Riley Exploration Permian, Inc. Reports Fiscal Second Quarter 2021 Financial and Operating Results
OKLAHOMA CITY, May 17, 2021 (Corrected) -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or the "Company"), today reported financial and operational results for the fiscal second quarter ended March 31, 2021.
Closed reverse merger transaction with Tengasco on February 26, 2021
Increased total equivalent sales volumes to 8.3 MBoe per day for the second quarter 2021, an increase of 11% over the same period in 2020, despite significant reductions in capital expenditures and production outages due to two severe storms
Generated Cash Flow from Operations of $38.1 million for the six months ended March 31, 2021
Reported a Net Loss of $51.9 million for the three months ended March 31, 2021, with Adjusted Net Income of $6.1 million for the same period
Incurred capital expenditures of $17.1 million for the six months ended March 31, 2021, which corresponds to 43% of EBITDAX1, representing a significant decrease of 49% compared to the same period for 2020
Generated Free Cash Flow1 of $20.6 million for the six months ended March 31, 2021
Paid cash common dividends of $3.8 million during the three months ended March 31, 2021; announced latest dividend of $0.28 per share with a record date of April 16, 2021, which was paid May 7, 2021, for a total of $5.0 million
Exited the second quarter with $10.1 million in cash and $97.5 million drawn on the credit facility
Decreased flaring by 35% quarter-over-quarter
Production, cash flow, capital investing and leverage trends all performing in line with previously released guidance and the Company’s capital allocation framework
Began operations on enhanced oil recovery (“EOR”) project, which will utilize a combination of water and C02 injection, including the goal of using anthropogenic CO2 (“ACO2")
Bobby Riley, Chief Executive Officer of Riley Permian, stated, “We’re excited to have closed our reverse merger transaction and welcome the positive reception by markets thus far. Riley Permian performed strongly during our fiscal second quarter of 2021, during which we overcame the extreme operating challenges presented by Winter Storm Uri, and we continued to create value for our shareholders.
“Halfway through our fiscal year, which ends on September 30, 2021, we remain firmly adhered to our capital allocation framework, including reinvesting less than 70% of EBITDAX1 in capital expenditures, as evidenced by our year-to-date allocation of only 43% of EBITDAX1. Combined with our robust operating performance, this capital discipline allowed us to generate over $38 million of Cash Flow from Operations and $20 million of Free Cash Flow1 during our fiscal year-to-date.”
“Further, we were pleased to declare the dividend of $0.28 per share, which was paid on May 7th. The payment of a regular quarterly dividend has long been a priority for Riley Permian, dating back to its predecessor entity as a private company. Going forward, one of Riley Permian’s core priorities is to continue to pay – and grow – a regular quarterly dividend, consistent with our shareholder-focused business model.”
1 Non-GAAP financial measure, which is defined and referenced below.
“Finally, we have formally begun operations on our EOR pilot after several years of extensive technical studies internally and with world-class partners. Our core asset in Yoakum County, TX, is an ideal candidate for EOR for both geologic and geographic reasons, and is directly adjacent to several of the largest and most successful EOR projects in the U.S. We forecast benefits of increased recoveries and further flattening of decline curves, leading to steadier cash flows, which fits our shareholder-focused business model. Riley aims to use anthropogenic sources of CO2 (ACO2), in accord with international calls for reducing emissions and CO2, and which fits our goal of producing low-carbon barrels.”
Second-quarter oil production averaged 6.0 MBbls per day and equivalent production averaged 8.3 MBoe per day, in line with our budgeted guidance previously disclosed. Sales of natural gas and natural gas liquids (NGLs) increased by 30% and 39%, respectively, compared to the quarter ended December 31, 2020 on account of increased processing capacity coming online in early February. Company management estimates that severe weather, including Winter Storm Uri and an additional powerful windstorm, effectively reduced production by approximately 3 percent.
During the fiscal second quarter of 2021, Riley Permian commenced a 7 gross (7 net) well drilling and completion (“D&C”) program and invested $9.1 million in D&C capital expenditures, which resulted in the drilling of 5 gross (4.5 net) wells and the completion of 2 gross (1.5 net) wells.
The Company’s drilling times (spud to reaching total depth) have continued to improve, with the results for wells drilled to date during this fiscal year averaging 5 days for a 1-mile lateral, and 6.5 days for a 1.5-mile lateral.
Cash Flow from Operations for the fiscal year-to-date 2021 was $38.1 million, which funded all capital expenditures, leading to Free Cash Flow2 of $20.6 million for the same period.
The Company reported a Net Loss of $51.9 million for the second quarter of 2021, including $7.0 million of Operating Income. The Company calculates Adjusted Net Income2 of $6.1 million, adjusted to exclude certain items, including the loss from discontinued operations, unrealized losses from derivative mark-to-market values, non-recurring transaction costs and a deferred tax expense related to the change in tax status.
During its fiscal second quarter of 2021 Riley Permian generated $21.0 million in EBITDAX2 and $23.2 million in Adjusted EBITDAX2, adjusted to exclude transaction and restructuring costs.
For the fiscal second quarter 2021 average unhedged realized prices were $56.71 per barrel of oil, $7.51 per Mcf of natural gas and $13.16 per barrel of natural gas liquids, resulting in a total equivalent unhedged price of $49.12 per Boe.
Riley Permian's cash operating costs for the fiscal second quarter of 2021 were $14.60 per Boe, including lease operating expense (“LOE”) of $9.07 per Boe (including a non-recurring expense of approximately $1.34 per Boe related to a downhole failure on a salt-water disposal well), cash G&A expenses (excluding stock-based and unit-based compensation expense shown after the effect of gross profit from contract services derived from management services agreements) of $2.93 per Boe, and production taxes of $2.60 per Boe.
2 Non-GAAP financial measure, which is defined and referenced below.
The Company continued to maintain a strong balance sheet, exiting the second quarter with $10.1 million in cash and $97.5 million drawn on its revolving credit facility.
EOR PILOT AND CCUS INVESTIGATION
Riley Permian has begun operations on its EOR pilot program, which will start with a 960-acre unit in Yoakum County, TX, applying water and C02 through vertical injection wells adjacent to horizontal producing wells. The Company began drilling the first vertical injection well beginning in May 2021 with approximately $1.5MM of associated capital estimated to be incurred during fiscal 2021.
In preparation for the pilot program, Riley Permian spent several years collecting extensive cores, logs and 3-D seismic data over the Platang Field, which the Company calls its Champions asset, to evaluate resource potential, including with the assistance of world-class advisors such as Baker Hughes, William M. Cobb and Associates, and others. From analysis of this data, Riley Permian management believes that in addition to significant recovery from primary production, EOR methods, particularly waterflooding (secondary recovery) and CO2 injection (tertiary recovery), which have been highly successful in the adjacent Wasson Field San Andres formation, will further increase recoveries in the Champions area. The Company’s Champion assets possess similar reservoir rock properties to Wasson and average oil saturations are quite favorable for both waterflooding and CO2 injection. Further, the most concentrated area of CO2 infrastructure in the U.S. is directly adjacent to Riley Permian’s Champions asset, including the CO2 pipeline hub at Denver City, TX.
Historically, EOR operations were most often applied to older, legacy oil fields past peak production and development stage. However, Riley Permian management believes the Champions asset is an excellent candidate for EOR methods – even as a more undeveloped asset – as we recognize the efficiencies gained by early application of waterflooding and CO2 injection. Beginning such applications early, concurrently with primary depletion and while the reservoir still has substantial pressure, can lead to more efficient oil displacement, operating synergies and higher ultimate recoveries. The historical sequencing of primary production, followed by traditional waterflooding, and subsequently by CO2 injection, can lead to an extremely long life cycle, whereas implementing these processes concurrently allows for an acceleration of the full value capture of the field in a notably shorter time frame.
Finally, Riley Permian aims to use anthropogenic sources of CO2 (ACO2) and is currently investigating multiple potential sources of ACO2 with leading industry players. The capture and use of ACO2 is part of a process known as Carbon, Capture, Utilization and Sequestration (CCUS), in which Riley Permian may participate as an offtake partner only or as an operating and financial partner. The Company’s EOR pilot, which we forecast to ultimately consist of 5 horizontal producers and up to 48 vertical injection wells, could ultimately consume approximately 80 MMcf per day of CO2, or 1.5 million metric tons of CO2 annually.
2021 OUTLOOK AND GUIDANCE
Based on current market conditions, the Company expects fiscal 2021 capital expenditures to total approximately $54 million to $56 million, which we believe will be consistent with our capital allocation framework of reinvesting approximately 65-70% of EBITDAX3, and which we believe will be funded entirely by Cash Flow from Operations.
3 Non-GAAP financial measure, which is defined and referenced below.
The Company forecasts full-year fiscal 2021 oil production to average 6.3 MBbls per day to 6.5 MBbls per day, with total equivalent production to average 8.3 MBoe per day to 8.7 MBoe per day, representing year-over-year growth of approximately 17% to 23%.
The Company forecasts third fiscal quarter of 2021 cash operating costs to include LOE of approximately $6.50 to $7.50 per Boe; cash G&A expenses (after offset from our contract services – related parties revenue) of approximately $2.80 to $3.30 per Boe, and production taxes of approximately $2.20 to $2.50 per Boe.
Riley Permian management will host a conference call for investors and analysts on Wednesday, May 12, 2021 at 9:00 a.m. CT to discuss the Company's results. Interested parties are invited to participate by calling:
U.S./Canada Toll Free, 844-965-3268
International, +1 639-491-2298
Conference ID number 3883784
An updated company presentation, which will include certain items to be discussed on the call, will be posted prior to the call on the Company's website .
A replay of the call will be available until May 26, 2021 by calling:
U.S./Canada Toll Free, 800-585-8367
International, +1 416-621-4642
Conference ID number 3883784
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements within the meaning of federal securities laws. All statements, other than historical facts, that address activities that the Company assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events, including the current adverse industry and macroeconomic conditions, commodity price volatility, production levels, the impact of the recent presidential and congressional elections on energy and environmental policies and regulations, any other potential regulatory actions (including those that may impose production limits in the Permian Basin), the impact and duration of the ongoing COVID-19 pandemic, acquisitions and sales of assets, future dividends, production, drilling and capital expenditure plans, need for financing, competitive position, growth potential, severe weather conditions (including the impact of the recent severe winter storms on production volumes), impact of impairment charges and effects of hedging arrangements. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of the Company.
These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, the risk that the Company may reduce, suspend or totally eliminate dividend payments in the future, whether variable or fixed, due to insufficient liquidity or other factors, potential adverse reactions or changes to the business or operations of the Company resulting from the recently completed merger, including the Company’s future financial condition, results of operations, strategy and plans; changes in capital markets and the ability of the Company to finance operations in the manner expected; the risk that the Company’s EOR and CCUS projects may not perform as expected or produce the anticipated benefits; the risks of oil and gas activities; and the fact that operating costs and business disruption may be greater than expected following the consummation of the merger.
Additional factors that could cause results to differ materially from those described above can be found in Riley Permian’s Annual Report on Form 10-K for the year ended December 31, 2020 and in its subsequently filed Quarterly Reports on Form 10-Q, as well as in the Registration Statement on Form S-4 filed by the Company with the SEC and declared effective by the SEC on February 2, 2021, each of which is on file with the SEC and available from the Company’s website at www.rileypermian.com under the “Investor” tab, and in other documents the Company files with the SEC.
The forward-looking statements in this press release are made as of the date hereof and are based on information available at that time. The Company does not undertake, and expressly disclaims, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.
Source: Riley Exploration Permian, Inc.
OKLAHOMA CITY, June 29, 2021 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or the "Company") announced today that it has commenced an underwritten public offering of shares of its common stock (the "Offering"). The Company intends to grant the underwriters a 30-day option to purchase up to an additional 15% of the shares of common stock sold in the Offering. The Offering is subject to market and other conditions, and there can be no assurance as to whether or when the Offering may be completed, or as to the actual size or terms of the Offering.
The Company intends to use approximately $25 million of the net proceeds from the Offering to accelerate its enhanced oil recovery ("EOR") pilot program, including funding capital expenditures related to drilling, completions and infrastructure. The EOR pilot program encompasses a 960-acre project area in Yoakum County, Texas, and will apply water and CO2 through vertical injection wells adjacent to horizontal producing wells, with the goal of using anthropogenic CO2 ("ACO2"). The Company intends to use the remaining net proceeds from the Offering for general corporate purposes, including, but not limited to, financing of capital expenditures, financing acquisitions or investments, repaying or refinancing of outstanding debt, financing other business opportunities, and working capital purposes.
Truist Securities is acting as sole book-running manager for the Offering.
The Offering will be made only by means of a prospectus supplement and the accompanying base prospectus filed as part of an effective shelf registration statement filed with the Securities and Exchange Commission ("SEC") on Form S-3. Copies of the preliminary prospectus supplement and accompanying base prospectus relating to the Offering, as well as copies of the final prospectus supplement, once available, may be obtained on the SEC's website at www.sec.gov or by contacting Truist Securities, Inc., Attention: Prospectus Department, 3333 Peachtree Road NE, 9th floor, Atlanta, Georgia 30326, [email protected]
This press release does not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Riley Exploration Permian, Inc.
Riley Permian is an independent oil and natural gas company focused on steadily growing its reserves, production and cash flow per share through the acquisition, exploration, development and production of oil, natural gas, and natural gas liquids in the Permian Basin. For more information please visit www.rileypermian.com.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts included in this press release, are forward-looking statements, including, but not limited to, statements regarding the Company's plans to issue the common stock and the anticipated use of the net proceeds from the Offering. When used in this press release, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "continue," "anticipate," "target," "could," "plan," "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future production and sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.
Additional factors that could cause results to differ materially from those described above can be found in the preliminary prospectus supplement and prospectus supplement and base prospectus related to the Offering, Riley Permian's Annual Report on Form 10-K for the year ended December 31, 2020 and in its subsequently filed Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021, each of which is on file with the SEC and available from the Company's website at www.rileypermian.com under the "Investor" tab.
The Company has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. You are urged not to place undue reliance on these forward–looking statements, which speak only as of the date they are made. The forward-looking statements in this press release are made as of the date hereof and are based on information available at that time. Except as may be required by applicable law or regulation, the Company does not undertake, and expressly disclaims, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.
Executive Vice President, Strategy
Source: Riley Exploration Permian, Inc.
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SOURCE Riley Exploration Permian, Inc.
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