Riley Exploration (REPX) Update - Mar 10

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dan_s
Posts: 34279
Joined: Fri Apr 23, 2010 8:22 am

Riley Exploration (REPX) Update - Mar 10

Post by dan_s »

Notes below are from Truist Financial

Riley Exploration Permian, Inc. (REPX)
One of Few E&Ps with Material Production & FCF Growth

Riley is set up nicely this year to capitalize on its previously solid organic program and its
recent accretive acquisition. We forecast production to grow 65%+ and FCF 100%+ this
year providing options to repay debt or boost already strong shareholder return (currently
dividend yield of 4%+).
We forecast much of the upcoming activity to be on the new Pecos
assets given the strong returns in the play. While not baked into our forecast, the company
continues to work on CCUS projects includes a potential large-scale storage hub in their
region that would garner notable attention.

Stable Activity to Lead to Sizeable Growth
We forecast REPX to likely continue with a relatively conservative single rig program that
should result in material production growth given the cycle time and typical well results. The
company now has various inventory options that along with continued efficient operations
should result in increased average well results. in addition to the increased upstream assets,
REPX has improved takeaway options in its newer acreage that should minimalize future
takeaway issues. The company also continues to make progress on its EOR play with steady
upside to likely come during future quarters.

Updating Estimates and Reiterating $43 Price Target
Riley announced 4Q22 earnings/FCF higher than Truist Securities estimates but lower than
the Street with better than expected quarterly production, but weaker pricing. The company
issued 2023 guidance that included pro-forma production as we were anticipating though
slightly higher than forecasted annual capital spending. REPX plans to continue with its
strong dividend payout (currently 10%+) along with upcoming debt repayment once the
latest deal closes. We anticipate much of the company’s future activity to be directed toward
the new assets beginning in 2H23. While we have not modeled any notable well upside
for the future results, we believe there is a good chance many of the new wells come
online with higher returns than recent results. We also have updated our model for 4Q22
actuals and more appropriate costs and organic volumes though reiterate our $43 price
target. Our $43 price target is driven by two equally weighted methodologies with the first
being our ’23 EV/EBITDAX multiple of 5.0x (3.8x peer group average) applied to our 2023E
EBITDAX estimate of $289MM ($252MM consensus), and the second being a FCF/EV Yield
assumption of 11.0%. We believe the premium multiple versus the peer group average is
warranted given the potential upcoming CCUS business.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34279
Joined: Fri Apr 23, 2010 8:22 am

Re: Riley Exploration (REPX) Update - Mar 10

Post by dan_s »

I hope to update my forecast model for REPX today but my desktop computer is having some problems. I am on the laptop now.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34279
Joined: Fri Apr 23, 2010 8:22 am

Re: Riley Exploration (REPX) Update - Mar 10

Post by dan_s »

My computer problems were resolved at 5PM. I will update REPX on Saturday morning.

Somehow my IP address got blocked by our website. Weird.
Dan Steffens
Energy Prospectus Group
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