Riley Exploration Per (REPX) Valuation Update - Aug 11

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Riley Exploration Per (REPX) Valuation Update - Aug 11

Post by dan_s »

At the time of this post REPX was trading at $25.95. First Call's price target is $45.00 and Truist Financial's most recent price target on 7/19 was $48.00.

I have updated my forecast model for their actual fiscal Q3 results that beat my forecast and their fresh guidance for fiscal Q4.

My current valuation increases by $1 to $52 per share.


Why?
> Fiscal Q4 production should be up ~1,200 Boepd, primarily because a 3rd party gas processing facility is now back online and their natural gas and NGL production is now ramping up. Crude oil production should also be up 100 to 200 bpd this quarter.
> Their unhedged volumes will increase steadily quarter-after-quarter.
> None of their NGLs are hedged, which will generate a nice revenue boost this quarter.
> For the fiscal year ending 9/30/2022, Riley's operating cash flow s/b approximately $146 million, capex s/b under $115 million, so FCF s/b be $31 million before dividends. I do expect them to increase dividends next year.
> The Company has a clean balance sheet and no near-term debt problems. FCF is able to fund ~20% YOY production growth.
> PV10 Net Asset Value per share is close to my valuation above.
> The CO2 flood pilot project is advancing. They are now injecting water and CO2 injections should ramp up in a few month. I believe the CO2 flood has the potential to significantly increase Riley's production and proven reserves next year.
> Riley will be hosting a Houston luncheon for us on September 15.

Note that my fiscal 2023 forecast does not include the potential of the CO2 flood.

My updated forecast/valuation model has been posted to the EPG website.
Dan Steffens
Energy Prospectus Group
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