We came across a bullish thesis on PrimeEnergy Resources Corporation (PNRG) on Substack by Anonymouskeepit. In this article, we will summarize the bulls’ thesis on PNRG. PrimeEnergy Resources Corporation (PNRG)'s share was trading at $212.79 as of Jan 15^th. PNRG’s trailing P/E was 9.17 according to Yahoo Finance.

Aerial view of an industrial landscape showing the scale of oil and gas operations.

PrimeEnergy Resources Corporation (PNRG) offers a compelling investment opportunity at $193 per share, with a 55% upside potential to a $300 target by year-end 2025. This thesis is supported by significant near-term production growth from a fully funded drilling program, industry-leading cost metrics, and exceptional capital allocation. Despite an 81% YTD return, the stock remains attractively valued at a 20% trailing free cash flow yield.

PNRG’s disciplined growth strategy, led by its founder/CEO, highlights its operational excellence and shareholder alignment. Over the past 34 years, the company has retired 76% of its shares while maintaining a strong balance sheet. With production expected to reach 20,000 boepd in 2025, up from 8,160 boepd at the end of 2023, the company is poised for transformative growth. This acceleration is driven by its West Texas drilling program, leveraging years of operational expertise in the Permian Basin. PNRG’s measured capital allocation during the shale boom preserved financial stability, distinguishing it from peers who overleveraged during the same period.

The company’s recent drilling success underscores its operational efficiency. As of Q3 2024, production has more than doubled to 16,530 boepd, with standout performance from wells like Studley CKO and Christi, which collectively contribute thousands of boepd net to PNRG's interests. With a balanced commodity mix of oil, gas, and NGLs, and no hedging, PNRG is well-positioned to capitalize on potential price upside. The company’s production costs, at $9.31/boe, and SG&A expenses, at 7.4% of revenue, are significantly below industry averages, reinforcing its competitive advantage.

Insider ownership of 70-80% ensures alignment between management and shareholders. The founder/CEO’s personal stake, combined with a history of share buybacks and a conservative capital structure, demonstrates a commitment to long-term value creation. PNRG’s fully funded growth strategy includes 30 horizontal wells planned for 2025 and 21 more in 2026-2027, supported by a robust operational foundation and favorable market conditions.

With industry-leading cost efficiency, strong free cash flow, and clear growth catalysts, PNRG is a standout among small-cap energy producers. The company’s focus on shareholder value, operational excellence, and disciplined growth offers a highly attractive risk/reward profile. At its current valuation, PNRG represents a unique opportunity to benefit from substantial production growth and strategic execution in the energy sector.

PrimeEnergy Resources Corporation (PNRG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 2 hedge fund portfolios held PNRG at the end of the third quarter which was 2 in the previous quarter. While we acknowledge the risk and potential of PNRG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PNRG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.