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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2004 OR [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 0-9408 PRIMA ENERGY CORPORATION  Delaware
    
    84-1097578(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 1099 18th Street, Suite 400, Denver CO 80202
(Address of principal executive offices) (Zip Code) (303) 297-2100
(Registrants telephone number, including area code) No Change
(Former name, former address and former fiscal year, if changed from last report.) Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x]   No [   ] Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12-b-2 of the Exchange Act). Yes [x]   No [   ] As of April 30, 2004, the Registrant had 12,980,192 shares of Common Stock,
$0.015 Par Value, outstanding.




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PRIMA ENERGY CORPORATION INDEX PagePart l  Financial InformationItem 1. Financial StatementsUnaudited Consolidated Balance Sheets
    
    
    3Unaudited Consolidated Statements of Income
    
    
    5Unaudited Consolidated Statements of Comprehensive Income
    
    
    6Unaudited Consolidated Statements of Cash Flows
    
    
    7Notes to Unaudited Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    19Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
    
    
    20Part II  Other InformationItem 2. Issuer Purchases of Equity Securities
    
    
    21Item 6. Exhibits and Reports on Form 8-K
    
    
    22Signatures
    
    
    23Certifications
    
    
    24Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of CEO & CFO
 2




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PART I. FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS PRIMA ENERGY CORPORATION 
 CONSOLIDATED BALANCE SHEETS
 ASSETS March 31,
    
    December 31,2004
    
    2003(Unaudited)CURRENT ASSETSCash and cash equivalents
    
    $
    50,359,000
    
    
    $
    55,918,000Available for sale securities, at market
    
    
    11,038,000
    
    
    
    1,274,000Receivables (net of allowance for doubtful
accounts: 3/31/04 $303,000; 12/31/03
$304,000)
    
    
    12,055,000
    
    
    
    10,759,000Tubular goods inventory
    
    
    1,503,000
    
    
    
    1,012,000Other
    
    
    2,115,000
    
    
    
    938,000Total current assets
    
    
    77,070,000
    
    
    
    69,901,000OIL AND GAS PROPERTIES, at cost, accounted
for using the full cost method
    
    
    187,940,000
    
    
    
    177,892,000Less accumulated depreciation, depletion
and amortization
    
    
    (80,879,000
    )
    
    
    (76,478,000
    )Oil and gas properties  net
    
    
    107,061,000
    
    
    
    101,414,000PROPERTY AND EQUIPMENT, at costOilfield service equipment
    
    
    9,868,000
    
    
    
    9,737,000Furniture and equipment
    
    
    747,000
    
    
    
    713,000Field office, shop and land
    
    
    451,000
    
    
    
    451,00011,066,000
    
    
    
    10,901,000Less accumulated depreciation
    
    
    (6,404,000
    )
    
    
    (6,183,000
    )Property and equipment  net
    
    
    4,662,000
    
    
    
    4,718,000OTHER ASSETS
    
    
    1,185,000
    
    
    
    1,184,000$
    189,978,000
    
    
    $
    177,217,000
 See accompanying notes to unaudited consolidated financial statements. 3




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PRIMA ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (contd.) LIABILITIES AND STOCKHOLDERS EQUITY March 31,
    
    December 31,2004
    
    2003(Unaudited)CURRENT LIABILITIESAccounts payable
    
    $
    3,613,000
    
    
    $
    3,722,000Amounts payable to oil and gas property owners
    
    
    3,168,000
    
    
    
    2,620,000Ad valorem and production taxes payable
    
    
    3,177,000
    
    
    
    3,477,000Accrued and other liabilities
    
    
    1,719,000
    
    
    
    1,951,000Derivatives, at fair value
    
    
    4,503,000
    
    
    
    1,983,000Total current liabilities
    
    
    16,180,000
    
    
    
    13,753,000AD VALOREM TAXES, non-current
    
    
    5,034,000
    
    
    
    3,634,000ASSET RETIREMENT OBLIGATIONS
    
    
    2,064,000
    
    
    
    1,903,000DEFERRED TAX LIABILITY
    
    
    30,228,000
    
    
    
    27,251,000Total liabilities
    
    
    53,506,000
    
    
    
    46,541,000STOCKHOLDERS EQUITYPreferred stock, $0.001 par value, 2,000,000 shares
authorized; no shares issued
    
    
    
    
    
    
    Common stock, $0.015 par value, 35,000,000 shares
authorized; 13,324,198 and 13,312,548 shares
issued
    
    
    200,000
    
    
    
    200,000Additional paid-in capital
    
    
    8,685,000
    
    
    
    8,455,000Retained earnings
    
    
    138,107,000
    
    
    
    131,265,000Accumulated other comprehensive loss
    
    
    (2,874,000
    )
    
    
    (1,598,000
    )Treasury stock, 348,406 shares at cost
    
    
    (7,646,000
    )
    
    
    (7,646,000
    )Total stockholders equity
    
    
    136,472,000
    
    
    
    130,676,000$
    189,978,000
    
    
    $
    177,217,000
 See accompanying notes to unaudited consolidated financial statements. 4




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PRIMA ENERGY CORPORATION 
 CONSOLIDATED STATEMENTS OF INCOME
  Three Months EndedMarch 31,2004
    
    2003REVENUESOil and gas sales
    
    $
    17,660,000
    
    
    $
    12,212,000Gains on derivatives instruments, net
    
    
    318,000
    
    
    
    1,354,000Oilfield services
    
    
    2,485,000
    
    
    
    1,939,000Interest, dividend and other income
    
    
    181,000
    
    
    
    105,00020,644,000
    
    
    
    15,610,000EXPENSESDepreciation, depletion and amortization:Depletion of oil and gas properties
    
    
    4,441,000
    
    
    
    3,135,000Depreciation of property and equipment
    
    
    254,000
    
    
    
    284,000Lease operating expense
    
    
    991,000
    
    
    
    941,000Ad valorem and production taxes
    
    
    1,863,000
    
    
    
    1,234,000Cost of oilfield services
    
    
    1,719,000
    
    
    
    1,739,000General and administrative
    
    
    994,000
    
    
    
    848,00010,262,000
    
    
    
    8,181,000Income Before Income Taxes and Cumulative Effect of
Change in Accounting Principle
    
    
    10,382,000
    
    
    
    7,429,000Provision for Income Taxes
    
    
    3,540,000
    
    
    
    2,450,000Net Income Before Cumulative Effect of Change in
Accounting Principle
    
    
    6,842,000
    
    
    
    4,979,000Cumulative Effect of Change in Accounting Principle
    
    
    
    
    
    
    403,000NET INCOME
    
    $
    6,842,000
    
    
    $
    5,382,000Basic Net Income per Share Before Cumulative Effect of
Change in Accounting Principle
    
    $
    0.53
    
    
    $
    0.39Cumulative Effect of Change in Accounting Principle
    
    
    
    
    
    
    0.03BASIC NET INCOME PER SHARE
    
    $
    0.53
    
    
    $
    0.42Diluted Net Income per Share Before Cumulative
Effect of Change in Accounting Principle
    
    $
    0.52
    
    
    $
    0.38Cumulative Effect of Change in Accounting Principle
    
    
    
    
    
    
    0.03DILUTED NET INCOME PER SHARE
    
    $
    0.52
    
    
    $
    0.41Weighted Average Common Shares Outstanding
    
    
    12,964,819
    
    
    
    12,820,817Weighted Average Common Shares Outstanding
Assuming Dilution
    
    
    13,271,725
    
    
    
    13,167,300
 See accompanying notes to unaudited consolidated financial statements. 5




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PRIMA ENERGY CORPORATION 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Three Months EndedMarch 31,2004
    
    2003Net income
    
    $
    6,842,000
    
    
    $
    5,382,000Other comprehensive income (loss):Change in fair value of hedges
    
    
    (3,158,000
    )
    
    
    (195,000
    )Reclassification adjustment for realized losses on hedges
included in net income
    
    
    1,174,000
    
    
    
    638,000Deferred income tax expense related to change in fair value
of hedges
    
    
    734,000
    
    
    
    (164,000
    )Change in fair value of available-for-sale securities
    
    
    (1,000
    )
    
    
    27,000Reclassification adjustment for realized gains
included in net income
    
    
    (41,000
    )
    
    
    Deferred income tax expense related to change in fair value
of available-for-sale securities
    
    
    16,000
    
    
    
    (10,000
    )(1,276,000
    )
    
    
    296,000COMPREHENSIVE INCOME
    
    $
    5,566,000
    
    
    $
    5,678,000
 See accompanying notes to unaudited consolidated financial statements. 6




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PRIMA ENERGY CORPORATION 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three Months EndedMarch 31,2004
    
    2003OPERATING ACTIVITIESNet income
    
    $
    6,842,000
    
    
    $
    5,382,000Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion and amortization
    
    
    4,695,000
    
    
    
    3,419,000Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (403,000
    )Deferred income taxes
    
    
    2,451,000
    
    
    
    1,539,000Unrealized (gains) losses on derivatives
instruments
    
    
    536,000
    
    
    
    (910,000
    )Other
    
    
    44,000
    
    
    
    169,000Changes in operating assets and liabilities:Receivables
    
    
    (1,296,000
    )
    
    
    (1,982,000
    )Inventory
    
    
    (491,000
    )
    
    
    (3,000
    )Other current assets
    
    
    98,000
    
    
    
    (56,000
    )Accounts payable and payables to owners
    
    
    439,000
    
    
    
    (2,812,000
    )Production taxes payable
    
    
    1,100,000
    
    
    
    1,152,000Accrued and other liabilities
    
    
    (232,000
    )
    
    
    8,000Net cash provided by operating activities
    
    
    14,186,000
    
    
    
    5,503,000INVESTING ACTIVITIESAdditions to oil and gas properties
    
    
    (10,131,000
    )
    
    
    (3,952,000
    )Purchases of available for sale securities
    
    
    (10,313,000
    )
    
    
    (57,000
    )Proceeds from sales of oil & gas properties
    
    
    258,000
    
    
    
    1,293,000Purchases of other property
    
    
    (253,000
    )
    
    
    (252,000
    )Proceeds from sales of available for sale securities
    
    
    549,000
    
    
    
    Proceeds from sales of other property
    
    
    5,000
    
    
    
    65,000Net cash used in investing activities
    
    
    (19,885,000
    )
    
    
    (2,903,000
    )FINANCING ACTIVITIESProceeds from common stock issued
    
    
    140,000
    
    
    
    17,000Treasury stock purchased
    
    
    
    
    
    
    (858,000
    )Net cash
provided by (used in) financing activities
    
    
    140,000
    
    
    
    (841,000
    )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (5,559,000
    )
    
    
    1,759,000CASH AND CASH EQUIVALENTS, beginning of period
    
    
    55,918,000
    
    
    
    36,263,000CASH AND CASH EQUIVALENTS, end of period
    
    $
    50,359,000
    
    
    $
    38,022,000
 See accompanying notes to unaudited consolidated financial statements. 7




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PRIMA ENERGY CORPORATION 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. GENERAL Prima Energy Corporation is an independent oil and gas company primarily
engaged in the exploration for, and the acquisition, development and production
of, crude oil and natural gas. Through wholly owned subsidiaries, we also
conduct operations in oil and gas property management, oilfield services and
natural gas gathering, marketing and trading. These activities have been
conducted predominantly in the Rocky Mountain region of the United States. Our consolidated financial statements include the accounts of Prima Energy
Corporation and its subsidiaries, which are collectively referred to in this
report as Prima or the Company. All significant intercompany transactions
have been eliminated. Financial information presented herein as of March 31, 2004 and for the
three-month periods ended March 31, 2004 and 2003 is unaudited but reflects all
adjustments that we believe are necessary to fairly present Primas financial
position, results of operations and cash flows for the periods shown. Such
adjustments consist only of normal recurring accruals. Certain prior-year
amounts have also been reclassified to conform to classifications reflected as
of March 31, 2004. Results for interim periods are not necessarily indicative
of results to be expected for our full fiscal year ending December 31, 2004. The consolidated financial statements presented in this Form 10-Q should
be read in conjunction with the Notes to Consolidated Financial Statements that
were included in Primas Annual Report on Form 10-K filed for the year ended
December 31, 2003. 2. ASSET RETIREMENT OBLIGATIONS Effective January 1, 2003, we adopted Statement of Financial Accounting
Standards No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143
provides that, if the fair value for an asset retirement obligation can be
reasonably estimated, the liability should be recognized in the period in which
it is incurred. Oil and gas producing companies typically incur such
liabilities upon drilling or acquiring wells. Under the method prescribed by
SFAS No. 143, an asset retirement obligation is recorded as a liability at its
estimated present value at the assets inception, with an offsetting increase
in property cost. The corresponding property cost, less the estimated
undiscounted salvage value, is then included in the calculation of depletion
cost for oil and gas properties. Periodic accretion of discount of the
estimated liability is also recorded in the income statement. Prior to adoption
of SFAS No. 143, we accrued for any estimated asset retirement obligation, net
of estimated salvage value, as part of our calculation of depletion,
depreciation and amortization. Under this method, the estimated net cost of
the obligation would be recognized over the life of the property on a
unit-of-production basis, with the estimated obligation netted in property cost
as part of the accumulated depreciation, depletion and amortization balance.
Based on our experience that salvage values have generally equaled or exceeded
abandonment costs for the types of properties that Prima has owned to date,
such net costs have been negligible. Our asset retirement obligation primarily represents the estimated present
value of the amount we will incur to plug, abandon and remediate our producing
properties at the end of their productive lives, in accordance with applicable
laws and regulations. We have determined our asset retirement obligation by
calculating the present value of estimated future cash flows related to the
liability. Our adoption of 8




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SFAS No. 143 as of January 1, 2003 resulted in the recognition of an increase
in the carrying value of our oil and gas properties of $2,252,000, an increase
in our deferred tax liability of $217,000, an increase in other non-current
liabilities of $1,632,000, and a net-of-tax adjustment increasing net income by
$403,000, which was recorded as the cumulative effect of a change in accounting
principle. A reconciliation of Primas liability for the three months ended
March 31, 2004 and 2003 is as follows: 2004
    
    2003Balance, January 1
    
    $
    1,903,000
    
    
    $
    1,632,000Liabilities incurred
    
    
    120,000
    
    
    
    Liabilities settled
    
    
    
    
    
    
    Accretion expense
    
    
    41,000
    
    
    
    32,000Revision to estimate
    
    
    
    
    
    
    Balance, March 31
    
    $
    2,064,000
    
    
    $
    1,664,000
 3. DERIVATIVES TRANSACTIONS From time to time, we have used crude oil and natural gas futures, options
and swaps, to mitigate risks associated with fluctuating oil and natural gas
prices and basis differentials. While the use of such derivatives can reduce
the adverse effects of oil and gas price declines or increases in basis
differentials, they also generally limit the benefits of price increases. All derivative financial instruments are recorded on the balance sheet at
fair value. Fair value is generally determined based on the difference between
the fixed contract price and the underlying market price at the determination
date, and/or the value confirmed by the counterparty. Changes in the fair value
of effective cash flow hedges are recorded as a component of accumulated other
comprehensive income (loss), which is later included in oil and gas sales when
the hedged transaction occurs. Changes in the fair value of derivatives that
are not designated as hedges, as well as any ineffective portion of hedge
derivatives, are recorded in gains (losses) on derivative instruments, net in
the income statement. Giving consideration to our current sources of oil and gas production, we
have determined that, swaps, collars, puts or floors that are based on NYMEX
oil prices or Rocky Mountain gas prices qualify as effective cash flow hedges.
Derivatives based on NYMEX gas prices will not qualify unless we have entered
into corresponding transactions to hedge basis differentials between NYMEX and
Rocky Mountain indices. In addition, stand-alone basis-differential swaps and
sales of call options do not qualify for hedge accounting. In the first quarter of 2004, $1,174,000 of losses on derivative
transactions that qualified for hedge accounting were included in oil and gas
sales. In the first quarter of 2003, $638,000 of similar losses were included
in oil and gas sales. First quarter 2004 revenues also included $318,000 of net
gains recognized on ineffective hedges, including unrealized gains resulting
from mark-to-market valuations at the end of the period. In the first quarter
of the prior year, we reported net gains of $1,354,000 on similar contracts. As of March 31, 2004, Prima had recorded a current liability of
$4,503,000, representing the aggregate unrealized mark-to-market losses for its
open derivative positions at that date. These positions are summarized below: 9




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Market
    
    Total Volumes in
    
    ContractProduct and Time Period
    
    Index
    
    MMBtu or Bbls
    
    Price
    
    Fair ValueNatural Gas:May  October 2004
    
    NW Rockies
    
    
    4,200,000
    
    
    $
    4.41
    
    
    $
    (3,737,000
    )November 2004
    
    CIG
    
    
    350,000
    
    
    
    4.00
    
    
    
    (489,000
    )Oil:May  September 2004
    
    NYMEX
    
    
    75,000
    
    
    
    31.14
    
    
    
    (277,000
    )Total Net Fair Value
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,503,000
    )
 4. EARNINGS PER SHARE Basic net income per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
net income per share reflects the potential dilution that could occur upon
exercise of options to acquire common stock, computed using the treasury stock
method. The treasury stock method assumes that the number of additional shares
that could be issued is reduced by the number of shares that could have been
repurchased with proceeds that Prima would receive upon exercise of the
options. The amount of shares that could have been repurchased was determined
using the average market price of our common stock during the reporting period. The following table reconciles the net earnings and common shares
outstanding used in the calculations of basic and diluted net income per share
for the quarters ended March 31, 2004 and 2003. Income
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    AmountQuarter Ended March 31, 2004:Basic Net Income per Share
    
    $
    6,842,000
    
    
    
    12,964,819
    
    
    $
    0.53Effect of Stock Options
    
    
    
    
    
    
    306,906Diluted Net Income per Share
    
    $
    6,842,000
    
    
    
    13,271,725
    
    
    $
    0.52Quarter Ended March 31, 2003:Basic Net Income per Share
    
    $
    5,382,000
    
    
    
    12,820,817
    
    
    $
    0.42Effect of Stock Options
    
    
    
    
    
    
    346,483Diluted Net Income per Share
    
    $
    5,382,000
    
    
    
    13,167,300
    
    
    $
    0.41
 5. STOCK-BASED COMPENSATION Prima has stock-based compensation plans for its employees and its
non-employee directors. The Company accounts for stock-based compensation
using the intrinsic value recognition and measurement principles prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations. No stock-based compensation expense
for employees or non-employee directors is reflected in net income, as all
options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. For disclosure purposes, the fair value of options is measured at the date
of grant using the Black-Scholes option valuation model, which was developed
for use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. Such option valuation models require
the input of highly subjective assumptions. Because options issued under
Primas stock-based 10




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compensation plans have characteristics significantly different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the estimated fair value, these valuation models do not
necessarily provide a reliable measure of the fair value of such stock options. For purposes of pro forma disclosures, the estimated fair values of option
grants are amortized to expense over the options vesting periods. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation. Three Months EndedMarch 31,2004
    
    2003Net IncomeAs reported
    
    $
    6,842,000
    
    
    $
    5,382,000Pro forma
    
    $
    6,586,000
    
    
    $
    5,128,000Basic Net Income Per ShareAs reported
    
    $
    0.53
    
    
    $
    0.42Pro forma
    
    $
    0.51
    
    
    $
    0.40Diluted Net Income Per ShareAs reported
    
    $
    0.52
    
    
    $
    0.41Pro forma
    
    $
    0.50
    
    
    $
    0.39
 6. INDUSTRY SEGMENT INFORMATION Prima organizes its activities into two operating segments consisting of:
1) the acquisition, exploration, development and operation of oil and gas
properties; and 2) providing oilfield services for wells that we operate and
for third-party operators. Our activities have been conducted primarily in the
Rocky Mountain region of the United States, which is one geographic area. The information below presents the operating segment data for Prima on the
basis used by management in deciding how to allocate resources and in assessing
performance, which is the same basis used in the preparation of our
consolidated financial statements. Total revenue by operating segment includes
both sales to unaffiliated customers, as reported in our consolidated
statements of income, and intersegment sales that are eliminated in
consolidation, which represent oilfield services provided for Prima-operated
wells. Oilfield services are priced and revenues are accounted for
consistently for both unaffiliated and intersegment sales. 11




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Three Months EndedMarch 31,2004
    
    2003RevenuesOil & gas (including derivative effects)
    
    $
    17,978,000
    
    
    $
    13,566,000Oilfield services
    
    
    3,259,000
    
    
    
    2,323,00021,237,000
    
    
    
    15,889,000Corporate
    
    
    181,000
    
    
    
    105,000Intersegment eliminations
    
    
    (774,000
    )
    
    
    (384,000
    )Total Revenues
    
    $
    20,644,000
    
    
    $
    15,610,000Operating EarningsOil & gas (including derivative effects)
    
    $
    10,683,000
    
    
    $
    8,256,000Oilfield services
    
    
    698,000
    
    
    
    19,00011,381,000
    
    
    
    8,275,000Corporate
    
    
    (870,000
    )
    
    
    (803,000
    )Intersegment eliminations
    
    
    (129,000
    )
    
    
    (43,000
    )Income Before Income Taxes and Cumulative
Effect of Change in Accounting
Principle
    
    $
    10,382,000
    
    
    $
    7,429,000
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS The following discussion is intended to assist in understanding Primas
financial position at March 31, 2004, its results of operations for the
three-month periods ended March 31, 2004 and March 31, 2003, and our assessment
of Primas liquidity and capital resources. Liquidity and Capital Resources Historically, Primas principal sources of liquidity have been the
internal generation of cash flow from operations, proceeds from occasional
asset sales, and existing net working capital. Additional potential sources of
capital include borrowings and issuances of common stock or other securities.
Our revenues and cash flows are substantially derived from oil and gas sales,
which are dependent upon oil and gas production volumes and sales prices. Cash flow from operations before changes in operating assets and
liabilities totaled $14,568,000 in the first quarter of 2004, compared to
$9,196,000 in the first quarter of 2003. (This is a non-GAAP financial measure
derived from net cash provided by operating activities; see Reconciliation of
Non-GAAP Financial Measure in table below.) We also received cash proceeds
totaling $258,000 from the sale of oil and gas properties. During the first
quarter of 2004, we invested $10,131,000 in oil and gas properties, including
$9,891,000 for well costs and other development activities, primarily in the
D-J Basin and on CBM properties in the Powder River Basin. Our net working
capital increased from $56,148,000 at the end of 2003 to $60,890,000 at March
31, 2004, and included $61,397,000 of cash equivalents and short-term
investments at the end of March 2004. Prima also continues to be free of
long-term debt. 12




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We currently anticipate investing approximately $45 million on property
and equipment during 2004, excluding acquisitions which are unbudgeted.
Projected activities for the full year include: drilling approximately 35 wells
and re-fracturing or re-completing approximately 50 wells in the D-J Basin;
drilling an estimated 150 CBM wells in the Powder River Basin and hooking up
most of these and 130 previously-drilled CBM wells; participation in up to six
wells in the Cave Gulch area; and certain exploratory activities, including
operations on Primas Coyote Flats Prospect in Utah. We intend to focus current
year CBM activities on drilling additional wells to further develop the
Porcupine-Tuit field, which is producing from a relatively shallow Wyodak coal,
and operations to evaluate and develop deeper unproved coals within our
Kingsbury, Cedar Draw, North Shell Draw and Wild Turkey project areas. During the quarter ended March 31, 2004, our D-J Basin operations included
drilling and completing ten gross (10 net) wells, completing two gross (2 net)
wells that were drilled last year, and re-fracturing 23 gross (21.8 net) wells.
Our Powder River Basin activities included drilling 14 gross (14 net) wells,
deepening eight gross (8 net) wells and installing equipment, flow lines and
related facilities in the North Shell Draw and Kingsbury project areas in
preparation for tie-in to a gathering system later this year. We also installed
additional compression equipment to bolster production rates from our 86
producing CBM wells in the Porcupine-Tuit area. Benefits began to be partially
realized in April 2004 and gross production at Porcupine-Tuit at the end of
that month aggregated approximately 26,000 Mcf per day, compared to an average
of 24,000 Mcf per day in the first quarter of 2004 (Primas net revenue
interests at Porcupine-Tuit average approximately 78%). Prima also recently participated with a 6.3% working interest in
completion operations to test the over-pressured Lance formation in the Sage
Flat Federal #17-20 well on the Merna Prospect, in the northern Green River
Basin. Flow rates were uneconomic after the well was stimulated and Prima
expects the operator to plug and abandon the well. We own an average 35%
working interest in 74,000 gross acres in the greater Merna area and have
received recent expressions of interest from other operators for conducting
additional drilling in the area to continue to test the play. In addition to investments in oil and gas properties, we utilized $253,000
for acquisitions of other property and equipment during the recent quarter. No
shares of treasury stock were acquired during the period, but approximately
291,000 shares of Primas common stock remain subject to purchase under an
existing authorization from our Board of Directors. We have previously reported an estimate that our oil and gas production in
2004 will aggregate between 15.6 Bcfe and 16.1 Bcfe. No adjustment of that
estimate is believed to be warranted at the present time. Approximately 40% of
current year production is projected to come from Powder River Basin CBM
properties. Most of this is expected to be derived from currently producing
Porcupine-Tuit wells that will exhibit depletion-related declines during the
year. Contributions from new wells in the Powder River Basin are expected to
begin during the third or fourth quarter and increase as de-watering occurs.
Overall, excluding acquisitions or discoveries, Primas net production is
projected to decline through late this year or early next year, when increasing
contributions from new CBM wells are expected to offset declines from other
wells, particularly Porcupine-Tuit. Natural gas is currently expected to account for more than 80% of Primas
total oil and gas production in 2004. Gas prices have been strong during the
past several months in response to a number of factors, including recent
declines in North American natural gas production and relatively high prices
for oil, which can be substituted for natural gas in some applications if
economically advantageous. 13




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As of May 5, 2004, average prices for the CIG monthly index that have been
published for 2004 (January through May) plus the average of CIG prices quoted
for the remainder of 2004 in futures markets combined to average $5.25 per
MMBtu of natural gas. This compares to average closing prices for the CIG
monthly index during 2003 of $4.04 per MMBtu of natural gas. There is no
assurance, however, that prices reflected in futures markets will actually be
realized, except to the extent that fixed price or hedging contracts are
entered into. As of the close of business on May 5, 2004, we had open contracts for
forward sales of 5,050,000 MMBtu of natural gas and 160,000 barrels of crude
oil, as well as certain basis differential contracts. These positions relate
to the period from June 2004 through March 2005 and are summarized in Item 3,
Part I of this report. We plan to fund our planned current year exploration, development, and
exploitation operations, the expansion of our service companies, and any
re-purchases of common stock with cash provided by operating activities and
existing working capital. We also regularly review opportunities for
acquisition of assets or companies related to the oil and gas industry that
could expand or enhance our existing business. If a sufficiently large
transaction is consummated, it could involve the incurrence of debt or issuance
of equity securities. Reconciliation of Non-GAAP Financial Measure Cash flow from operations before changes in operating assets and
liabilities is presented because of its acceptance as an indicator of the
ability of an oil and gas exploration and production company to internally fund
exploration and development activities. This measure should not be considered
as an alternative to net cash provided by operating activities as defined by
generally accepted accounting principles. A reconciliation of cash flow from
operations before changes in operating assets and liabilities to net cash
provided by operating activities is shown below: Three Months EndedMarch 31,2004
    
    2003Net cash provided by operating activities
    
    $
    14,186,000
    
    
    $
    5,503,000Net changes in operating assets and liabilities
    
    
    382,000
    
    
    
    3,693,000Cash flow from operations before changes in operating
assets and liabilities
    
    $
    14,568,000
    
    
    $
    9,196,000
 Results of Operations As noted, our primary source of revenues is the sale of oil and natural
gas production. Because of significant fluctuations in oil and natural gas
prices and variances in production volumes, our operating results for any
period are not necessarily indicative of future operating results. Oil and gas
prices have historically been volatile and are likely to continue to be
volatile. Prices are affected by, among other things, market supply and demand
factors, market uncertainty, and actions of the United States and foreign
governments and international cartels. These factors are beyond our control.
Our revenues, cash flows, earnings and operations are adversely affected when
oil and gas prices decline. Natural gas has typically represented approximately
80% of our total oil and gas production mix. After reaching record high levels
early in 2001, gas prices declined significantly until early 2003 when prices
again approached record levels, and prices have generally remained at favorable
levels into 2004. These price movements 14




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have significantly impacted our operating results. We cannot accurately
predict future oil and natural gas prices, but historically oil and gas supply
and demand have responded to changes in price levels to correct from
short-lived extreme levels of high or low prices. In addition to factors affecting global or national markets for oil and
natural gas, our business is subject to regional influences on natural gas
markets. Gas production in the Rocky Mountain area, where Primas producing
properties are located, generally exceeds regional consumption needs and the
surplus is transported via pipelines to other markets. Rocky Mountain gas has
typically sold for a lower price than gas produced in the Gulf Coast region or
in areas closer to major consumption markets that rely on gas delivered from
outside the region. The size of the discount has varied widely based on
seasonal factors, structural factors, and other supply and demand influences.
From 1991 through 2003, CIG gas prices averaged approximately $0.65 per MMBtu
less than the average for gas at Henry Hub, but the amount of this discount
ranged on an annual basis between $0.26 (1999) and $1.40 (2003), and monthly
variances in index prices ranged from an $0.11 premium (January 1993) to a
$4.27 discount (March 2003). Basis differentials widened considerably beginning
in May 2002, resulting in depressed regional prices for Rocky Mountain gas for
several months despite relatively strong gas prices in other areas of the
country. In early 2003, Rocky Mountain gas prices improved but basis
differentials remained wide, as prices in other regions increased as much or
more. Beginning in May 2003, when significant expansions in pipeline capacity
were completed and placed in service, basis differentials began to
significantly narrow. NYMEX-versus-CIG differentials during the four calendar
quarters of 2003 averaged sequentially $2.82, $1.51, $0.81 and $0.47. During
the first quarter of 2004, the basis differential averaged $0.82 and recent
forward market quotes indicate expectations of average differentials during the
next year of approximately $0.70 to $0.80. Future basis differentials, which
we expect to have an important impact on our operating results, may vary
substantially from the current indications on futures markets due to a number
of factors, including but not limited to, the timing, size and location of
pipeline expansions and the timing, size and location of changes in regional
gas deliverability. Since historically most of Primas revenues have been derived from oil and
gas sales, our profitability has been primarily determined by oil and gas
production volumes and average margins realized per unit of production. Oil and
gas prices, over which we have little control, can vary significantly from
period to period and are a key determinant of profitability. We also look at
all of our costs, other than those directly related to oilfield service
operations, on a per-Mcfe basis. 15




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The following table, which presents selected operating data, is followed
by discussion of our results of operations for the periods indicated: Three Months EndedMarch 31,2004
    
    2003Production:Natural gas (Mcf)
    
    
    3,493,000
    
    
    
    2,795,000Oil (barrels)
    
    
    116,000
    
    
    
    93,000Total natural gas equivalents (Mcfe)
    
    
    4,191,000
    
    
    
    3,353,000Revenue:Natural gas sales
    
    $
    13,830,000
    
    
    $
    8,993,000Oil sales
    
    $
    3,830,000
    
    
    $
    3,219,000Total oil and gas sales
    
    $
    17,660,000
    
    
    $
    12,212,000Avg. sales price (including hedging effects):Natural gas (per Mcf)
    
    $
    3.96
    
    
    $
    3.22Oil (per barrel)
    
    $
    32.94
    
    
    $
    34.60Total natural gas equivalents (per Mcfe)
    
    $
    4.21
    
    
    $
    3.64Expenses (per Mcfe):Depletion of oil & gas properties
    
    $
    1.06
    
    
    $
    0.93Lease operating expense
    
    $
    0.24
    
    
    $
    0.28Ad valorem and production taxes
    
    $
    0.44
    
    
    $
    0.37General and administrative expense
    
    $
    0.24
    
    
    $
    0.25$
    1.98
    
    
    $
    1.83
 For the quarter ended March 31, 2004, Prima reported net income of
$6,842,000, or $0.52 per diluted share. These operating results compare to
first quarter 2003 net income of $5,382,000, or $0.41 per diluted share,
including a gain of $403,000, or $0.03 per diluted share, resulting from the
cumulative effect of change in accounting principle pursuant to adoption of
SFAS 143. Total revenues increased by $5,034,000, from $15,610,000 in the first
quarter of 2003 to $20,644,000 in the latest quarter. Total expenses other than
income taxes increased by $2,081,000, from $8,181,000 in the first three months
of 2003 to $10,262,000 in the recent quarter. These year-over-year changes
represent increases of 32% in revenue and 25% in expenses. Oil and gas sales in the first quarter of 2004 rose by 45%, to
$17,660,000, from $12,212,000 reported for the same period in 2003. This
increase was attributable to the combined effects of a 25% year-over-year
improvement in production volumes and a 16% increase in average realized prices
per equivalent unit of oil and gas production. The overall improvement in
revenues also reflected a $546,000, or 28%, increase in revenues from oilfield
service operations and a $1,036,000 reduction in gains on commodity derivatives
that were not accounted for as hedges. Primas total production in the first quarter of 2004 of 4,191,000 Mcfe,
or approximately 46,000 Mcfe per day, compares to 3,353,000 Mcfe produced in
the same quarter of 2003. Our product mix was 83% natural gas and 17% oil in
both periods, with volumes of gas and oil both increasing by 25%
year-over-year. Gas and oil production in the recent quarter of 3,493,000 Mcf
and 116,000 barrels, respectively, compare to 2,795,000 Mcf and 93,000 barrels
in the same period last year. The increased gas volumes were primarily due to
Powder River Basin CBM operations, which generated net production of 1,781,000
Mcfe in the first quarter of 2004 and 1,144,000 Mcfe in the first quarter of
2003. CBM production in both periods was primarily attributable to the
Porcupine-Tuit property, which began producing in the third quarter of 2002 and
was inclining through late 2003 as wells de-watered and 16




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additional wells were drilled and hooked-up. Higher oil production was attributable to increased
drilling and re-frac activity in the D-J Basin, which focused on areas in the
Wattenberg Field characterized by relatively low gas-oil ratios. Average gas price realizations in the first quarter of 2004 were $3.96 per
Mcf, compared to $3.22 in the first quarter of 2003, for an increase of $0.74,
or 23%. Average oil price realizations were $32.94 per barrel in the recent
quarter and $34.60 in the same period last year, for a decrease of $1.66 per
barrel, or 5%. On an energy equivalent basis, the average price received in the
latest quarter was $4.21 per Mcfe, or 16% above the $3.64 per Mcfe realized in
the prior year period. In the recent quarter, hedging effects reduced realized
prices by $0.26 per Mcf of gas, $2.25 per barrel of oil and $0.28 per Mcfe. In
the prior years quarter, hedging effects reduced average gas prices by $0.24
per Mcf, increased average oil prices by $0.44 per barrel and lowered the
average price realized per Mcfe by $0.19. Approximately 78% of Primas total
oil and gas revenues in 2004 were derived from natural gas sales, compared to
74% in the first quarter of 2003. First quarter 2004 revenues included $318,000 of net gains recognized on
ineffective hedges, including unrealized gains resulting from mark-to-market
valuations at the end of the period. These ineffective hedges consisted of
contracts for forward sales of NYMEX natural gas or stand-alone basis
differential hedges, which do not qualify as effective cash flow hedges. In the
first quarter of the prior year, we reported net gains of $1,354,000 on similar
contracts. Depletion expense reported for 2004 was $4,441,000, including $41,000 of
accretion expense for estimated future asset retirement obligations, in
accordance with SFAS 143. The rate of $1.06 per Mcfe of oil and gas production
in 2004 compares to $0.93 per Mcfe in 2003, which included $32,000 of accretion
expense. Depreciation of other fixed assets, which include service equipment,
office furniture and equipment, and buildings, totaled $254,000 and $284,000
for the first quarters of 2004 and 2003, respectively. Lease operating expenses (LOE) totaled $991,000 for the three months
ended March 31, 2004 compared to $941,000 for the three months ended March 31,
2003, an increase of $50,000 or 5%. Additional costs were largely attributable
to new production from CBM wells, and LOE decreased per unit-of-production,
from $0.28 per Mcfe in the first quarter of 2003 to $0.24 per Mcfe in the
recent quarter. Ad valorem and other production taxes totaled $1,863,000 and
$1,234,000 for the same periods, an increase of $629,000. Production taxes
averaged $0.44 and $0.37 per Mcfe in the 2004 and 2003 quarters, respectively,
reflecting both higher product prices in 2004 and an increased portion of sales
attributable to properties in Wyoming, where severance tax rates are higher
than in Colorado. Total lifting costs (LOE plus ad valorem and production
taxes) were 16% of oil and gas revenues in the first quarter of 2004 compared
to 18% in the first quarter of 2003. Oilfield services include the operations of Action Oilfield Services, Inc.
(Colorado) and Action Energy Services (Wyoming), wholly owned subsidiaries.
Related revenues include well servicing fees from completion and swab rigs, CBM
drilling rigs, trucking, water hauling, equipment rentals, and other related
activities. Services are provided to both Prima and unaffiliated third parties,
but billings on Prima-operated properties are eliminated in consolidation.
Reported oilfield service revenues and expenses for the quarter ended March 31,
2004 were $2,485,000 and $1,719,000, respectively, for a gross margin of
$766,000. In the same quarter last year, reported oilfield service revenues
and expenses totaled $1,939,000 and $1,739,000, respectively, for a gross
margin of $200,000. Revenues and costs related to services provided on
Prima-operated properties represented approximately 24% of the service
companies revenues in the 2004-period compared to 17% in the same quarter last
year. The 28% year-over-year increase in reported revenues, despite the
increased portion of work conducted on behalf of Prima, reflected higher
utilization and billing rates in response to greater demand. The 1% reduction
in costs 17




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reflected the increased amount eliminated in consolidation, due to the
greater portion of work performed for Prima, and changes in the mix of
activities conducted for Prima and other operators. General and administrative expenses (G&A), net of third party
reimbursements and amounts capitalized, were $994,000 for the three months
ended March 31, 2004 compared to $848,000 for the three months ended March 31,
2003. Net G&A increased $146,000 or 17%, primarily due to staff expansions.
These costs were partially offset by third-party reimbursements of management
and operator fees that increased from $114,000 in 2003 to $131,000 in 2004, and
capitalized G&A that increased from $531,000 in 2003 to $633,000 in 2004. We recorded an income tax provision of $3,540,000 for the three months
ended March 31, 2004 compared to $2,450,000 for the three months ended March
31, 2003. Primas effective tax rates were 34% in 2004 and 33% in 2003. The
effective tax rates in both years were less than statutory rates due to
permanent differences in financial and taxable income, consisting primarily of
statutory depletion deductions. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary market risks relate to changes in prices received on our sales
of natural gas and oil production. We periodically enter into derivatives
contracts to mitigate a portion of this commodity price risk. Such derivatives
consist of commodity futures or price swaps (agreements with counterparties to
exchange floating prices for fixed prices), and options on such futures or
price swaps. These instruments reduce our exposure to decreases in gas and oil
prices, or increases in differentials between NYMEX and Rocky Mountain gas
prices, but they also generally limit the benefits realized from increases in
prices or narrowing of basis differentials. By hedging only a portion of our
exposure to changes in prices, we are able to benefit from increases in gas and
oil prices or improvements in basis differentials, but we remain exposed to
market risk on the portion of our production not covered by such derivatives.
Prima also retains risks related to the ineffective portion of its derivatives
instruments, when applicable. We have entered into derivatives contracts that are intended to offset
risks associated with downward price movements in benchmark NYMEX gas and oil
prices, and basis swaps to offset risks of increases in the differential
between NYMEX and Rocky Mountain gas prices. These derivatives positions
represent cash flow hedges that are determined to be qualifying or
non-qualifying for hedge accounting treatment in accordance with the provisions
of SFAS 133. See Derivatives Transactions in Notes to Consolidated Financial
Statements for additional information with respect to our derivatives and
related accounting policies. Personnel who have appropriate skills, experience and supervision execute
all derivatives transactions. The personnel involved in these activities must
follow prescribed trading limits and parameters that are regularly reviewed by
Primas Chief Executive Officer. Primas Chief Executive Officer approves all
derivatives transactions before being entered into and significant transactions
are reviewed by Primas Board of Directors. We utilize only conventional
derivatives instruments and attempt to manage credit risk by entering into
derivatives contracts only with financial institutions that are believed to be
reputable and which carry an investment grade rating. 18




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##### Table of Contents



We closed certain derivative instruments between April 1, 2004 and May 5,
2004, for net realized losses totaling $544,000. As of the close of business on
May 5, 2004, open oil and gas derivative instruments showed net unrealized
losses of $5,649,000, as follows: Market
    
    Total Volumes in
    
    ContractProduct and Time Period
    
    Index
    
    MMBtu or Bbls
    
    Price
    
    Fair ValueNatural Gas FuturesJune  December 2004
    
    NW Rockies
    
    
    4,700,000
    
    
    $
    4.74
    
    
    $
    (4,545,000
    )November 2004
    
    CIG
    
    
    350,000
    
    
    
    4.00
    
    
    
    (606,000
    )January  March 2005
    
    NYMEX/CIG Basis
    
    
    (75,000
    )
    
    
    0.68
    
    
    
    (53,000
    )Crude Oil FuturesJune 2004 - February 2005
    
    NYMEX
    
    
    160,000
    
    
    
    35.21
    
    
    
    (445,000
    )Total Net Fair Value
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,649,000
    )
 Certain information regarding our market risks is provided below.
Investors and other users are cautioned to avoid simplistic use of these
disclosures. Users should realize that the actual impact of future commodity
price movements would likely differ from the amounts disclosed below due to
ongoing changes in risk exposure levels and concurrent adjustments to
positions. It is not possible to accurately predict future movements in natural
gas and oil prices. During the first quarter of 2004, Prima sold 116,000 barrels of oil. A
hypothetical decrease of $3.52 per barrel (10% of average first quarter prices
excluding hedging transactions) would have decreased our production revenues by
$408,000 for that period. Prima sold 3,493,000 Mcf of natural gas during the
first quarter of 2004. A hypothetical decrease of $0.42 per Mcf (10% of average
first quarter prices excluding hedging transactions) would have decreased our
production revenues by $1,467,000 for that period. 
 ITEM 4. CONTROLS AND PROCEDURES Primas principal executive officer and principal financial officer
evaluated the effectiveness of Primas disclosure controls and procedures, as
such term is defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange
Act of 1934, as amended, within 90 days of the filing date of this Quarterly
Report on Form 10-Q. Based upon their evaluation, the principal executive
officer and principal financial officer concluded that Primas disclosure
controls and procedures were effective. There were no significant changes in
Primas internal controls or in other factors that could significantly affect
these controls since the date the controls were evaluated. 19




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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Managements Discussion and Analysis of Financial Condition and Results
of Operations included in Item 2 of this Report contains forward-looking
statements which are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements include,
without limitation, statements relating to liquidity, financing of operations,
capital expenditures budget (both the amount and the source of funds),
continued volatility of oil and natural gas prices, future drilling plans and
other such matters. The words anticipate, expect, plan or intend and
similar expressions identify forward-looking statements. Such statements are
based on certain assumptions and analyses made by Primas management in light
of their experience and perceptions of historical trends, current conditions,
expected future developments and other factors that are believed to be
appropriate in the circumstances. Prima does not undertake to update, revise
or correct any of the forward-looking information. Factors that could cause
actual results to differ materially from the expectations expressed in the
forward-looking statements include, but are not limited to, the following:
industry conditions; volatility of oil and natural gas prices; hedging
activities; operational risks (such as blowouts, fires and loss of production);
insurance coverage limitations; potential liabilities, delays and associated
costs imposed by government regulation (including environmental regulation);
the need to develop and replace Primas oil and natural gas reserves; the
substantial capital expenditures required to fund operations; risks related to
exploration and developmental drilling; and uncertainties about oil and natural
gas reserve estimates. For a more complete explanation of these various
factors, see Cautionary Statement for the Purposes of the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995 included in
Primas Annual Report on Form 10-K for the year ended December 31, 2003,
beginning on page 21. You
are cautioned not to place undue reliance on our forward-looking
statements, which speak only as of the date of this report, or in the
case of documents incorporated by reference, the date of those documents. 20




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PART II. OTHER INFORMATION 
 ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES e)The following table provides information about purchases by the
Company during the quarter ended March 31, 2004, of shares of the Companys
common stock, which is the sole class of equity securities registered by the
Company pursuant to Section 12 of the Exchange Act. (c)
    
    (d)Total Number of
    
    Maximum Number of(a)
    
    (b)
    
    Shares Purchased as
    
    Shares that May YetTotal Number of
    
    Average Price Paid
    
    Part of Publicly
    
    Be Purchased UnderShares Purchased
    
    per Share
    
    Announced Program
    
    the Program01/01/2004
 01/31/2004
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    291,26302/01/2004  02/29/2004
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    291,26303/01/2004  03/31/2004
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    291,263Total
    
    
    0
    
    
    $
    0.00
    
    
    
    0
 On March 27, 2001, we announced that our board of directors authorized a
stock repurchase program whereby we may purchase from time-to-time, in open
market transactions or negotiated sales, up to 5% of the shares then
outstanding, or 639,669 shares of our common stock. Through June of 2003, we
had repurchased a total of 348,406 shares under this program for $7.6 million
at a weighted-average price of $21.95 per share. We have not made any
purchases under this program since June of 2003. Additional purchases of
shares may occur as market conditions warrant. We expect future purchases will
be funded with internally generated cash flow or from working capital. 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  (a)
    
    Exhibits Exhibit No.
    
    Document3.1
    
    Certificate of Incorporation of Prima Energy Corporation,
Delaware, as filed August 18, 1988. (Incorporated by reference to
Registration of Securities of Certain Successor Issuers on Form 8-B
dated January 20, 1989.)3.2
    
    Certificate of Amendment of Certificate of Incorporation of Prima
Energy Corporation filed May 1, 1989. (Incorporated by reference to
Annual Report on Form 10-K for Prima Energy Corporation dated June 30,
1989.)3.3
    
    Bylaws of Prima Energy Corporation. (Incorporated by reference to
Registration of Securities of Certain Successor Issuers on Form 8-B
dated January 20, 1989.)3.4
    
    Certificate of Amendment of the Certificate of Incorporation of
Prima Energy Corporation. (Incorporated by reference to Quarterly
Report on Form 10-Q for Prima Energy Corporation dated June 30, 1997.)
 21




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##### Table of Contents



Exhibit No.
    
    Document3.5
    
    Certificate of Amendment of the Certificate of Incorporation of
Prima Energy Corporation. (Incorporated by reference to Quarterly
Report on Form 10-Q for Prima Energy Corporation dated September 30,
2000.)3.6
    
    Certificate of Amendment of the Certificate of Incorporation of
Prima Energy Corporation. (Incorporated by reference to Quarterly
Report on Form 10-Q for Prima Energy Corporation dated June 30, 2001.)4.1
    
    Rights Agreement dated as of May 23, 2001, between Prima Energy
Corporation and Computershare Trust Company, Inc., as Rights Agent,
including the form of Certificate of Designation, Powers, Preferences
and Rights of Series A Participating Preferred Stock dated May 29,
2001, as Exhibit A, the Form of Right Certificate, as Exhibit B, and
the Summary of Rights to Purchase Preferred Shares. (Incorporated by
reference to Current Report on Form 8-K for Prima Energy Corporation
dated May 23, 2001.)10.1
    
    Prima Energy Corporation Employee Stock Ownership Plan
(Incorporated by reference to Annual Report on Form 10-K for Prima
Energy Corporation dated June 30, 1989.)10.2
    
    Prima Energy Corporation 1993 Stock Incentive Plan. (Incorporated
by reference to Annual Report on Form 10-K for Prima Energy Corporation
dated December 31, 1993.)10.3
    
    Agreement of Lease between Denver-Stellar Associates LP, Landlord
and Prima Energy Corporation, Tenant, effective December 1, 2000.
(Incorporated by reference to Annual Report on Form 10-K for Prima
Energy Corporation dated December 31, 2000.)10.4
    
    Prima Energy Corporation Non-Employee Directors Stock Option Plan.
(Incorporated by reference to Quarterly Report on Form 10-Q for Prima
Energy Corporation dated March 31, 2002.)10.5
    
    Prima Energy Corporation 2001 Stock Incentive Plan. (Incorporated
by reference to Quarterly Report on Form 10-Q for Prima Energy
Corporation dated March 31, 2002.)31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13(a)-14(a) /15d-14(a) of the Securities Exchange Act of 1934, as
amended32.1
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
  (b)
    
    Reports on Form 8-K During the quarter ended March 31, 2004, the Company filed the following
reports on Form 8-K:  
    
    Report dated March 8, 2004, reporting year-end 2003 reserves and
production, year 2003 estimated capital expenditures, and an update of
commodity hedging transactions.
    
    Report dated March 10, 2004, reporting year-end 2003 financial results
and providing an update of operating activities and commodity hedging
transactions.   22




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. PRIMA ENERGY CORPORATION(Registrant)Date May 10, 2004
    
    By
    
    /s/ Richard H. Lewis

Richard H. Lewis,
President and Chief Executive OfficerDate May 10, 2004
    
    By
    
    /s/ Neil L. Stenbuck

Neil L. Stenbuck,
Executive Vice President and Chief Financial Officer
 23




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##### Table of Contents



EXHIBIT INDEX Exhibit No.
    
    Document3.1
    
    Certificate of Incorporation of Prima Energy Corporation,
Delaware, as filed August 18, 1988. (Incorporated by reference to
Registration of Securities of Certain Successor Issuers on Form 8-B
dated January 20, 1989.)3.2
    
    Certificate of Amendment of Certificate of Incorporation of Prima
Energy Corporation filed May 1, 1989. (Incorporated by reference to
Annual Report on Form 10-K for Prima Energy Corporation dated June 30,
1989.)3.3
    
    Bylaws of Prima Energy Corporation. (Incorporated by reference to
Registration of Securities of Certain Successor Issuers on Form 8-B
dated January 20, 1989.)3.4
    
    Certificate of Amendment of the Certificate of Incorporation of
Prima Energy Corporation. (Incorporated by reference to Quarterly
Report on Form 10-Q for Prima Energy Corporation dated June 30, 1997.)3.5
    
    Certificate of Amendment of the Certificate of Incorporation of
Prima Energy Corporation. (Incorporated by reference to Quarterly
Report on Form 10-Q for Prima Energy Corporation dated September 30,
2000.)3.6
    
    Certificate of Amendment of the Certificate of Incorporation of
Prima Energy Corporation. (Incorporated by reference to Quarterly
Report on Form 10-Q for Prima Energy Corporation dated June 30, 2001.)4.1
    
    Rights Agreement dated as of May 23, 2001, between Prima Energy
Corporation and Computershare Trust Company, Inc., as Rights Agent,
including the form of Certificate of Designation, Powers, Preferences
and Rights of Series A Participating Preferred Stock dated May 29,
2001, as Exhibit A, the Form of Right Certificate, as Exhibit B, and
the Summary of Rights to Purchase Preferred Shares. (Incorporated by
reference to Current Report on Form 8-K for Prima Energy Corporation
dated May 23, 2001.)10.1
    
    Prima Energy Corporation Employee Stock Ownership Plan
(Incorporated by reference to Annual Report on Form 10-K for Prima
Energy Corporation dated June 30, 1989.)10.2
    
    Prima Energy Corporation 1993 Stock Incentive Plan. (Incorporated
by reference to Annual Report on Form 10-K for Prima Energy Corporation
dated December 31, 1993.)10.3
    
    Agreement of Lease between Denver-Stellar Associates LP, Landlord
and Prima Energy Corporation, Tenant, effective December 1, 2000.
(Incorporated by reference to Annual Report on Form 10-K for Prima
Energy Corporation dated December 31, 2000.)10.4
    
    Prima Energy Corporation Non-Employee Directors Stock Option Plan.
(Incorporated by reference to Quarterly Report on Form 10-Q for Prima
Energy Corporation dated March 31, 2002.)10.5
    
    Prima Energy Corporation 2001 Stock Incentive Plan. (Incorporated
by reference to Quarterly Report on Form 10-Q for Prima Energy
Corporation dated March 31, 2002.)31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13(a)-14(a) /15d-14(a) of the Securities Exchange Act of 1934, as
amended32.1
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002