Riley Exploration Permian, Inc. (REPX)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue fell to $85.4M and GAAP net income was $30.5M ($1.44 diluted EPS); non-GAAP Adjusted Net Income was $22.0M ($1.02 EPS), reflecting a $19.0M derivatives gain that boosted GAAP but was adjusted out for non-GAAP comparisons .
• Volumes held steady sequentially at 24.4 MBoe/d while oil declined 3% QoQ to 15.2 MBbls/d, impacted by Permian midstream constraints; management highlighted unreliability of gas processing driving selective shut-ins and deferrals .
• Guidance raised for full-year production (27.0–28.0 MBoe/d and 16.5–17.0 MBbls/d oil) while total 2025 capital spending reduced to $113–146M (down from $170–210M), incorporating the July 1 Silverback acquisition and updated midstream/power timelines .
• Balance sheet and hedges: principal debt rose to $284M at quarter-end (later $401M post-close), with oil swaps/floors protecting downside into 2026; RPC Power supplied ~65% of Texas field load and expanded 2026 ERCOT projects .
• Stock reaction catalysts: raised volume guidance with lower capex, Silverback close and synergy potential, visible midstream progress enabling higher gas flow assurance, and clearer H2 activity ramp .

What Went Well and What Went Wrong

• What Went Well

  • Free cash flow remained positive: $18.0M Total FCF and $21.3M Upstream FCF in Q2; Adjusted EBITDAX of $59.3M despite lower pricing .
  • Hedging/derivatives mitigated macro: $19.0M net derivatives gain (including $5.2M realized), lifting GAAP earnings and protecting cash margins; robust oil collars/fixed swaps into 2026 .
  • Strategic execution: closed Silverback on July 1 for $142M, expanding Eddy County footprint and undeveloped inventory; RPC Power serving ~65% of Texas load and advancing 40 MW of ERCOT thermal projects for 2026 .
  • Management quote: “We adjusted our development activity and capital budget in response to lower oil prices and generated significant free cash flow… These challenges also present opportunities, which we’re addressing through our midstream and power generation initiatives.” — Bobby Riley, CEO .

• What Went Wrong

  • Price-driven revenue compression: average realized oil price fell to $62.17/bbl (from $70.12 in Q1 and $79.25 in Q2’24), driving revenue down to $85.4M and cash from operations to $33.6M .
  • Infrastructure constraints: Permian midstream bottlenecks and unreliable gas processing caused shut-ins and deferred production; oil volumes -3% QoQ .
  • Cost pressure: LOE rose to $18.9M ($8.52/Boe) and cash G&A of $6.2M ($2.80/Boe), while net interest expense remained elevated at $7.2M .

Financial Results

Segment/KPI breakdown:

Guidance Changes

Context/why: Updated for Silverback integration (six months in FY), rephasing activity to H2, and explicitly acknowledging third-party midstream variability; capex was re-optimized while increasing production targets .

Earnings Call Themes & Trends

Management Commentary

• “Riley Permian demonstrated solid overall performance in the second quarter in spite of a challenging oil market and regional operating environment… These challenges also present opportunities, which we’re addressing through our midstream and power generation initiatives.” — Bobby Riley, CEO .
• Call highlight: “Unreliable natural gas processing… leads to shut-in wells and deferred production.” — Bobby Riley .
• Operations: “We drilled 10, completed 2 and turned in line 7 gross operated wells… added an additional 9% to our self-generated power in Texas.” — Operations remarks .

Q&A Highlights

• Topics centered on midstream reliability/timing, H2 activity cadence post-Silverback, LOE trajectory and interest expense outlook, and ERCOT power monetization; management reiterated 2026 in-service for the NM pipeline phases and detailed Q3 cost guidance .
• Clarified that H2 production uplift (Q3/Q4 guidance) incorporates Silverback volumes and staged turn-in-line schedule, with midstream capacity enabling more robust New Mexico development .
• Discussed hedging coverage and interest rate swaps, supporting cash flow stability amid pricing/financing volatility .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2025 EPS and revenue was unavailable in our dataset; therefore, we cannot provide beat/miss comparisons to S&P Global consensus.
• Note: Non-GAAP diluted EPS was $1.02 and GAAP diluted EPS was $1.44; revenue was $85.4M .
• S&P Global disclaimer: Estimates were not returned; S&P Global consensus data unavailable.

Key Takeaways for Investors

• Guidance reset is constructive: higher FY production with lower FY capex signals improved capital efficiency and integration benefits from Silverback; H2 ramp visible in Q3/Q4 targets .
• Midstream self-help is progressing: initial NM facilities commissioned (15 MMcf/d capacity), pipe ordered, and 2026 pipeline in-service remains the key unlock for sustained New Mexico growth .
• Power JV is a differentiator: ~65% load coverage in Texas and ERCOT build-out should support lower LOE and diversified cash flows in 2026+ .
• Hedging/derivative gains cushioned weak oil realizations; downside floors (~$64–$67/bbl near-term) and HH collars stabilize cash generation amid macro volatility .
• Watch costs and interest: Q3 guidance points to higher LOE ($8.90–$9.90/Boe) and interest ($9–$11M), which could partially offset H2 volume lift until midstream efficiencies are fully realized .
• Balance sheet flexibility tightened post-close (credit facility borrowings at $246M on Aug 1); execution on FCF and midstream milestones will be important to manage leverage through 2026 .
• Near-term trading: narrative likely driven by H2 activity ramp, Silverback synergy updates, and tangible midstream/power progress; any signs of improved realized prices or lower LOE could be incremental positives .

(Non-GAAP definitions and reconciliations referenced in company materials)