Riley Exploration Permian (REPX) Q1 Results - May 9

[dan_s]

FIRST QUARTER 2024 HIGHLIGHTS

Averaged 20.4 MBoe/d of total equivalent production (oil production of 14.2 MBbls/d) < Above my forecast of 20,000 Boepd / 14,000 Bopd.

Generated $56 million of operating cash flow or $58 million before changes in working capital < Slightly lower than my forecast of $59.9 million Adjusted Operating Cash Flow.

Incurred total accrual (activity-based) capital expenditures before acquisitions of $26 million and cash capital expenditures before acquisitions of $35 million

Generated Free Cash Flow of $23 million < Very Good

Paid dividends of $0.36 per share in the first quarter for a total of $7 million

Reduced debt outstanding by $15 million

Signed agreement during the first quarter of 2024 and subsequently closed during the second quarter of 2024 on the purchase of oil and natural gas properties in Eddy County, New Mexico < Lots of "Running Room" in this new Core Area.

MANAGEMENT COMMENTARY

"Our Company had a strong start to the year with both operational and financial performance during the first quarter," said Bobby D. Riley, Chief Executive Officer and Chairman of the Board. "We're experiencing improved cycle times and efficiencies in our development activities, leading to measurable cost savings. We continue to prioritize free cash flow generation which allows for debt reduction and direct shareholder return through dividends. Finally, we recently closed on the previously announced acquisition in New Mexico, contiguous to our existing New Mexico assets, which adds valuable development inventory in the region."

OPERATIONS UPDATE AND FINANCIAL RESULTS

During the first quarter 2024, the Company drilled 7 gross operated horizontal wells, completed 4 gross operated horizontal wells and turned to sales 6 gross operated horizontal wells.

The Company averaged oil production of 14.2 MBbls/d, representing an increase of 4% from the prior quarter. The Company averaged total equivalent production of 20.4 MBoe/d (70% oil and 85% liquids).

First quarter 2024 revenues totaled $100 million, net cash provided by operating activities (including changes in working capital) was $56 million and net income was $19 million, or $0.94 per diluted share.

On a non-GAAP basis, first quarter Adjusted EBITDAX was $70 million, cash flow from operations before changes in working capital was $58 million, Free Cash Flow was $23 million and Adjusted Net Income was $32 million, or $1.61 per diluted share. < "Adjusted Net Income" is what you should be comparing to my forecast of $29.1 million and to other analysts forecast, like what First Call EPS forecasts are.

First quarter 2024 average realized prices, before derivative settlements, were $75.25 per barrel of oil, $0.42 per Mcf of natural gas and $5.97 per barrel of natural gas liquids. The Company reported a $17.1 million loss on derivatives during the first quarter 2024, which includes a $0.1 million realized gain on settlements and a $17.2 million non-cash loss due to changes in the fair value of derivatives.

Riley Permian's operating expenses for the first quarter of 2024 include lease operating expense ("LOE") of $17 million, or $9.05 per Boe, cash G&A expense(1) of $5 million, or $2.90 per Boe, and production and ad valorem taxes of $7 million or $3.90 per Boe (7% of revenue).

The Company incurred $26 million in total accrued capital expenditures before acquisitions for the first quarter. On a cash basis, the Company had total capital expenditures before acquisitions of $35 million for the quarter. The larger amount of cash capital expenditures relative to accrual basis capital expenditures was partially driven by prepayments for various items, including infrastructure improvements scheduled for the remainder of 2024.

During the first quarter of 2024, the Company made an additional capital contribution of $5.6 million to its joint venture RPC Power LLC, which is anticipated to complete funding needs for the current project. As of March 31, 2024, the Company had invested $11.5 million to date and owned approximately 35% of the joint venture. < This new company could have a lot of upside for us.

During the first quarter of 2024, the Company reduced total debt by $15 million, including a principal reduction of $10 million on the Credit Facility and $5 million on the unsecured senior notes. Interest expense during the first quarter was $9 million, of which $8 million was cash interest expense(2).

The Company had $342 million of total debt as of March 31, 2024, including $175 million drawn on its Credit Facility with approximately $200 million available for future borrowing, and $167 million of senior unsecured notes, net of discount and deferred financing costs. On a principal basis, the Company had $355 million of total debt, including $180 million principal value of unsecured senior notes. Subsequent to quarter end, the Company completed its semi-annual redetermination of its revolving credit borrowing base. The borrowing base and elected commitments were reaffirmed at $375 million.

Shareholders' equity was $435 million as of March 31, 2024. The number of common shares outstanding was 20.4 million as of March 31, 2024.

On April 3, 2024, the Company issued 1,015,000 shares of common stock at a par value of $0.001 per share. Net proceeds from the issuance were approximately $25.9 million, after deducting the underwriting discount and commissions.