New York, May 21, 2026, 16:01 EDT
- PrimeEnergy shares slipped 1.2% after the company posted a drop in first-quarter profit.
- Permian Basin natural gas prices dropped below zero, forcing sellers to pay to get rid of gas.
- President Charles E. Drimal, Jr. said the pricing strain “may continue throughout 2026.”
PrimeEnergy Resources Corporation shares dropped Thursday as the small U.S. oil-and-gas producer posted first-quarter profit that was about half of last year’s, but said it still has no debt and cash flow remained steady.
The Nasdaq stock was last at $243.06, off 1.2%. Shares changed hands between $239.00 and $252.97. Energy shares had a tough session. The SPDR S&P Oil & Gas Exploration & Production ETF lost 2.2%. W&T Offshore was down 1.9%.
PrimeEnergy’s new report puts numbers on a familiar problem in the Permian Basin—producers are dealing with too much gas and pipelines can’t keep up. When natural gas prices dip below zero, producers sometimes have to pay to move gas just to keep oil wells running.
PrimeEnergy reported net income to common stockholders dropped to $4.3 million, or $2.67 per basic share, compared to $9.1 million, or $5.40 per share, in the same period last year. The company said it still produced around $24 million in cash flow for development and other uses, kept its debt at zero, and had access to a $115 million revolving credit facility, a bank line it can use if needed.
Gas dragged down the quarter. PrimeEnergy said oil revenue reached $35.4 million versus $32.7 million last year, but natural gas revenue flipped to a negative $1.0 million, down from a $6.0 million gain. Revenue from natural gas liquids dropped as well, down to $5.2 million from $8.5 million.
PrimeEnergy sold 2.566 million Mcf of gas for an average price of minus 40 cents per Mcf in the quarter. One Mcf is equal to 1,000 cubic feet. Oil output increased 8.1% to 494,000 barrels. Average oil price was $71.60 a barrel, up slightly.
PrimeEnergy president Charles E. Drimal, Jr. pointed to a “lack of pipeline capacity” in the Permian Basin, warning this “could become more severe” before new pipelines come online. Drimal also said the company’s stock was trading at a “substantial discount” to asset value, citing share buybacks last quarter.
The company repurchased 14,500 shares in the first quarter, paying an average of $180.81 a share. So far, it has bought back around 3.93 million shares since the buyback program began, with a total spend near $119.6 million.
PrimeEnergy said Apache Corporation has indicated drilling on their Permian project, where PrimeEnergy is a participant, should begin in June. PrimeEnergy plans to put about $52 million into the project this year and will keep working in West Texas and Oklahoma.
Wider problems are showing up beyond PrimeEnergy. Reuters said this month that Waha, the West Texas gas hub tied to Permian output, has seen prices average negative $2.17 per mmBtu in 2026 so far. That compares with positive numbers in 2025. A mmBtu is a gas pricing unit based on heat content.
But oil staying strong may not support PrimeEnergy for long if gas stays weak. The company said swings in commodity prices, pipeline bottlenecks, drilling expenses and moving product can all pressure cash flow. If oil prices fall, gas prices get worse or drilling returns slow, PrimeEnergy’s buybacks and drilling plans could be tough to cover just from cash.
