PrimeEnergy Resources: revenue returns to growth, but Q2 profit leans on last year's low base

On 6 August PrimeEnergy Resources reported results for the second quarter of 2026. Revenue added 1.2% year on year to USD 42.5m, EBITDA declined 3.9% to USD 24.0m, while net profit doubled to USD 6.5m. The EBITDA margin remains high at 56.5%, the net margin rose from 7.7% to 15.4%, and the company has held a net cash position for a second consecutive quarter. In our view, with an EV/EBITDA multiple of 3.38 and negative net debt, the share looks attractive for an investor willing to accept volatility in energy prices.

Key takeaways

— Revenue returned to growth for the first time in five quarters, but only by 1.2%

— Profit doubled, and the effect came from last year's low base

— The EBITDA margin remains above 56%, though slightly below last year's level

— The company has held a net cash position for a second consecutive quarter

— Operating cash flow remains solid, while capital expenditure shrank to a minimum

— An EV/EBITDA multiple of 3.38 and negative net debt leave room for a re-rating

Attractiveness

Key figures, USD bn

Revenue returned to growth for the first time in five quarters, but only by 1.2%

In the second quarter of 2026, PrimeEnergy Resources' revenue amounted to USD 42.5m, up 1.2% year on year. This is the first quarterly growth after four consecutive declines: in Q1 2026 revenue fell 21.3%, in Q4 2025 – 15.7%, in Q3 – 33.8%, and in Q2 2025 – 35.2%.

Sequential improvement is also visible: compared with Q1 2026, revenue rose 7.8% from USD 39.4m to USD 42.5m. This suggests that the revenue bottom has likely been passed, although the absolute level is still far from the peaks of 2024, when quarterly revenue exceeded USD 60m.

The year-on-year growth is mainly due to last year's low base: in Q2 2025 revenue was USD 42.0m, the lowest in several years. Without this base effect, the current result looks modest, and the sustainability of the recovery remains questionable.

Profit doubled, and the effect came from last year's low base

Net profit in Q2 2026 was USD 6.5m, up 102.3% from USD 3.2m in Q2 2025. This growth is mainly explained by the low base: a year ago profit was depressed, and the current recovery looks sharp against that backdrop.

The net margin rose to 15.4% from 7.7% a year earlier. The margin improvement occurred despite a 3.9% decline in EBITDA, indicating that the main contribution to profit growth came not from operating results but from factors below the operating line – possibly lower interest expenses or one-off items.

Operating profit in Q2 2026 was USD 8.1m versus USD 4.2m a year earlier. At the same time, EBITDA declined to USD 24.0m from USD 25.0m. The divergence between EBITDA and operating profit dynamics is due to depreciation and possible write-offs, which are not detailed in the reporting.

The EBITDA margin remains above 56%, though slightly below last year's level

The EBITDA margin in Q2 2026 was 56.5%, down from 59.5% a year earlier. This is still a very high level, indicating strong pricing environment and cost control, despite a slight contraction.

A 3 percentage point decline in margin with revenue growth of 1.2% means costs grew faster than revenue. However, the absolute EBITDA figure – USD 24.0m – remains significant and allows the company to generate sustainable cash flow even amid volatile energy prices.

For comparison: in Q1 2026 the EBITDA margin was 55.7% (USD 21.9m on revenue of USD 39.4m), so sequentially the margin even improved slightly. This suggests that cost pressure may be easing.

The company has held a net cash position for a second consecutive quarter

Net debt at the end of Q2 2026 was -USD 28.1m, meaning the company has a net cash position. This is the second consecutive quarter with negative net debt: at the end of Q1 2026 the figure was -USD 18.6m.

The net debt to EBITDA ratio for the trailing twelve months is -0.07, confirming the absence of debt burden. A negative value means cash and equivalents exceed debt obligations.

The strengthening of the cash position occurred against the backdrop of solid operating cash flow and minimal capital expenditure. This gives the company financial flexibility and reduces risks in case of a deterioration in the market environment.

Operating cash flow remains solid, while capital expenditure shrank to a minimum

Operating cash flow in Q2 2026 was USD 15.4m, slightly below Q1 (USD 16.1m) but significantly better than the negative value in Q2 2025 (-USD 8.3m). Over the trailing twelve months, operating cash flow reached USD 96.7m.

Capital expenditure in Q2 2026 was only USD 0.7m – the lowest level in several years. For comparison: in Q1 2026 capex was USD 1.5m, and a year earlier – USD 6.0m. Such a reduction in investment frees up significant funds and supports the growth of the cash position.

Free cash flow (operating cash flow minus capital expenditure) in Q2 was about USD 14.7m. This allows the company not only to finance current operations but also to accumulate liquidity or return funds to shareholders.

An EV/EBITDA multiple of 3.38 and negative net debt leave room for a re-rating

Based on the trailing twelve months, PrimeEnergy Resources' EV/EBITDA is 3.38, and P/E is 14.1. Market capitalisation currently stands at USD 350.8m. With negative net debt and LTM EBITDA of USD 101.7m, the EV/EBITDA looks low, which may indicate undervaluation.

Return on equity (ROE) over the trailing twelve months is 12.0%. This is a moderate figure reflecting the company's ability to generate profit on invested capital.

According to the portal's model, which re-prices EBITDA at current commodity prices at the target EV/EBITDA, the upside of the share to its fair value is estimated at -11%. This means that, in our view, the market is already pricing in a fairly optimistic scenario, and further growth is possible only with an improvement in fundamentals.

Valuation on the latest reported figures

Bottom line

PrimeEnergy Resources showed its first revenue growth in five quarters, but it was only 1.2% and relies on last year's low base. Net profit doubled, but this growth is also due to the base effect, while EBITDA even declined slightly. The strengths are a high EBITDA margin (56.5%), solid operating cash flow, and a net cash position that has been negative in terms of debt for a second consecutive quarter. The EV/EBITDA multiple of 3.38 and negative net debt make the share attractive for an investor willing to accept volatility in energy prices, but the portal's model indicates limited upside at -11%. Verdict: the share looks attractive at the current price level, but the key factor remains the sustainability of the revenue recovery and the ability to maintain the margin.