Prairie Operating Co. ( PROP ) is seeing a plunge in its stock price on Friday following the announcement of a public offering and an acquisition.

The company revealed it is conducting an underwritten public offering of $200 million in common stock, with the possibility of an additional $30 million in shares through a 30-day option for the underwriters.

The funds raised from this offering will primarily be used to finance the company’s acquisition of oil and gas assets from Bayswater Exploration and Production and its affiliates.

The deal, termed as the Bayswater Acquisition, comes with a price tag of $602.75 million and will significantly bolster Prairie’s presence in the Denver-Julesburg Basin.

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The transaction consideration will consist of cash and up to ~5.2 million shares of Prairie common stock. Prairie anticipates funding the cash portion of the consideration, net of expected purchase price adjustments, through a combination of cash on hand and borrowings under its expanded credit facility and proceeds from one or more capital markets transactions.

Prairie aims to complete the acquisition by February 2025, with an effective date of December 1, 2024.

Following the acquisition, Prairie expects a transformational increase in its oil-weighted production, reaching around 27,500 net barrels of oil equivalent per day, with 69% of that being liquids.

The company also anticipates significant free cash flow generation, with adjusted EBITDA projected to range between $350 million and $370 million for 2025.

This acquisition is seen as a strategic move to drive sustainable growth and enhance operational efficiencies.

Price Action: PROP shares are trading lower by 27.1% to $6.296 at last check Friday.

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