AAP Podcast #50 - The State of the Energy Market with Prairie Operating Co.

AAP lead portfolio manager Chris Versace discusses the state of the oil market with Edward Kovalik Chairman and CEO of Prairie Operating Co. (CRKR). Formed in 2023, Prairie has a rather unique business model in that it combines a fast-follower strategy without any leverage on the balance sheet, offering bottom-line profit leverage as Prairie scales its drilling operations. Ed shares his longer-term outlook on the energy market, one that is underpinned by underinvestment in capacity and could lead to a domestic supply crunch in the coming quarters. Arguably, Prairie is a new, built-from-the-ground-up energy company that doesn’t have the typical industry baggage and it benefits from Ed’s time as a merchant banker focused on the energy market.

Investors looking for small-cap energy companies may want to dig further into Prairie Operating Co., starting with its latest investor relations presentation. The company’s strategy speaks to the AAP portfolio’s position in the Energy Select Sector SPDR Fund (XLE), and while we like the Prairie’s flexible business model, the current market cap and trading volume will keep us on the sidelines. As the company moves from permitting to drilling later this year and into 2024, we’ll look to revisit it.