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PrimeEnergy Q1 Earnings Fall Y/Y on Unfavorable Gas Prices
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Shares of PrimeEnergy Resources Corporation (PNRG - Free Report) have declined 37.9% since reporting first-quarter 2026 results, significantly underperforming the S&P 500’s 2.7% return. The stock has also lagged the broader market over the past month, falling 28% against a 4.8% increase in the S&P 500.
Earnings & Revenue Performance
PrimeEnergy reported first-quarter 2026 net income attributable to common stockholders of $4.3 million, or $2.67 per basic share, down from $9.1 million, or $5.40 per basic share, in the year-ago quarter.
Total revenues and other income declined 21.3% year over year to $39.4 million from $50.1 million. The decline was led by sharply weaker natural gas and natural gas liquids (NGL) revenues, partly offset by higher oil sales. Oil revenues increased 8.3% to $35.4 million, while natural gas revenues swung to a loss of $1 million from positive revenues of $6 million a year earlier. NGL revenues fell 39.3% to $5.2 million.
PrimeEnergy Corporation Price, Consensus and EPS Surprise
Total oil and gas revenues decreased 16.3% year over year to $39.5 million. Oil production rose 8.1% to 494,000 barrels, while the average realized oil price inched up 0.2% to $71.60 per barrel. Natural gas volumes sold increased 7.4% to 2.57 million Mcf, but the average realized gas price deteriorated to negative 40 cents per Mcf from positive $2.52 per Mcf in the prior-year period. NGL volumes declined 14.8%, while average realized NGL prices dropped 28.8% to $13.38 per barrel.
Production expenses increased 2.1% to $9.7 million, reflecting costs associated with additional West Texas wells brought online during the second half of 2025. Production and ad valorem taxes declined 2.3% to $3.2 million. Depreciation, depletion and amortization expenses decreased 17.9% to $16.7 million, while interest expenses fell 54.2% to $0.3 million.
The company also recorded a $1.9-million unrealized loss on derivative instruments during the quarter.
Management Commentary
Management highlighted the company’s ability to remain profitable despite what it described as unprecedented negative natural gas pricing in the Permian Basin. President Charles E. Drimal Jr. said that realized natural gas prices averaged negative 40 cents per Mcf during the quarter because of insufficient pipeline takeaway capacity in the region. He noted that discussions with the company’s marketing group indicate that these conditions could persist through 2026 and potentially worsen until additional pipeline infrastructure becomes operational.
Drimal emphasized that PrimeEnergy’s oil-weighted asset base, strong balance sheet and disciplined capital allocation enabled the company to generate approximately $24 million in cash flow available for development activities and corporate purposes despite the difficult natural gas market environment.
Factors Affecting Quarterly Results
The primary factor behind the earnings decline was the collapse in realized natural gas pricing. While oil production and oil revenues increased year over year, negative natural gas prices reduced revenues and profitability. Management attributed the pricing weakness to continued growth in associated gas production from the Permian Basin, coupled with inadequate pipeline capacity to move volumes to end markets.
The company noted that natural gas prices in the Permian Basin were affected by regional transportation constraints during the quarter and warned that these conditions could persist through the remainder of 2026. To help mitigate commodity-price volatility, PrimeEnergy maintained oil derivative contracts covering 518,000 barrels at a weighted-average price of $74.92 per barrel as of March 31, 2026.
Guidance
PrimeEnergy expects to invest $52 million during 2026 in horizontal drilling projects, primarily in West Texas and Oklahoma. Planned activity includes Apache-operated development in Upton County, TX, where the company expects to hold an average 41.8% ownership interest across 12 wells, indicating an investment of $50.6 million. Management also outlined additional drilling opportunities in Oklahoma with Validus Energy II and Ovintiv Mid-Continent.
The company ended the quarter with $19.4 million in cash, no outstanding debt and full availability under its $115-million revolving credit facility, which was reaffirmed in February 2026.
Other Developments
PrimeEnergy repurchased 14,500 shares of common stock during the quarter for $2.6 million at an average price of $180.81 per share. Since the inception of its repurchase program, the company has bought back 3.93 million shares for $119.6 million.
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PrimeEnergy Q1 Earnings Fall Y/Y on Unfavorable Gas Prices
Shares of PrimeEnergy Resources Corporation (PNRG - Free Report) have declined 37.9% since reporting first-quarter 2026 results, significantly underperforming the S&P 500’s 2.7% return. The stock has also lagged the broader market over the past month, falling 28% against a 4.8% increase in the S&P 500.
Earnings & Revenue Performance
PrimeEnergy reported first-quarter 2026 net income attributable to common stockholders of $4.3 million, or $2.67 per basic share, down from $9.1 million, or $5.40 per basic share, in the year-ago quarter.
Total revenues and other income declined 21.3% year over year to $39.4 million from $50.1 million. The decline was led by sharply weaker natural gas and natural gas liquids (NGL) revenues, partly offset by higher oil sales. Oil revenues increased 8.3% to $35.4 million, while natural gas revenues swung to a loss of $1 million from positive revenues of $6 million a year earlier. NGL revenues fell 39.3% to $5.2 million.
PrimeEnergy Corporation Price, Consensus and EPS Surprise
PrimeEnergy Corporation price-consensus-eps-surprise-chart | PrimeEnergy Corporation Quote
Operating Performance & Key Metrics
Total oil and gas revenues decreased 16.3% year over year to $39.5 million. Oil production rose 8.1% to 494,000 barrels, while the average realized oil price inched up 0.2% to $71.60 per barrel. Natural gas volumes sold increased 7.4% to 2.57 million Mcf, but the average realized gas price deteriorated to negative 40 cents per Mcf from positive $2.52 per Mcf in the prior-year period. NGL volumes declined 14.8%, while average realized NGL prices dropped 28.8% to $13.38 per barrel.
Production expenses increased 2.1% to $9.7 million, reflecting costs associated with additional West Texas wells brought online during the second half of 2025. Production and ad valorem taxes declined 2.3% to $3.2 million. Depreciation, depletion and amortization expenses decreased 17.9% to $16.7 million, while interest expenses fell 54.2% to $0.3 million.
The company also recorded a $1.9-million unrealized loss on derivative instruments during the quarter.
Management Commentary
Management highlighted the company’s ability to remain profitable despite what it described as unprecedented negative natural gas pricing in the Permian Basin. President Charles E. Drimal Jr. said that realized natural gas prices averaged negative 40 cents per Mcf during the quarter because of insufficient pipeline takeaway capacity in the region. He noted that discussions with the company’s marketing group indicate that these conditions could persist through 2026 and potentially worsen until additional pipeline infrastructure becomes operational.
Drimal emphasized that PrimeEnergy’s oil-weighted asset base, strong balance sheet and disciplined capital allocation enabled the company to generate approximately $24 million in cash flow available for development activities and corporate purposes despite the difficult natural gas market environment.
Factors Affecting Quarterly Results
The primary factor behind the earnings decline was the collapse in realized natural gas pricing. While oil production and oil revenues increased year over year, negative natural gas prices reduced revenues and profitability. Management attributed the pricing weakness to continued growth in associated gas production from the Permian Basin, coupled with inadequate pipeline capacity to move volumes to end markets.
The company noted that natural gas prices in the Permian Basin were affected by regional transportation constraints during the quarter and warned that these conditions could persist through the remainder of 2026. To help mitigate commodity-price volatility, PrimeEnergy maintained oil derivative contracts covering 518,000 barrels at a weighted-average price of $74.92 per barrel as of March 31, 2026.
Guidance
PrimeEnergy expects to invest $52 million during 2026 in horizontal drilling projects, primarily in West Texas and Oklahoma. Planned activity includes Apache-operated development in Upton County, TX, where the company expects to hold an average 41.8% ownership interest across 12 wells, indicating an investment of $50.6 million. Management also outlined additional drilling opportunities in Oklahoma with Validus Energy II and Ovintiv Mid-Continent.
The company ended the quarter with $19.4 million in cash, no outstanding debt and full availability under its $115-million revolving credit facility, which was reaffirmed in February 2026.
Other Developments
PrimeEnergy repurchased 14,500 shares of common stock during the quarter for $2.6 million at an average price of $180.81 per share. Since the inception of its repurchase program, the company has bought back 3.93 million shares for $119.6 million.