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Bull Of The Day: Prairie Operating Co. (PROP)
Investors rarely get the chance to invest in a company right before a game-changing transformation, but that’s exactly what’s happening with Prairie Operating Co. (PROP) Zacks Rank #1 (Strong Buy). With oil prices firming up and Prairie’s landmark acquisition of Bayswater, the company is set to increase daily production nearly tenfold, creating one of the most compelling growth opportunities in the energy sector today.
Beyond the operational upside, Prairie’ssmart financing structure minimized dilution to common shareholders, making this an even more attractive investment at current levels. Adding to the bullish case, Prairie is expected to receive potential institutional research coverage from up to nine banks that were on the financing syndicate imminently, a rare opportunity for retail investors to get ahead of Wall Street.
And if that weren’t enough, an outsized short position in the stock sets the stage for a potential explosive short squeeze, further enhancing the upside potential.
A Game-Changing Acquisition: 10x Production Growth
Prairie’s acquisition of Bayswater’s DJ Basin assets is a transformational event that will reshape the company’s production profile. The acquisition adds approximately 24,000 net acres in Weld County and boosts Prairie’s production from a modest 2,500 barrels of oil equivalent per day (BOEPD) to an estimated 27,500 BOEPD—a near 10x increase.
This massive jump in production not only accelerates revenue growth but also positions Prairie as a key operator in the DJ Basin, a highly productive oil and gas region.
A Financing Masterstroke: Raising Capital Through Minimal Dilution
Prairie was initially expected to raise $200 million through a secondary offering, which would have significantly diluted existing shareholders. Instead, managementdownsized the common stock offering to just under $40 million while incorporating a new series of preferred stock to raise the remaining capital.
This strategy dramatically minimized dilution, allowing current shareholders to benefit more fully from the company’s meteoric production growth and rising earnings potential.
Institutional Research Coverage Imminent: A Rare Advantage for Retail Investors
One of the most exciting aspects of investing in Prairie right now is that institutional research coverage is expected soon from the banking syndicate involved in the financing, which includes potentially nine marquee firms from the banking syndicate (Citigroup, KeyBanc, Truist, Piper Sandler, Roth, Johnson Rice & Company and Pickering Energy Partners.)
For retail investors, this presents a rare opportunity, typically, institutional coverage boosts visibility, attracts large funds, and catalyzes stock appreciation. Investors who buy in now are getting ahead of this wave before Wall Street analysts start formally covering the stock.
The Hidden Catalyst: A Short Squeeze Setup
In addition to its fundamental strengths, Prairie presents a compelling short squeeze opportunity.
- Prior to the announcement of its transformational Bayswater acquisition, Prairie had roughly 300,000 shares short at any given time.
- However, after the first equity offering was announced, short interest exploded to over 1.6 million shares—more than five times the previous level.
- This figure does not include any shares that may have been sold short naked or fractionally, which could push the real short position even higher.
- At current trading volumes, it would take almost six days for short sellers to fully cover their positions—a setup primed for a squeeze.
The short thesis was based on expectations of a large, dilutive equity offering or a failed deal, neither of which materialized. Instead, the company executed a shareholder-friendly financing strategy to fund the acquisition, leaving an outsized number of shares short that will eventually need to cover.
If you recall, back in February, Prairie experienced a mini short squeeze in after-hours trading, surging from $7.50 to nearly $10 on just 150,000 shares traded.
Now, imagine what could happen if all 1.6 million shares shorted are forced to cover. The buying pressure could send the stock soaring, creating a massive opportunity for investors positioned ahead of the squeeze.
Earnings Estimates Skyrocketing
With first oil production from the Shelduck project beginning in Q1 2025, earnings estimates for Prairie have exploded higher according to the current research report:
- Q1 2025 EPS estimates jumped from $0.32 to $1.18 in just 60 days.
- Full-year 2025 EPS estimates surged from $2.44 to $4.78, signaling massive, expected profitability.
Revenue Growth: A Staggering 8,642% Increase
Prairie’s revenue in 2024 was a modest $8 million, but thanks to its dramatically expanded production base, Singular Research's analyst now project 2025 revenue of approximately $694 million—an 8,642% year-over-year increase.
Valuation: Deeply Undervalued Relative to Peers
Despite its explosive growth, Prairie remains massively undervalued:
- The stock trades at a forward P/E ratio of just 1.23x—a fraction of the 11x industry average.
- The price-to-book ratio is 2.55x, well below the 6x industry average.
Given the upcoming surge in production and earnings, Prairie deserves a substantial re-rating, and its valuation should converge toward industry norms—which could mean a multi-fold increase in share price.
Conclusion
With oil prices strengthening, Prairie is executing one of the most compelling growth stories in the energy sector today. The company has secured a game-changing acquisition, structured a shareholder-friendly financing deal, and is on the verge of institutional research coverage—all while trading at a deep discount to its true value.
And with 1.6 million shares short and a clear catalyst for a squeeze, Prairie could see explosive upside in the near term.
For investors looking for significant upside potential, Prairie Operating Co. (PROP) offers a rare, asymmetric opportunity to buy before the market fully realizes the scale of this transformation.
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Prairie Operating Co. (PROP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).