Shares of PrimeEnergy Resources Corporation (PNRG Quick QuotePNRG - Free Report) have risen 1.6% since reporting results for the first quarter of 2025. This compares with the S&P 500 index’s 1.8% decline over the same time frame. Over the past month, the stock has gained 5.1% compared with the S&P 500’s 6.5% rally.

PrimeEnergy posted first-quarter revenues of $50.1 million, marking a 16.4% increase from the prior-year period’s $42.99 million. The rise was driven by significantly higher natural gas and NGL volumes despite a modest year-over-year dip in oil revenues.

Net income came in at $9.1 million, down 19.3% from $11.3 million a year ago. Diluted earnings per share (EPS) fell 15.7% to $3.72 from $4.41 in the prior-year quarter due to increased depreciation and interest expenses tied to expanded drilling operations.

Production Growth Drives Revenue Gains

Oil production rose 6% year over year to 457,000 barrels, while natural gas output skyrocketed 106.6% to 2.39 billion cubic feet. NGL production also soared 120.4% to 454,000 barrels. These volume increases compensated for commodity price softness, particularly a 7.5% drop in the average realized price of oil and an 11.3% decline in NGL pricing.

Oil sales slipped 1.9% to $32.7 million, but natural gas revenues more than quadrupled to $6 million, and NGL revenues soared 95.4% to $8.5 million. Total oil and gas revenues improved 21% year over year.

Operating Expenses & Margins

Production costs rose 4.3% to $9.5 million, tracking the company’s growing output. Depreciation, depletion and amortization expenses nearly doubled to $20.4 million, reflecting PrimeEnergy’s expanded asset base in West Texas from intensified drilling. Interest expenses skyrocketed 174.4% to $590,000 due to higher debt balances and interest rates under the company’s revolving credit facility. General and administrative costs decreased slightly, and income tax expenses fell in line with lower pretax income.

Management Commentary

Chief financial officer Beverly Cummings described the quarter as demonstrating “strong operational momentum,” pointing to growth in gas and NGL volumes, and continued capital returns via share repurchases. Management has also emphasized that its portfolio is well-positioned for commodity price volatility, citing a mix of mature reserves and active development areas in Texas.

Strategic Factors Impacting Results

The company’s performance was heavily influenced by robust development in West Texas, where it participated in dozens of new horizontal wells in 2024 and early 2025. These investments led to notable production gains, particularly in natural gas and NGLs. However, weaker oil and NGL pricing partially offset the top-line benefits. Depreciation and interest costs also weighed on profitability, stemming from capital-intensive drilling activity and higher interest rates on variable-rate debt.

Guidance & Outlook

The company disclosed expectations to invest $118 million in 38 horizontal wells in 2025, continuing its aggressive capital deployment in the Midland Basin. Management reiterated its intent to fund capital needs primarily through operating cash flows and its $300-million credit facility, which had $108.5 million in remaining availability as of quarter-end.

Other Developments

In the quarter, PrimeEnergy repurchased 47,970 shares for $9.17 million, continuing its long-running share repurchase program. The company has now returned $112.6 million to shareholders through buybacks. A $619,000 gain was also recorded from the disposition of a workover rig, reflecting PrimeEnergy’s ongoing portfolio optimization strategy.

Overall, while PNRG’s earnings declined due to heavier investment and rising costs, underlying growth in production and revenues, and continued capital returns signal confidence in its long-term strategy.