Riley Exploration Permian's Q1 2025 Highlights: Strong Performance Amid Acquisition Strategy

Riley Exploration Permian's Q1 2025 Report

Riley Exploration Permian, Inc. (NYSE American: REPX), a key player in the energy sector, has released its financial results for the first quarter of 2025. The report reflects a period of strong operational performance, reinforced by strategic acquisitions and prudent financial management.

Production and Financial Highlights

During the first quarter, Riley Permian averaged an impressive 24.4 MBoe/d in total equivalent production, comprising 15.6 MBbls/d of oil. This performance generated $50 million in operating cash flow and $36 million in total free cash flow. These metrics demonstrate the company’s ability to convert production effectively into financial results, providing a solid foundation for future growth.

Moreover, the first-quarter financial figures reveal a reduction in total debt by $21 million, leading to a debt-to-Adjusted EBITDAX ratio of only 0.9x, a commendable figure that indicates robust financial health. The company also reaffirmed its borrowing base of $400 million within its senior secured revolving credit facility, ensuring ample liquidity moving forward.

Strategic Acquisition of Silverback Exploration

Riley Permian announced its intention to acquire Silverback Exploration for $142 million, acquiring valuable assets, including 5 MBoe/d of additional production and upwards of 300 undeveloped locations. This acquisition aligns with their long-term strategy to bolster production capacity and enhance operational capabilities, particularly in New Mexico’s oil-rich regions. CEO Bobby D. Riley expressed confidence in the acquisition, viewing it as a strategic opportunity to create significant long-term value while navigating current market challenges.

Investment and Development Plans

In light of the changing macroeconomic landscape, Riley Permian adjusted its 2025 investment guidance. The company plans to reduce its investment midpoint guidance by 50%, focusing on key acquisitions instead of aggressive production expansion. This prudent approach reflects the company's adaptability and forward-thinking strategy in uncertain market conditions.

Management is prioritizing the acquisition and preservation of high-quality inventory while carefully managing production conversion processes. This strategic focus aims to maintain stable production profiles while navigating the challenging macroeconomic landscape.

Midstream Infrastructure Advances

Riley Permian is also advancing its midstream infrastructure development in New Mexico, planning for a 20-inch natural gas pipeline with the capacity to handle 150 MMcf/d. Initial phases of this project are underway, with the completion of gathering lines and a compression station, positioning the company to leverage natural gas production effectively.

Additionally, their joint venture, RPC Power LLC, is set to play a critical role in meeting electricity needs at their Champions field in Texas, underscoring a holistic approach to operations that aligns power generation with oil and gas production.

Summary and Future Outlook

Riley Exploration Permian's commitment to capital efficiency and strategic acquisitions highlights its potential for sustained growth amidst volatility. While the company has made prudent adjustments to its guidance, the acquisition of Silverback Exploration offers promising avenues for future production and operational synergies, paving the way for long-term value creation.

As market conditions continue to evolve, Riley Permian is strategically positioned to maintain competitiveness through disciplined financial management and careful capital allocation, ensuring stability and growth potential in the ever-changing energy landscape.