Can Prairie Operating Co. Win Big With Its DJ Basin Land Grab?

Prairie Operating Co. PROP has quickly positioned itself as the most aggressive consolidator in the northern Denver-Julesburg (DJ) Basin. Over the past year and a half, PROP completed three major acquisitions — Genesis, Nickel Road and Bayswater — spreading over 54,000 net acres and establishing an approximately 10-year runway of high-graded inventory. 

Colorado’s DJ Basin is a geologically attractive area with supportive local policies and proximity to infrastructure. The DJ Basin also benefits from a regional gas market that imports from Canada, potentially offering better pricing than the oversupplied Texas gas markets.

In particular, the $603 million Bayswater transaction marks a game-changing move. The deal expanded Prairie Operating Co.’s production footprint to 26,000 barrels of oil equivalent per day (BOE/d) and added 600 drilling locations across 24,000 net acres in Colorado’s DJ Basin — an area known for stability, efficiency and favorable permitting. With built-in efficiencies and immediate free cash flow generation, this move enhances operational leverage and financial stability.

With an expected adjusted EBITDA of $350-$370 million post-acquisition, Houston-based Prairie Operating Co. anticipates strong free cash flow generation, reinforcing its ability to fund future growth without excessive debt. Overall, these acquisitions offer scale and resource leverage that could materially change PROP’s production profile.

What Sets PROP Apart From Competition?

While oil production in the DJ Basin began in the 1970s, activity has accelerated significantly in recent years. This growth is driven by the presence of major operators such as Chevron CVX and Civitas Resources CIVI. 

What makes PROP’s bold bet on DJ Basin consolidation compelling is the lack of near-term competition. Larger players like Chevron and Civitas Resources have shifted focus to other basins, leaving Prairie Operating Co. with a relatively open field. While Civitas Resources’ inventory now includes 1,200 locations in the Permian, Chevron spans almost every corner of the globe.

That gives Prairie Operating Co. a rare chance to build scale and optionality in a region where consolidation has historically come at a premium. With more than 586 gross locations and 157 permits already in hand, PROP’s platform now resembles a mini-major within its niche, and its appetite for further deals appears intact.

PROP’s Price Performance, Valuation and Estimates

Shares of Prairie Operating Co. have lost more than 40% year to date.

From a valuation standpoint, PROP trades at a forward price-to-sales ratio of 0.29, well below the sector average. The company carries a Value Score of A.

The Zacks Consensus Estimate for Prairie Operating Co.’s 2025 earnings implies a 383% jump year over year.

The stock currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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