Business Context and Reporting Period
Company: Riley Exploration Permian, Inc. (REPX)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: REPX is a growth-oriented independent oil and natural gas company focused on horizontal drilling in the Permian Basin, primarily in Yoakum County, Texas (Champions field) and Eddy County, New Mexico (Red Lake field). The company operates 96% of its production and holds 97,538 net acres with 873 net producing wells as of year-end.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net Income | $160.8 million | $88.9 million | +81% |
| Diluted EPS | $7.59 | $4.26 | +78% |
| Oil & Gas Sales (Net) | $392.0 million | $409.8 million | -4% |
| Operating Cash Flow | $212.5 million | $246.3 million | -14% |
| Capital Expenditures | $120.2 million | $108.3 million | +11% |
| Debt Outstanding | $247.9 million | $269.5 million | -8% |
| Available Borrowing Capacity | $290.0 million | $285.0 million | +2% |
| Dividends Paid | $33.3 million | $30.8 million | +8% |
Production Data (2025): Average net production was 29,205 Boe/d (up 30% from 2024). Production mix was approximately 60% oil, 18% natural gas, and 22% NGLs.
Reserves: Total proved reserves increased to 147.4 MMBoe (from 123.6 MMBoe in 2024), driven by extensions, discoveries, and the Silverback Acquisition.
Material Changes vs. Prior Period
- Acquisitions: Completed the acquisition of Silverback Exploration II, LLC in July 2025 for approximately $123 million, adding ~40,000 net acres in Eddy County, New Mexico.
- Divestitures:
- Midstream Sale: Sold Dovetail Midstream, LLC and compressor assets to Targa for ~$121 million total cash, recognizing a pre-tax gain of $71.7 million.
- Viking Sale: Sold non-core Texas assets to Combo Resources in exchange for 250,000 shares of REPX common stock (subsequently retired).
- Revenue Drivers: Net oil and gas sales decreased 4% primarily due to lower realized oil prices ($62.95/Bbl vs. $74.10/Bbl in 2024), partially offset by a 30% increase in production volumes.
- Expense Changes: Lease operating expenses increased $16.0 million due to higher production volumes. Depletion, depreciation, and amortization (DD&A) increased $18.3 million due to higher production and the Silverback acquisition.
- Impairments: Recognized $1.2 million in impairment on proved properties and $1.6 million on other assets (EOR project equipment), compared to $41.5 million in total impairments in 2024 (which included a $30.2 million write-off of the EOR project).
Guidance, Outlook, and Risks
Management Commentary: The company focuses on enhancing returns on invested capital, generating sustainable free cash flow, and maintaining a flexible balance sheet. The Midstream Sale provided significant liquidity and a long-term gas purchase agreement with Targa (15-year term) for New Mexico production.
Capital Allocation:
- Dividends: Declared quarterly dividends totaling $33.6 million in 2025.
- Share Repurchases: Approved a $100 million stock repurchase program in December 2025; no shares purchased under this program in Q4 2025, though 250,000 shares were retired via the Viking Sale.
Key Risks and Contingencies:
- Commodity Price Volatility: Significant exposure to fluctuations in oil and natural gas prices; realized prices for natural gas and NGLs were negative in 2025 due to high gathering, processing, and transportation (GP&T) costs.
- Regulatory Environment: Risks related to produced water disposal restrictions in the Permian Basin due to seismic activity, potential increases in bonding requirements, and evolving GHG emission regulations.
- Customer Concentration: One purchaser accounted for 60% of revenue in 2025; future concentration is expected to increase as substantially all natural gas and NGLs will be sold to Targa under the new agreement.
- Debt Covenants: Subject to leverage and liquidity covenants under the Credit Facility and Senior Notes that may restrict dividends or buybacks if not met.
Investor Verification Checklist
- Midstream Sale Proceeds: Verify the final purchase price adjustments and the timing of the $60 million contingent earnout payments from Targa.
- GP&T Cost Structure: Analyze the sustainability of negative realized prices for natural gas and NGLs and the impact of the new Targa gas purchase agreement on future margins.
- Debt Capacity: Confirm the $400 million borrowing base redetermination status and the impact of the Senior Notes quarterly principal payments ($5 million/quarter) on liquidity.
- Reserve Revisions: Review the 23.0 MMBoe of proved undeveloped reserves (PUDs) added via extensions and discoveries to ensure they align with the 5-year development plan required by SEC rules.
- Regulatory Compliance: Monitor the status of New Mexico's proposed bonding rule changes and their potential impact on capital requirements for inactive or low-producing wells.