class A common stock. Share counts by class are also presented
in the condensed consolidated balance sheet below.
Hedging Program
The Company maintains a multi-year commodity hedging
program to provide cash flow visibility across oil, natural gas, and NGL production. The hedge position reflects the hedge restructuring
executed concurrent with the closing of the business combination, the additional hedge protection added in connection with the ABS refinancing,
and the hedges entered into in connection with the closing of the Canyon Creek acquisition. The following table summarizes Presidio’s
current commodity hedge position as of August 11, 2026.
| | |
3Q26 | | |
4Q26 | | |
1Q27 | | |
2Q27 | | |
3Q27 | | |
4Q27 | | |
FY28 | | |
FY29 | | |
Beyond | |
| Oil Swaps | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Volume (MBbl) | |
| 273 | | |
| 266 | | |
| 255 | | |
| 248 | | |
| 242 | | |
| 237 | | |
| 887 | | |
| 756 | | |
| 937 | |
| Avg. Strike ($/Bbl) | |
$ | 60.01 | | |
$ | 60.59 | | |
$ | 87.90 | | |
$ | 108.14 | | |
$ | 100.59 | | |
$ | 88.02 | | |
$ | 63.17 | | |
$ | 67.55 | | |
$ | 64.38 | |
| Natural Gas Swaps | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Volume (BBtu) | |
| 7,429 | | |
| 7,183 | | |
| 6,865 | | |
| 6,624 | | |
| 6,520 | | |
| 6,388 | | |
| 24,143 | | |
| 20,400 | | |
| 56,926 | |
| Avg. Strike ($/MMBtu) | |
$ | 5.29 | | |
$ | 5.30 | | |
$ | 4.94 | | |
$ | 4.30 | | |
$ | 3.43 | | |
$ | 3.76 | | |
$ | 3.56 | | |
$ | 3.58 | | |
$ | 3.48 | |
| Natural Gas Basis Swaps | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Volume (BBtu) | |
| 7,090 | | |
| 6,961 | | |
| 6,869 | | |
| 6,624 | | |
| 6,523 | | |
| 6,390 | | |
| 22,762 | | |
| 8,663 | | |
| — | |
| Avg. Strike ($/MMBtu) | |
$ | (0.57 | ) | |
$ | (0.41 | ) | |
$ | 0.11 | | |
$ | (0.55 | ) | |
$ | (0.49 | ) | |
$ | (0.40 | ) | |
$ | (0.41 | ) | |
$ | (0.52 | ) | |
| — | |
| NGL Swaps | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Volume (MBbl) | |
| 627 | | |
| 613 | | |
| 593 | | |
| 580 | | |
| 528 | | |
| 517 | | |
| 1,806 | | |
| 1,322 | | |
| 1,316 | |
| Avg. Strike ($/Bbl) | |
$ | 23.05 | | |
$ | 23.14 | | |
$ | 24.86 | | |
$ | 23.02 | | |
$ | 26.76 | | |
$ | 25.64 | | |
$ | 25.48 | | |
$ | 23.41 | | |
$ | 21.49 | |
| NGL hedges include a combination of individual component hedges and WTI hedges allocated to NGL volumes. |
Summary Financial and Operational Data
The following table presents Presidio’s
key financial and operational metrics for the second quarter of 2026 on a successor basis (three months ended June 30, 2026). The Company’s
business combination closed on March 4, 2026, resulting in separate predecessor and successor periods for the first quarter that are not
directly comparable to the full three-month successor period presented for the second quarter. Accordingly, no comparative prior-period
information is presented below. Per-unit metrics are presented on a $/Boe basis.
| | |
Three Months
Ended
June 30,
2026
(Successor) | |
| Production | |
| | |
| Net production (MBoe) | |
| 2,071 | |
| Average daily production (MBoe/d) | |
| 22.8 | |
| Production mix – oil / gas / NGLs | |
| 16% / 57% / 27 | % |
| Revenue and Realizations ($/Boe) | |
| | |
| Average realized price, excluding derivatives | |
$ | 25.93 | |
| Realized derivative gain (loss) | |
$ | 3.31 | |
| Average realized price, including derivatives | |
$ | 29.24 | |
| Operating Costs ($/Boe) | |
| | |
| Lease operating expense | |
$ | 9.39 | |
| Production taxes | |
$ | 1.42 | |
| Ad valorem taxes | |
$ | 0.41 | |
| Total operating expense | |
$ | 11.22 | |
| General and administrative | |
$ | 3.46 | |
| Adjusted General and administrative | |
$ | 2.28 | |
| Depletion, Depreciation & Amortization ($/Boe) | |
| | |
| Depletion, oil and gas properties | |
$ | 7.31 | |
| Depreciation and amortization, other | |
$ | 0.41 | |
| Aggregate Financials ($ thousands, except per share) | |
| | |
| Total revenue | |
| 54,000 | |
| Income (loss) from operations | |
| 6,062 | |
| Net income (loss) | |
| 15,479 | |
| Net income (loss) attributable to Presidio Production Company | |
| 14,425 | |
| Net income per Class A share, basic and diluted | |
$ | 0.34 | |
| Adjusted EBITDA | |
| 33,176 | |
| Adjusted Unhedged EBITDA | |
| 26,315 | |
Certain
amounts are presented in thousands, except per-share data. Adjusted General and Administrative, Adjusted EBITDA and Adjusted Unhedged
EBITDA are non-GAAP measures; see “Non-GAAP Financial Measures and Reconciliations.”
Average realized prices by product for the three months ended June
30, 2026 (Successor), before and after the impact of derivatives settled in cash, were as follows:
| Three Months Ended June 30, 2026 (Successor) | |
Excluding
Derivatives
(Pre-Hedge) | | |
Including
Derivatives
(Post-Hedge) | |
| Oil ($/Bbl) | |
$ | 94.38 | | |
$ | 63.69 | |
| Natural gas ($/Mcf) | |
$ | 1.08 | | |
$ | 4.23 | |
| NGLs ($/Bbl) | |
$ | 26.94 | | |
$ | 17.64 | |
| Total ($/Boe) | |
$ | 25.93 | | |
$ | 29.24 | |
Conference Call Information
Presidio reported its second quarter 2026 results
on Tuesday, August 11, 2026, and will host a conference call to discuss the results the following morning, Wednesday, August 12, 2026
at 11:00 AM Eastern Time (10:00 AM Central Time). A live webcast and replay will be available on the Investor Relations section of the
Company’s website at https://ir.bypresidio.com/. The call may be accessed by dialing (877) 407-0784. A replay of the call
will be available shortly after the call by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (international); passcode 13761597. The replay
will be available through Wednesday, August 26, 2026.
About Presidio Production Company
Headquartered in Fort Worth, TX, Presidio Production
Company (NYSE: FTW) is a yield-focused, differentiated oil and gas operator in the United States focused on the acquisition and optimization
of producing oil and natural gas wells, without drilling. Presidio applies engineering expertise and AI-driven analytics to enhance performance
and extend asset life. The Company’s Class A common stock is listed on the New York Stock Exchange under the ticker symbol “FTW”.
To learn more, visit https://bypresidio.com/.
Non-GAAP Financial Measures and Reconciliations
This press release includes Adjusted EBITDA, Adjusted
Unhedged EBITDA, Adjusted General and Administrative Expense, Leverage and Net Debt, which are financial measures not calculated in accordance
with generally accepted accounting principles in the United States (“GAAP”).
Presidio defines Adjusted EBITDA as net income
(loss) before (1) interest expense, net, (2) depreciation, depletion, amortization and accretion, (3) unrealized loss (gain) on derivative
instruments, (4) non-cash share-based compensation, (5) non-recurring compensation expense related to our Class B Units, (6) (gain) loss
on sale of assets, net, (7) loss on ARO liabilities, (8) change in fair value of earnout liability, (9) loss on early extinguishment of
debt, (10) income tax expense (benefit), (11) acquisition and transaction costs, and (12) certain non-recurring costs that management
does not consider indicative of ongoing performance.
Adjusted EBITDA is used as a supplemental financial
performance measure by Presidio management and by external users of our financial statements, such as industry analysts, investors, lenders,
rating agencies and others, to evaluate our operating performance and Presidio’s results of operations from period to period and
against our peers without regard to financing methods, capital structure or historical cost basis. We exclude the items listed above from
net income (loss) in arriving at Adjusted EBITDA because these items and related amounts can vary substantially from company to company
within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets
were acquired. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative
to, or more meaningful than, net income (loss) as determined in accordance with GAAP or as an indicator of our operating performance.
Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance,
such as a company’s cost of capital and tax burden, as well as the historic costs of depreciable assets, none of which are reflected
in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by
unusual items. Our computations of Adjusted EBITDA may not be identical to other similarly titled measures of other companies.
Presidio defines Adjusted Unhedged EBITDA as Adjusted
EBITDA further adjusted to remove realized gains and losses on derivative instruments. This measure is intended to show our operating
results without the impact of our hedging program. Management believes Adjusted Unhedged EBITDA is an important metric that provides valuable
insight into the Company’s underlying operational performance by removing the effects of financing decisions, non-cash charges,
and hedging activities. Adjusted Unhedged EBITDA is a supplemental non-GAAP measure and may not be comparable to similarly titled measures
of other companies.
Adjusted EBITDA and Adjusted Unhedged EBITDA are
not substitutes for, and should be considered in addition to, net income (loss), cash flows from operating activities, or any other measure
of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and Adjusted Unhedged EBITDA as presented may
not be comparable to similarly titled measures of other companies. A reconciliation of Adjusted EBITDA and Adjusted Unhedged EBITDA to
net loss, the most directly comparable GAAP measure, is provided below.
Presidio defines Adjusted General and Administrative
Expense as General and Administrative Expense adjusted to remove non-cash share-based compensation, non-recurring compensation expense
related to our Class B Units, and certain non-recurring costs that management does not consider indicative of ongoing performance. This
measure is intended to show our General and Administrative Expenses without the impact of non-cash and non-recurring items. Management
believes Adjusted General and Administrative Expense is an important metric that provides valuable insight into the Company’s underlying
operational performance. Adjusted General and Administrative Expense is a supplemental non-GAAP measure and may not be comparable to similarly
titled measures of other companies. A reconciliation of Adjusted General and Administrative Expense to General and Administrative Expense,
the most directly comparable GAAP measure, is provided below.
Presidio defines Net Debt as the aggregate principal
amount outstanding of the Company’s ABS notes, RBL borrowings and Trail Dust term loan, excluding lease obligations, less total
cash (including restricted cash). Presidio defines Leverage as Net Debt divided by annualized Adjusted EBITDA, calculated by multiplying
the applicable quarter’s Adjusted EBITDA by four. The Leverage ratio presented in this press release is calculated using Adjusted
EBITDA for the second quarter of 2026.
Management believes Net Debt and Leverage are
useful to investors, analysts and rating agencies in evaluating the Company’s capital structure and ability to service its indebtedness.
Net Debt and Leverage are supplemental non-GAAP measures, should not be considered alternatives to total debt or net income (loss) determined
in accordance with GAAP, and may not be comparable to similarly titled measures of other companies. A reconciliation of Net Debt to total
debt, the most directly comparable GAAP measure, is set forth below.
Reconciliation of GAAP Financial Measures to
Adjusted EBITDA and Adjusted Unhedged EBITDA
The following table reconciles net income (loss),
the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA and Adjusted Unhedged EBITDA for
the three months ended June 30, 2026 (Successor). The Company’s business combination closed on March 4, 2026, resulting in separate
predecessor and successor periods for the first quarter that are not directly comparable to the full three-month successor period presented
for the second quarter. Accordingly, no comparative prior-period information is presented below.
| $ in thousands | |
Three Months
Ended
June 30,
2026
(Successor) | |
| Net Income (Loss) (GAAP) (1) | |
$ | 15,479 | |
| Depletion, oil and gas properties | |
| 15,130 | |
| Depreciation of other property and equipment | |
| 859 | |
| Accretion of asset retirement obligation | |
| 1,150 | |
| Gain from sale of assets | |
| (158 | ) |
| Loss on ARO liabilities | |
| - | |
| Unrealized (gain) loss from derivative transactions | |
| (17,962 | ) |
| Change in fair value of earnout liability | |
| 2,972 | |
| Loss on early extinguishment of debt | |
| 4,475 | |
| Share-based compensation (2) | |
| 2,219 | |
| Acquisition and transaction costs | |
| 544 | |
| Interest expense | |
| 4,286 | |
| Non-recurring cost (3) | |
| 221 | |
| Income tax expense (benefit) | |
| 3,961 | |
| Adjusted EBITDA | |
$ | 33,176 | |
| Realized (gain) loss from derivative transactions | |
| (6,861 | ) |
| Adjusted Unhedged EBITDA | |
$ | 26,315 | |
| (1) |
Reflects total GAAP net income (loss), which includes $1.1 million of net income attributable to non-controlling interests;
net income attributable to Presidio Production Company was $14.4 million. |
| (2) |
Includes share-based compensation expense related to restricted stock units. |
| (3) |
Includes one-time severance fees. |
Reconciliation of GAAP Financial Measures to
Adjusted General and Administrative Expense
The following table reconciles General and Administrative
Expense, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted General and Administrative Expense
for the three months ended June 30, 2026 (Successor). The Company’s business combination closed on March 4, 2026, resulting in separate
predecessor and successor periods for the first quarter that are not directly comparable to the full three-month successor period presented
for the second quarter. Accordingly, no comparative prior-period information is presented below.
| $ in thousands (except per Boe) | |
Three Months
Ended
June 30,
2026
(Successor) | |
| General and Administrative (GAAP) | |
$ | 7,164 | |
| Share-based compensation (1) | |
| (2,219 | ) |
| Non-recurring cost (2) | |
| (221 | ) |
| Adjusted General and Administrative | |
$ | 4,724 | |
| Adjusted General and Administrative per Boe | |
$ | 2.28 | |
| (1) |
Includes share-based compensation expense related to restricted stock units. |
| (2) |
Includes one-time severance fees. |
Reconciliation of Net Debt to Total Debt
The following table sets forth the Company’s
outstanding debt and reconciles total debt, the most directly comparable GAAP measure, to Net Debt as of June 30, 2026 ($ in thousands).
| ($ in thousands) | |
June 30,
2026 | |
| ABS III Securitization notes | |
$ | 348,117 | |
| Citizens RBL (undrawn) | |
| - | |
| Trail Dust term loan | |
| 2,013 | |
| Equipment financing obligations | |
| 1,462 | |
| ABS III debt issuance costs, net | |
| (8,520 | ) |
| Total Debt (GAAP) | |
$ | 343,072 | |
| Less: Equipment financing obligations | |
| (1,462 | ) |
| Plus: ABS III debt issuance costs, net | |
| 8,520 | |
| Principal outstanding (ABS Notes, RBL, Trail Dust) | |
$ | 350,130 | |
| Less: Cash and cash equivalents | |
| (42,317 | ) |
| Less: Restricted cash | |
| (11,278 | ) |
| Net Debt | |
$ | 296,535 | |
| Plus: ABS Warehouse Facility draw funded at Canyon Creek closing (July 1, 2026) (1) | |
| 55,000 | |
| Net Debt, as adjusted for the Canyon Creek acquisition (1) | |
$ | 351,535 | |
| (1) |
Reflects the $55 million draw under the ABS Warehouse Facility, led by Goldman
Sachs, funded in connection with the closing of the Canyon Creek acquisition on July 1, 2026, a subsequent event. Shown as a memo
item and does not adjust the Company’s June 30, 2026 GAAP debt balances. Does not give effect to Canyon Creek’s contribution
to Adjusted EBITDA or cash flow. |
Condensed Consolidated Statement of Operations
(Unaudited)
The following table presents the Company’s
condensed consolidated statement of operations for the three months ended June 30, 2026 (Successor) ($ in thousands, except per share
amounts). The Company’s business combination closed on March 4, 2026, resulting in separate predecessor and successor periods for
the first quarter that are not directly comparable to the full three-month successor period presented for the second quarter. Accordingly,
no comparative prior-period information is presented below.
| | |
Three Months
Ended
June 30,
2026
(Successor) | |
| Revenues | |
| |
| Oil sales | |
$ | 30,673 | |
| Natural gas sales | |
| 7,645 | |
| Natural gas liquids sales | |
| 15,381 | |
| Field services revenue | |
| 301 | |
| Total revenues | |
| 54,000 | |
| Operating Expenses | |
| | |
| Lease operating expenses | |
| 19,454 | |
| Production taxes | |
| 2,945 | |
| Ad valorem taxes | |
| 850 | |
| Depletion, oil and gas properties | |
| 15,130 | |
| Depreciation and amortization, other | |
| 859 | |
| Accretion of asset retirement obligation | |
| 1,150 | |
| General and administrative | |
| 7,164 | |
| Acquisition and transaction costs | |
| 544 | |
| Cost of field services revenue | |
| - | |
| Gain on sale of assets | |
| (158 | ) |
| Total operating expenses | |
| 47,938 | |
| Income (loss) from operations | |
| 6,062 | |
| Other Income (Expense) | |
| | |
| Gain (loss) on commodity derivatives | |
| 24,823 | |
| Change in fair value of earnout liability | |
| (2,972 | ) |
| Loss on early extinguishment of debt | |
| (4,475 | ) |
| Interest expense | |
| (4,286 | ) |
| Other income (expense) | |
| 288 | |
| Total other income (expense) | |
| 13,378 | |
| Net income (loss) before income taxes | |
| 19,440 | |
| Income tax benefit (expense) | |
| (3,961 | ) |
| Net income (loss) | |
| 15,479 | |
| Net income (loss) attributable to non-controlling interests | |
| 1,054 | |
| Net income (loss) attributable to Presidio Production Company | |
$ | 14,425 | |
| Net income per Class A share, basic and diluted | |
$ | 0.34 | |
| Weighted average Class A shares outstanding, basic and diluted | |
| 26,756,317 | |
Condensed Consolidated Balance Sheet (Unaudited)
The following table presents the Company’s
condensed consolidated balance sheet as of June 30, 2026 ($ in thousands). The Company’s business combination closed on March 4,
2026, resulting in separate predecessor and successor periods for the first quarter that are not directly comparable to the full three-month
successor period presented for the second quarter. Accordingly, no comparative prior-period information is presented below.
| ($ in thousands) | |
June 30,
2026 | |
| Assets | |
| |
| Cash and cash equivalents | |
$ | 42,317 | |
| Restricted cash | |
| 11,278 | |
| Accounts receivable, oil and gas | |
| 18,105 | |
| Accounts receivable, joint interest owners | |
| 10,623 | |
| Derivative assets, current | |
| 54,555 | |
| Hedge receivable | |
| 6,586 | |
| Prepaid expenses and other current assets | |
| 2,414 | |
| Total current assets | |
| 145,878 | |
| Oil and natural gas properties, net | |
| 673,984 | |
| Other property and equipment, net | |
| 4,590 | |
| Derivative assets, noncurrent | |
| 11,058 | |
| Right-of-use assets | |
| 3,561 | |
| Deferred tax assets, noncurrent | |
| 182 | |
| Other noncurrent assets | |
| 8,491 | |
| Total assets | |
$ | 847,744 | |
| Liabilities and Equity | |
| | |
| Accounts payable | |
$ | 15,696 | |
| Production taxes payable | |
| 3,570 | |
| Revenue and royalties payable | |
| 26,071 | |
| Derivative liabilities, current | |
| 10,946 | |
| Hedge payable | |
| 10,092 | |
| Current portion of long-term debt | |
| 35,836 | |
| Lease liabilities, current | |
| 299 | |
| Other current liabilities | |
| 21,090 | |
| Total current liabilities | |
| 123,600 | |
| Long-term debt, net | |
| 307,236 | |
| Asset retirement obligations | |
| 79,921 | |
| Lease liabilities | |
| 3,328 | |
| Derivative liabilities, noncurrent | |
| 2,058 | |
| Earnout liability | |
| 17,772 | |
| Total liabilities | |
| 533,915 | |
| Series A redeemable preferred stock (125,375 shares) | |
| 112,123 | |
| Series B convertible redeemable preferred stock (27,173 shares) | |
| 24,701 | |
| Class A common stock (27,686,745 shares issued and outstanding) | |
| 3 | |
| Class B common stock (1,676,830 shares issued and outstanding) | |
| - | |
| Additional paid-in capital | |
| 191,524 | |
| Accumulated deficit | |
| (32,166 | ) |
| Total stockholders’ equity attributable to Presidio Production Company | |
| 159,361 | |
| Non-controlling interest | |
| 17,644 | |
| Total stockholders’ equity | |
| 177,005 | |
| Total liabilities, redeemable preferred stock and stockholders’ equity | |
$ | 847,744 | |
Cautionary Note Regarding Hydrocarbon Disclosures
The U.S. Securities and Exchange Commission (“SEC”)
permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC’s
definitions for such terms. Presidio uses certain terms in this press release, such as estimated production, reserves estimates, and
resource potential, that the SEC’s guidelines may prohibit it from including in filings with the SEC. Investors are urged to consider
closely the disclosure in the Company’s filings with the SEC, including its Quarterly Report on Form 10-Q for the quarter ended
June 30, 2026, when available, each of which may be obtained without charge at www.sec.gov.
Cautionary Note Regarding Forward-Looking Statements
The statements contained in this press release
that are not purely historical are forward-looking statements. These forward-looking statements include, but are not limited to, statements
regarding our expectations, hopes, beliefs, intentions or strategies regarding the future, including statements regarding Adjusted EBITDA,
Adjusted Unhedged EBITDA, and other financial and operational results; the payment, maintenance and anticipated increase of the Company’s
dividend; the Canyon Creek acquisition and its anticipated benefits and returns; the ABS refinancing and the Company’s cost of capital,
liquidity and capital structure; the Company’s ABS Warehouse Facility and future borrowings thereunder; the Company’s acquisition
pipeline and its ability to identify, finance and complete future acquisitions; the Company’s hedging program; and the Company’s
investment in artificial intelligence, including the development and potential commercialization of its AI platform. In addition, any
statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,”
“potential,” “predict,” “project,” “should,” “would” and similar expressions
may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this
press release are based on our current expectations and beliefs concerning future developments and their potential effects on the Company.
There can be no assurance that future developments affecting the Company will be those that we have anticipated. These forward-looking
statements speak only as of the date this press release is issued and involve a number of risks, uncertainties (some of which are beyond
our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied
by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions
prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
Factors that may cause actual results to differ
materially from current expectations include, but are not limited to: (1) the ability to recognize the anticipated benefits of the Canyon
Creek acquisition, which may be affected by, among other things, competition, the ability of the Company to reduce operating costs, grow
and manage growth profitably, maintain relationships with customers and suppliers, successfully integrate the Canyon Creek assets into
the assets of the Company and retain its management and key employees; (2) the Company’s ability to identify, finance and complete
future acquisitions and to realize the anticipated benefits thereof; (3) changes in applicable laws or regulations; (4) the possibility
that the Company may be adversely affected by other economic, business, and/or competitive factors; (5) changes in domestic and foreign
business, market, financial, political conditions, and in applicable laws and regulations; (6) the ability to meet stock exchange listing
standards; (7) the ability of the Company to build or maintain relationships with customers and suppliers and retain its management and
key employees; (8) risks related to commodity price volatility and its impact on cash flows and dividend sustainability; (9) risks related
to oil and gas operations, including production declines, operational challenges, and regulatory changes; (10) risks related to the Company’s
indebtedness, the ABS refinancing, and borrowings under the ABS Warehouse Facility; (11) the ability to recognize the anticipated benefits
of the Company’s investment in artificial intelligence and the development and potential commercialization of its AI platform; (12)
risks related to the Company’s ability to pay, maintain or increase dividend payments; and (13) other risk factors described herein
as well as the risk factors and uncertainties described in documents filed by the Company with the U.S. Securities and Exchange Commission
(the “SEC”), the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”
and similar sections in its filings with the SEC, and any periodic Exchange Act reports filed with the SEC such as its Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. The recipient of this press release should carefully consider
the foregoing risk factors and the other risks and uncertainties which will be more fully described in the documents filed by the Company
from time to time with the SEC. If any of these risks materialize or the underlying assumptions prove incorrect, actual results could
differ materially from the results implied by these forward-looking statements.
In addition, there may be additional risks that
the Company does not presently know, or that it currently believes are immaterial, that could also cause actual results to differ from
those contained in the forward-looking statements. Nothing in this communication should be regarded as a representation or warranty, either
express or implied, by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated
results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which
speak only as of the date they are made.
In addition, the information contained in this
press release is provided as of the date hereof and may change, and the Company and its representatives and affiliates specifically disclaim
any obligation to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, inaccuracies,
future events or otherwise, except as may be required under applicable securities laws. Information contained on our website is not a
part of or incorporated into this press release. Dividends are not guaranteed and may be adjusted, suspended, or discontinued at the discretion
of the Board of Directors based on liquidity, legal surplus, business conditions, commodity price volatility, market conditions and other
factors.
Notes
| (1) | Non-GAAP measure. See “Non-GAAP Financial Measures
and Reconciliations” for definitions and reconciliations. |
| (2) | Debt balances given as principal outstanding and reflect
principal outstanding for borrowed money; refer to the Company’s Form 10-Q for additional information. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20260811563574/en/
Presidio Media and Investor Contact:
Connor Fair, Director of
Investor Relations
investors@bypresidio.com
Exhibit 99.2
PRESIDIO PRODUCTION COMPANY Q2 2026 EARNINGS
CONFERENCE CALL
Aug 12, 2026 10:44 AM Eastern Daylight Time
CONNOR FAIR | Director of Investor Relations
Good morning, and welcome to Presidio Production
Company’s second quarter 2026 earnings conference call. I am Connor Fair, Director of Investor Relations, and joining me today are our
Chairman and Co-CEO, Will Ulrich; Co-CEO and Director, Chris Hammack; EVP and CFO, John Brawley; EVP and General Counsel, Brett Barnes;
and Chief Technology Officer, Jason Hudak.
As a reminder, today’s call includes forward-looking
statements. These statements are based on management’s current expectations and assumptions and are subject to risks, uncertainties and
other factors, many of which are beyond the Company’s control, that could cause actual results to differ materially from those expressed
or implied on this call. For a discussion of these risks, please refer to the cautionary language in yesterday’s earnings release and
the risk factors in our filings with the SEC, which are available on the Investor Relations section of our website.
We will also refer to certain non-GAAP financial
measures. The most directly comparable GAAP measures, together with definitions and reconciliations, are included in yesterday’s earnings
release, which is available on the Investor Relations section of our website.
With that, I will turn the call over to Will.
WILL ULRICH
| Chairman and Co-CEO
Thank you, Connor, and good morning.
We all have mountains to climb — the ones
set before us, and the ones we choose to set for ourselves. Chris and I started this business with nothing more than a friendship and
an idea: that we could create massive value from investing in oil and gas without ever drilling a well — a direct challenge to a
hundred-and-fifty-year-old industry philosophy.
I’ve thought often, these past two weeks, about
the passing of Nirmal “Nims” Purja, who died in an avalanche in Pakistan on July 30th. If you don’t know his story, I’d encourage
you to watch the Netflix documentary 14 Peaks. Nims set out to do the impossible — to climb all fourteen of the world’s 8,000-meter
peaks in six months — and he did it. He called it Project Possible.
At Presidio we also believe in the Possible. We
seek out challenges, and when we can’t find them, we will create them. We choose our routes, we take risks when the moment calls for it,
but our objective is to deliberately deliver on our business model over long periods of time.
This quarter was no exception. A few months ago,
on our first call as a public company, we told you what we intended to do. We said we would acquire producing assets and optimize them
— and through closing and integrating Canyon Creek, we have. We said we would continue creating efficiencies in our balance sheet
— and through refinancing our bonds and funding our first acquisition under our $1 billion ABS acquisition warehouse with Goldman
Sachs, now joined by Citizens Bank, we have. We said we would accelerate our position as the world’s first agentic oil and gas company
— and through this quarter’s hires, led by our new Chief Technology Officer, Jason Hudak, and a team of seasoned Silicon Valley
executives, we have. We set a target to raise the Company’s production 3 to 5 percent through AI, without drilling and without capital
expenditure, and we are well on our way, achieving a 2.3% uplift through 2nd quarter. We told you about our backlog of acquisitions,
which remains as attractive as ever, and — like a climber who waits for the right conditions to summit — we will make our
next acquisition in short order.
All of this is happening against the backdrop
of major changes in the global energy landscape that I discussed on last quarter’s call, and we believe FTW is one of the most compelling
investment cases in American energy today.
We are an operator and acquiror of producing,
cash-flowing American oil and gas assets. The case for Presidio rests on four pillars, our dividend, acquisitions, optimization, and AI.
First, the dividend. The starting point for any
investor in Presidio is cash return. Our annualized dividend is $1.35 per share, a yield of approximately 12 percent at our recent share
price. Canyon Creek closed on July 1st, so the results we are reporting today contain none of its cash flow — and we intend to raise
the dividend once the Canyon Creek assets are contributing to our results. We generated $15.7 million of free cash flow in the quarter,
or roughly $0.50 per share, against a $0.3375 quarterly dividend.
Second, growth through acquisition, backed by
unique capital markets access. We have closed two acquisitions as a public company in under five months — EQVR at our formation
and Canyon Creek immediately following this quarter — and our acquisition pipeline stands at approximately $17 billion. What makes
that pipeline actionable rather than aspirational is our capital structure. Our $1 billion ABS acquisition warehouse, our master-trust
dropdown structure, and refinancing flexibility that is unprecedented in the energy ABS market mean we can move on the right asset quickly
and finance it efficiently, in a way that most operators our size simply cannot. During the quarter, twenty-five opportunities came across
our desk. We took sixteen through review and bid on nine. We see nearly every deal in the market, and we bid on a little over a third
of it, with discipline.
Third, optimization —where the story has
continued to evolve. Our operating discipline has always been core to the thesis. Historically that discipline showed up primarily as
expense discipline, and it still does — lease operating expense came in at $9.39 per Boe this quarter. Increasingly, the same discipline,
paired with our data and AI capability, is showing up on the production side. Chris will walk you through the specifics, but the headline
is this: we are no longer only the best operators at controlling cost. We are becoming the best operators at growing production from assets
with almost zero capital expenditures.
And fourth, our AI platform that increasingly
ties the other three together. During the quarter we appointed Jason Hudak as Chief Technology Officer. Jason is not an oil and gas person
— he is a Silicon Valley technology and AI executive with nearly three decades of experience, most recently as Vice President of
Engineering at Aerospike, with prior senior roles at Twilio, RapidAPI, Foursquare and Yahoo. Jason has built out a team of senior technology
leaders across AI product, machine learning, data engineering, data science and cloud infrastructure, drawing from companies including
Twilio, Cisco, , Aerospike, VMware and Akamai.
We are pairing world-class technology talent with
the operating knowledge and field data already inside Presidio. Oil and gas expertise tells us which problems matter; technology expertise
lets us solve them faster, more consistently and at greater scale. This is not a corporate IT initiative and it is not primarily about
automating back-office work. As I’ve said previously, in this business, production, revenue and cash flow are the prize, and that
is where the mandate points.
I want to be specific about what this has already
produced, because it is easy for the word “AI” to sound like a slogan rather than a result. Production for the quarter averaged
22,755 barrels of oil equivalent per day. Against our 3 to 5 percent full-year AI uplift target, we have now delivered approximately 2.3
percent — 1.4% from DOUG, our production-surveillance agent, and another nearly 1% from adjacent AI initiatives Chris will describe.
That is measured, well-level uplift, generating $4.5 million annualized revenue in Q2, and we are just getting started. One could see
substantial additional value just attributed to where our growing AI platform sits today.
We now have roughly 2,000 wells on the intelligence
platform. We are on track against our 3 to 5 percent full-year target, and Chris is going to take you into the field and show you exactly
how it happens.
Turning to the quarter, the second quarter was
an important period of execution.
We reported net income attributable to Presidio
Production Company of $14.4 million, or $0.34 per Class A share, and generated Adjusted EBITDA of $33.2 million against the $30 million
we guided you to — a beat of $3.2 million, or roughly 11 percent and production averaged 22,755 Boe per day with minimal CAPEX of
$0.6 million.
We also completed a lower-cost investment-grade
ABS financing. Immediately following quarter-end, we closed the Canyon Creek acquisition and entered the Arkoma Basin — a transaction
that, together with our lower cost of capital, supports future dividend increases, subject to Board approval.
Canyon Creek is our second acquisition as a public
company and marks our entry into the Arkoma Basin. That entry matters because Canyon Creek is more than a single transaction — it
establishes a new land-and-expand platform. The first deal gives us an operating foothold, local knowledge, field infrastructure and a
team in the basin. From that foundation we apply our operating playbook, build basin-level intelligence, and evaluate adjacent opportunities
from a position of strength.
That is how we built Presidio from the beginning
with our land and expand strategy. We enter a basin through an asset we understand, improve it through operations, and then expand around
that position with discipline.
We will remain selective. The objective is not
to win every process or grow for growth’s sake — it is to acquire the right producing assets, at the right price, with a clear path
to operational improvement, compelling returns and increases to the dividend.
We acquire producing American oil and gas assets
with existing cash flow. We make those assets more productive through operations, technology and better decisions. We finance them efficiently.
And we return a meaningful portion of the resulting cash flow to shareholders.
We acquire. We optimize. We grow the dividend.
We repeat.
With that, I’ll turn the call over to Chris.
CHRIS
HAMMACK | Co-CEO
Thank you, Will.
At Presidio, value creation begins the moment
we close an acquisition. We take responsibility for the people, the wells, the vendors and the systems, and we begin improving how the
asset is operated from day one.
We are not relying on drilling or large capital
projects. Our total capital expenditure for the quarter was $600,000 against $33.2 million of Adjusted EBITDA. Value comes instead from
the thousands of daily decisions that determine production, operating cost and cash flow across a mature asset base. I want to spend my
time this morning on those decisions because they are unique in today’s market.
Before I get into any of that, through the first
half of 2026 we have recorded zero recordable injuries, zero days-away cases and zero vehicle incidents. Our safety committee is employee-led,
we hold monthly field safety meetings with season-appropriate focus, and every post-incident review is shared with the entire field staff.
Lessons travel from the field up, not just from the office down. In an operation running roughly 2,000 wells across three states, that
record is the result of deliberate work by our field organization, and I want to recognize them for it.
Will mentioned that we have delivered roughly
2.3 percent of production uplift from AI against our 3 to 5 percent full-year target. Let me tell you exactly where it came from.
First, DOUG. DOUG is our production-surveillance
agent. It continuously monitors well-level data across the operated base, flags deviations against expected behavior, and routes recommendations
to the field engineer responsible for that well. Over the last three months DOUG has averaged 400 barrels of oil equivalent per day of
incremental production — 1.4 percentage points of our production result on its own. It is the single largest contributor to our
production beat this quarter, and it did not exist a year ago.
Second, AI-enhanced weekend coverage. Weekends
have always been our weak spot on a mature asset base, for the simple reason that we run reduced manpower. So we used AI to identify which
wells carry the most downtime attributable to lack of weekend coverage, cross-referenced against our highest-production wells, and gave
our weekend pumpers an interactive table and map — a game plan for where to go and in what order. In the second quarter, weekend
production increased 2.5 percent. That is a scheduling problem we had lived with for years, solved with better information rather than
more headcount.
Third, the AI plunger box. We have installed these
on 24 wells. Rather than requiring full-scale SCADA infrastructure, the unit analyzes and continuously adjusts plunger cycle timing, monitors
micro-events, estimates fluid volumes per cycle, and tracks plunger performance even when a traditional sensor misses the signature. On
the wells where it is installed, gas went from a pre-install average of 2,680 Mcf per day to 2,946 Mcf per day post-install — roughly
a 10 percent lift on that population, and about 0.2 percent on total company production. We have 24 wells on it today. Once we optimize
wells with this plunger box, we will move it to the next group for further optimization.
None of these replace field judgment. All three
of them point field judgment at the right well, in the right order, on the right day. That distinction matters, and it is why our field
organization has adopted this rather than resisted it.
Now, let me talk about workovers. Our wedge workover
program is the clearest example of what disciplined, data-directed intervention produces on a mature asset base. We have completed 25
of 69 identified jobs, with 44 remaining in the current queue and the program projected to finish in the fourth quarter.
In the second quarter we completed seventeen workovers.
The payout period compressed from 1 year at original forecast to 0.75 years on actuals. PV-10 improved from $2.7 million to $3.4 million.
Returns exceeded 100% for these workovers. These are going better than we expected, and we have more to do.
This reason this matters beyond the barrels: each
tranche of workovers teaches us something about which candidates screen well and which do not, and that feedback goes straight back into
how the next tranche gets built.
Turning to the integrations, and I’ll take EQVR
first. The EQVR asset is 216 active wells producing approximately 2,800 net Boe per day, and the integration is substantially complete
on the items that drive cost.
The headline is a 30 percent reduction in lease
operating expense on that asset, from roughly $700 thousand per month in the second quarter of 2025 to $500 thousand today. Here is how
we got there. On labor, we redesigned the asset into four routes, filled a new Production Tech position through internal promotion, and
retained the fifth EQV pumper for a Presidio route — while eliminating the contract pumper entirely. On compression, we released
two units, downsized two more, and renegotiated eight, with the majority of the remaining fleet now under contract through the second
and third quarters of 2027. On chemicals, we moved the vendor onto Presidio pricing. We completed production software integration in mid-May
and have finished SCADA integration.
We are also continuing to improve the quality
and consistency of data coming off the EQVR assets, because better data improves both day-to-day operating decisions and the performance
of the intelligence platform over time.
Now to Canyon Creek. At Canyon Creek — 42
active operated wells, approximately 3,500 net Boe per day — we took over field operations on day one and immediately began running
the same playbook.
Already complete: we eliminated one contract route
and created a company route, eliminated an additional foreman role, swapped the chemical vendor and eliminated an excessive former expense
by executing workovers the prior operator had deferred, and transitioned production software on day one. We also completed all five of
the neglected workovers we had identified in diligence — all five successful.
In progress: on compression, two releases and
two downsizes are complete with one additional downsize scheduled for August. On SCADA, we have completed the transition to Presidio and
are now working the direct SCADA-to-production-software integration. Yard consolidation — scrapping unusable inventory and moving
to smaller yard space — is scheduled for the end of September.
We are projecting a 32 percent reduction in lease
operating expense at Canyon Creek, from roughly $250 thousand a month to $170 thousand, measured against the third quarter of 2025.
Speed matters here. The first days and weeks after
closing are when operating culture is established, responsibilities are clarified and the foundation for future performance is set. We
want the people closest to the wells to understand how decisions get made, what they are accountable for and how they are empowered to
improve the asset. And we want data from those wells flowing quickly into the systems our operating and engineering teams use every day.
Once those systems, relationships and disciplines
are in place, we are in a far stronger position to evaluate and integrate additional assets in the basin. That is why land-and-expand
matters. Canyon Creek is not simply another acquisition — it is the operating platform, local knowledge, field infrastructure and
data foundation from which we expand in the Arkoma.
One last item, and it is one that gets overlooked.
Over the trailing twelve months through July, we realized $12.9 million of cash consideration from leasehold monetization across 61 separate
transactions. We are a producing-asset company. We do not need to hold undeveloped acreage that someone else values more highly than we
do, and turning that acreage into cash is a real and repeatable part of how this model funds itself.
I’ll now turn the call over to John.
JOHN BRAWLEY
| EVP and CFO
Thank you, Chris.
This was Presidio’s first full quarter as a public
company following our IPO in March. I’ll note the quarter does not include Canyon Creek, which closed July 1st, immediately following
quarter-end.
We had a strong quarter across all four key areas
— production, revenue, operating expenses and EBITDA — and I want to take each in turn, because in every case the outperformance
traces to something specific.
When I go through the numbers below, for revenue
I’m talking about the whole quarter in the first quarter, both the predecessor and the successor period combined, for any per unit
metrics I’m using just the successor period from March 4 to March 31, as that period contains the EQVR asset and is post-IPO and
therefore apples to apples on a per unit basis with the second quarter.
Starting with production. Production averaged
22,800 Boe per day, slightly above the successor period (March 4 to March 31), with a mix of approximately 16 percent oil, 57 percent
natural gas and 27 percent NGLs. The increasing (versus normally declining) production is attributable to our AI systems and our wedge
workover program.
Turning to revenue. Revenue (including hedge settlements)
was $60.9 million including $6.9 million of realized hedge settlements — up from $34.4 million in the first quarter. The largest
drivers of increased revenues for the quarter come from our restructured hedges and an increase in oil and NGL pricing during the quarter
(partially offset a by a reduction in natural gas prices).
On the cost side lease operating expense was $9.39
per Boe, improved from $9.47 in the first quarter successor period. Total operating expense including production and ad valorem taxes
was $11.22 per Boe, down from $11.68. This was the impact of enhanced production from optimization, AI, and the realization of cost efficiencies.
Consolidated net income was $15.5 million, of
which $14.4 million was attributable to Presidio or $0.34 per Class A share.
Adjusted EBITDA was $33.2 million against the
$30 million we discussed on our prior call. While this was a good quarter, given current commodity prices which trail off in the third
and fourth quarters – I would expect EBITDA to be very slightly under $30 million per quarter in the next two quarters, but summing
to $90 million for the last nine months of 2026.
Reconciliations of any non-GAAP measures to net
income are included in the earnings release.
The quarter benefited from the first full period
of the restructured hedge portfolio, together with continued operating efficiencies across the asset base. Capital expenditures remained
minimal, consistent with our low-reinvestment model.
ABS Refinancing & Warehouse
Next, I’ll spend some time on the ABS refinancing
because it meaningfully improved both our cost of capital and the structure supporting our acquisition and dividend model.
On June 9, we closed a $350 million investment-grade
refinancing of our prior asset-backed securitization at a weighted average coupon of 6.38%. The refinancing included two investment-grade
tranches of $175 million each. We reduced the weighted average coupon by 184 basis points, from 8.22% to 6.38%.
The transaction was used to repay our prior ABS,
payoff balances outstanding under our RBL and a $35 million hedge restrike.
The refinancing also introduced an Anticipated
Repayment Date, or ARD, structure. Although the notes mature in 2041, the ARD structure reduces scheduled amortization during the first
five years. Said simply, less cash is contractually directed to principal in the near term, leaving more cash available to support dividends
and acquisitions.
That is an important improvement from the prior
ABS. We now have a lower fixed cost of capital, long-duration financing, and a more efficient near-term amortization profile.
In structuring this ABS we were intentional in
creating a structure which works with our strategy, and as a public company. We are keeping our capital structure as simple as possible,
while still taking advantage of the ABS advance rates and cost of capital.
The most important structural feature of our ABS
is its ability to be flexible to fund our growth. We approached this flexibility through two avenues. First, the ABS includes a master
trust structure which allows for the drop down of additional assets into a new series of bonds. This is relatively common in ABS. The
second structural design element is new, a first in the energy ABS market. Because we are a growing public company and transparency is
important in our capital structure, we fundamentally changed the call protection versus all energy ABS transactions preceding us. To date
energy ABS pre-payments typically required payment of all expected future interest (discounted at treasuries plus 50 bps), our notes are
however redeemable at 102, 101 in years 1, 2, and at par thereafter.
This allows us unprecedented flexibility to refinance
multiple series of notes into one, following acquisitions or dropdowns from our warehouse. It allows us to finance future acquisitions
without creating unnecessary complexity in the capital structure.
We now have two options for adding assets to our
ABS: utilization of the master trust structure or refinancing without a painful make-whole cost.
Taken together, the lower coupon, reduced scheduled
amortization and greater refinancing flexibility create a materially better financing platform for Presidio.
Speaking of the warehouse facility – the
Canyon Creek acquisition marked the first use of our $1 Billion ABS Warehouse Facility.
We funded the transaction with an initial $55
million draw under the facility. And, in connection with the closing of Canyon Creek, we issued 1,962,240 shares of Class A common stock
to the sellers.
The warehouse performed exactly as designed. It
allowed us to fund a PDP acquisition efficiently at closing, with the ability to move that asset into permanent ABS financing over time.
I also note that our friends at Citizens Bank
(who also lead our credit facility) joined the warehouse for 40% participation, broadening our lender base and adding capacity to support
future acquisitions. This demonstrates that we continue to attract world class capital partners at an attractive cost of capital.
Capital Structure and Leverage
Continuing with the balance sheet, as of June
30, total debt principal outstanding was $350 million and Net Debt was $296.5 million.
Giving pro forma effect to the $55 million draw
under the ABS Warehouse Facility used to fund Canyon Creek, Net Debt was $351.5 million.
Based on pro forma Net Debt of $351.5 million
and annualized second-quarter Adjusted EBITDA of approximately $132.7 million, Leverage was 2.7 times.
Liquidity
As for liquidity — as of June 30, we had
$42.3 million of unrestricted cash and no borrowings outstanding under the RBL.
Subsequent to quarter-end, the borrowing base
was redetermined in the ordinary course from $65 million to $60 million. The reduction reflects the realization of production and hedges
since the prior borrowing base redetermination.
Therefore, liquidity pro forma for the borrowing
base adjustment is currently approximately $102.3 million, consisting of $42.3 million of unrestricted cash and $60.0 million of available
capacity under the RBL.
Hedging Program
As for hedges — we continue to maintain
a multi-year commodity hedging program across oil, natural gas and NGL production.
The detailed hedge table is included in the earnings
release.
We view hedging as an important part of our capital
structure. It provides cash flow visibility, supports dividend durability and helps us underwrite acquisitions with greater confidence.
Acquisition Pipeline
I’ll close with the acquisition market.
Instability in the middle east has led to moderately higher commodity prices. That environment has led to a plethora of companies deciding
to put their assets on the market, when previously they were on the fence. Deal activity has been incredibly strong and we have been actively
bidding on opportunities daily and weekly. We are bidding on assets from $50 million to $2 billion.
Our bids have been competitive, however we will
not overpay and we remain disciplined on price, structure and returns.
The environment is strong, and we’re getting
turns at bat. The combination of our PDP strategy, public platform, ABS access and operating track record, position us well to execute
on our growth strategy.
With that, I’ll turn the call back to Will
for closing remarks.
WILL ULRICH
| Closing Remarks
Thank you, John.
Last quarter we said Presidio was built for a
changing game in energy. This quarter we showed what that means in practice.
We delivered $14.4 million of net income attributable
to Presidio and $33.2 million of Adjusted EBITDA against $30 million guided — a beat of roughly 11 percent. We were able to increase
production during the period and have now delivered 2.3 percent of AI-driven production uplift against our 3 to 5 percent target, with
zero incremental capital. We cut 184 basis points off our cost of ABS capital and funded $35 million of additional hedge protection through
2027. We closed Canyon Creek and established a new operating platform in the Arkoma. And our dividend is on exactly the schedule we described
to you last quarter — $1.35 per share now, with an expected raise in the future for the Canyon Creek acquisition, subject to Board
approval now that Canyon Creek is on our platform.
We have an acquisition pipeline of approximately
$17 billion. We will remain disciplined. We are not trying to own every asset — we are trying to own the assets where our operating
model, capital structure and technology create the greatest value.
This country will need more reliable energy, more
productive infrastructure, and better decisions from the physical assets already in the ground. Presidio sits directly at that intersection.
We own producing American oil and gas assets. We operate them with a low-reinvestment model — $0.6 million of capex against $33.2
million of EBITDA this quarter. We finance them through a purpose-built capital structure. And we are building technology designed to
make every well, every employee and every acquisition more productive.
That combination is rare. We believe it is strategically
important. And we believe it can become extraordinarily valuable.
Our work now is to execute: continue to integrate
EQVR and Canyon Creek, continue improving the existing asset base, acquire the right assets at the right price, grow the dividend, and
build a company worthy of the opportunity in front of us.
We are still at the beginning.
Thank you for joining us this morning. Operator,
please open the line for questions.
