Houston-based Prairie Operating Co. has renegotiated the terms of its previously announced asset purchase agreement, resulting in a significant reduction in cash consideration and amendments to its preferred stock conditions.
On August 15, 2024, Prairie Operating Co. entered into an amendment to the asset purchase agreement with Nickel Road Development LLC and Nickel Road Operating LLC to acquire certain assets for a revised cash purchase price of $57 million, subject to adjustments. This amendment reflects a $14.5 million reduction from the original cash consideration and includes adjustments to the effective time of the agreement, outside date for closing, and other transaction-related terms.
In addition to the amendment, the company has reached a Consent & Agreement with a significant shareholder, Narrogal Nominees Pty Ltd, which holds a substantial portion of Prairie's convertible preferred stock. This agreement includes consents for the funding of the acquisition and ongoing operations, a release of mortgage on company property, and amendments to increase the beneficial ownership limitation ceiling from 9.99% to 49.9%.
The shareholder has also agreed to a standstill provision, limiting further acquisition of common stock for a ten-year period, and a voting agreement to proportionally exercise voting rights if they exceed 29.9% of the common stock. This agreement aligns with the company's efforts to maintain a balanced governance structure.
Furthermore, Prairie Operating Co. has filed amendments to its certificates of designation for its Series D and Series E Convertible Preferred Stock, reflecting the new beneficial ownership limitation ceiling. These filings also include a correction to an immaterial clerical error in the company's Second Amended and Restated Certificate of Incorporation.
The company disclosed that the significant shareholder exercised warrants to purchase 4 million shares of common stock for $24 million, with the proceeds intended for general working capital purposes, potentially contributing to the funding of the asset acquisition.
These strategic moves come as Prairie Operating Co. continues to strengthen its position in the crude petroleum and natural gas sector. The company's stock, traded under the ticker PROP on The Nasdaq Stock Market LLC, may see investor reaction to these developments as it moves forward with the acquisition and operational enhancements.
In other recent news, Prairie Operating Co. has secured $24 million from the full exercise of Series E B Warrants by Watermill Capital Partners, marking their continued support for the company's strategic growth initiatives. This move coincides with the conversion of all Series E preferred stock into common stock, simplifying Prairie's capital structure to bolster its potential for long-term growth.
The company is also advancing its growth plans with the new Shelduck South project, an eight-well pad targeting the Niobrara B and C formations across 1,260 mineral acres, with production expected to commence in the fourth quarter of 2024.
Prairie Operating Co. has also announced its intention to begin a drilling program at its Shelduck South property in Colorado in August 2024. This venture, facilitated by Precision Drilling (NYSE:PDS), aligns with Prairie's commitment to lower emissions.
Furthermore, the company is set to join the Russell 3000 Index, a move indicative of the company's growth strategies and progress. This inclusion, determined by market-capitalization rankings and style attributes, could potentially increase investor visibility and broaden the investor base. These recent developments underscore Prairie Operating Co.'s commitment to responsible development and growth.
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