Presidio Production Q1 Earnings Call Highlights

Key Points

• Presidio Production reiterated a dividend-focused acquisition strategy, saying it buys long-life producing oil and gas assets, improves cash flow, and returns capital to shareholders. Management said it expects to raise the annualized dividend from $1.35 to $1.50 per share after closing its planned $83 million Arkoma Basin acquisition, subject to board approval.
• Management said first-quarter results were distorted by transaction-related accounting, hedge restructuring costs, and non-cash items, so they should not be viewed as representative of ongoing earnings power. Presidio guided to about $30 million of adjusted EBITDA in Q2 and said that level is a reasonable quarterly framework through the rest of 2026.
• The company highlighted strong acquisition capacity and operational leverage, including $48.7 million of liquidity, a pro forma leverage ratio of about 2.2x, and a $1 billion ABS warehouse facility to fund future deals. Presidio also emphasized its technology-driven operating model and AI tools, which it says can boost production without added capital spending.

Presidio Production NYSE: FTW used its first-quarter 2026 earnings call to outline its dividend-focused acquisition strategy, explain why management views the quarter as not representative of future results, and highlight plans to expand through producing asset acquisitions while applying operational technology to increase cash flow.

Co-CEO Will Ulrich said Presidio’s strategy is centered on acquiring long-life, low-decline producing oil and gas assets, improving cash flows and returning capital through a fixed and growing dividend. “We acquire, we optimize, we grow the dividend, we repeat,” Ulrich said.

The company recently declared its first dividend at an annualized rate of $1.35 per share. Ulrich said Presidio intends to raise the annualized dividend to $1.50 per share after closing its planned acquisition of producing assets in the Arkoma Basin, subject to board approval. The transaction, which management also referred to as the Canyon Creek acquisition, has a purchase price of $83 million and is expected to close early in the third quarter.

First Quarter Results Affected by Transaction Items

CFO John Brawley said Presidio’s first-quarter results should not be viewed as indicative of the company’s ongoing earnings power because the period was affected by the March 4 closing of its business combination and related accounting treatment.

Brawley said the quarter was split into a predecessor period from Jan. 1 through March 3 and a successor period from March 4 through March 31. He said investors “cannot add the predecessor and successor periods together” because the EQVR assets acquired at closing were not reflected in the predecessor period.

The quarter included several non-recurring and non-cash items, including approximately $47 million of non-cash stock-based compensation in the predecessor period tied to the transaction, about $7 million of acquisition and transaction costs, and approximately $44 million of unrealized net commodity derivative losses as oil and gas prices moved higher. Presidio also recorded $2.2 million of realized derivative costs tied to a $60 million hedge restructuring, with the economic benefit of those restructured hedges beginning in the second quarter.

“The first quarter carries the cost of the hedge restructuring and the transaction,” Brawley said. “The second quarter is where the benefit begins.”

Presidio guided to approximately $30 million of adjusted EBITDA in the second quarter, assuming current strip pricing. Brawley said management believes that level is a reasonable framework for each quarter through the remainder of 2026.

Production, Liquidity and Balance Sheet

Brawley said current net production is approximately 22,000 barrels of oil equivalent per day, consisting of roughly 16% oil, 57% natural gas and 27% natural gas liquids. Lease operating expense in the successor period was $9.47 per BOE, while capital expenditures were under $1 million, which Brawley said was consistent with Presidio’s low-reinvestment model.

At quarter-end, Presidio reported total liquidity of $48.7 million, including $20.7 million of unrestricted cash and $28 million of undrawn capacity under its $65 million reserve-based lending facility. Total cash, including restricted cash, was $31.5 million.

Principal debt outstanding was $295.9 million, including $256.8 million of investment-grade ABS notes, $37 million drawn on the RBL and a $2.1 million term loan. Net debt was $264.4 million. Based on the projected second-quarter adjusted EBITDA run rate, Brawley said pro forma leverage was approximately 2.2 times.

The company also has Series A preferred stock with $125 million of aggregate stated value, carrying an 8% cash-pay rate and a 4% payment-in-kind rate.

Acquisition Financing and Deal Pipeline

Management emphasized Presidio’s $1 billion Goldman Sachs ABS warehouse facility as a key tool for future acquisitions. Brawley said the facility is designed to finance producing-asset acquisitions and is not a short-term bridge. He said it allows Presidio to place multiple transactions into the warehouse before refinancing them into longer-term ABS structures.

Upon closing the Canyon Creek acquisition, Presidio expects to draw $55 million from the facility to fund the cash portion of the purchase price alongside cash on hand.

Brawley said Presidio has “well over $1 billion of bids in process,” including marketed and bilateral opportunities. In response to a question from William Blair analyst Neal Dingmann, Brawley said the company is looking at several deals in Oklahoma with a liquids profile similar to existing assets, as well as opportunities in Texas that likely have a higher liquids component.

Presidio’s acquisition criteria include operated, developed producing assets with strong margins and lower declines, preferably below 20%, in Texas, Oklahoma and surrounding areas. Brawley said the company is targeting equity returns above 20% and “won’t grow for growth’s sake.”

Operational Playbook and AI Initiatives

Co-CEO Chris Hammack described Presidio’s operational approach as a repeatable playbook used after acquisitions. He said the company interviews all field staff, flattens field structures, aligns incentives with asset performance and focuses on areas such as compression, artificial lift, chemicals and field deployment.

Hammack said Presidio achieved a 28% reduction in compression expense in the first month of one acquisition case study and reduced chemical expense by 39% across the portfolio from 2023 to 2024. He also said Presidio’s pump-by-exception model reduced well visits by 50% while maintaining the same or better production performance.

Ulrich highlighted Presidio’s FTW Technologies subsidiary and its Asset Intelligence platform, which he said is trained on operational data, field voice submissions, well files, drilling and completion reports, workover reports, pressures, production volumes and geology. He said the Asset Intelligence group has a target of increasing production 3% to 5% this year without capital expenditures. Through the first four months of 2026, Ulrich said Presidio has achieved an approximately 1% improvement.

In the Q&A session, Ulrich said one early production gain came from identifying weekly production patterns tied to reduced weekend well interactions. He said the company’s AI tool helped flatten production peaks and troughs. He also described a well intelligence agent called “Doug,” which provides field operators with guidance on where to focus attention, while leaving final decisions to pumpers.

Hedging and Market Strategy

Brawley said Presidio’s restructured hedge book took effect at the start of the second quarter and provides multi-year cash flow visibility across oil, natural gas and NGL production, extending in some cases to 2031. In response to Water Tower Research analyst Jeff Robertson, Brawley said Presidio’s hedging strategy is driven by its use of ABS debt and typically includes seven years of gas hedging, five years of oil hedging, three years of NGL hedging and three years of basis hedging, generally using swaps.

Ulrich also discussed natural gas marketing, saying Presidio has long sought to move molecules as close to end users as possible. He said about 30% of the company’s gas is currently sold to power plants for electric generation, and that data center build-outs in the Panhandle could increase end-user demand. Ulrich said gas from the Arkoma acquisition will likely be directed to LNG markets.

Management closed the call by reiterating that Presidio is focused on acquiring producing assets, improving operations, applying technology and increasing dividends over time.

About Presidio Production NYSE: FTW

Presidio Production Co is a U.S.-based energy company focused on acquiring, operating and optimizing mature oil and gas assets with a disciplined, technology-driven model.

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