Shares of PrimeEnergy Resources Corporation PNRG have lost 8.3% since reporting 2024 results. This compares with the S&P 500 index’s 2.2% decline over the same time frame. Over the past month, the stock has plunged 17% compared with the S&P 500’s 3.8% fall.

Revenues & Earnings Surge Y/Y Amid Strong Production Growth

For the year ended Dec. 31, 2024, PrimeEnergy reported total revenues of $237.8 million, up 79% from $132.8 million in 2023. Net income nearly doubled to $55.4 million from $28.1 million the previous year. This translated into basic earnings per share of $31.43, a 107% year-over-year upsurge from $15.19, and diluted earnings per share of $21.95, up from $10.77.

Revenue growth was driven by a significant increase in oil and natural gas liquids (NGL) production volumes. Oil production skyrocketed 123% year over year to 2.56 million barrels, while NGL volumes soared 112% to 1.28 million barrels. Although the average realized oil price slipped 1.4% to $75.80 per barrel and natural gas prices plummeted 77.6% to $0.43 per Mcf, the volume increases more than offset these price declines. Total oil and gas revenues upsurged 107% to $223 million, with oil contributing the bulk of the gain at $193.7 million.

PrimeEnergy Corporation Price, Consensus and EPS Surprise

PrimeEnergy Corporation price-consensus-eps-surprise-chart | PrimeEnergy Corporation Quote

Investment Returns Evident in Key Operational Metrics

PrimeEnergy's capital spending in 2024 totaled $113 million, with 48 horizontal wells drilled — 47 in Reagan County and one in Upton County, TX. The company collaborated with operators such as Double Eagle, Civitas and Pioneer on these developments. The largest investments included $66 million with Double Eagle and $46.7 million with Civitas. Production ramp-up from these wells played a major role in lifting overall output.

The company’s proved reserves at the year-end stood at 26.5 million barrels of oil equivalent, including 10.6 million barrels of oil, 8.3 million barrels of NGLs and 45.8 billion cubic feet of natural gas. While proved developed reserves grew significantly, proved undeveloped reserves declined, indicating successful conversion of reserves into production.

Management Emphasizes Balanced Growth & Liquidity

Management reiterated its commitment to financial discipline, emphasizing that the 2025 capital budget would be aligned with projected cash flows. Any shortfall is expected to be funded through borrowings under its revolving credit facility. As in past years, PrimeEnergy remains open to asset sales or joint ventures to enhance liquidity. In 2024, the company raised $4.2 million from asset sales and reinvested $3.9 million into new acreage acquisitions in West Texas.

PNRG highlighted its long-term focus on horizontal drilling, particularly in the Midland Basin, wherein it has already invested more than $430 million since 2012. The company also signaled ongoing activity in Oklahoma’s Scoop/Stack Play, though at a smaller scale.

Drivers Behind Revenue & Earnings Growth

The standout driver for the strong financial results was volume expansion, especially in oil. The 123% surge in oil production, which is by far the most lucrative segment, more than offset the minor dip in average oil prices. NGL sales also contributed meaningfully, both in volume and price improvement.

However, natural gas revenues declined 77.6% due to a collapse in realized pricing from $1.92 per Mcf in 2023 to 43 cents in 2024. This slashed gas revenues by $4.6 million, down 58.3% year over year, but was not enough to weigh down the overall revenue trajectory due to its smaller share in the revenue mix.

Production cost efficiency improved as well. Average production costs per barrel of oil equivalent dropped to $9.29 in 2024 from $12.98 in 2023, underscoring scale advantages and possibly more favorable operating conditions.

Outlook & Guidance

Management shared expectations of continued capital deployment of $129 million in 2025 across 43 horizontal wells. This follows $113 million invested in 2024 and $96 million in 2023, signaling a consistent annual increase in development efforts. PrimeEnergy anticipates further investment of $224 million in horizontal drilling in West Texas over the next few years, which reflects a bullish long-term stance despite commodity price volatility.

Other Developments

In addition to operational progress, PrimeEnergy executed several transactions in 2024. These included the divestiture of non-core assets, producing acreage and an equipment company subsidiary, for $4.2 million. Meanwhile, it acquired $3.88 million worth of undeveloped acreage in West Texas, reinforcing its commitment to future drilling activity.

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