REPX(REPX) - 2024 Q2 - Quarterly Results

Q2 2024 Results Overview Riley Permian achieved strong Q2 2024 results with robust production, significant cash flow, and strategic debt reduction, driven by operational efficiencies and asset expansion Second Quarter 2024 Highlights Riley Permian reported strong Q2 2024 results, achieving 21.3 MBoe/d production, $51.6 million in operating cash flow, and $38.3 million in Free Cash Flow Q2 2024 Key Financial and Operational Highlights | Metric | Value | | :----- | :---- | | Total Equivalent Production | 21.3 MBoe/d | | Oil Production | 14.7 MBbls/d | | Operating Cash Flow | $51.6 million | | Operating Cash Flow (before WC changes) | $57.6 million | | Accrual Capital Expenditures (before acquisitions) | $21.4 million | | Cash Capital Expenditures (before acquisitions) | $19.3 million | | Free Cash Flow | $38.3 million | | Dividends Paid | $7.5 million ($0.36/share) | | Debt Reduction | $20.0 million | | Net Proceeds from Equity Offering | $25.4 million | | New Mexico Acreage Added | 13,900 net acres | | RPC Power Ownership Increase | 35% to 50% | Management Commentary CEO Bobby D. Riley highlighted the company's successful execution of its annual plan, noting outperformance in 2024 legacy well production, favorable efficiencies, and significant cost savings in drilling and completion activities, which are the largest drivers of free cash flow improvement - Outperformance on 2024 legacy well production results relative to internal forecasts[2] - Experienced favorable efficiencies and cost savings on drilling and completion activity, representing the largest driver of free cash flow improvement[2] - Achieved core objective of smoothing development activity and spend[2] Detailed Financial and Operational Performance Riley Permian reported strong Q2 2024 financial and operational results, driven by increased revenues, robust production, strategic acquisitions, and expanded joint venture investments Second Quarter 2024 Financial and Operational Results For Q2 2024, Riley Permian reported total revenues of $105.4 million, net income of $33.5 million, and diluted EPS of $1.59 Q2 2024 Financial Performance | Metric | Value | | :----- | :---- | | Total Revenues | $105.4 million | | Net Cash Provided by Operating Activities | $51.6 million | | Net Income | $33.5 million | | Diluted EPS | $1.59 | | Adjusted EBITDAX (non-GAAP) | $73.3 million | | Cash Flow from Operations (before WC changes, non-GAAP) | $57.6 million | | Free Cash Flow (non-GAAP) | $38.3 million | | Adjusted Net Income (non-GAAP) | $33.1 million | | Adjusted Diluted EPS (non-GAAP) | $1.57 | Q2 2024 Operational Metrics | Metric | Value | | :----- | :---- | | Average Oil Production | 14.7 MBbls/d | | Average Total Equivalent Production | 21.3 MBoe/d | | Oil Percentage | 69% | | Liquids Percentage | 86% | | Average Realized Oil Price | $79.25 per barrel | | Average Realized Natural Gas Price | $(0.61) per Mcf | | Average Realized NGLs Price | $(0.10) per barrel | | Lease Operating Expense (LOE) | $16.5 million ($8.50 per Boe) | | Cash G&A Expense | $6.6 million ($3.39 per Boe) | | Production & Ad Valorem Taxes | $7.2 million ($3.70 per Boe) | | Total Accrued Capital Expenditures (before acquisitions) | $21.4 million | | Cash Capital Expenditures (before acquisitions) | $19.3 million | - Drilled 2 gross operated horizontal wells, completed 8, and brought online 4[5] - Made an additional capital contribution of $9.5 million to RPC Power LLC, increasing total investment to $21.0 million for 50% ownership[6] - Reduced total debt by $20.0 million ($15.0 million on Credit Facility, $5.0 million on Senior Notes)[6] - Total debt as of June 30, 2024, was $322.7 million (principal balance $335.0 million), with $215.0 million available under Credit Facility, and borrowing base reaffirmed at $375 million[6] - Shareholders' equity was $489.0 million with 21.6 million common shares outstanding[6] - Issued 1,015,000 shares of common stock for net proceeds of approximately $25.4 million[7] Investment Update Riley Permian completed an acquisition in Eddy County, New Mexico, adding 13,900 net acres, and expanded the scope of its RPC Power joint venture to build new power generation and storage assets for ERCOT, targeting commercial operations in 2025 - Acquired oil and natural gas properties in Eddy County, New Mexico for $17.6 million, adding approximately 13,900 total net acres[8] - Expanded RPC Power joint venture to build new power generation and storage assets for ERCOT, with facilities targeted for commercial operations throughout 2025[8] Select Financial and Production Data The company's Q2 2024 net oil and natural gas sales reached $105.3 million, contributing to a six-month total of $204.8 million, a significant increase from the prior year Select Financial Data (in thousands) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Oil and natural gas sales, net | $105,343 | $99,424 | $99,312 | $204,767 | $165,724 | | Income from Operations | $53,612 | $50,567 | $45,010 | $104,179 | $81,044 | | Adjusted EBITDAX (1) | $73,264 | $70,146 | $66,265 | $143,410 | $109,773 | | Cash Flow from Operations | $51,641 | $56,125 | $55,915 | $107,766 | $88,720 | | Free Cash Flow (1) | $38,263 | $23,308 | $3,270 | $61,571 | $5,619 | Production Data, net | Metric | Q2 2024 | Q1 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :----------------------- | :------ | :------ | :------ | :------- | :------- | | Oil (MBbls) | 1,342 | 1,289 | 1,370 | 2,631 | 2,263 | | Natural gas (MMcf) | 1,608 | 1,631 | 1,677 | 3,239 | 2,626 | | NGLs (MBbls) | 330 | 293 | 283 | 623 | 417 | | Total (MBoe) | 1,940 | 1,854 | 1,933 | 3,794 | 3,118 | | Daily combined volumes (Boe/d) | 21,319 | 20,374 | 21,236 | 20,846 | 17,225 | | Daily oil volumes (Bbls/d) | 14,747 | 14,165 | 15,055 | 14,456 | 12,503 | Average Realized Prices | Metric | Q2 2024 | Q1 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :------------------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Oil ($ per Bbl) | $79.25 | $75.25 | $71.41 | $77.29 | $71.94 | | Natural gas ($ per Mcf) | $(0.61) | $0.42 | $0.02 | $(0.09) | $0.21 | | NGLs ($ per Bbl) | $(0.10) | $5.97 | $5.10 | $2.75 | $5.65 | | Oil ($ per Bbl) (incl. derivatives) | $76.96 | $74.33 | $69.46 | $75.68 | $68.51 | | Natural gas ($ per Mcf) (incl. derivatives) | $0.16 | $1.20 | $0.24 | $0.69 | $0.35 | Weighted Average Common Shares Outstanding (in thousands) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :----- | :------ | :------ | :------ | :------- | :------- | | Basic | 20,866 | 19,891 | 19,671 | 20,378 | 19,660 | | Diluted | 21,087 | 19,992 | 19,985 | 20,539 | 19,951 | 2024 Outlook and Guidance Riley Permian provided comprehensive Q3 and full-year 2024 guidance, outlining planned well activity, production targets, capital expenditures, and key operating and corporate cost projections Activity, Production, and Investing Guidance Riley Permian provided detailed guidance for Q3 and reiterated full-year 2024 activity, production, and investing expenditures Activity, Production, and Investing Guidance | Metric | Q3 2024 | Full-Year 2024 | | :------------------------------------------ | :---------- | :------------- | | Gross Operated Well Activity | | | | Drilled | 10 - 12 | 24 - 26 | | Completed | 1 - 3 | 18 - 20 | | Turned to Sales | 4 - 7 | 20 - 22 | | Net Production | | | | Total (MBoe/d) | 21.0 - 23.0 | 21.0 - 22.5 | | Oil (MBbls/d) | 14.8 - 15.3 | 14.5 - 15.2 | | Investing Expenditures (Accrual, in millions) | | | | Drilling and Completions and Capital Workovers | $20 - 25 | $79 - 84 | | Infrastructure and Other | 7 - 9 | 21 - 26 | | Total E&P Capex | $27 - 34 | $100 - 110 | | Joint Venture Investment | $4 - 5 | $21 - 22 | | Total Investments | $31 - 39 | $121 - 132 | Cost Guidance The company provided cost guidance for Q3 2024, projecting lease operating expense between $8.50-$9.50 per Boe and cash G&A between $3.00-$3.50 per Boe Operating and Corporate Costs Guidance | Metric | Q3 2024 | Full-Year 2024 | | :---------------------------------------------------- | :---------- | :------------- | | Lease operating expense, including workover expense ($ per Boe) | $8.50 - 9.50 | N/A | | Production tax (% of revenue) | 6% - 8% | N/A | | Cash G&A ($ per Boe) (2) | $3.00 - 3.50 | N/A | | Interest expense ($ in millions) (3) | $8.5 - 9.5 | N/A | | Income Tax Cash Payment ($ in millions) (4) | $5 - 7 | $22 - 25 | Consolidated Financial Statements The consolidated financial statements for Q2 2024 show a strengthened balance sheet with increased assets and equity, improved operational profitability, and positive cash flow generation Condensed Consolidated Balance Sheets As of June 30, 2024, total assets increased to $1,002.9 million from $945.7 million at year-end 2023, driven by an increase in oil and natural gas properties and equity method investment Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2024 | December 31, 2023 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Total Assets | $1,002,957 | $945,711 | +$57,246 | | Oil and natural gas properties, net | $889,270 | $846,901 | +$42,369 | | Equity method investment | $20,757 | $5,620 | +$15,137 | | Total Liabilities | $513,925 | $524,116 | -$10,191 | | Long-term debt | $302,720 | $335,959 | -$33,239 | | Total Shareholders' Equity | $489,032 | $421,595 | +$67,437 | Condensed Consolidated Statements of Operations For Q2 2024, total revenues were $105.4 million, up from $99.9 million in Q2 2023, with income from operations increasing to $53.6 million from $45.0 million year-over-year Condensed Consolidated Statements of Operations (in thousands) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Total Revenues | $105,403 | $99,912 | $205,147 | $166,924 | | Total Costs and Expenses | $51,791 | $54,902 | $100,968 | $85,880 | | Income from Operations | $53,612 | $45,010 | $104,179 | $81,044 | | Total Other Income (Expense) | $(9,408) | $(1,500) | $(35,385) | $3,007 | | Net Income | $33,548 | $33,068 | $52,306 | $64,919 | | Diluted Net Income per Share | $1.59 | $1.65 | $2.55 | $3.25 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $51.6 million in Q2 2024, with investing activities using $45.0 million and financing activities using $2.2 million Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net Cash Provided by Operating Activities | $51,641 | $55,915 | $107,766 | $88,720 | | Net Cash Used in Investing Activities | $(45,048) | $(347,521) | $(87,656) | $(417,403) | | Net Cash (Used in) Provided by Financing Activities | $(2,247) | $296,072 | $(24,519) | $322,123 | | Net Increase (Decrease) in Cash and Cash Equivalents | $4,346 | $4,466 | $(4,409) | $(6,560) | | Cash, End of Period | $10,910 | $6,741 | $10,910 | $6,741 | Derivative Instruments Riley Permian actively manages commodity price and interest rate exposures through various derivative contracts, including fixed price swaps, collars, and interest rate swaps Commodity Derivative Contracts Riley Permian utilizes fixed price swaps, costless collars, and basis swaps to manage exposure to oil and natural gas price volatility Open Commodity Derivative Contracts as of August 2, 2024 | Contract Type | Period | Notional Volume | Weighted Average Fixed Price / Put Price | Call Price | | :------------ | :----- | :-------------- | :--------------------------------------- | :--------- | | Oil Swaps (Bbl) | | | | | | | Q3 2024 | 455,000 | $74.91 | N/A | | | Q4 2024 | 435,000 | $74.90 | N/A | | | 2025 | 645,000 | $73.63 | N/A | | Natural Gas Swaps (Mcf) | | | | | | | Q3 2024 | 600,000 | $3.21 | N/A | | | Q4 2024 | 450,000 | $3.67 | N/A | | | 2025 | 1,470,000 | $3.71 | N/A | | | 2026 | 555,000 | $4.02 | N/A | | Oil Collars (Bbl) | | | | | | | Q3 2024 | 366,000 | $61.00 | $83.61 | | | Q4 2024 | 390,000 | $61.92 | $83.39 | | | 2025 | 1,635,000 | $63.41 | $76.42 | | | 2026 | 356,000 | $60.53 | $80.29 | | Natural Gas Collars (MMBtu) | | | | | | | Q3 2024 | 405,000 | $3.01 | $3.68 | | | Q4 2024 | 405,000 | $3.50 | $4.45 | | | 2025 | 1,395,000 | $3.29 | $4.30 | | Oil Basis (Bbl) | | | | | | | Q3 2024 | 330,000 | $0.97 | N/A | | | Q4 2024 | 330,000 | $0.97 | N/A | Interest Rate Derivative Contracts The company uses floating-to-fixed interest rate swaps to manage exposure on its Credit Facility - Entered into floating-to-fixed interest rate swaps to manage future interest rate exposure related to the Credit Facility[22] - A fixed-to-floating interest rate swap entered in March 2024 for May-December 2024 resulted in an approximate $1 million gain on a notional amount of $80 million[22] Open Interest Rate Derivative Positions as of June 30, 2024 | Open Coverage Period | Position | Notional Amount (In thousands) | Fixed Rate | | :------------------- | :------- | :----------------------------- | :--------- | | July 2024 - April 2026 | Long | $30,000 | 3.180 % | | July 2024 - April 2026 | Long | $50,000 | 3.039 % | | July 2024 - December 2024 | Short | $80,000 | 4.910 % | Corporate Information and Legal Disclosures Riley Permian announced a Q2 results conference call and provided an overview of its Permian Basin operations, accompanied by comprehensive cautionary statements regarding forward-looking information and associated risks Conference Call and Company Overview Riley Permian will host a conference call on August 8, 2024, to discuss Q2 results, with details provided for participation and replay - Conference call for investors and analysts scheduled for August 8, 2024, at 9:00 a.m. CT to discuss Q2 results and host a Q&A session[13] - Riley Permian is a growth-oriented, independent oil and natural gas company focused on acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids[13] Cautionary Statements The report includes cautionary statements regarding forward-looking information and guidance, emphasizing that such statements are based on management's beliefs and assumptions and are subject to significant risks, uncertainties, and material revision - Forward-looking statements are based on management's beliefs and assumptions and are subject to risks, uncertainties, and assumptions, including commodity price volatility, operational risks, and regulatory changes[14] - Guidance estimates are inherently uncertain and subject to significant business, economic, operational, and regulatory risks, and are subject to material revision[15] - Key risk factors include volatility of oil, natural gas, and NGL prices; regional supply and demand; production delays or interruptions; cost and availability of midstream activities; severe weather; ability to complete M&A; integration failures; project delays; failure to realize JV benefits; EOR/CCUS project performance; operational risks; borrowing base reductions; derivative strategy impact; financial covenant compliance; economic conditions; capital market access; tax deduction loss; business strategy risks; concentration of operations; legislative/regulatory changes; permit acquisition; water use restrictions; environmental policies; drilling equipment availability; tax consequences; public health crises; geopolitical conflicts; litigation; and cybersecurity threats[14]