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Prairie Operating Co. is getting deeper in Colorado with the acquisition of Nickel Road Operating LLC.
Houston-based Prairie Operating is acquiring the assets of Nickel Road Operating (NRO) for a total consideration of $94.5 million, the company announced Jan. 11.
The consideration includes $83 million in cash and $11.5 million in deferred cash payments.
NRO’s assets are operations located near Prairie’s existing footprint in the Denver-Julesburg (D-J) Basin—largely in rural Weld County, Colorado.
The deal includes 5,500 net contiguous acres (90% HBP) and 62 permitted undeveloped drilling locations.
The liquids-weighted assets produce approximately 3,370 boe/d (84% liquids; 66% oil) from 26 operated horizontal wells.
The assets include third-party proven reserves of around 22.2 MMboe, representing a PV-10 value of $254 million.
Prairie expects the undeveloped drilling locations to pay out in about a year after beginning production. The low-cost drilling locations are also expected to breakeven below a WTI price of $30/bbl.
“This acquisition increases and strengthens our overall position within a top-tier U.S. shale basin and aligns with our strategy of creating value through accretive acquisitions,” said Prairie Operating Chairman and CEO Ed Kovalik.
The acquisition is expected to close in the first half of 2024.
After closing, Prairie will have around 45,000 acres in Weld County, offset by high-profile operators like Chevron Corp., EOG, Occidental Petroleum and Civitas Resources, the company said in investor materials.
“Today’s target rich environment gives us ample opportunity to continue executing our acquisition strategy,” said Prairie’s President Gary Hanna. “These assets strategically enhance our existing operations, enabling us to capitalize on operational efficiencies in the D-J Basin.”
Hanna, a veteran of the oil and gas industry, has served as president and a board director at Prairie since May 2023, regulatory filings show. Hanna was previously chairman and interim CEO of Delaware Basin E&P Rosehill Resources.
Prairie Operating was formed last year between the merger of Creek Road Miners Inc., a publicly traded company using stranded gas assets to power cryptocurrency mining operations, and Prairie, a vehicle to acquire and develop oil and gas assets.
In conjunction with the merger, Prairie acquired undeveloped leasehold acreage in Weld County from Exok Inc. Prairie later exercised an option to acquire additional D-J Basin acreage from Exok.
After closing the Exok transactions, Prairie controlled approximately 37,189 acres in Weld County.
In December, Prairie received approval to list its common stock on the Nasdaq Capital Market exchange.
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