What Presidio Production (FTW) Said on Its Q3 Earnings Call

Key Points

• Presidio raised its annualized dividend to $1.50 per share from $1.35, citing cash flow from the Canyon Creek acquisition.
• Production climbed about 15% quarter over quarter to a record 26,133 barrels of oil equivalent per day. Adjusted EBITDA was $29.1 million, while a $66.5 million unrealized hedge loss drove a $46.4 million net loss.
• AI programs were estimated to have boosted output from existing assets by 3.2% in Q3, with management targeting 3%–5% production growth in 2026 without additional capital spending.

Presidio Production NYSE: FTW raised its quarterly dividend after a full quarter of production from its Canyon Creek acquisition, while reporting higher output and a net loss driven by an unrealized hedge loss.

The company declared a third-quarter dividend of $0.375 per share, or $1.50 annualized, up from an annualized $1.35. Chairman and Co-CEO Will Ulrich said the increase reflected additional cash flow from Canyon Creek, which closed in July.

Production rose approximately 15% from the prior quarter to 26,133 barrels of oil equivalent per day, the company’s highest quarterly level as a public company. Lease operating expense fell to $9.10 per barrel of oil equivalent from $9.39 in the previous quarter.

Presidio reported third-quarter adjusted EBITDA of $29.1 million, down from $33.2 million in the prior quarter. CFO John Brawley attributed much of the difference to commodity prices and the shape of the company’s hedge book. He said the company still expects approximately $90 million in EBITDA across the last three quarters of the year.

The company recorded a $46.4 million net loss attributable to Presidio, which Brawley said was caused by a $66.5 million unrealized, noncash loss on its hedge book as commodity prices rose. Leasehold sales are not included in the EBITDA figures, he said.

Acquisitions and Asset Sales

Presidio’s strategy is to acquire producing wells, improve their operations and return cash to shareholders through dividends. Ulrich said the company has cut operating costs by about 30% at the EQVR assets acquired at its initial public offering and projects a 32% reduction at Canyon Creek.

Co-CEO Chris Hammack said Presidio moved Canyon Creek’s 42 wells onto its production systems on the first day after closing. The company also completed five deferred workovers on the assets, all of which were successful, he said. Presidio recently added a small working interest in Canyon Creek for approximately $4.3 million.

The company has completed $17 million in leasehold sales so far in 2026, including $2.1 million in the third quarter and $7.1 million to date in the fourth quarter. Hammack said the sales were not included in Presidio’s outlook at the time of its IPO. The company also seeks to monetize acreage through partnerships and retained royalty interests.

Brawley said Presidio has identified more than $17 billion of potential acquisition targets across three basins. Ulrich said the company is reviewing potential bolt-on opportunities in the Arkoma Basin, while Hammack said it is evaluating undeveloped acreage there for possible joint ventures or sales.

AI Programs Aim to Lift Production

Presidio estimates its artificial intelligence programs increased production from existing assets by approximately 3.2% in the third quarter, up from 2.3% in the second quarter. Its 2026 target is a 3% to 5% increase without additional capital spending, and Ulrich said programs coming online could bring the exit rate to around 4%.

Hammack said the programs include production surveillance that ranks wells needing attention, weekend well checks and a pilot system that adjusts plunger cycles using data from individual wells. The plunger system is operating on 25 wells; management has not set a number for its 2027 rollout.

AI analysis also helped identify shut-in wells that could be restarted economically after Presidio negotiated lower water disposal rates, Hammack said. The first returned to production in October, and 10 more are planned by year-end. He added that the technology makes recommendations, while field personnel make the final decisions.

Ulrich said the company’s analysis found a roughly 15% gap between actual and theoretical maximum production across its wells. He described that figure as the potential opportunity, rather than a production target, and said Presidio is incorporating its tools into an operating platform called Mainspring.

Debt and Liquidity

At Sept. 30, Presidio had $400.6 million in total debt principal and $349.4 million in net debt. Its leverage was 2.8 times, based on annualized adjusted EBITDA for the last two quarters, Brawley said. Liquidity was almost $100 million, including unrestricted cash and borrowing capacity.

Brawley expects the borrowing base on the company’s undrawn reserve-based lending facility to fall from $60 million to around $45 million at its winter redetermination as hedge cash flow rolls off. He said the reduction would have a relatively small effect on liquidity.

The CFO said Presidio fixed the interest rate on its core $344 million asset-backed security at 6.38% in June. After quarter-end, it also used a swap to effectively fix 75% of its warehouse debt interest rate. Brawley put the blended effective rate across the warehouse and core ABS at approximately 6.6%.

About Presidio Production (NYSE:FTW)

Presidio Production Company is an independent oil and natural gas exploration and production company. Its activities include acquiring, developing and producing oil and gas properties. The company's operations are focused on the Permian Basin, spanning West Texas and southeastern New Mexico. Presidio is based in Fort Worth, Texas.

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