Prairie Operating Co. (PROP)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2026 and 2025 should be read in conjunction with our
condensed consolidated financial statements and related notes to those financial statements that are included elsewhere in this report, as well as our audited consolidated financial statements and related notes and the related “Management’s
Discussion and Analysis of Financial Condition and Results or Operations” in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Additionally, refer to “Cautionary Statement Regarding Forward-looking
Statements” at the beginning of this Quarterly Report on Form 10-Q. Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,” “our” or similar terms refer to Prairie Operating Co.

Overview

We are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets and operations are strategically located in the oil region of rural Weld County,
Colorado, within the DJ Basin. We believe that the DJ Basin is one of the premier resource plays in the U.S., as Weld County boasts some of the lowest break-even prices in the U.S., and has a long production history which has proven and
consistent results. The productivity of this resource is demonstrated by the integral role that Weld County holds in Colorado’s energy economy, having produced approximately 85% of Colorado’s oil production to date.

As of June 30, 2026, our assets included approximately 68,500 net leasehold acres in, on and under approximately 97,600 gross acres. In addition to growing production through our drilling operations, we intend to
continue growing our business through accretive acquisitions, focusing on assets with the following criteria: (i) producing reserves, with opportunities to add accretive, undeveloped bolt–on acreage; (ii) ample, high rate–of–return inventory of
drilling locations that can be developed with cash flow reinvestment; (iii) strong well–level economics; (iv) liquids–rich assets; and (v) accretive valuation.

Recent Developments

Drilling and Completion Activities

Our 2026 capital expenditure guidance is $185.0 million to $195.0 million. As of June 30, 2026, cash expenditure for the development of oil and natural gas properties totaled $132.6 million, with an additional
$12.4 million incurred in accounts payable and accrued expenses. Refer to Factors Affecting the Comparability of Financial Results – Capital Program below for a further discussion of our current
capital program.

In December 2025, we moved our drilling rig to our Blehm/Schneider pad, which consists of 10 wells in Weld County. These wells came online in April 2026 with initial average two-stream gross production of 700 Boe/d.

We then moved the drilling rig to our Elder East and West pad, which consists of nine wells. Drilling at the Elder East and West pad was completed during the first quarter of 2026 and the wells came online in May 2026 with initial average
two-stream gross production of 915 Boe/d.

In February, we began drilling at our Opal Coalbank pad, which consists of eight wells. Completion activities at the Opal Coalbank pad began in May 2026, and the wells came online towards the end of June 2026 with initial average two-stream
gross production of 450 Boe/d.

After we completed drilling at our Opal Coalbank pad, we moved the drilling rig to our Burnett pad development in Weld County, which consists of four wells. Completion activities at the Burnett pad were finalized
at the end of July 2026 and the well came online shortly after.

Following the Burnett pad, we moved the drilling rig to our Castor pad development in Weld County, which consists of 6 wells. Completion activities at the Castor pad are expected to be finalized mid-way through third quarter of 2026 and
first production is expected during the third quarter of 2026.

Series F Preferred Stock Letter Agreements and Series F Preferred Stock Anniversary Warrants Amendments

On March 25, 2026, we entered into the First Series F Preferred Stock Warrant Amendment, which, among other things, extended the issuance date of Series F Preferred Stock Anniversary Warrants from March 26, 2026 to
April 7, 2026.

On April 6, 2026, we entered into the Second Series F Preferred Stock Warrant Amendment. Among other things, the Second Series F Preferred Stock Warrant Amendment amended and restated the First Series F Preferred
Stock Warrant Amendment to extend the issuance date of the Series F Preferred Stock Anniversary Warrants from April 7, 2026 to April 9, 2026.

On April 8, 2026, we entered into the First Series F Preferred Stock Letter Agreement, pursuant to which, among other things, we repurchased 13,727 shares of Series F Preferred Stock from the Series F Preferred
Stockholder for the Series F Preferred Stock Repurchase Price, the cash portion of which was $19.0 million.

Additionally, pursuant to the Series F Preferred Stock Letter Agreement, we issued the First Series F Preferred Stock Penny Warrants to the Series F Preferred
Stockholder, and agreed that, if on July 8, 2026, which date was subsequently extended to August 7, 2026 and further extended to August 31, 2026, for any reason, the Series F Preferred Stock Anniversary Warrants have not been issued to the
Series F Preferred Stockholder, we will issue the Series F Second Penny Warrants. Further, pursuant the Series F Preferred Stock Letter Agreement, upon the Series F Preferred Stockholders receipt of the Series F Preferred Stock Repurchase
Price and the issuance of the First Series F Preferred Stock Penny Warrants, the Series F Preferred Stockholder waived our obligation to pay the $3.0 million extension fee.

On June 10, 2026, we entered into the Second Series F Preferred Stock Letter Agreement. Among other things, the Second Series F Preferred Stock Letter Agreement further extended the issuance date of the Series F Preferred Stock Anniversary
Warrants to August 7, 2026 and reduced the number of Common Stock shares issuable upon exercise of the Series F Preferred Stock Anniversary Warrants to a number of shares equal to the quotient of (i) 65% of the Stated Value of all Series F
Preferred Stock held on the Series F Preferred Stock Anniversary Warrant Issuance Date, divided by (ii) the average of the 10 daily volume-weighted average per share trading prices of the Common Stock during the 10 trading-days prior to the
Series F Preferred Stock Anniversary Warrant Issuance Date. Additionally, we granted the Series F Preferred Stockholder the Incremental Share Rights.

On August 7, 2026, we entered into another the Third Series F Preferred Stock Letter Agreement, which, among other things, extended the issuance date of the Series F Preferred Stock Anniversary Warrant from August
7, 2026 to August 14, 2026. The Third Series F Preferred Stock Letter Agreement also amends the First Series F Preferred Stock Letter Agreement to extend the issuance date of the Second Series F Preferred Stock Penny Warrants from August 7, 2026
to August 14, 2026, so that if on August 14, 2026 (rather than August 7, 2026 as provided by the First Series F Preferred Stock Letter Agreement), for any reason, the Series F Preferred Stock Anniversary Warrants are not issued to the Series F
Preferred Stockholder, we will issue the Second Series F Preferred Stock Penny Warrants to the Series F Preferred Stockholder.

On August 14, 2026, we entered into the Fourth Series F Preferred Stock Letter Agreement, which, among other things, extended the
issuance date of Series F Preferred Stock Anniversary Warrants from August 14, 2026 to August 31, 2026. The Fourth Series F Preferred Stock Letter Agreement also amends the First Series F Preferred Stock Letter Agreement and the Third Series
F Preferred Stock Letter Agreement to extend the issuance date of the Second Series F Preferred Stock Penny Warrants from August 7, 2026 to August 14, 2026 and subsequently to August 31, 2026, so that if on August 31, 2026 (rather than August
7, 2026 and August 14, 2026 as provided by the First Series F Preferred Stock Letter Agreement and the Third Series F Preferred Stock Letter Agreement), for any reason, the Series F Preferred Stock Anniversary Warrants are not issued to the
Series F Preferred Stockholder, we will issue the Second Series F Preferred Stock Penny Warrants to the Series F Preferred Stockholder. Additionally, the Fourth Series F Preferred Stock Letter Agreement waives the breach of the Current Ratio
covenant as a Triggering Event through January 1, 2027.

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Factors Affecting the Comparability of Financial Results

Commodity Prices

Since oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can have a material impact on our financial results and capital expenditures.
In an effort to reduce the impact of price volatility, and in compliance with requirements under our Credit Facility, we enter into derivative contracts to economically hedge a portion of our estimated production from our proved, developed,
producing oil and natural gas properties against adverse fluctuations in commodity prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil, natural gas, and NGL prices on our cash
flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil, natural gas, and NGL prices. Further, we could sustain losses to the extent our oil, natural gas, and NGL derivative contract prices
are lower than market prices and, conversely, we could recognize gains to the extent our oil, natural gas, and NGL derivative contract prices are higher than market prices. Refer to Results of Operations - Other
expenses below for a discussion of our recognized gains or losses on derivative contracts.

As of June 30, 2026, we had the following outstanding crude oil, natural gas, and NGL derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate, NYMEX Henry Hub, and Mount
Belvieu OPIS, respectively:

[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations for the year ended December 31, 2025 and 2024 should be read in conjunction with our consolidated
financial statements and related notes to those financial statements and other financial information appearing in this Annual Report.

Our discussion includes forward–looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and
intentions. Actual results and the timing of events could differ materially from those anticipated in these forward–looking statements as a result of a number of factors, including those described under the headings “Risk Factors” and
“Cautionary Statement Regarding Forward–Looking Statements” appearing elsewhere in the Annual Report. Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,” “our” or similar terms refer to Prairie
Operating Co.

Overview

We are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets and operations are strategically located in the oil region of rural Weld County,
Colorado, within the DJ Basin. We believe the DJ Basin to be one of the premier resource plays in the U.S., as Weld County boasts some of the lowest break–even prices in the U.S., and has a long production history which has proven and
consistent results. The productivity of this resource is demonstrated by the integral role that Weld County holds in Colorado’s energy economy, having produced approximately 83% of Colorado’s oil production to date.

As of December 31, 2025, our assets included approximately 68,000 net leasehold acres in, on and under approximately 98,200 gross acres. We strive to deliver energy in an environmentally efficient manner by
deploying next–generation technology and techniques. In addition to growing production through our drilling operations, we intend to continue growing our business through accretive acquisitions, such as the NRO Acquisition, which closed in
October 2024, the Bayswater Acquisition, which closed in March 2025, the Edge Acquisition, which closed in July 2025, and the Summit and Crown acquisitions, which closed in October 2025, focusing on assets with the following criteria: (i)
producing reserves, with opportunities to add accretive, undeveloped bolt–on acreage; (ii) ample, high rate–of–return inventory of drilling locations that can be developed with cash flow reinvestment; (iii) strong well–level economics; (iv)
liquids–rich assets; and (v) accretive valuation.

Recent Developments

Recent Acquisitions

In July 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million, payable in cash subject to certain closing price adjustments. We closed the
Edge Acquisition on July 3, 2025, which included 13 operated wells on approximately 11,300 net acres. We funded the transaction by borrowing under our Credit Facility with Citi. Additionally, the assets we acquired in the Edge Acquisition
include the fully permitted Simpson pad, which we began developing in August 2025, as well as seven other fully permitted locations.

In August 2025, we completed the Third Exok Acquisition, acquiring approximately 5,000 net acres from Exok for $1.6 million.

In October 2025, we entered into agreements to acquire certain assets from Summit and Crown for a total purchase price of $2.3 million payable in cash, subject to certain closing adjustments. The Summit and
Crown Acquisitions included the acquisition of five operated wells on approximately 3,400 net acres.

Bayswater Acquisition and Funding Transactions

On February 6, 2025, we and certain of our subsidiaries entered into a purchase and sale agreement with Bayswater, pursuant to which we and certain of our subsidiaries agreed to acquire the Bayswater Assets from
Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments.

On March 26, 2025, we entered into our Credit Facility, which amended and restated our existing reserve–based credit agreement with Citi. The Credit Facility provides for a maximum credit commitment of $1.0
billion and is scheduled to mature on March 26, 2029. Further, on March 26, 2025, we issued Common Stock in a public offering, resulting in proceeds of $41.4 million, net of $2.4 million of underwriting discounts and commissions and $3.7
million in issuance fees. Concurrently with the public offering, we issued the Series F Preferred Stock, resulting in approximately $136.1 million of net proceeds, after deducting the advisor fees and offering expenses.

At the closing of the Bayswater Acquisition on March 26, 2025, we (i) paid approximately $482.5 million in cash to Bayswater, $15.0 million of which was deposited in escrow pending the Additional Working Interest
Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and (ii) issued 3,656,099 shares of our Common Stock to Bayswater. We funded the cash portion of the purchase price for the Bayswater Acquisition with cash on hand,
the proceeds from the issuance of Common Stock and the issuance of the Series F Preferred Stock, and borrowings under our Credit Facility. We completed the final settlement with Bayswater on October 15, 2025, resulting in a final
consideration of $475.6 million. Refer to Liquidity and Capital Resources – Significant Sources of Liquidity below for a further discussion of issuance of the Series F Preferred Stock and Credit
Facility.

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Drilling and Completion Activities

On April 1, 2025, we launched the development program at our Rusch pad development in Weld County, which consists of 11 two–mile lateral wells. The Rusch wells came online late in September 2025 with initial
production measured before any deductions for fuel, flare, or vented volumes (“Two–stream”) gross production per well of 475 Boe/d.

On April 28, 2025, we announced our plan to begin completions on nine previously drilled but uncompleted wells acquired in the Bayswater Acquisition. Completion activities at the Opal/Coalbank
pad began in May 2025, and the wells came online mid–July 2025 with initial average Two–stream gross production per well of 725 Boe/d.

On June 1, 2025, we moved the drilling rig to our Noble pad development in Weld County, which consists of seven wells. The Noble wells came online in November 2025 with initial average Two–stream gross production
per well of 550 Boe/d.

In September 2025, we moved the drilling rig to our then–recently acquired Simpson pad development in Weld County, which consists of six wells. Three of the Simpson pad wells came online in December 2025 and the
remainder came online in January 2026 with initial average Two–stream gross production per well of 500 Boe/d.

In December 2025, we moved the drilling rig to our Blehm pad and then our Schneider pad, both of which are in Weld County and consist of five wells each. Completion activities at the Blehm and Schneider pads are
ongoing and first production is expected early in the second quarter of 2026. At the end of 2025, we moved the drilling rig to our Elder East and West pad, which consists of nine wells. Drilling at the Elder East and West pad is expected to
be completed early in the second quarter of 2026.

At–the–Market Offering

On June 20, 2025, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Citigroup Global Markets Inc. and Truist Securities, Inc., as managers (together, the “Managers”).
Pursuant to the agreement, we have the option to sell shares of Common Stock up to an aggregate offering price of $75.0 million through the Managers (the “ATM Offering”). The Common Stock sold under the ATM Offering, if any, will be made
under our Registration Statement on Form S–3, which was declared effective on May 2, 2025, and the prospectus supplement dated June 20, 2025 relating to the ATM Offering filed with the SEC, in each case, as may be amended or supplemented
from time to time.

We anticipate the net proceeds from the ATM Offering will be used for general corporate purposes, which may include, among other things, advancing our development and drilling program, repayment of existing
indebtedness, or financing potential acquisition opportunities. Additionally, per the Series F Certificate of Designation, the Series F Preferred Stockholder can require us to use a portion of the net proceeds from sales of the ATM Offering
to redeem a number of shares of the Series F Preferred Stock. As of December 31, 2025, we have not issued any shares under the ATM Offering.

Series F Preferred Stock Warrants

On March 25, 2026, we and the Series F Preferred Stockholder entered into the Series F Preferred Stock Warrant Amendment, which, among other things, changes the issuance of the Series F
Preferred Stock Warrants from the first anniversary of the issuance date of the Series F Preferred Stock to April 7, 2026. Additionally, the Series F Preferred Stock Warrant Amendment provides that we will pay the Series F Preferred
Stockholder an aggregate amount equal to $3.0 million on April 6, 2026, unless the obligation to pay such fee has been waived by the Series F Preferred Stockholder in their sole discretion.

Factors Affecting the Comparability of Financial Results

Commodity Prices

Since oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can have a material impact on our financial results and capital
expenditures. In an effort to reduce the impact of price volatility, and in compliance with requirements under our Credit Facility, we enter into derivative contracts to economically hedge a portion of our estimated production from our
proved, developed, producing oil and natural gas properties against adverse fluctuations in commodity prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil, natural gas, and
NGL prices on our cash flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil, natural gas, and NGL prices. Further, we could sustain hedge losses to the extent our oil, natural gas,
and NGL derivative contract prices are lower than market prices and, conversely, we could recognize gains to the extent our oil, natural gas, and NGL derivative contract prices are higher than market prices. Refer to Results of Operations – Other income and expenses below for a discussion of our recognized gains or losses on derivative contracts.

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As of December 31, 2025, we had the following outstanding crude oil, natural gas, and NGL derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate, NYMEX Henry Hub,
and Mount Belvieu OPIS, respectively:

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]