REPX(US:REPX)2021-12-14 21:16Part I Business and Properties Riley Exploration Permian, Inc. is an independent oil and gas company focused on Permian Basin development, aiming to grow cash flow and return capital to stockholders - The company is a growth-oriented, independent oil and natural gas company primarily focused on the horizontal development of the San Andres formation in the Permian Basin30 - In February 2021, the company consummated a reverse merger with Tengasco, Inc., and subsequently changed its name to Riley Exploration Permian, Inc.2431 - A key strategic initiative in 2021 was the commencement of an Enhanced Oil Recovery (EOR) project in Yoakum County, Texas, using water and CO2 injection to lower decline rates and increase oil recovery3266 Total Proved Reserves as of September 30 | Reserve Type | Unit | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | | Oil | MBbls | 46,263 | 37,158 | 37,159 | | Natural Gas | MMcf | 76,019 | 53,683 | 40,991 | | Natural Gas Liquids | MBbls | 13,229 | 10,681 | 10,812 | | Total Proved Reserves | MBoe | 72,163 | 56,787 | 54,803 | Production and Operating Data (Fiscal Year Ended Sep 30) | Metric | Unit | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Production | | | | | Oil | MBbls | 2,340 | 2,060 | | Total Production | MBoe | 3,154 | 2,592 | | Average Daily Production | Boe/d | 8,640 | 7,081 | | Average Prices | | | | | Oil | $/Bbl | $58.29 | $36.35 | | Combined | $/Boe | $47.12 | $28.22 | | Average Operating Costs | | | | | Lease Operating Expenses | $/Boe | $6.97 | $7.81 | - The company has a significant customer concentration, with one purchaser accounting for 87% of revenue in fiscal year 2021 and 86% in 202081 Risk Factors The company faces significant business, operational, regulatory, and financial risks, including commodity price volatility - Business, Operations, and Strategy Risks: The company's financial condition is highly sensitive to volatile oil, natural gas, and NGL prices. Its operations are capital-intensive, and access to financing may be limited. A significant portion of its assets (42% of proved reserves are undeveloped) and operations are concentrated in the Permian Basin, increasing vulnerability to regional issues137141156165 - Legal, Regulatory, and Tax Risks: The company is subject to stringent and evolving environmental regulations, particularly concerning hydraulic fracturing, water disposal (linked to seismic activity), and greenhouse gas emissions, which could increase costs and restrict operations. Changes in tax laws, such as the TCJA, could also adversely impact financial results222234242254 - COVID-19, Acts of God, and Cyber Security Risks: The COVID-19 pandemic has created significant demand and price volatility. Operations are also exposed to extreme weather, power outages, and increasing cybersecurity threats that could disrupt business and lead to financial losses214218220 - Common Stock and Corporate Risks: The market price of the company's common stock (REPX) may be volatile. The board has discretion over dividend policy. A concentration of ownership (80.1% held by executive officers, directors, and principal stockholders) allows for significant influence over corporate matters257268278 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None285 Legal Proceedings The company is a defendant in a lawsuit seeking approximately $14 million for alleged fraudulent transfer - The company is a defendant in a lawsuit initiated by the Trustee for the bankruptcy of Hoactzin Partners, L.P., concerning the alleged fraudulent transfer of Kansas Working Interests287 - The lawsuit seeks to recover approximately $14 million in damages, plus punitive damages and attorney's fees. The company sold all its Kansas assets on April 2, 2021287288 Mine Safety Disclosures This item is not applicable to the company - Not applicable290 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on NYSE American, declared $18.1 million in FY2021 dividends - The company's common stock trades on the NYSE American under the symbol "REPX"292 Dividends Declared | Fiscal Year Ended | Total Dividends Declared ($) | | :--- | :--- | | September 30, 2021 | ~$18.1 million | | September 30, 2020 | ~$15.0 million | - In Q4 2021, the company acquired 16,127 shares from employees at an average price of $23.39 per share to cover tax withholding obligations on vested equity awards298 Selected Financial Data This item is reserved - [Reserved]299 Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2021, Riley Permian's revenue grew to $148.6 million, but a $89.2 million non-cash derivative loss led to a $46.9 million net loss Fiscal Year 2021 vs. 2020 Results of Operations | Metric | Unit | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenues | | | | | Oil and Natural Gas Sales, net | $ thousands | 148,636 | 73,133 | | Production | | | | | Total Production | MBoe | 3,154 | 2,592 | | Daily Combined Volumes | Boe/d | 8,640 | 7,081 | | Average Prices | | | | | Oil | $/Bbl | 58.29 | 36.35 | | Combined | $/Boe | 47.12 | 28.22 | Key Expenses (Fiscal Year Ended Sep 30) | Expense Category | Unit | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Lease Operating Expenses | $ thousands | 21,975 | 20,243 | | Production and Ad Valorem Taxes | $ thousands | 8,636 | 4,280 | | Depletion, Depreciation, etc. | $ thousands | 26,015 | 21,479 | | General & Administrative | $ thousands | 20,759 | 11,789 | | (Gain) Loss on Derivatives, net | $ thousands | (89,195) | 33,876 | - The significant increase in G&A expense in FY2021 was primarily due to a $5.8 million increase in equity compensation expense following the Merger and a $3.1 million increase in administrative costs related to being a public company326 Cash Flow Summary (Fiscal Year Ended Sep 30) | Cash Flow Category | Unit | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $ thousands | 86,073 | 62,550 | | Net Cash used in Investing Activities | $ thousands | (59,628) | (51,521) | | Net Cash used in Financing Activities | $ thousands | (14,937) | (13,095) | - In July 2021, the company completed a common stock offering, receiving net proceeds of $46.7 million, of which $35.5 million was used to pay down its revolving credit facility333 - As of September 30, 2021, the company had a working capital deficit of $46.9 million, primarily due to $42.1 million in current derivative liabilities resulting from higher commodity prices334 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are commodity price volatility, counterparty credit, and interest rates, managed through derivatives - The company's major market risk is the volatile pricing of its oil, natural gas, and NGL production. It uses derivative contracts to hedge a portion of this risk360 - As of September 30, 2021, the company had a net liability derivative position of $51.0 million, a significant shift from a net asset position of $21.9 million at the end of fiscal 2020, reflecting the rise in commodity prices361 - The company has significant customer credit risk, with one purchaser accounting for 87% of revenue in FY2021. This risk is mitigated by the credit quality of the end customers and the fungible nature of oil and gas products365 - Interest rate risk is managed through floating-to-fixed interest rate swaps on its revolving credit facility, which had $60 million outstanding as of September 30, 2021367 Financial Statements and Supplementary Data This section refers to the consolidated financial statements and supplementary data beginning on page F-1 - The information required by this item appears beginning on page F-1 of this report369 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None370 Controls and Procedures Management concluded disclosure controls were effective as of September 30, 2021, and material weaknesses were fully remediated - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021371 - Material weaknesses in internal control over financial reporting, previously identified as of March 31, 2021, were fully remediated as of September 30, 2021374376 - Remediation actions included hiring additional accounting personnel (including a Chief Accounting Officer), engaging third-party consultants, and enhancing financial reporting processes375 Other Information The company reports no other information for this item - None378 Part III Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement381 Executive Compensation Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement382 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement383 Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement384 Principal Accountant Fees and Services Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the registrant's definitive proxy statement385 Part IV Exhibits and Financial Statement Schedules This section lists documents filed as part of the 10-K report, including consolidated financial statements and an index of exhibits - This section contains the index to the Consolidated Financial Statements (beginning on page F-1) and a list of all exhibits filed with the report388389 Form 10-K Summary The company reports no summary for this item - None393