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RE

Riley Exploration Permian, Inc. (REPX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong free cash flow and deleveraging despite zero wells turned to sales; revenues were $102.5M, net income $28.6M ($1.36 diluted EPS), Adjusted EBITDAX $71.1M, and upstream free cash flow $39.3M .
  • Management cut 2025 standalone total investments by ~50% and trimmed midpoint production guidance ~3%, prioritizing inventory preservation and the pending $142M Silverback acquisition that adds ~5 MBoe/d and 300+ gross undeveloped locations .
  • New Mexico midstream build-out advanced (first compression station commissioned; 20-inch pipeline targeted 2026), supporting oil production reliability via improved gas/water takeaway; RPC Power JV now covers ~56% of Texas field load and ERCOT merchant project is progressing .
  • Balance sheet improved: debt reduced $21M in Q1; leverage ~0.9x LTM Adjusted EBITDAX; borrowing base reaffirmed at $400M; total liquidity $310M as of 3/31/25 .
  • Potential stock catalysts: Silverback closing in early Q3 2025, midstream phases/gathering additions, ERCOT power project timing, and hedge-protected cash flows (70% PDP oil hedged for 2025; detailed swaps/collars through 2026) .

What Went Well and What Went Wrong

  • What Went Well

    • Free cash flow and deleveraging: upstream FCF $39.3M; total FCF $36.4M; debt down $21M; leverage 0.9x .
    • Operational cost discipline: LOE per Boe $8.34; cash G&A $3.38/Boe; service costs ~10% lower YoY; potential 20% compression if rig counts decline .
    • Strategic positioning: Silverback acquisition adds inventory, SWD capacity, water storage, and synergizes with midstream/power strategy; 98% HBP acreage reduces urgency to drill .
    • Quote: “We are prioritizing the acquisition and preservation of high-quality inventory over the conversion of inventory to production.” — Bobby Riley .

  • What Went Wrong

    • Lower realized gas/NGL pricing and derivative loss: avg gas price $0.71/Mcf; NGL $5.41/Bbl; net derivatives loss $5.9M .
    • Production modestly down QoQ: daily Boe/d and oil/d declined ~2% with zero wells turned to sales; completions stacked for later quarters .
    • Guidance reduction: standalone 2025 investments cut ~50%; production midpoint trimmed ~3% due to macro and acquisition pacing .
    • Analyst concern: midstream timing/costs and tariff impacts; company paused pipe orders to optimize economics and may explore financing alternatives for midstream .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$99.4 $102.7 $102.5
Net Income ($USD Millions)$18.8 $10.9 $28.6
Diluted EPS ($USD)$0.94 $0.52 $1.36
Adjusted EBITDAX ($USD Millions)$70.1 $69.1 $71.1
Cash from Operations ($USD Millions)$56.1 $66.4 $50.4
Upstream Free Cash Flow ($USD Millions)$23.3 $28.7 $39.3
Total Free Cash Flow ($USD Millions)$23.3 $17.7 $36.4
Oil Production (MBbls)1,289 1,464 1,406
Total Production (MBoe)1,854 2,303 2,199
Avg Oil Price ($/Bbl)$75.25 $68.50 $70.12
Avg Gas Price ($/Mcf)$0.42 $0.02 $0.71
Avg NGL Price ($/Bbl)$5.97 $5.18 $5.41
LOE ($USD Millions)$16.8 $19.7 $18.3
Cash G&A ($USD Millions)$5.3 $8.7 (admin costs; cash G&A disclosed $9M Q4) $7.0
Production & Ad Valorem Taxes ($USD Millions)$7.2 $8.0 $6.7

KPIs (Q1 2025):

  • Daily production: 24.4 MBoe/d; oil 15.6 MBbls/d; liquids 83%; oil mix 64% .
  • Dividend: $0.38/share paid; total ~$8M .
  • Liquidity: $310M ($9M cash; $301M undrawn revolver) .
  • Net debt and leverage: principal debt $259M; debt-to-LTM Adjusted EBITDAX ~0.9x .

Guidance Changes

MetricPeriodPrevious Guidance (3/5/25)Current Guidance (5/7/25)Change
Total Investments (Accrual, $M)FY 2025 Standalone$188–$232 $95–$116 Lowered
Upstream Capex ($M)FY 2025 Standalone$110–$130 $63–$78 Lowered
Midstream Capex ($M)FY 2025 Standalone$60–$80 $18–$22 Lowered
Power JV Investment ($M)FY 2025 Standalone$18–$22 $14–$16 Lowered
Total Production (MBoe/d)FY 2025 Standalone24.6–25.6 23.8–24.9 Lowered (~3% midpoint)
Oil Production (MBbls/d)FY 2025 Standalone15.8–16.3 15.2–15.7 Lowered
Total Investments ($M)FY 2025 Combined (incl. Silverback)N/A$100–$121 New
Total Production (MBoe/d)FY 2025 Combined (incl. Silverback)N/A25.8–26.9 New
Q2 2025 Op CostsQ2 2025N/ALOE $8–$9/Boe; Cash G&A $3.00–$3.50/Boe; taxes 6–8% New

Management rationale: weaker strip/realized prices and strategic focus on acquisition/midstream pacing; plan to turn to sales already completed wells to maintain volumes; explore financing alternatives for midstream; pause pipe orders to optimize spend timing .

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
Midstream gas takeawayAnnounced NM gathering/compression plan; initial construction slated Q4; ~$12M Q4 spend Commissioning underway; ~15 MMcf/d capacity; high-pressure sales imminent First compressor station commissioned; path/ROW for 20" line; flexible timing; expandable to 100 MMcf/d; 2026 in-service target Execution progressing; phased build, pacing spend
Power JV (RPC Power)50% self-generated power in TX; merchant project siting/permitting/equipment orders Increased self-generated load; ERCOT project updates; 2025 $18–$22M equity ~56% TX field load from RPC; ERCOT phase 2 progressing (50MW thermal secured; interconnections in place) Growing contribution; merchant project nearing construction
Hedging strategyPortfolio protects cash flows; explanation of risk-management approach Continued hedging; debt-neutral aim at ~$70 WTI 2025: ~70% PDP oil hedged; ~57% total oil at ~$67 downside; 2026: ~67% PDP oil at ~$59 downside; collars converted to swaps for clarity Increased coverage; optimization of structures
Costs/tariffsCost reductions via pad/zipper fracs; LOE $8.60/BOE Service availability improving; costs slightly up due to fixed facilities ~10% service cost compression YoY; tariffs could offset; potential ~20% compression if rig counts fall Net favorable cost dynamics
Regulatory (SWD, permitting)NW Shelf constraints; strategic infrastructure approach Rationale to build own midstream vs third-party limits; multiple plant access Silverback assets add SWD capacity and recycled water storage; permitting differences for NM power noted Infrastructure mitigates regulatory bottlenecks
Borrowing base / leverageDebt down $100M YoY; leverage ~1.07x Neutral debt plan at ~$70 WTI Borrowing base reaffirmed at $400M; potential incremental PDP uplift post-acquisition; leverage comfortable for Board Conservative balance sheet stance

Management Commentary

  • “We’re excited to announce another strategic acquisition... The acquisition adds significant, long-term upstream development potential and supports our prior decision to invest in gas midstream infrastructure in the region.” — Bobby Riley .
  • “For the balance of 2025, on a pro forma combined basis, we’ve hedged oil prices for 70% of forecasted PDP volumes and 57% of total oil volumes at a weighted average $67 downside price.” — Philip Riley .
  • “Service costs... average of 10% compression over last year... even post tariffs, we’re still well positioned to lower overall well cost.” — John Suter .
  • “We are reducing 2025 investing midpoint guidance on a standalone basis by 50% while reducing midpoint total production guidance by 3%.” — Management .

Q&A Highlights

  • Silverback rationale and seller motivation: private equity portfolio fit; Riley’s midstream build confers strategic advantage to unlock constrained region .
  • Midstream scope and economics: contiguous acreage increases volumes through future system; gathering/compression additions likely; benefits oil by debottlenecking gas/water .
  • Borrowing base impact: PDP value ~half of purchase; potential incremental borrowing base uplift, with $400M base reaffirmed .
  • Hedging philosophy: risk management driven; converted 2026 collars to swaps to uplift pricing and clarify cash flow .
  • Asset decline profile: Silverback relatively shallow decline; permissive HBP footprint supports opportunistic capital allocation .

Estimates Context

  • S&P Global consensus for Q1 2025 EPS and revenue was unavailable via our data feed, so estimates-based beat/miss analysis cannot be provided. We attempted to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q1 2025 (and Q4/Q3 2024) and the service returned no data. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Capital efficiency intact: Q1 revenue $102.5M and Adjusted EBITDAX $71.1M with robust FCF generation and leverage down to ~0.9x LTM EBITDAX .
  • Strategic pivot: 2025 standalone investments cut ~50% and production trimmed modestly to preserve inventory and integrate Silverback; combined H2 2025 volumes rise after close .
  • Infrastructure-led upside: first NM compressor station online; 20-inch pipeline targeted for 2026; gathering expansions and midstream fees to enhance economics, including non-owned working interest molecules .
  • Hedge-protected cash flows: substantial 2025–2026 oil coverage at ~$67/$59 downside levels reduces commodity risk through integration and project execution .
  • Acquisition synergy: Silverback adds ~47k net acres, SWD/water assets and >300 gross locations contiguous to Riley, improving development optionality and reducing decline pressure .
  • Cost advantages: service cost compression and internal power generation (~56% of TX load) underpin lower unit costs and reduce downtime risk .
  • Near-term catalysts: acquisition closing (early Q3 2025), midstream gathering additions and financing update, and ERCOT merchant power project milestones .

Appendix: Product Mix and Operations

MetricQ1 2024Q4 2024Q1 2025
Oil (% of total volumes)69% (1,289/1,854 MBoe) 64% (1,464/2,303 MBoe) 64% (1,406/2,199 MBoe)
Liquids (% of total)N/AN/A83%
Wells Completed (Gross/Net)N/A5/4.5 10/6.3
Wells Turned to Sales (Gross/Net)N/A6/5.5 0/0 (Q1; staggered to Q2–Q4)

Notes:

  • Dividend: $0.38/share approved 4/14/25; paid 5/8/25 .
  • Liquidity: $310M at 3/31/25; debt principal $259M (Credit Facility $99M; Senior Notes $160M) .
  • Derivatives: Q2–Q4 2025 oil swaps/collars ~$68–72 fixed; gas swaps $3.30–3.74; extended through 2026–2027; interest rate swaps in place .