REPX(US:REPX)2025-05-08 15:00Financial Data and Key Metrics Changes - The company generated $54 million of operating cash flow before working capital, converting it to $39 million of upstream free cash flow, with a capital expenditure (CapEx) of only 35% reinvested into upstream while keeping volumes mostly flat [21] - Debt was reduced by $21 million quarter over quarter, resulting in a leverage ratio of 0.9 times [21] - Average daily net production was 15,620 barrels of oil per day and 24,430 barrels of oil equivalent per day for Q1 2025, with a slight decline in net production from 1.46 million to 1.41 million barrels quarter over quarter, but a 19% increase compared to the same quarter last year [11][12] Business Line Data and Key Metrics Changes - The company completed 10 wells in Q1 2025, with five wells flowing back and beginning production in May, while the other five will come online in the second half of 2025 [11] - Operating costs were lowered, with lease operating expenses (LOE) per BOE for Q1 2025 at $8.34, a 2% reduction from Q4 2024 and an 8% reduction from the same quarter last year [12] Market Data and Key Metrics Changes - The company noted a 10% compression in many service costs compared to last year, despite potential tariff impacts [13] - The acquisition of Silverback Exploration is expected to enhance the company's long-term upstream development potential and increase its working interest in existing units [6][8] Company Strategy and Development Direction - The company is prioritizing the acquisition and preservation of high-quality inventory over the conversion of inventory to production, indicating a focus on long-term growth [8] - The strategic acquisition of Silverback Exploration for $142 million in cash is aimed at expanding the company's footprint in New Mexico and enhancing its operational capabilities [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to succeed in the current market environment, citing a strong asset base and disciplined capital allocation philosophy [8] - The company anticipates that favorable market conditions will return for bringing on new production, despite current market volatility [26] Other Important Information - The company achieved a total recordable incident rate of zero for Q1 2025, with 93% safe days, marking a record percentage of safe days in a quarter [9][10] - The company is exploring financing alternatives for midstream projects and may reaccelerate project spending based on market conditions [27] Q&A Session Summary Question: What do you think the motivation for the seller was regarding the Silverback acquisition? - The seller was a large private equity firm that often focuses on larger entities, and the asset may have been too small for them [33] Question: Does the larger contiguous acreage position change the scope of your midstream project? - The acquisition supports the decision to invest in infrastructure, and additional gathering and compression may be needed over time [39] Question: What impact could the Silverback assets have on Riley's borrowing base during redetermination? - The PDP value is estimated to be about half of the purchase price, and the company expects some incremental benefit to the borrowing base [46] Question: Can you discuss how you are thinking about hedging downside risk in the current market environment? - The company views hedging as a risk management tool and has laid in some swaps for 2026 to provide clearer cash flow streams [47] Question: Are there any significant permitting differences between power projects in New Mexico versus Texas? - The permitting process is manageable, with some additional costs for air permits in New Mexico [51]