Riley Exploration Permian Inc. Reports Strong Earnings Call

Riley Exploration Permian Inc ((REPX)) has held its Q4 earnings call. Read on for the main highlights of the call.

Riley Exploration Permian Inc. recently held its earnings call, showcasing a positive sentiment driven by notable achievements in production growth, cost reduction, and strategic investments. Despite some challenges, such as production mix shifts and potential project delays, the overall outlook remains optimistic.

Exceeding Production and Expense Reduction Targets

Riley Exploration Permian Inc. reported a remarkable 15% growth in oil production and a 22% increase in total production, significantly surpassing their initial targets. Additionally, the company achieved a 27% reduction in upstream cash capital expenditures, exceeding their goal of a 10% reduction. This performance highlights the company’s efficiency and ability to optimize operations.

Strategic New Mexico Midstream Project

The company is investing in a New Mexico midstream project, which includes a 15-year gas purchase agreement and plans for a high-pressure 20-inch natural gas pipeline. This infrastructure is designed to transport up to 150 million cubic feet per day, enhancing operational control and opening commercial opportunities with third-party producers.

Improved Operational Efficiency

Riley Exploration has made significant strides in operational efficiency, decreasing cost per foot by 11% year-over-year and increasing lateral feet drilled per day by 20%. The company also achieved a total recordable incident rate of zero for 2024, underscoring its commitment to safety and efficiency.

Strong Financial Position

The company has strengthened its financial position by reducing debt by $90 million year-over-year, achieving a one-times leverage at year-end. Notably, 38% of upstream free cash flow was allocated to debt reduction, reflecting a disciplined approach to financial management.

Power Joint Venture Progress

Riley Exploration is expanding its power project scope to include new power generation for sale into ERCOT. The company has increased self-generated power usage by 20% from the end of 2024, demonstrating progress in its joint venture initiatives.

Production Mix Shift

The company’s increased gas processing in Texas has resulted in a gassier production mix, with oil production growth lagging behind total production growth. This shift presents both challenges and opportunities for the company’s production strategy.

Potential Delays in Midstream Project

There are potential delays in the completion of the New Mexico midstream project due to right-of-way and regulatory approvals. While this presents a challenge, the company remains focused on overcoming these hurdles to achieve its strategic goals.

Forward-Looking Guidance

Looking ahead, Riley Exploration Permian Inc. anticipates a total production growth of 9% to 14% for 2025. The company plans to focus on capital efficiency and strategic infrastructure investment while maintaining a strong balance sheet to support future development initiatives. This forward-looking guidance underscores the company’s commitment to sustainable growth and operational excellence.

In summary, Riley Exploration Permian Inc.’s earnings call reflects a positive sentiment with significant achievements in production growth and cost reduction. The company’s strategic investments and improved financial positioning provide a strong foundation for future growth, despite some challenges in production mix and project timelines. Investors and stakeholders can remain optimistic about the company’s trajectory and its ability to navigate the evolving energy landscape.