Prairie Operating Co. Amends Credit Agreement, Adds Production Covenant

What Happened

• Prairie Operating Co. announced a Third Amendment to its Amended & Restated Credit Agreement with Citibank, N.A. and lenders, entered August 14, 2026 (effective June 30, 2026). The amendment temporarily lowers the Current Ratio covenant the company must maintain and adds a new minimum hydrocarbon production covenant measured over rolling three‑month periods (first tested August 31, 2026).
• The company also entered a Letter Agreement with Hudson Bay PH XIX LLC (High Trail) dated August 14, 2026, which moves certain warrant issuance dates from August 14, 2026 to August 31, 2026, may result in issuance of a “Second Penny Warrant” to purchase 3,000,000 common shares at $0.01 per share, and provides a limited waiver of a Current Ratio maintenance obligation through December 31, 2026, subject to specified conditions.

Key Details

• Current Ratio covenant temporarily changed from 1.00:1.00 to: 0.50:1.00 for quarter ending June 30, 2026; 0.40:1.00 for quarter ending September 30, 2026; and 0.60:1.00 for quarter ending December 31, 2026.
• New minimum hydrocarbon production covenant is tested monthly on rolling three‑month periods, first tested on August 31, 2026.
• Letter Agreement: Anniversary Warrant issuance dates moved to August 31, 2026; if Anniversary Warrants are not issued, the company will issue a Second Penny Warrant to High Trail to buy 3,000,000 common shares at $0.01 (subject to adjustment).
• Limited Waiver of the Current Ratio maintenance requirement is conditioned on the company not allowing the Current Ratio to fall below the reduced thresholds on any fiscal quarter‑end dates specified.

Why It Matters

• The credit amendment eases near‑term liquidity covenant pressure by lowering the Current Ratio thresholds for three fiscal quarters, which can reduce the risk of a covenant breach in the short term.
• The addition of a production covenant ties a portion of the company’s borrowing terms to operational performance (hydrocarbon output), making production levels directly relevant to covenant compliance and access to the credit facility.
• The warrant changes could lead to potential dilution (up to 3,000,000 common shares exercisable at $0.01), and the limited waiver is conditional—investors should watch upcoming quarter‑end Current Ratio and production results to assess covenant compliance and potential lender actions.