UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-15555 Riley Exploration Permian, Inc. (Exact name of registrant as specified in its charter) Delaware 87-0267438 (State or other jurisdiction of incorporation or organization) ...

Financial Data and Key Metrics Changes - For Q1 2023, the company reported net income of $32 million or $1.60 per diluted share, and adjusted net income of $25 million or $1.26 per diluted share [17] - Adjusted EBITDAX for the quarter was $44 million, up by $9 million or 26% year-over-year, but down approximately $2 million or 5% quarter-over-quarter [17] - Operating cash flow was $33 million or $37 million before working capital changes, which is up by $7 million or 23% year-over-year [50] Business Line Data and Key Metrics Changes - The company turned to sales 7 gross and 5.3 net wells during the quarter, significantly higher than the 1 gross and 1 net well turned to sales in Q4 2022 [30] - Lease operating expenses (LOE) on a unit of production basis were slightly lower year-over-year, reflecting cost control efforts [5] - Accrual base CapEx was $42 million and cash CapEx was $35 million, resulting in free cash flow of just over $2 million [18] Market Data and Key Metrics Changes - The company anticipates oil production to average 14,000 to 15,000 barrels per day and total equivalent production to average 20,000 to 21,000 barrels of oil equivalent per day in Q2 2023 [38] - The macro environment has been volatile, influenced by Fed-induced monetary tightening and weak gas and NGL pricing [37] Company Strategy and Development Direction - The company announced a joint venture to construct new power infrastructure for on-site generation using produced gas, aligning with sustainable practices [2] - The New Mexico acquisition is seen as a major milestone for long-term growth and value creation [46] - The company plans to focus on reinvestment or volume growth for discretionary cash flow, with a balance available for debt paydown and dividends [51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about production increases in Q2 relative to both Q4 2022 and Q1 2023, driven by the New Mexico acquisition and continued development of core assets [47] - The company remains flexible to slow down spending based on commodity prices and will evaluate options with the management team and Board [37] Other Important Information - The company plans to continue paying its quarterly dividend, which represents a significant amount of excess free cash flow [52] - The integration of the New Mexico asset is ongoing, with plans to complete the transition during the current quarter [41] Q&A Session Summary Question: Integration of new assets and insights gained - Management is working through a transition period with the previous operator and intends to complete the integration during the current quarter [41] Question: Plans for the Enhanced Oil Recovery (EOR) project - The company is continuing to inject and refresh the reservoir, with plans for reinjection using compressors expected to come online soon [23][24]

2023 Plan Guidance 7 (1) Based on management estimates and midpoint guidance. Price sensitivity uses actual prices through 4/30/2023 and flat price case thereafter; each case uses $2.54 for Henry Hub natural gas index price. "75% As Reported" metrics reflect the impact of the New Mexico Acquisition for the second, third and fourth quarters of 2023. "100% Pro Forma" metrics represent illustrative, run-rate metrics as if the New Mexico Acquisition closed on January 1, 2023. (2) A non-GAAP financial measure as ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-15555 | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common stock, par value $0.001 | REPX | NYSE American | In ...

Financial Data and Key Metrics Changes - Total revenue for the fourth quarter was approximately $64 million, which is 10% lower than the third quarter, primarily due to a 13% decrease in realized oil prices, partially offset by higher production and lower derivative settlements [14][18] - Cash flow from operations before changes in working capital decreased from $50 million to $44 million, representing a 12% decrease quarter-over-quarter [15] - For the full year, cash flow from operations before working capital increased by 89% year-over-year from $89 million to $169 million, driven by higher volumes and prices [16][41] Business Line Data and Key Metrics Changes - Production grew from 12.7 to 13.3 MBoe per day in the fourth quarter, a 4% increase quarter-over-quarter, and year-over-year average production increased from 9.2 to 11.5 MBoe per day, a 25% increase [5][41] - Lease operating expenses for the fourth quarter were $8.8 million or $7.16 per BOE, representing a 5% decrease quarter-over-quarter and a 5% increase year-over-year [6] Market Data and Key Metrics Changes - The company anticipates starting operations on the Pecos assets in mid-April, with new production expected by early to mid-summer [4] - The acquisition of Pecos Oil & Gas assets is expected to enhance production and diversify the company's portfolio, reducing single area concentration risk [9] Company Strategy and Development Direction - The company is focused on driving profitable growth and investing in long-term initiatives, including the acquisition of new assets and the development of on-site power generation [10][40] - The joint venture for on-site power generation aims to improve control over energy costs and reduce carbon emissions [10] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures are being observed, but there are signs of prices starting to come down, which could lead to improved efficiencies [28] - The company is working on a large-scale storage hub project for CO2, indicating a commitment to advancing environmental initiatives [31] Other Important Information - The company paid $25 million in dividends during the year, corresponding to 44% of free cash flow, and has paid dividends for 16 consecutive quarters [42][43] - The first phase of the power generation project is expected to be operational by June 2023, providing 10 megawatts of power [10] Q&A Session Summary Question: Thoughts on Pecos assets and competition - Management anticipates starting operations in mid-April and bringing on new production by early to mid-summer [4] Question: Inflation costs and mitigation - Management noted that prices may be starting to come down, which could help drive efficiencies [28] Question: Update on CCUS project - The company is working with partners on a large-scale storage hub project, focusing on efficiency and shareholder capital [31] Question: Infrastructure issues with Yeso assets - There are no anticipated large infrastructure CapEx needs, as existing infrastructure is in place [57] Question: Flexibility with midstream contracts - Management indicated that there is flexibility with midstream contracts to maximize economics [61] Question: Impact of power project on operating efficiency - The power project aims to improve operational quality and reduce costs associated with fluctuating power quality [62] Question: Hedging positions for oil - The company has established hedge positions to protect cash flows, especially with the new acquisition [86]

Forward-Looking Statements All statements, other than historical facts, that address activities that Riley Permian assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management's current beliefs, based on currently available information, as to the outcome and timing of future events, including the volatility of oil, natural gas and NGL prices; the scope, ...

Part I [Business and Properties](index=8&type=section&id=Items%201%20and%202.%20Business%20and%20Properties) Riley Exploration Permian, Inc. is an independent oil and natural gas company focused on the horizontal development of the San Andres formation in the Permian Basin, aiming to grow cash flow, identify new investment opportunities, and distribute returns to stockholders [Overview and Strategy](index=8&type=section&id=Overview%20and%20Strategy) The company is an independent oil and gas entity focused on acquisition, exploration, and development in the San Andres formation of the Permian Basin[22](index=22&type=chunk) - In February 2023, the company agreed to acquire oil and gas leases in Eddy County, New Mexico for approximately **$330 million**, partially financed by **$200 million** in new Senior Notes[26](index=26&type=chunk)[27](index=27&type=chunk) - Business strategy focuses on three core pillars: growing cash flow from operations, identifying new investment opportunities (including CCUS projects), and distributing excess returns to stockholders through dividends[30](index=30&type=chunk) - The company is developing an Enhanced Oil Recovery (EOR) project in Yoakum County, Texas, by injecting water and CO2 to lower decline rates and increase oil recovery[28](index=28&type=chunk)[60](index=60&type=chunk) [Properties and Reserves](index=10&type=section&id=Properties%20and%20Reserves) Company Properties Overview (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Net Acres | ~30,470 | | Net Producing Wells | 100 | | Operated Net Production (FY2022) | 93% | | Average Working Interest (Operated) | 95% | | Average Net Daily Production (FY2022) | 11,505 Boe/d | Estimated Proved Reserves Summary | Reserve Category (thousand barrels of oil equivalent) | Dec 31, 2022 | Sep 30, 2021 | Sep 30, 2020 | | :--- | :--- | :--- | :--- | | Proved Developed Producing | 49,122 | 40,968 | 30,186 | | Proved Developed Non-Producing | 0 | 548 | 0 | | Proved Undeveloped | 28,551 | 30,647 | 26,601 | | **Total Proved Reserves** | **77,673** | **72,163** | **56,787** | - Proved Undeveloped Reserves (PUDs) decreased from **30,366 thousand barrels of oil equivalent** at the end of 2021 to **28,551 thousand barrels of oil equivalent** at year-end 2022, primarily due to downward revisions of **7,411 thousand barrels of oil equivalent** attributed to increased costs and decreased well projections, which offset **7,037 thousand barrels of oil equivalent** of extensions and discoveries[39](index=39&type=chunk) - The estimated future development cost for PUDs as of December 31, 2022, is approximately **$324.4 million**, expected to be financed through cash flow from operations and borrowings[40](index=40&type=chunk) [Drilling, Acreage, and Production](index=13&type=section&id=Drilling%2C%20Acreage%20and%20Production) Drilling Results (Productive Wells) | Well Type | Year Ended Dec 31, 2022 (Net) | Year Ended Sep 30, 2021 (Net) | Year Ended Sep 30, 2020 (Net) | | :--- | :--- | :--- | :--- | | Development | 14 | 13 | 3 | | Exploratory | 0 | 1 | 0 | | **Total** | **14** | **14** | **3** | Acreage Statistics (as of Dec 31, 2022) | Acreage Type | Gross Acres | Net Acres | | :--- | :--- | :--- | | Developed | 37,984 | 27,107 | | Undeveloped | 6,024 | 3,363 | | **Total** | **44,008** | **30,470** | Production and Average Prices | Metric | Year Ended Dec 31, 2022 | Year Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Production** | | | | Total Production (thousand barrels of oil equivalent) | 4,199 | 3,154 | | Avg. Daily Production (barrels of oil equivalent per day) | 11,505 | 8,640 | | **Avg. Realized Prices (pre-hedges)** | | | | Oil ($/Bbl) | $92.86 | $58.29 | | Natural Gas ($/Mcf) | $3.33 | $2.88 | | Combined ($/Boe) | $76.05 | $47.12 | | **Avg. Realized Prices (post-hedges)** | | | | Combined ($/Boe) | $58.13 | $41.95 | [Marketing, Regulation, and Human Capital](index=17&type=section&id=Marketing%2C%20Regulation%2C%20and%20Human%20Capital) - The company has significant customer concentration, with one purchaser accounting for **89% of revenue** in the year ended December 31, 2022[73](index=73&type=chunk) - Operations are substantially affected by federal, state, and local laws, including regulations on drilling permits, well spacing, production rates, environmental protection, hydraulic fracturing, and greenhouse gas emissions[79](index=79&type=chunk)[96](index=96&type=chunk) - As of December 31, 2022, the company employed **65 people** and is not a party to any collective bargaining agreements[123](index=123&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company faces a wide range of risks inherent to its business and the oil and gas industry, including commodity price volatility, reserve estimate accuracy, capital access, geographic concentration, and regulatory changes - **Business & Operational Risks:** An extended decline in commodity prices could adversely affect business, financial condition, and the value of reserves; reserve estimates are based on assumptions that may prove inaccurate[133](index=133&type=chunk)[147](index=147&type=chunk) - **Geographic Concentration Risk:** Substantially all producing properties are located in the Northwest Shelf of the Permian Basin, making the company vulnerable to regional risks like regulatory changes, infrastructure constraints, and competition for personnel[159](index=159&type=chunk) - **Regulatory & Environmental Risks:** Federal, state, and local initiatives related to hydraulic fracturing, GHG emissions, and climate change could result in increased costs, operating restrictions, and reduced demand for oil and gas[240](index=240&type=chunk)[247](index=247&type=chunk) - **Financial & Market Risks:** Covenants in the revolving credit facility may restrict business activities and the ability to pay dividends; derivative activities could result in financial losses; the market price of the company's common stock may be volatile[196](index=196&type=chunk)[204](index=204&type=chunk)[261](index=261&type=chunk) - **Company-Specific Risks:** Executive officers, directors, and principal stockholders own **77.3%** of the company's stock, giving them significant influence over corporate matters[279](index=279&type=chunk) [Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) The company was involved in an adversary proceeding related to the bankruptcy of Hoactzin Partners, L.P., concerning alleged fraudulent transfers, which was fully resolved through a settlement agreement in October 2022 - On October 13, 2022, the company entered into a settlement agreement to resolve the Hoactzin Partners L.P. adversary proceeding, agreeing to pay **$80 thousand** to the bankruptcy trustee[290](index=290&type=chunk) - In November 2022, the Bankruptcy Court approved the settlement, the payment was made, and the proceeding against the company was dismissed with prejudice[291](index=291&type=chunk) Part II [Market for Common Equity, Stockholder Matters, and Issuer Purchases](index=58&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is listed on the NYSE American under "REPX", declared significant quarterly dividends totaling approximately **$25.3 million** in FY2022, and limited share repurchases to employee tax withholding purposes - The company's common stock trades on the NYSE American under the symbol REPX, with approximately **121 holders of record** as of March 1, 2023[295](index=295&type=chunk) Dividends Declared | Period | Total Dividends Declared | | :--- | :--- | | Year Ended Dec 31, 2022 | ~$25.3 million | | Three Months Ended Dec 31, 2021 | ~$6.2 million | | Year Ended Sep 30, 2021 | ~$10.6 million | - For the year ended December 31, 2022, the company repurchased **44,738 shares** at an average price of **$22.11 per share**, solely for employee tax withholding purposes on vesting transactions[301](index=301&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a significant increase in production and revenue for the year ended December 31, 2022, driven by successful drilling activities and higher commodity prices, while maintaining a strong liquidity position [Results of Operations](index=62&type=section&id=Results%20of%20Operations) Revenue and Production Comparison | Metric | Year Ended Dec 31, 2022 | Year Ended Sep 30, 2021 | | :--- | :--- | :--- | | Oil and Natural Gas Sales | $319.3 million | $148.6 million | | Total Production (thousand barrels of oil equivalent) | 4,199 | 3,154 | | Avg. Realized Price ($/Boe) | $76.05 | $47.12 | - Total oil and natural gas revenue increased by **$170.7 million (115%)** in FY2022, driven by a **61%** increase in the average realized combined price and a **33%** increase in production volumes[316](index=316&type=chunk)[304](index=304&type=chunk) - Lease operating expenses (LOE) increased by **$10.5 million**, primarily due to higher workover expenses (**$5.4 million**) and increased costs for electricity, chemicals, and new wells coming online (**$4.2 million**)[323](index=323&type=chunk) - A proved property impairment loss of **$7.3 million** was recognized for the year ended December 31, 2022, related to the New Mexico field, as the company focused drilling efforts on its Yoakum County acreage[332](index=332&type=chunk) - The company recorded a total loss on derivatives of **$51.6 million**, which included **$75.3 million** in cash settlement losses, partially offset by a **$23.7 million** non-cash gain on the change in fair value of contracts[337](index=337&type=chunk)[338](index=338&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary sources of liquidity are cash flow from operations and borrowings under the revolving credit facility; cash flow from operations increased **98%** to **$170.3 million** for the year ended Dec 31, 2022[342](index=342&type=chunk)[346](index=346&type=chunk) - As of December 31, 2022, the company had a working capital deficit of **$25.3 million**, an improvement from a **$32.8 million** deficit a year prior, primarily due to a decrease in current derivative liabilities[343](index=343&type=chunk) Revolving Credit Facility Status (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Borrowing Base | $225 million | | Outstanding Borrowings | $56 million | | Available Capacity | $169 million | [Critical Accounting Estimates](index=69&type=section&id=Critical%20Accounting%20Estimates) - The company utilizes the successful efforts method of accounting, which requires significant management judgment in classifying wells as developmental or exploratory and assessing costs for capitalization or expense[355](index=355&type=chunk) - Estimates of proved oil and natural gas reserves are a major component of the depletion calculation and impairment assessments, prepared by a third-party consulting firm and inherently imprecise[359](index=359&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes, and the independent auditor issued an unqualified opinion - Based on an evaluation as of December 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[368](index=368&type=chunk) - Management assessed the effectiveness of internal control over financial reporting using the COSO 2013 framework and concluded that, as of December 31, 2022, it was effective[370](index=370&type=chunk) - The independent registered public accounting firm, BDO USA, LLP, audited the company's internal control over financial reporting and opined that it was maintained effectively in all material respects as of December 31, 2022[373](index=373&type=chunk) Part III [Part III](index=76&type=section&id=Part%20III) Items 10 through 14, covering Directors, Executive Compensation, Security Ownership, Certain Relationships, and Principal Accountant Fees, are incorporated by reference from the company's definitive proxy statement, to be filed within 120 days after the fiscal year-end Part IV [Exhibits and Financial Statement Schedules](index=77&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section contains the consolidated financial statements and a list of exhibits filed with the report, including key agreements for the New Mexico Acquisition and Senior Notes - The consolidated financial statements are referenced as appearing on page F-1[388](index=388&type=chunk) - Key exhibits filed include the Purchase and Sale Agreement dated February 22, 2023, for the New Mexico Acquisition and a related Commitment Letter for **$200 million** in Senior Notes[392](index=392&type=chunk) [Financial Statements and Supplementary Data](index=82&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements present the financial position and results of operations for Riley Exploration Permian, Inc., with total assets of **$515.3 million** and net income of **$118.0 million** for the year ended December 31, 2022, and proved reserves of **77.7 million barrels of oil equivalent** with a standardized measure of **$1.11 billion** [Note 4. Acquisitions](index=101&type=section&id=Note%204.%20Acquisitions) - The February 26, 2021 merger with Tengasco, Inc. was accounted for as a reverse merger, with REP LLC as the accounting acquirer, for a total consideration of approximately **$26.4 million**[508](index=508&type=chunk)[509](index=509&type=chunk) Purchase Price Allocation for Tengasco Merger (in thousands) | Category | Fair Value | | :--- | :--- | | Total assets acquired | $9,593 | | Total liabilities assumed | $2,214 | | **Net identifiable assets acquired** | **$7,379** | | Goodwill | $19,013 | | **Net assets acquired** | **$26,392** | [Note 9. Revolving Credit Facility](index=108&type=section&id=Note%209.%20Revolving%20Credit%20Facility) - In 2022, the company amended its credit agreement, increasing the borrowing base to **$225 million** and extending the maturity to April 2026[546](index=546&type=chunk) - As of December 31, 2022, the company had **$56 million** in outstanding borrowings and **$169 million** available under the facility, and was in compliance with all covenants[551](index=551&type=chunk) [Note 15. Subsequent Events](index=116&type=section&id=Note%2015.%20Subsequent%20Events) - On February 22, 2023, the company agreed to acquire oil and gas interests in Eddy County, New Mexico from Pecos Oil & Gas, LLC for approximately **$330 million**[592](index=592&type=chunk) - The New Mexico Acquisition will be funded through an amended credit facility (up to **$130 million**) and the issuance of **$200 million** in new **10.5%** unsecured senior notes due in five years[593](index=593&type=chunk)[594](index=594&type=chunk) - In anticipation of the acquisition, the company significantly increased its commodity derivative positions for 2023, 2024, and 2025[595](index=595&type=chunk)[597](index=597&type=chunk) [Note 16. Supplemental Information on Oil and Natural Gas Operations (Unaudited)](index=118&type=section&id=Note%2016.%20Supplemental%20Information%20on%20Oil%20and%20Natural%20Gas%20Operations%20%28Unaudited%29) Changes in Proved Reserves (thousand barrels of oil equivalent) | Description | Total (thousand barrels of oil equivalent) | | :--- | :--- | | **Balance at Dec 31, 2021** | **73,407** | | Extensions and discoveries | 14,796 | | Revisions | (6,331) | | Production | (4,199) | | **Balance at Dec 31, 2022** | **77,673** | Standardized Measure of Discounted Future Net Cash Flows (in thousands) | Description | Dec 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | :--- | | Future net cash flows | $2,576,563 | $1,785,071 | $1,401,491 | | 10% annual discount | $(1,468,187) | $(1,081,602) | $(848,555) | | **Standardized Measure** | **$1,108,376** | **$703,469** | **$552,936** | - The standardized measure increased from **$703.5 million** at the end of 2021 to **$1.11 billion** at the end of 2022, primarily driven by a net positive change in prices and production costs of **$406.8 million** and extensions/discoveries of **$321.0 million**[623](index=623&type=chunk)

Riley Exploration Permian, Inc. (NYSE:REPX) Q3 2022 Earnings Conference Call November 15, 2022 11:00 AM ET Company Participants Philip Riley - Chief Financial Officer and Executive Vice President, Strategy Bobby Riley - Chairman and Chief Executive Officer Kevin Riley - President Conference Call Participants Neal Dingmann - Truist Securities John White - ROTH Capital Noel Parks - Tuohy Brothers Richard Dearnley - Longport Partners Operator Hello and thank you for standing by. My name is Regina and I will be ...

Part I [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The financial statements reflect significant revenue growth, a net income turnaround, increased assets, and strong operating cash flow for the period [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and shareholders' equity significantly increased, driven by oil and gas properties and strong earnings, while the revolving credit facility was reduced Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$490,551** | **$396,169** | **$94,382** | | Cash and cash equivalents | $17,908 | $8,317 | $9,591 | | Oil and natural gas properties, net | $431,067 | $359,131 | $71,936 | | **Total Liabilities** | **$177,897** | **$158,331** | **$19,566** | | Revolving credit facility | $48,000 | $65,000 | ($17,000) | | Current derivative liabilities | $22,529 | $30,984 | ($8,455) | | **Total Shareholders' Equity** | **$312,654** | **$237,838** | **$74,816** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved significant net income for the nine months ended September 30, 2022, driven by strong oil and gas revenue growth Statement of Operations Summary (Nine Months Ended Sep 30, in thousands) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $243,697 | $128,022 | 90.4% | | Income From Operations | $162,689 | $53,196 | 205.8% | | Loss on derivatives | ($44,395) | ($75,286) | (41.0%) | | Net Income (Loss) From Continuing Operations | $91,204 | ($38,928) | N/A | | Net Income (Loss) | $91,204 | ($57,725) | N/A | | Diluted EPS from Continuing Operations | $4.65 | ($2.29) | N/A | [Condensed Consolidated Statements of Changes in Members'/Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Members'%2FShareholders'%20Equity) Shareholders' equity significantly increased, primarily driven by net income, partially offset by dividends declared - Shareholders' equity increased by **$74.8 million** in the first nine months of 2022, primarily due to net income of **$91.2 million**, offset by **$18.5 million** in dividends declared (**$6.154 million** in Q1, **$6.159 million** in Q2, **$6.159 million** in Q3)[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased, funding capital expenditures and debt repayment, resulting in a positive cash balance Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $130,352 | $70,186 | | Net Cash Used in Investing Activities | ($83,182) | ($51,229) | | Net Cash Used in Financing Activities | ($37,579) | ($7,666) | | **Net Increase in Cash** | **$9,591** | **$15,190** | | Cash and Cash Equivalents, End of Period | $17,908 | $17,067 | [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail fiscal year change, derivative instruments, credit facility terms, and other key disclosures including a legal settlement - The company changed its fiscal year from an October 1 - September 30 cycle to a calendar year (January 1 - December 31) basis, commencing with the **2022 calendar year**[32](index=32&type=chunk) - The company uses commodity derivative contracts (fixed price swaps, costless collars, basis swaps) to manage price risk. As of September 30, 2022, these contracts covered significant portions of future oil and natural gas production through **2023**[61](index=61&type=chunk)[62](index=62&type=chunk) - The revolving credit facility borrowing base was increased to **$200 million** in April 2022 and further to **$225 million** in October 2022. The maturity was extended to **April 2026**, and the benchmark interest rate was changed from LIBOR to SOFR[73](index=73&type=chunk)[101](index=101&type=chunk) - A settlement was reached in a legal proceeding for **$80,000**, contingent on Bankruptcy Court approval, to resolve claims related to a 2018 asset transfer by a predecessor company[94](index=94&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong performance to increased production and higher commodity prices, highlighting robust cash flow and strong liquidity - Total net equivalent production increased by **33%** to **12.7 MBoe/d** for Q3 2022 compared to Q3 2021[105](index=105&type=chunk) - Generated **$130.4 million** in cash flow from operations and incurred **$96.5 million** in accrued capital expenditures for the nine months ended September 30, 2022[105](index=105&type=chunk) - The company ended Q3 with **$17.9 million** in cash and **$48.0 million** drawn on its revolving credit facility, which had its borrowing base increased to **$225 million** subsequent to quarter-end[105](index=105&type=chunk)[151](index=151&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Total oil and gas revenues significantly increased due to higher prices and production, with rising operating expenses and a net gain on derivatives Production and Realized Prices (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Production (MBoe) | 2,977 | 2,456 | 21.2% | | Daily Production (Boe/d) | 10,903 | 8,997 | 21.2% | | Avg. Realized Oil Price ($/Bbl) | $97.74 | $63.76 | 53.3% | | Avg. Realized Combined Price ($/Boe) | $81.26 | $51.39 | 58.1% | - For the nine months ended Sep 30, 2022, oil revenues increased **97%** to **$224.9 million**, with **$78.2 million** of the increase from higher prices and **$32.4 million** from higher volumes[118](index=118&type=chunk) - Transaction costs of **$2.6 million** were incurred in the first nine months of 2022 related to a potential business combination that was not consummated[136](index=136&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on operations and its revolving credit facility, which increased its borrowing base, despite a working capital deficit - The company had a working capital deficit of **$32.7 million** as of September 30, 2022, compared to a deficit of **$32.8 million** at year-end 2021. The deficit includes **$22.5 million** in current derivative liabilities[144](index=144&type=chunk) - Net cash from operating activities increased **86%** to **$130.4 million** for the nine months ended Sep 30, 2022, primarily due to a **$115.7 million** increase in revenues[145](index=145&type=chunk)[146](index=146&type=chunk) - The borrowing base under the revolving credit facility was increased to **$200 million** in April 2022 and again to **$225 million** in October 2022. As of September 30, 2022, borrowings were **$48 million**, with **$152 million** of available capacity[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable for the current reporting period - The company states that this item is not applicable[156](index=156&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of **September 30, 2022**[157](index=157&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended **September 30, 2022**[158](index=158&type=chunk) Part II. OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in material legal proceedings, with a previously disclosed adversary proceeding resolved via settlement - The company does not believe any current legal actions will have a material effect on its consolidated financial position or results of operations[160](index=160&type=chunk) - Details regarding a material legal proceeding and its settlement are incorporated by reference from Note 14 of the financial statements[161](index=161&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company highlights business risks including regulatory restrictions, critical infrastructure designation, and enhanced ESG scrutiny impacting operations - Regulatory actions by the Railroad Commission of Texas (RRC) to curtail produced water injection in the Permian Basin to control seismic activity could increase operating costs[164](index=164&type=chunk) - Designation as a "critical gas supplier" under new Texas rules could subject the company to additional regulation and compliance costs, including potential weatherization measures[165](index=165&type=chunk)[167](index=167&type=chunk) - Enhanced scrutiny on ESG matters and the adoption of climate change legislation restricting greenhouse gas (GHG) emissions could result in increased operating costs and reduced demand for the company's products[168](index=168&type=chunk)[170](index=170&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales, repurchasing shares to satisfy employee tax withholding on restricted stock vesting Issuer Repurchases of Equity Securities (Nine Months Ended Sep 30, 2022) | Quarter Ending | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Q1 | 12,640 | $26.81 | | Q2 | 8,576 | $25.08 | | Q3 | 341 | $25.02 | - Shares were repurchased from employees for the payment of personal income tax withholding on vesting transactions and were not part of a publicly announced program[172](index=172&type=chunk) [Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable - The company reports this item as not applicable[173](index=173&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable - The company reports this item as not applicable[174](index=174&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This section is not applicable - The company reports this item as not applicable[175](index=175&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various corporate agreements and executive certifications

Production and Revenue - Total net equivalent production increased by 12% to 10.2 MBoe/d for the three months ended June 30, 2022, and by 20% to 10.0 MBoe/d for the nine months ended June 30, 2022, compared to the same periods in 2021[104]. - Oil sales revenue for the three months ended June 30, 2022, was $82.5 million, a 109% increase from $39.5 million in the same period in 2021[109]. - The average realized price for oil was $108.41 per Bbl for the three months ended June 30, 2022, compared to $64.55 per Bbl in the same period in 2021, reflecting a 68% increase[111]. - Natural gas revenues increased by $1.9 million to $2.9 million for the three months ended June 30, 2022, despite a 22% decrease in volumes[115]. - NGL revenues increased by $1.3 million to $2.4 million for the three months ended June 30, 2022, with realized prices increasing by $23.14 per Bbl[115]. Expenses and Costs - Lease operating expenses rose to $8.1 million for the three months ended June 30, 2022, compared to $5.8 million in the same period in 2021[119]. - Lease Operating Expenses (LOE) increased by $2.3 million for the three months ended June 30, 2022, compared to the same period in 2021, with $2.1 million attributed to higher workover expenses[121]. - For the nine months ended June 30, 2022, LOE increased by $6.0 million, primarily due to $4.7 million in costs associated with new wells and additional production volume[122]. - Production and ad valorem taxes rose by $3.5 million and $6.0 million for the three and nine months ended June 30, 2022, respectively, driven by increased oil and natural gas sales[124]. - Total exploration expense for the three months ended June 30, 2022, was $22,000, significantly lower than $2.785 million in the same period in 2021[125]. - Depletion, depreciation, amortization, and accretion expense increased by $0.1 million and $1.4 million for the three and nine months ended June 30, 2022, respectively, due to higher production[129]. - General and Administrative (G&A) expenses increased by $0.1 million for the three months ended June 30, 2022, but decreased by $0.7 million for the nine months ended June 30, 2022[131]. Cash Flow and Financing - Cash flow from operations generated was $97.0 million for the nine months ended June 30, 2022[104]. - The company exited the fiscal third quarter with $16.8 million in cash and $61.0 million drawn on its revolving credit facility[104]. - Net cash provided by operating activities increased by $38.1 million or 65% to $97.0 million for the nine months ended June 30, 2022, compared to $58.8 million for the same period in 2021[143]. - Net cash used in investing activities increased by $37.8 million or 96% to $77.2 million for the nine months ended June 30, 2022, primarily due to higher capital spending related to increased drilling and completion activity[144]. - Net cash used in financing activities increased by $1.9 million or 11% to $20.1 million for the nine months ended June 30, 2022, with $1.0 million utilized from the revolving credit facility for capital expenditures[145]. - The Company's borrowing base was $200 million with outstanding borrowings of $61 million on June 30, 2022, providing an available borrowing capacity of $139 million[146]. - The Company amended its Credit Agreement on April 29, 2022, increasing the borrowing base from $175 million to $200 million and extending the maturity date to April 2026[147]. Dividends and Shareholder Returns - The company paid cash dividends of $6.1 million during the three months ended June 30, 2022, with a latest dividend of $0.31 per share[104]. - The Company authorized and declared a quarterly dividend totaling approximately $6.2 million for the three months ended June 30, 2022[148]. Tax and Derivative Losses - The effective income tax rate for the nine months ended June 30, 2022, was 21.8%, compared to an effective rate of (38.0)% in the same period in 2021[138]. - The loss on derivatives for the three months ended June 30, 2022, was $12.363 million, a decrease from $35.396 million in the same period in 2021[134]. Working Capital and Commitments - As of June 30, 2022, the company had a working capital deficit of $55.6 million, compared to a deficit of $46.9 million as of September 30, 2021[141]. - The increase in revenues was $110.5 million, partially offset by an increase of $55.0 million on settlements for commodity derivative contracts and an increase in operating expenses of $15.2 million[143]. - The Company had a net paydown of $3.5 million on its revolving credit facility for the same period in 2021, contrasting with the current year's utilization[145]. - The Company has commitments with its primary midstream counterparty and has entered into purchase commitments throughout the nine months ended June 30, 2022[149].