Presidio Production NYSE: FTW reported second-quarter net income attributable to the company of $14.4 million, or $0.34 per Class A share, as adjusted EBITDA reached $33.2 million, exceeding the $30 million the company had previously discussed.
The oil and gas operator, which focuses on acquiring and optimizing producing assets rather than drilling new wells, averaged 22,755 barrels of oil equivalent per day during the quarter. Capital expenditures were $600,000, while free cash flow totaled $15.7 million, or roughly $0.50 per share.
Chairman and Co-CEO Will Ulrich said the company’s results reflected progress in acquisitions, financing, operational optimization and artificial intelligence initiatives. The reported quarter did not include results from the Canyon Creek acquisition, which closed July 1.
Production gains tied to AI and workovers
Management said its artificial intelligence efforts generated approximately 2.3% production uplift during the second quarter, putting the company on track toward its stated full-year target of 3% to 5% production growth from AI without drilling or incremental capital expenditures.
Ulrich said the production gains represented about $4.5 million of annualized revenue in the quarter. Presidio had roughly 2,000 wells on its intelligence platform at quarter-end.
Co-CEO Chris Hammack said DUG, the company’s production-surveillance agent, averaged 400 BOE per day of incremental production over the prior three months, accounting for 1.4 percentage points of the total production uplift. The platform monitors well-level data, identifies deviations from expected performance and routes recommendations to field personnel.
Other initiatives included AI-supported weekend well coverage, which management said increased weekend production by 2.5%, and AI plunger boxes installed on 24 wells. On those wells, gas production rose from an average of 2.7 million per day before installation to 3 million per day afterward, a roughly 10% increase, according to Hammack.
The company also completed 17 workovers in the quarter as part of a 69-job “wedge” program. Of the total identified jobs, 25 had been completed and 44 remained, with the program expected to conclude in the fourth quarter. Hammack said actual payout periods for the workovers improved to 0.75 years from an original one-year forecast, while PV-10 increased to $3.4 million from $2.7 million and returns exceeded 100%.
Revenue, expenses and outlook
Revenue including hedge settlements totaled $60.9 million, including $6.9 million of realized hedge settlements, compared with $34.4 million in the first quarter. Chief Financial Officer John Brawley said the increase was primarily driven by the company’s restructured hedge portfolio and higher oil and natural gas liquids prices, partly offset by lower natural gas prices.
Production for the quarter was approximately 16% oil, 57% natural gas and 27% natural gas liquids.
Lease operating expense declined to $9.39 per BOE from $9.47 per BOE in the first-quarter successor period. Total operating expense, including production and ad valorem taxes, fell to $11.22 per BOE from $11.68 per BOE.
Brawley said current commodity prices are expected to result in adjusted EBITDA “very slightly” below $30 million in each of the third and fourth quarters, while totaling $90 million for the final nine months of 2026.
Canyon Creek establishes Arkoma platform
Presidio closed its Canyon Creek acquisition immediately after the quarter ended, entering the Arkoma Basin. The acquired assets include 42 operated wells producing approximately 3,500 net BOE per day.
Management said it began implementing its operating playbook on the assets immediately, including eliminating a contract route, creating a company route, removing a foreman role, changing chemical vendors and completing five workovers that had been deferred by the prior operator. All five workovers were successful, Hammack said.
The company projects a 32% reduction in lease operating expense at Canyon Creek, to roughly $170,000 per month from approximately $250,000 per month measured against the third quarter of 2025. It has also completed two compression releases and two downsizes, with another downsize scheduled for August.
At the previously acquired EQVR asset, which includes 216 active wells producing approximately 2,800 net BOE per day, Presidio said integration was substantially complete on cost-related items. Management cited a 30% reduction in lease operating expense, to about $500,000 per month from roughly $700,000 per month in the second quarter of 2025.
Financing changes and acquisition pipeline
On June 9, Presidio completed a $350 million investment-grade refinancing of its prior asset-backed securitization, lowering the weighted average coupon to 6.38% from 8.22%. The refinancing included two $175 million investment-grade tranches and reduced the company’s cost of capital by 184 basis points.
The financing repaid the prior ABS, paid outstanding reserve-based lending balances and funded a $35 million hedge restructuring. Brawley said the structure’s anticipated repayment date reduces scheduled amortization in the first five years, leaving more cash available for dividends and acquisitions.
Canyon Creek was funded partly through an initial $55 million draw on Presidio’s $1 billion ABS acquisition warehouse. The company also issued 1,962,240 Class A shares to the sellers. Citizens Bank joined the facility with 40% participation.
As of June 30, Presidio had $350 million of total debt principal outstanding and net debt of $296.5 million. On a pro forma basis including the Canyon Creek warehouse draw, net debt was $351.5 million and leverage was approximately 2.7 times annualized second-quarter adjusted EBITDA. Liquidity was approximately $102.3 million after a routine borrowing-base adjustment, consisting of $42.3 million in unrestricted cash and $60 million of available capacity under its reserve-based lending facility.
Ulrich said the company’s annualized dividend is $1.35 per share, representing an approximately 12% yield at the recent share price. Management intends to raise the dividend once Canyon Creek begins contributing to results, subject to board approval.
Presidio’s acquisition pipeline stands at approximately $17 billion. During the quarter, the company reviewed 16 of 25 opportunities presented and bid on nine. Brawley said Presidio is evaluating assets ranging from $50 million to $2 billion and remains focused on price, structure and equity-levered returns near 20%.
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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