Riley Exploration Permian, Inc.: Riley Permian Reports Third Quarter 2024 Results

OKLAHOMA CITY, Nov. 6, 2024 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or the "Company"), today reported financial and operating results for the third quarter ended September 30, 2024.

THIRD QUARTER 2024 HIGHLIGHTS

• Averaged 23.4 MBoe/d of total equivalent production (oil production of 15.5 MBbls/d)
  
  
• Generated $72.1 million of operating cash flow or $60.5 million before changes in working capital⁽¹⁾
  
  
• Incurred total accrual (activity-based) capital expenditures before acquisitions of $30.0 million and cash capital expenditures before acquisitions of $22.7 million
  
  
• Generated Free Cash Flow⁽¹⁾ of $37.8 million
  
  
• Paid dividends of $0.36 per share for a total of $8.1 million
  
  
• Reduced the principal value of debt outstanding by $35.0 million
  
  
• Completed the installation of our remaining electrical generation equipment used to power a portion of our field operations in Texas, with a total of 20 MW of installed capacity

MANAGEMENT COMMENTARY

Bobby D. Riley, Chief Executive Officer and Chairman of the Board commented: "Riley Permian delivered another quarter of strong results as we continued to execute our annual plan. Operating cash flow improved quarter-over-quarter despite lower commodity prices, driven by higher production and improved commodity hedge settlements. We've generated $99 million of Free Cash Flow⁽¹⁾ year-to-date, which has contributed to $70 million of principal debt reduction and $23 million of dividends paid. Our electric power projects continue advancing, which we believe will be increasingly valuable to our operations and the Company."

"Additionally, during the third quarter, we opted to discontinue our EOR Project, which was begun in 2021, and which follows an approximate two-year period of water and CO₂ injection applied to three horizontal producing wells. Technical achievements were delivered from the pilot program, showing that our oil can be successfully mobilized with CO₂. However, given the relatively early life stage of our assets, we believe that we can currently generate higher production levels with lower operating costs using primary production methods, and that secondary EOR may be more applicable for our assets later in their useful life, after the completion of the primary phase of production."

THIRD QUARTER 2024 OPERATIONS UPDATE AND FINANCIAL RESULTS

For the quarter ended September 30, 2024, the Company's revenues totaled $102.3 million, net cash provided by operating activities was $72.1 million and net income was $25.7 million, or $1.21 per diluted share.

On a non-GAAP basis, Adjusted EBITDAX⁽¹⁾ was $71.7 million, cash flow from operations before changes in working capital⁽¹⁾ was $60.5 million, Free Cash Flow⁽¹⁾ was $37.8 million and Adjusted Net Income⁽¹⁾ was $31.5 million, or $1.49 per diluted share.

Average oil production was 15.5 MBbls/d and average total equivalent production was 23.4 MBoe/d (66% oil and 85% liquids). Oil volumes increased by 6% quarter-over-quarter while natural gas and NGL volumes increased by 21% and 24%, respectively. The increased natural gas and NGL volumes were driven by additional processing capacity that came on-line in July at our primary third-party midstream gas processor in Texas, relieving prior gas processing constraints.

Average realized prices were $73.95 per barrel of oil, $(0.60) per Mcf of natural gas and $(4.40) per barrel of natural gas liquids. The Company's oil, natural gas and NGL sales are presented net of gathering, processing and transportation costs. These costs, related to natural gas and NGLs, at times exceeded the price received and resulted in negative average realized prices.

The Company recorded a $24.2 million gain due to commodity derivatives, including a $23.4 million non-cash, unrealized gain and a $0.8 million realized gain.

Lease operating expense ("LOE") was $18.5 million, or $8.60 per Boe, cash G&A expense⁽¹⁾ was $5.9 million, or $2.73 per Boe, and production and ad valorem taxes were $7.0 million or $3.25 per Boe.

Total accrued capital expenditures before acquisitions were $30.0 million and $22.7 million on a cash basis. The Company drilled 11.5 net operated horizontal wells, completed 3 net operated horizontal wells, and brought online to production 6 net operated horizontal wells.

The Company recorded a $30.2 million impairment related to the discontinuation of our EOR Project, including a $28.9 million non-cash impairment and $1.3 million cash impairment related to the termination of the Kinder Morgan CO₂ contract. Select equipment from the EOR Project was salvaged for use in the Company's conventional vertical and horizontal development programs.

The Company reduced total debt by $35.0 million, including a principal reduction of $30.0 million on its Credit Facility and $5.0 million on its Senior Notes. Interest expense was $8.8 million.

The Company had $288.6 million of total debt, or $300.0 million principal balance, as of September 30, 2024, with approximately $245.0 million available for future borrowing under its Credit Facility.

Shareholders' equity was $507.4 million as of September 30, 2024, and the number of common shares outstanding was 21.5 million.

POWER ACTIVITY UPDATE

RPC Power LLC ("RPC Power"), our power-focused joint venture, completed the installation of the remaining electrical generation equipment used to power a portion of Riley Permian's field operations in Texas, with a total of 20 MW of installed capacity as of September 30, 2024. RPC Power advanced its larger, ERCOT-focused project during the third quarter with progress on siting, permitting and generation equipment procurement.

During the third quarter 2024, Riley Permian made an additional capital contribution of $1.5 million to RPC Power. The Company has invested a total of $22.5 million to date and has 50% ownership.

___________________
(1)	A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com.

Selected Operating and Financial Data
(Unaudited)
		Three Months Ended						Nine Months Ended
		September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Select Financial Data (in thousands):
Oil and natural gas sales, net		$ 102,339		$ 105,343		$ 107,694		$ 307,106		$ 273,418
Income from Operations		$ 17,478		$ 53,612		$ 58,229		$ 121,657		$ 139,273
Adjusted EBITDAX(1)		$ 71,741		$ 73,264		$ 72,227		$ 215,151		$ 182,000
Cash Flow from Operations		$ 72,130		$ 51,641		$ 52,652		$ 179,896		$ 141,372
Free Cash Flow(1)		$ 37,809		$ 38,263		$ 31,280		$ 99,380		$ 36,897
Production Data, net:
Oil (MBbls)		1,424		1,342		1,292		4,055		3,555
Natural gas (MMcf)		1,940		1,608		1,616		5,179		4,242
NGLs (MBbls)		408		330		274		1,031		691
Total (MBoe)		2,155		1,940		1,835		5,949		4,953
Daily combined volumes (Boe/d)		23,424		21,319		19,949		21,712		18,143
Daily oil volumes (Bbls/d)		15,478		14,747		14,043		14,799		13,022
Average Realized Prices: (2)
Oil ($ per Bbl)		$ 73.95		$ 79.25		$ 80.87		$ 76.12		$ 75.19
Natural gas ($ per Mcf)		$ (0.60)		$ (0.61)		$ 0.61		$ (0.28)		$ 0.36
NGLs ($ per Bbl)		$ (4.40)		$ (0.10)		$ 8.11		$ (0.08)		$ 6.63
Average Realized Prices, including the effects of derivative settlements: (2)(3)
Oil ($ per Bbl)		$ 73.84		$ 76.96		$ 76.00		$ 75.03		$ 71.23
Natural gas ($ per Mcf)		$ (0.10)		$ 0.16		$ 0.63		$ 0.39		$ 0.46
NGLs ($ per Bbl)(4)		$ (4.40)		$ (0.10)		$ 8.11		$ (0.08)		$ 6.63
Weighted Average Common Shares Outstanding (in thousands):
Basic		20,992		20,866		19,680		20,584		19,667
Diluted		21,209		21,087		19,989		20,764		19,964

_____________________
(1)	A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com.
(2)	The Company's oil, natural gas and NGL sales are presented net of gathering, processing and transportation costs. The costs, related to natural gas and NGLs, at times exceed the price received and result in negative average realized prices.
(3)	The Company's calculation of the effects of derivative settlements includes gains and losses on the settlement of its commodity derivative contracts. These gains and losses are included under other income (expense) on the Company's condensed consolidated statements of operations.
(4)	During the periods presented, the Company did not have any NGL derivative contracts in place.

2024 GUIDANCE

Riley Permian is providing fourth quarter guidance based on currently scheduled development activity and current market conditions. The average working interest on gross operated wells drilled is subject to change and may have corresponding impacts on investing expenditures. Total equivalent production estimates, inclusive of production from natural gas and NGLs, may be subject to variability based on natural gas dynamics.

Activity, Production, and Investing Guidance		Q4 2024
Gross Operated Well Activity
Drilled		7 - 9
Completed		3 - 5
Turned to Sales		4 - 6
Net Production
Total (MBoe/d)		23.5 - 24.5
Oil (MBbls/d)		15.5 - 16.1
Investing Expenditures by Category (Accrual, in millions) (1)
Drilling and Completions and Capital Workovers		$18 - 21
Infrastructure and Other		14 - 21
Total E&P Capex		$32 - 42
Joint Venture Investment		$0 - 1
Total Investments		$32 - 43
Cost Guidance		Q4 2024
Operating and Corporate Costs
Lease operating expense, including workover expense ($ per Boe)		$8.00 - 9.00
Production tax (% of revenue)		6% - 8%
Cash G&A(2) ($ per Boe)		$2.50 - 3.00
Interest expense ($ in millions)(3)		$7.5 - 8.5
Income Tax Cash Payment ($ in millions)		$1.5 - 2.5

_______________
(1)	Activity-based investing expenditures before acquisitions.
(2)	A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com.
(3)	Interest expense is net of interest rate derivative settlements.

CONFERENCE CALL
In connection with the earnings release, Riley Permian management will host a conference call for investors and analysts on November 7, 2024 at 9:00 a.m. CT to discuss the Company's results and to host a Q&A session. Interested parties are invited to participate by calling:

• Toll Free Dial-In, [phone]
• Toll Dial-in, [phone]
• Conference ID number 1303008

An updated company presentation, which will include certain items to be discussed on the call, will be posted prior to the call on the Company's website (www.rileypermian.com). In addition to a webcast of the call available on the Company's website, a replay of the call will be available until November 21, 2024 by calling:

• Toll Free Dial-In, [phone]
• Toll Dial-in, [phone]
• Conference ID number 1303008

About Riley Exploration Permian, Inc.
Riley Permian is a growth-oriented, independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and natural gas liquids. For more information, please visit www.rileypermian.com.

Investor Contact:
405-438-0126
[email protected]

Cautionary Statement Regarding Forward Looking Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained in this release that are not historical facts are forward-looking statements that represent management's beliefs and assumptions based on currently available information. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position and potential growth opportunities. Our forward-looking statements do not consider the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes," "intends," "may," "should," "anticipates," "expects," "could," "plans," "estimates," "projects," "targets," "forecasts" or comparable terminology or by discussions of strategy or trends. You should not place undue reliance on these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this release are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied by the forward-looking statements.

Among the factors that could cause actual future results to differ materially are the risks and uncertainties the Company is exposed to. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to: the volatility of oil, natural gas and NGL prices; regional supply and demand factors, any delays, curtailment delays or interruptions of production, and any governmental order, rule or regulation that may impose production limits; cost and availability of gathering, pipeline, refining, transportation and other midstream and downstream activities; severe weather and other risks that lead to a lack of any available markets; our ability to successfully complete mergers, acquisitions or divestitures; the inability or failure of the Company to successfully integrate the acquired assets into its operations and development activities; the potential delays in the development, construction or start-up of planned projects; failure to realize any of the anticipated benefits of our joint ventures or other equity investments; projects may not perform as expected or produce the anticipated benefits; risks relating to our operations, including development drilling and testing results and performance of acquired properties and newly drilled wells; inability to prove up undeveloped acreage and maintain production on leases; any reduction in our borrowing base on our revolving credit facility from time to time and our ability to repay any excess borrowings as a result of such reduction; the impact of our derivative strategy and the results of future settlement; our ability to comply with the financial covenants contained in our credit agreement and senior notes; changes in general economic, business or industry conditions, including changes in inflation rates, interest rates and foreign currency exchange rates; conditions in the capital, financial and credit markets and our ability to obtain capital needed for development and exploration operations on favorable terms or at all; the loss of certain tax deductions; risks associated with executing our business strategy, including any changes in our strategy; risks associated with concentration of operations in one major geographic area; legislative or regulatory changes, including initiatives related to hydraulic fracturing, regulation of greenhouse gases, water conservation, seismic activity, weatherization, or protection of certain species of wildlife, or of sensitive environmental areas; the ability to receive drilling and other permits or approvals and rights-of-way in a timely manner (or at all), which may be restricted by governmental regulation and legislation; restrictions on the use of water, including limits on the use of produced water and a moratorium on new produced water well permits recently imposed by the Railroad Commission of Texas in an effort to control induced seismicity in the Permian Basin; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; public health crisis, such as pandemics and epidemics, and any related government policies and actions and the effects of such public health crises on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics; general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine, the Israel-Hamas conflict and the global response to such conflicts; risks related to litigation; and cybersecurity threats, technology system failures and data security issues. Additional factors that could cause results to differ materially from those described above can be found in Riley Permian's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC and available from the Company's website at www.rileypermian.com under the "Investor" tab, and in other documents the Company files with the SEC.

The forward-looking statements in this press release are made as of the date hereof and are based on information available at that time. The Company does not undertake, and expressly disclaims, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.

Cautionary Statement Regarding Guidance

The estimates and guidance presented in this release are based on assumptions of current and future capital expenditure levels, prices for oil, natural gas and NGLs, available liquidity, indications of supply and demand for oil, well results, and operating costs. The guidance provided in this release does not constitute any form of guarantee or assurance that the matters indicated will be achieved. While we believe these estimates and the assumptions on which they are based are reasonable as of the date on which they are made, they are inherently uncertain and are subject to, among other things, significant business, economic, operational, and regulatory risks, and uncertainties, some of which are not known as of the date of the statement. Guidance and estimates, and the assumptions on which they are based, are subject to material revision. Actual results may differ materially from estimates and guidance. Please read the "Cautionary Statement Regarding Forward Looking Information" section above, as well as "Risk Factors" in our annual report on Form 10-K and our quarterly reports on Form 10-Q, which are incorporated herein.

RILEY EXPLORATION PERMIAN, INC.
CONSOLIDATED BALANCE SHEETS
		(Unaudited)
		September 30, 2024		December 31, 2023
		(In thousands, except share amounts)
Assets
Current Assets:
Cash		$ 13,322		$ 15,319
Accounts receivable, net		41,034		35,126
Prepaid expenses		2,037		1,631
Inventory		6,738		6,177
Current derivative assets		12,195		5,013
Total Current Assets		75,326		63,266
Oil and natural gas properties, net (successful efforts)		871,996		846,901
Other property and equipment, net		19,189		20,653
Non-current derivative assets		2,475		2,296
Equity method investment		22,047		5,620
Other non-current assets, net		6,842		6,975
Total Assets		$ 997,875		$ 945,711
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable		$ 14,213		$ 3,855
Accrued liabilities		25,716		33,159
Revenue payable		33,745		30,695
Current derivative liabilities		-		360
Current portion of long-term debt		20,000		20,000
Other current liabilities		13,570		6,276
Total Current Liabilities		107,244		94,345
Non-current derivative liabilities		30		-
Asset retirement obligations		31,406		19,255
Long-term debt		268,620		335,959
Deferred tax liabilities		82,077		73,345
Other non-current liabilities		1,093		1,212
Total Liabilities		490,470		524,116
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $0.0001 par value, 25,000,000 shares authorized; 0 shares issued and outstanding		-		-
Common stock, $0.001 par value, 240,000,000 shares authorized; 21,541,393 and 20,405,093 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		21		20
Additional paid-in capital		310,155		279,112
Retained earnings		197,229		142,463
Total Shareholders' Equity		507,405		421,595
Total Liabilities and Shareholders' Equity		$ 997,875		$ 945,711

RILEY EXPLORATION PERMIAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
		(In thousands)
Revenues:
Oil and natural gas sales, net		$ 102,339		$ 107,694		$ 307,106		$ 273,418
Contract services - related parties		-		600		380		1,800
Total Revenues		102,339		108,294		307,486		275,218
Costs and Expenses:
Lease operating expenses		18,532		16,898		51,793		43,287
Production and ad valorem taxes		7,002		7,242		21,407		18,573
Exploration costs		375		231		439		643
Depletion, depreciation, amortization and accretion		20,722		18,706		55,971		46,390
Other impairments		30,158		-		30,158		-
General and administrative:
Administrative costs		5,879		5,530		17,862		17,497
Share-based compensation expense		1,720		1,109		6,693		3,448
Cost of contract services - related parties		-		128		363		347
Transaction costs		473		221		1,143		5,760
Total Costs and Expenses		84,861		50,065		185,829		135,945
Income from Operations		17,478		58,229		121,657		139,273
Other Income (Expense):
Interest expense, net		(8,789)		(10,338)		(26,713)		(21,515)
Gain (loss) on derivatives, net		24,217		(35,345)		6,781		(20,925)
Income (loss) from equity method investment		(210)		23		(235)		(213)
Total Other Income (Expense)		15,218		(45,660)		(20,167)		(42,653)
Net Income from Operations before Income Taxes		32,696		12,569		101,490		96,620
Income tax expense		(7,033)		(3,922)		(23,521)		(23,054)
Net Income		$ 25,663		$ 8,647		$ 77,969		$ 73,566
Net Income per Share:
Basic		$ 1.22		$ 0.44		$ 3.79		$ 3.94
Diluted		$ 1.21		$ 0.43		$ 3.76		$ 3.89
Weighted Average Common Shares Outstanding:
Basic		20,992		19,680		20,584		19,667
Diluted		21,209		19,989		20,764		19,964

RILEY EXPLORATION PERMIAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
		(In thousands)
Cash Flows from Operating Activities:
Net income		$ 25,663		$ 8,647		$ 77,969		$ 73,566
Adjustments to reconcile net income to net cash provided by operating activities:
Exploratory well costs and lease expirations		404		231		404		619
Depletion, depreciation, amortization and accretion		20,722		18,706		55,971		46,390
Other impairments		30,158		-		30,158		-
(Gain) loss on derivatives, net		(24,217)		35,345		(6,781)		20,925
Settlements on derivative contracts		815		(6,269)		(910)		(13,660)
Amortization of deferred financing costs and discount		1,343		1,189		3,975		2,470
Share-based compensation expense		1,720		1,109		6,693		3,594
Deferred income tax expense		3,659		3,865		8,732		17,602
(Income) loss from equity method investment		210		(23)		235		213
Other		42		(23)		-		(25)
Changes in operating assets and liabilities		11,611		(10,125)		3,450		(10,322)
Net Cash Provided by Operating Activities		72,130		52,652		179,896		141,372
Cash Flows from Investing Activities:
Additions to oil and natural gas properties		(22,446)		(31,275)		(76,372)		(114,298)
Net assets acquired in business combination		-		408		-		(324,686)
Acquisitions of oil and natural gas properties		(1,459)		-		(19,597)		(5,443)
Contributions to equity method investment		(1,500)		-		(16,662)		(3,566)
Additions to other property and equipment		(264)		(222)		(694)		(499)
Net Cash Used in Investing Activities		(25,669)		(31,089)		(113,325)		(448,492)
Cash Flows from Financing Activities:
Deferred financing costs		(11)		(36)		(80)		(6,250)
Proceeds from credit facility		-		-		15,000		178,000
Repayments under credit facility		(30,000)		(5,000)		(70,000)		(24,000)
Proceeds from senior notes, net of issuance costs		-		-		-		188,000
Repayments of senior notes		(5,000)		(5,000)		(15,000)		(10,000)
Payment of common share dividends		(8,132)		(6,810)		(22,839)		(20,173)
Proceeds from issuance of common shares, net		-		87		25,415		87
Common stock repurchased for tax withholding		(906)		(1,179)		(1,064)		(1,479)
Net Cash (Used in) Provided by Financing Activities		(44,049)		(17,938)		(68,568)		304,185
Net Increase (Decrease) in Cash and Cash Equivalents		2,412		3,625		(1,997)		(2,935)
Cash, Beginning of Period		10,910		6,741		15,319		13,301
Cash, End of Period		$ 13,322		$ 10,366		$ 13,322		$ 10,366

DERIVATIVE CONTRACTS

The Company's oil and natural gas derivative instruments consisted of fixed price swaps, costless collars, and basis swaps. The following table summarizes the open financial derivatives as of November 1, 2024, related to oil and natural gas production:

				Weighted Average Price
Period (1)		Notional Volume		Fixed		Put		Call
				($ per unit)
Oil Swaps (Bbl)
Q4 2024		435,000		$ 74.90
2025		645,000		$ 73.63
Natural Gas Swaps (Mcf)
Q4 2024		510,000		$ 3.62
2025		1,875,000		$ 3.60
2026		555,000		$ 4.02
Oil Collars (Bbl)
Q4 2024		390,000				$ 61.92		$ 83.39
2025		1,700,000				$ 63.28		$ 76.59
2026		817,000				$ 59.62		$ 78.29
Natural Gas Collars (MMBtu)
Q4 2024		405,000				$ 3.50		$ 4.45
2025		1,445,000				$ 3.30		$ 4.30
2026		1,975,000				$ 3.08		$ 3.79
Oil Basis (Bbl)
Q4 2024		330,000		$ 0.97

__________________
(1)	Q4 2024 derivative positions shown include 2024 contracts, some of which have settled as of November 1, 2024.

Interest Rate Contracts

The Company entered into floating-to-fixed interest rate swaps, in which it will receive a floating market rate equal to one-month CME Term Secured Overnight Financing Rate and will pay a fixed interest rate, to manage future interest rate exposure related to the Company's Credit Facility. In March 2024, the Company entered into a fixed-to-floating interest rate swap for the period May 2024 to December 2024, to reduce our interest rate exposure, which resulted in a gain of approximately $1 million on a notional amount of $80 million. The remaining gain of $0.4 million will be realized upon settlement of the contracts in 2024.

The following table summarizes the open interest rate derivative positions as of September 30, 2024:

Open Coverage Period		Position		Notional Amount		Fixed Rate
				(In thousands)
October 2024 - April 2026		Long		$ 30,000		3.180 %
October 2024 - April 2026		Long		$ 50,000		3.039 %
October 2024 - December 2024		Short		$ 80,000		4.910 %

SOURCE Riley Exploration Permian, Inc.