OKLAHOMA CITY, March 8, 2023 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or the "Company"), today reported financial and operating results for the fourth quarter and year ended December 31, 2022 .
FOURTH QUARTER 2022 HIGHLIGHTS
- Averaged oil production of 10.0 MBbls/d, exceeding the high end of guidance and representing an increase of 37% as compared year-over-year to the fourth quarter 2021
- Reported net income of $27 million, or $1.37 per share, which includes $7 million of non-cash gain on derivative contracts and income from operations of $41 million
- Generated $46 million of Adjusted EBITDAX(1) and $40 million of operating cash flow, representing a decrease of 10% and 28%, respectively, over the prior quarter, driven primarily by lower commodity pricing
- Incurred total accrual (activity-based) capital expenditures before acquisitions of $27 million and total cash capital expenditures before acquisitions of $30 million
- Paid dividends of $0.34 per share in the fourth quarter for a total of $7 million
FULL YEAR 2022 HIGHLIGHTS
- Increased net oil production by 31% year-over-year to 8.8 MBbls/d and total net equivalent production by 25% year-over-year to 11.5 MBoe/d
- Reported net income of $118 million, or $6.04 per share, with income from operations of $204 million
- Generated $176 million of Adjusted EBITDAX(1), $170 million of operating cash flow from continuing operations and $56 million of Free Cash Flow(1)
- Invested total cash capital expenditures before acquisitions of $113 million, corresponding to a reinvestment rate of 66% of operating cash flow from continuing operations, down from 88% in 2021
- Paid $25 million in dividends on common shares, corresponding to 44% of Free Cash Flow(1)
- Reported total proved developed reserves of 47 MMBoe and total proved reserves of 72 MMBoe based on NYMEX pricing
- Completed change in fiscal year end to December 31st from September 30th during the calendar third quarter 2022
In February 2023, Riley Permian entered into a definitive purchase agreement to acquire oil and natural gas assets from Pecos Oil & Gas, LLC, an investment of Cibolo Energy Partners LLC, for cash consideration of $330 million, subject to customary closing adjustments, (the "New Mexico Acquisition"). The acquisition will be funded through a combination of borrowings under the Company's revolving credit facility and the issuance of new unsecured senior notes. The oil and natural gas assets are located in Eddy County, New Mexico and primarily target the Yeso trend.
(1) | A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com. | ||||
2023 GUIDANCE HIGHLIGHTS
Riley Permian is providing 2023 guidance including pro forma combined guidance for the pending New Mexico Acquisition based on an expected close date early in the second quarter of 2023
- Full year 2023(1) guidance for oil production of 12.8 - 13.4 MBbls/d (18.4 - 19.2 MBoe/d)
- Full year 2023(1) guidance for activity-based investing expenditures before acquisitions of $160 - $180 million
- First quarter 2023 guidance for oil production of 9.8 - 10.2 MBbls/d (13.2 - 13.8 MBoe/d)
- First quarter 2023 guidance for activity-based investing expenditures before acquisitions of $47 - $54 million
"2022 was another record year for Riley Permian, with our out-performance continuing through the fourth quarter," said Riley Permian Chairman and CEO, Bobby Riley . "We continue to deliver record production levels while working to minimize the impact of inflationary and supply chain pressures on costs, which is reflected in our financial results. Our team has worked tirelessly to optimize our core business as well as to execute on a variety of exciting new ventures. Most significantly, we entered into a purchase agreement to acquire oil and gas assets in the Yeso trend in New Mexico . The New Mexico Acquisition provides us with a combination of material current production and a significant number of high quality drilling locations for future development. The New Mexico asset, with its many similarities to our core asset in Yoakum County, allows us to leverage our experience and enhance our scale, which we believe will result in efficiencies and an improved cost structure. Additionally, we recently announced our entry into a joint venture that will facilitate better control over electric power supply, which we expect will improve operations, control costs and reduce our gas flaring. Further, we're progressing on CCUS initiatives, including advancing with partners on the potential development of a large-scale CO2 storage hub in our immediate region of the Permian Basin. Finally, consistent with our historical practice, our management team and Board are committed to continued performance management and value creation for shareholders."
(1) | Full year 2023 guidance information here reflects Riley Permian for the first quarter of 2023 and Riley Permian with the New Mexico Acquisition for the second, third and fourth quarters of 2023 based on assumption that the New Mexico Acquisition closes early in the second quarter of 2023. | ||||
Selected Operating and Financial Data | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Year Ended | |||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||
Select Financial Data (in thousands): | ||||||||||
Oil and natural gas sales, net | $ 77,446 | $ 87,471 | $ 56,650 | $ 319,343 | $ 182,872 | |||||
Net income (loss) | $ 26,807 | $ 59,817 | $ 21,398 | $ 118,011 | $ (36,328) | |||||
Adjusted EBITDAX(2) | $ 45,876 | $ 51,240 | $ 27,074 | $ 176,396 | $ 97,274 | |||||
Production Data, net: | ||||||||||
Oil (MBbls) | 916 | 866 | 669 | 3,217 | 2,462 | |||||
Natural gas (MMcf) | 990 | 985 | 844 | 3,229 | 2,985 | |||||
Natural gas liquids (MBbls) | 141 | 140 | 105 | 444 | 411 | |||||
Total (MBoe) | 1,222 | 1,170 | 915 | 4,199 | 3,371 | |||||
Daily combined volumes (Boe/d) | 13,283 | 12,717 | 9,940 | 11,505 | 9,237 | |||||
Daily oil volumes (Bbls/d) | 9,957 | 9,413 | 7,271 | 8,814 | 6,744 | |||||
Average Realized Prices: | ||||||||||
Oil ($ per Bbl) | $ 80.60 | $ 92.40 | $ 75.67 | $ 92.86 | $ 67.00 | |||||
Natural gas ($ per Mcf) | 1.92 | 4.28 | 3.20 | 3.33 | 3.38 | |||||
Natural gas liquids ($ per Bbl) | 12.10 | 23.13 | 31.64 | 22.22 | 19.08 | |||||
Total average price ($ per Boe) | $ 63.38 | $ 74.76 | $ 61.94 | $ 76.05 | $ 54.24 | |||||
Average Realized Prices, including the effects of derivative settlements(3): | ||||||||||
Oil ($ per Bbl) | $ 67.02 | $ 75.80 | $ 54.05 | $ 71.75 | $ 52.55 | |||||
Natural gas ($ per Mcf) | 0.28 | 1.57 | 1.37 | 1.06 | 2.74 | |||||
Natural gas liquids ($ per Bbl)(4) | 12.10 | 23.13 | 31.64 | 22.22 | 19.08 | |||||
Total average price ($ per Boe) | $ 51.87 | $ 60.20 | $ 44.43 | $ 58.13 | $ 43.14 | |||||
Cash Costs ($ per Boe)(2) | $ 13.77 | $ 16.98 | $ 15.85 | $ 16.52 | $ 15.60 | |||||
Cash Margin ($ per Boe)(2) | $ 49.61 | $ 57.78 | $ 46.09 | $ 59.53 | $ 38.64 | |||||
Cash Margin, including derivative settlements ($ per Boe)(2) | $ 38.10 | $ 43.22 | $ 28.58 | $ 41.61 | $ 27.54 | |||||
(1) | Calculated by adding the results of our prior fiscal year ended September 30, 2021 plus the three months ended December 31, 2021 less the prior three months ended December 31, 2020. | ||||
(2) | A non-GAAP financial measure as defined in the supplemental financial tables available on the Company's website at www.rileypermian.com. | ||||
(3) | The Company's calculation of the effects of derivative settlements includes losses on the settlement of its commodity derivative contracts. These losses are included under other income (expense) on the Company's consolidated statements of operations. | ||||
(4) | During the periods presented, the Company did not have any NGL derivative contracts in place. | ||||
OPERATIONS AND DEVELOPMENT ACTIVITY UPDATE
Riley Permian averaged oil production of 10.0 MBbls per day for the three months ended December 31, 2022, representing an increase of 37% as compared year-over-year to the fourth quarter 2021 and 6% as compared quarter-over-quarter to the third quarter 2022. The Company averaged total equivalent production of 13.3 MBoe per day for the fourth quarter, an increase of 34% as compared to the same period in 2021 and 4% as compared to the prior quarter.
The Company turned to sales 1 gross (1.0 net) horizontal well during the fourth quarter and 15 gross (11.8 net) horizontal wells during the year ended December 31, 2022 . In November 2022, the Company began CO2 injection on its EOR pilot project with longer term assessment of the project continuing.
The Company incurred $27 million in total accrued capital expenditures before acquisitions for the fourth quarter, 30% lower than the Company's previously released midpoint guidance. The lower than anticipated accrued capital expenditures were driven primarily by deferred activity - including drilling one less well in the fourth quarter than planned and less activity on the EOR Project due to certain facility buildout delays - as well as better than anticipated cost performance on drilling and completions. On a cash basis, the Company had total capital expenditures before acquisitions of $30 million for the quarter. Additionally, the Company acquired surface acreage positions within its operating footprint in Yoakum County, Texas . This surface land will be used to support a variety of initiatives, including the recently announced on-site power generation joint venture, and is expected to contribute to operating synergies.
FINANCIAL RESULTS
For the three months ended December 31, 2022, the Company reported net income of $27 million and operating income of $41 million . The Company generated Adjusted EBITDAX(1) of $46 million, operating cash flow of $40 million and Free Cash Flow(1) of $15 million .
For the year ended December 31, 2022, the Company reported net income of $118 million and operating income of $204 million . The Company generated Adjusted EBITDAX(1) of $176 million, operating cash flow of $170 million and Free Cash Flow(1) of $56 million . The pattern of the Company's development activity affects cash capital expenditures and may continue to cause fluctuations in Free Cash Flow(1) from quarter to quarter with longer periods more representative of Free Cash Flow(1) generation potential than an individual quarter.
Fourth quarter 2022 average realized prices, before derivative settlements were $80.60 per barrel of oil, $1.92 per Mcf of natural gas and $12.10 per barrel of natural gas liquids, resulting in a total equivalent price, before derivative settlements, of $63.38 per Boe. Adjusted for derivative settlements, total equivalent price was $51.87 per Boe, corresponding to realized derivative settlement losses of $11.51 per Boe or $14 million . The Company reported a $7 million loss on derivatives, which includes a $14 million loss on settlements and a $7 million non-cash gain due to changes in the fair value of derivatives. Total oil and natural gas sales revenue, net of derivative settlements, was $63 million, a decrease of $7 million or 10% over the third quarter of 2022. Year-over-year, total oil and natural gas sales revenue, net of derivative settlements, increased 56%.
Riley Permian's total Cash Costs(1) for the fourth quarter of 2022 were $16.8 million, representing a decrease of 15% compared to the third quarter of 2022. Lease operating expense ("LOE") was $8.8 million, 10% lower than midpoint guidance, which remained flat quarter-over-quarter despite increased volumes. Cash G&A expense(1) was $4.5 million, 9% below midpoint guidance. The Company reported interest income for the quarter of $0.9 million, which includes a $1.5 million favorable settlement related to the termination of the Company interest rate swap, partially offset by $0.6 million of interest expense.
During the fourth quarter 2022, the Company raised the common dividend by 10% to $0.34 per share and paid a cash dividend of $6.5 million . Subsequent to the year end, the Company declared a cash dividend of $0.34 per share, which was paid in February 2023 .
As of December 31, 2022, the Company had $56 million drawn on its credit facility, reflecting a net drawdown of $8 million during the fourth quarter. The drawdown was used primarily to fund the surface land acquisition. In October 2022, the Company completed an amendment to its credit facility which increased the borrowing base from $200 million to $225 million.
(1) | A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com. | ||||
RESERVES
Estimated proved reserves increased 6% over 2021 to 77.7 MMBoe at December 31, 2022 based on SEC pricing. Of the total proved reserves, 82% was oil and NGLs, and 37% was associated with proved undeveloped reserves. The increase to proved developed reserves and total proved reserves was primarily attributable to drilling activity by the Company and higher commodity prices in 2022, slightly offset by adjustments in certain well type curves and higher service costs.
FIRST QUARTER AND FULL YEAR 2023 OUTLOOK AND GUIDANCE
Riley Permian is providing 2023 guidance based on currently scheduled development activity and current market conditions, including combined guidance for the pending New Mexico Acquisition based on an expected close date early in the second quarter of 2023.
Activity and Investing Guidance | Q1 2023 | Full Year 2023 (1) (Reporting) | ||
Forecasted Contribution of New Mexico Acquisition to Period | - % | 75 % | ||
Texas Activity | ||||
Gross operated wells drilled | 7 - 9 | 13 - 15 | ||
Average working interest on gross operated wells drilled | 99% - 100% | 98% - 99% | ||
New Mexico Activity | ||||
Gross operated wells drilled | - | 7 - 9 | ||
Average working interest on gross operated wells drilled | NA | 90% - 97% | ||
Investing Expenditures by Category (Accrual, in millions) | ||||
E&P(2) | $44 - 50 | $150 - 165 | ||
Joint Venture investment | $3 - 4 | $10 - 15 | ||
Total | $47 - 54 | $160 - 180 | ||
E&P Capital Expenditures by Region(2) (Accrual) | ||||
Texas | 99% - 100% | 65% - 75% | ||
New Mexico | - % | 35% - 25% | ||
(1) | Full year 2023 guidance information here reflects Riley Permian for the first quarter of 2023 and Riley Permian with the New Mexico Acquisition for the second, third and fourth quarters of 2023 based on assumption that the New Mexico Acquisition closes early in the second quarter of 2023. | ||||
(2) | Expenditures are before acquisitions. | ||||
FIRST QUARTER AND FULL YEAR 2023 OUTLOOK AND GUIDANCE, Continued
Production, Realizations and Cost Guidance | Q1 2023 | Full Year 2023 (1) (Reporting) | Full Year 2023 (2) (Illustrative Pro Forma) | |||
Forecasted Contribution of New Mexico Acquisition to Period | - % | 75 % | 100 % | |||
Net Production | ||||||
Total (MBoe/d) | 13.2 - 13.8 | 18.4 - 19.2 | 20.1 - 21.2 | |||
Oil (MBbl/d) | 9.8 - 10.2 | 12.8 - 13.4 | 13.8 - 14.6 | |||
Oil (%) | 74% - 75% | 70% - 71% | 68% - 69% | |||
Natural gas (%) | 16% - 14% | 16% - 15% | 18% - 16% | |||
NGL (%) | 10% - 11% | 14 % | 14% - 15% | |||
Basis Differentials and Fees | ||||||
Oil ($ per Bbl) | ($3.65) - (3.15) | ($3.90) - (2.90) | ||||
Natural gas ($ per Mcf) | ($2.90) - (2.50) | ($2.70) - (2.10) | ||||
NGL (% of WTI) | 9% - 13% | 12% - 16% | ||||
Operating and Corporate Costs | ||||||
Lease operating expense, including workover expense ($ per Boe) | $8.00 - 9.00 | $8.00 - 9.00 | ||||
Production tax (% of revenue) | 6.0% - 8.0% | 6.0% - 8.0% | ||||
Cash G&A(3) ($ per Boe) | $3.80 - 4.40 | $3.00 - 3.50 | ||||
Cash payments for income taxes ($ in millions) | $0.0 - 0.5 | $6.0 - 8.0 | ||||
(1) | Full year 2023 guidance information here reflects Riley Permian for the first quarter of 2023 and Riley Permian with the New Mexico Acquisition for the second, third and fourth quarters of 2023 based on assumption that the New Mexico Acquisition closes early in the second quarter of 2023. | ||||
(2) | Pro forma full year 2023 guidance information reflects combined Riley Permian with the New Mexico Acquisition as if the New Mexico Acquisition closed on January 1, 2023. This is shown for illustrative purposes only. | ||||
(3) | A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com. | ||||
CONFERENCE CALL
Riley Permian management will host a conference call for investors and analysts on March 9, 2023 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, (888) 330-2214
- International, +1 (646) 960-0161
- Conference ID number 5405646
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 (www.rileypermian.com). A replay of the call will be available until March 23, 2023 by calling:
- (800) 770-2030 or (647) 362-9199
- Conference ID number 5405646
About Riley Exploration Permian, Inc.
Riley Permian is a growth-oriented, independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and natural gas liquids. For more information, please visit www.rileypermian.com.
Investor Contact:
Rick D'Angelo
405-438-0126
[email protected]
Cautionary Statement Regarding Forward Looking Information
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained in this release that are not historical facts are forward-looking statements that represent management's beliefs and assumptions based on currently available information. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position and potential growth opportunities. Our forward-looking statements do not consider the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes," "intends," "may," "should," "anticipates," "expects," "could," "plans," "estimates," "projects," "targets," "forecasts" or comparable terminology or by discussions of strategy or trends. You should not place undue reliance on these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this release are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied by the forward-looking statements.
Among the factors that could cause actual future results to differ materially are the risks and uncertainties the Company is exposed to. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to: the volatility of oil, natural gas and NGL prices; the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 ("COVID-19") pandemic and any related variants), including reactive or proactive measures taken by governments, regulatory agencies and businesses related to the pandemic, and the effects of COVID-19 on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics; regional supply and demand factors, any delays, curtailment delays or interruptions of production, and any governmental order, rule or regulation that may impose production limits; cost and availability of gathering, pipeline, refining, transportation and other midstream and downstream activities; severe weather and other risks that lead to a lack of any available markets; our ability to successfully complete mergers, acquisitions and divestitures; the risk that the Company's EOR project may not perform as expected or produce the anticipated benefits; risks relating to our operations, including development drilling and testing results and performance of acquired properties and newly drilled wells; any reduction in our borrowing base on our revolving credit facility from time to time and our ability to repay any excess borrowings as a result of such reduction; the impact of our derivative strategy and the results of future settlement; our ability to comply with the financial covenants contained in our credit agreement; conditions in the capital, financial and credit markets and our ability to obtain capital needed for development and exploration operations on favorable terms or at all; the loss of certain tax deductions; risks associated with executing our business strategy, including any changes in our strategy; inability to prove up undeveloped acreage and maintain production on leases; risks associated with concentration of operations in one major geographic area; legislative or regulatory changes, including initiatives related to hydraulic fracturing, emissions, and disposal of produced water, which may be negatively impacted by regulation or legislation; the ability to receive drilling and other permits or approvals and rights-of-way in a timely manner (or at all), which may be restricted by governmental regulation and legislation; risks related to litigation; evolving geopolitical and military hostilities in other areas of the world; and cybersecurity threats, technology system failures and data security issues. 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, 2022 filed 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.
Cautionary Statement Regarding Guidance
The estimates and guidance presented in this release are based on assumptions of current and future capital expenditure levels, prices for oil, natural gas and NGLs, available liquidity, indications of supply and demand for oil, well results, and operating costs. The guidance provided in this release does not constitute any form of guarantee or assurance that the matters indicated will be achieved. While we believe these estimates and the assumptions on which they are based are reasonable as of the date on which they are made, they are inherently uncertain and are subject to, among other things, significant business, economic, operational, and regulatory risks, and uncertainties, some of which are not known as of the date of the statement. Guidance and estimates, and the assumptions on which they are based, are subject to material revision. Actual results may differ materially from estimates and guidance. Please read the "Cautionary Statement Regarding Forward Looking Information" section above, as well as "Risk Factors" in our annual report on Form 10-K and our quarterly reports on Form 10-Q, which are incorporated herein.
RILEY EXPLORATION PERMIAN, INC. | ||||
CONSOLIDATED BALANCE SHEETS | ||||
December 31, 2022 | December 31, 2021 | |||
(In thousands, except share amounts) | ||||
Assets | ||||
Current Assets: | ||||
Cash and cash equivalents | $ 13,301 | $ 8,317 | ||
Accounts receivable | 25,551 | 18,002 | ||
Prepaid expenses and other current assets | 3,236 | 4,122 | ||
Inventory | 8,886 | 780 | ||
Current derivative assets | 20 | 83 | ||
Total current assets | 50,994 | 31,304 | ||
Oil and natural gas properties, net (successful efforts) | 440,102 | 359,131 | ||
Other property and equipment, net | 20,023 | 3,174 | ||
Non-current derivative assets | - | 267 | ||
Other non-current assets, net | 4,175 | 2,293 | ||
Total Assets | $ 515,294 | $ 396,169 | ||
Liabilities and Shareholders' Equity | ||||
Current Liabilities: | ||||
Accounts payable | $ 3,939 | $ 7,737 | ||
Accounts payable - related parties | 324 | 164 | ||
Accrued liabilities | 35,582 | 12,874 | ||
Revenue payable | 17,750 | 11,370 | ||
Current derivative liabilities | 16,472 | 30,984 | ||
Other current liabilities | 2,238 | 947 | ||
Total Current Liabilities | 76,305 | 64,076 | ||
Non-current derivative liabilities | 12 | 9,515 | ||
Asset retirement obligations | 2,724 | 2,261 | ||
Revolving credit facility | 56,000 | 65,000 | ||
Deferred tax liabilities | 45,756 | 17,384 | ||
Other non-current liabilities | 1,051 | 95 | ||
Total Liabilities | 181,848 | 158,331 | ||
Commitments and Contingencies | ||||
Shareholders' Equity: | ||||
Preferred stock, $0.0001 par value, 25,000,000 shares authorized; 0 shares issued and outstanding | - | - | ||
Common stock, $0.001 par value, 240,000,000 shares authorized; 20,160,980 and 19,836,885 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 20 | 20 | ||
Additional paid-in capital | 274,643 | 271,737 | ||
Retained earnings (Accumulated deficit) | 58,783 | (33,919) | ||
Total Shareholders' Equity | 333,446 | 237,838 | ||
Total Liabilities and Shareholders' Equity | $ 515,294 | $ 396,169 | ||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
2022 | 2021 | 2022 | 2021(1) | |||||
(In thousands) | ||||||||
Revenues: | ||||||||
Oil and natural gas sales, net | $ 77,446 | $ 56,650 | $ 319,343 | $ 182,872 | ||||
Contract services - related parties | 600 | 600 | 2,400 | 2,400 | ||||
Total Revenues | 78,046 | 57,250 | 321,743 | 185,272 | ||||
Costs and Expenses: | ||||||||
Lease operating expenses | 8,753 | 7,419 | 32,458 | 24,826 | ||||
Production and ad valorem taxes | 4,419 | 3,005 | 19,273 | 10,352 | ||||
Exploration costs | 492 | 611 | 2,032 | 9,753 | ||||
Depletion, depreciation, amortization and accretion | 9,946 | 6,867 | 32,113 | 26,892 | ||||
Impairment of oil and natural gas properties | 7,325 | - | 7,325 | - | ||||
General and administrative: | ||||||||
Administrative costs | 4,929 | 3,633 | 18,496 | 15,155 | ||||
Unit-based compensation expense | - | - | - | 276 | ||||
Share-based compensation expense | 1,165 | 951 | 3,439 | 7,055 | ||||
Cost of contract services - related parties | 187 | 150 | 450 | 479 | ||||
Transaction costs | - | 1,258 | 2,638 | 3,941 | ||||
Total Costs and Expenses | 37,216 | 23,894 | 118,224 | 98,729 | ||||
Income From Operations | 40,830 | 33,356 | 203,519 | 86,543 | ||||
Other Income (Expense): | ||||||||
Interest income (expense), net | 870 | (896) | (1,090) | (4,195) | ||||
Loss on derivatives | (7,179) | (5,193) | (51,574) | (80,479) | ||||
Total Other Expense | (6,309) | (6,089) | (52,664) | (84,674) | ||||
Net Income from Continuing Operations Before Income Taxes | 34,521 | 27,267 | 150,855 | 1,869 | ||||
Income tax expense | (7,714) | (5,869) | (32,844) | (19,400) | ||||
Net Income (Loss) from Continuing Operations | 26,807 | 21,398 | 118,011 | (17,531) | ||||
Discontinued Operations: | ||||||||
Loss from discontinued operations | - | - | - | (18,738) | ||||
Income tax expense on discontinued operations | - | - | - | (59) | ||||
Loss on Discontinued Operations | - | - | - | (18,797) | ||||
Net Income (Loss) | 26,807 | 21,398 | 118,011 | (36,328) | ||||
Dividends on preferred units | - | - | - | (574) | ||||
Net Income (Loss) Attributable to Common Shareholders/Unitholders | $ 26,807 | $ 21,398 | $ 118,011 | $ (36,902) | ||||
Net Income (Loss) per Share/Unit from Continuing Operations: | ||||||||
Basic | $ 1.37 | $ 1.10 | $ 6.04 | $ (1.02) | ||||
Diluted | $ 1.35 | $ 1.09 | $ 5.99 | $ (1.02) | ||||
Weighted Average Common Shares/Units Outstanding: | ||||||||
Basic | 19,621 | 19,470 | 19,553 | 17,806 | ||||
Diluted | 19,849 | 19,569 | 19,686 | 17,806 | ||||
(1) | Calculated by adding the results of our prior fiscal year ended September 30, 2021 plus the three months ended December 31, 2021 less the prior three months ended December 31, 2020. | ||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(In thousands) | ||||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ 26,807 | $ 21,398 | $ 118,011 | $ (36,328) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Loss from discontinued operations | - | - | - | 18,797 | ||||
Oil and gas lease expirations | 488 | 588 | 1,953 | 9,511 | ||||
Depletion, depreciation, amortization and accretion | 9,946 | 6,867 | 32,113 | 26,892 | ||||
Impairment of proved properties | 7,325 | - | 7,325 | - | ||||
Loss on derivatives | 7,179 | 5,193 | 51,574 | 80,479 | ||||
Settlements on derivative contracts | (14,059) | (16,014) | (75,257) | (37,491) | ||||
Amortization of deferred financing costs | 183 | 282 | 731 | 780 | ||||
Unit-based compensation expense | - | - | - | 276 | ||||
Share-based compensation expense | 1,262 | 951 | 3,946 | 7,055 | ||||
Deferred income tax expense | 5,170 | 5,756 | 28,372 | 19,108 | ||||
Changes in operating assets and liabilities | (4,365) | (3,294) | 1,520 | 2,834 | ||||
Net Cash Provided by Operating Activities - Continuing Operations | 39,936 | 21,727 | 170,288 | 91,913 | ||||
Cash Flows from Investing Activities: | ||||||||
Additions to oil and natural gas properties | (29,561) | (29,011) | (111,662) | (79,258) | ||||
Acquisitions of oil and natural gas properties | - | - | - | (445) | ||||
Acquisitions of land | (15,342) | - | (15,342) | - | ||||
Additions to other property and equipment | (171) | (117) | (1,252) | (1,513) | ||||
Tengasco acquired cash | - | - | - | 859 | ||||
Net Cash Used in Investing Activities - Continuing Operations | (45,074) | (29,128) | (128,256) | (80,357) | ||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(In thousands) | ||||||||
Cash Flows from Financing Activities: | ||||||||
Deferred financing costs | (220) | (274) | (1,942) | (360) | ||||
Proceeds from revolving credit facility | 18,000 | 5,000 | 22,000 | 8,500 | ||||
Repayment under revolving credit facility | (10,000) | - | (31,000) | (41,000) | ||||
Payment of common share/unit dividends | (6,809) | (6,056) | (25,066) | (20,624) | ||||
Proceeds from issuance of common stock | - | - | - | 50,000 | ||||
Public offering costs | - | - | - | (3,316) | ||||
Payment of preferred unit dividends | - | - | - | (1,491) | ||||
Common stock repurchased for tax withholding | (440) | (19) | (1,040) | (533) | ||||
Purchase of common units under long-term incentive plan | - | - | - | (191) | ||||
Net Cash Provided by (Used in) Financing Activities - Continuing Operations | 531 | (1,349) | (37,048) | (9,015) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents from Continuing Operations | (4,607) | (8,750) | 4,984 | 2,541 | ||||
Cash Flows from Discontinued Operations: | ||||||||
Operating activities | - | - | - | 7 | ||||
Investing activities | - | - | - | 3,892 | ||||
Net Increase in Cash and Cash Equivalents from Discontinued Operations | - | - | - | 3,899 | ||||
Net Increase (Decrease) in Cash and Cash Equivalents | (4,607) | (8,750) | 4,984 | 6,440 | ||||
Cash and Cash Equivalents, Beginning of Period | 17,908 | 17,067 | 8,317 | 1,877 | ||||
Cash and Cash Equivalents, End of Period | $ 13,301 | $ 8,317 | $ 13,301 | $ 8,317 | ||||
OIL, NATURAL GAS AND NGL RESERVES
Netherland, Sewell & Associates, Inc. ("NSAI") is the Company's third-party reservoir engineer, who prepared the estimates of the Company's proved reserves as of December 31, 2022, in accordance with the rules and regulations of the SEC using an average price equal to the unweighted arithmetic average of the first day of each month within the 12-month period ended December 31, 2022 of $94.14 per Bbl for oil and $6.36 per Mcf for natural gas. The Company prepared estimates of proved reserves as of December 31, 2022 using NYMEX pricing, which were not reviewed by NSAI. A summary of our proved reserves as of December 31, 2022 is presented below.
SEC Pricing | NYMEX Pricing(1) | |||||||
Reserves as of December 31, 2022 | Proved | Total Proved | Proved | Total Proved | ||||
Oil (MBbls) | 29,632 | 48,882 | 28,270 | 45,151 | ||||
Natural gas (MMcf) | 59,314 | 86,018 | 56,492 | 79,762 | ||||
Natural gas liquids (MBbls) | 9,604 | 14,454 | 9,170 | 13,393 | ||||
Total (MBoe) | 49,122 | 77,673 | 46,855 | 71,838 | ||||
PV-10(2) (in thousands) | $ 1,010,251 | $ 1,401,148 | $ 652,817 | $ 802,174 | ||||
(1) | See table below for the NYMEX pricing used to prepare internal reserve estimates. | ||||
(2) | A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com. | ||||
Oil | Natural Gas | ||
($ per Bbl) | ($ per Mcf) | ||
Calendar year 2023 | $ 79.07 | $ 4.24 | |
Calendar year 2024 | $ 73.89 | $ 4.27 | |
Calendar year 2025 | $ 69.77 | $ 4.39 | |
Calendar year 2026 | $ 66.55 | $ 4.46 | |
Calendar year 2027 | $ 63.87 | $ 4.50 | |
After 2027 | $ 63.87 | $ 4.50 |
OIL, NATURAL GAS AND NGL RESERVES, Continued
NSAI prepared the estimates of the Company's proved reserves as of December 31, 2021, in accordance with the rules and regulations of the SEC using an average price equal to the unweighted arithmetic average of the first day of each month within the 12-month period ended December 31, 2021 of $66.55 per Bbl for oil and $3.60 Mcf for natural gas. The Company prepared estimates of proved reserves as of December 31, 2021 using NYMEX pricing, which were not reviewed by NSAI. The table below presents a summary of our proved reserves as of December 31, 2021 .
SEC Pricing | NYMEX Pricing(1) | |||||||
Reserves as of December 31, 2021 | Proved | Total Proved | Proved | Total Proved | ||||
Oil (MBbls) | 27,096 | 47,021 | 26,964 | 46,848 | ||||
Natural gas (MMcf) | 47,974 | 77,486 | 47,728 | 77,185 | ||||
Natural gas liquids (MBbls) | 7,949 | 13,471 | 7,910 | 13,423 | ||||
Total (MBoe) | 43,041 | 73,406 | 42,829 | 73,135 | ||||
PV-10(2) (in thousands) | $ 616,231 | $ 879,143 | $ 589,287 | $ 808,676 | ||||
(1) | See table below for the NYMEX pricing used to prepare internal reserve estimates. | ||||
(2) | A non-GAAP financial measure as defined and reconciled in the supplemental financial tables available on the Company's website at www.rileypermian.com. | ||||
Oil | Natural Gas | ||
($ per Bbl) | ($ per Mcf) | ||
Calendar year 2022 | $ 72.23 | $ 3.69 | |
Calendar year 2023 | $ 66.39 | $ 3.36 | |
Calendar year 2024 | $ 62.66 | $ 3.13 | |
Calendar year 2025 | $ 60.12 | $ 3.07 | |
After 2025 | $ 59.19 | $ 3.33 |
Reserve estimates above do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties, all of which are located within the continental United States . NYMEX pricing does not comport with the reporting requirements of the SEC and should not be used as a substitute for or compared with estimates of proved reserves using SEC pricing.
DERIVATIVE CONTRACTS
The following table summarizes the open financial derivatives as of March 3, 2023, related to oil and natural gas production. As discussed above, the Company entered into a purchase agreement for the New Mexico Acquisition. In conjunction, the Company added to its open derivative contracts in anticipation of an early second quarter close on the acquisition.
Weighted Average Price | ||||||||
Period (1) | Notional | Fixed | Put | Call | ||||
($ per unit) | ||||||||
Oil Swaps (Bbl) | ||||||||
Q1 2023 | 225,000 | $ 53.65 | $ - | $ - | ||||
Q2 2023 | 315,000 | $ 62.78 | $ - | $ - | ||||
Q3 2023 | 216,000 | $ 63.04 | $ - | $ - | ||||
Q4 2023 | 189,000 | $ 62.51 | $ - | $ - | ||||
2024 | 240,000 | $ 71.60 | $ - | $ - | ||||
Oil Collars (Bbl) | ||||||||
Q1 2023 | 210,000 | $ - | $ 70.95 | $ 89.96 | ||||
Q2 2023 | 300,000 | $ - | $ 71.50 | $ 88.98 | ||||
Q3 2023 | 330,000 | $ - | $ 68.64 | $ 88.85 | ||||
Q4 2023 | 330,000 | $ - | $ 68.64 | $ 88.85 | ||||
2024 | 1,293,000 | $ - | $ 61.02 | $ 86.39 | ||||
2025 | 315,000 | $ - | $ 60.00 | $ 77.98 | ||||
Natural Gas Swaps (MMBtu) | ||||||||
Q1 2023 | - | $ - | $ - | $ - | ||||
Q2 2023 | 450,000 | $ 2.60 | $ - | $ - | ||||
Q3 2023 | 450,000 | $ 2.60 | $ - | $ - | ||||
Q4 2023 | 400,000 | $ 3.23 | $ - | $ - | ||||
2024 | 1,500,000 | $ 3.43 | $ - | $ - | ||||
2025 | 375,000 | $ 4.05 | $ - | $ - | ||||
Natural Gas Collars (MMBtu) | ||||||||
Q1 2023 | - | $ - | $ - | $ - | ||||
Q2 2023 | 300,000 | $ - | $ 2.55 | $ 3.20 | ||||
Q3 2023 | 300,000 | $ - | $ 2.55 | $ 3.20 | ||||
Q4 2023 | 300,000 | $ - | $ 3.12 | $ 4.07 | ||||
2024 | 1,065,000 | $ - | $ 3.19 | $ 4.14 | ||||
2025 | 255,000 | $ - | $ 3.65 | $ 4.95 | ||||
Oil Basis (Bbl) | ||||||||
Q1 2023 | 240,000 | $ 1.28 | $ - | $ - | ||||
Q2 2023 | 360,000 | $ 1.28 | $ - | $ - | ||||
Q3 2023 | 360,000 | $ 1.28 | $ - | $ - | ||||
Q4 2023 | 360,000 | $ 1.28 | $ - | $ - | ||||
2024 | 960,000 | $ 0.87 | $ - | $ - | ||||
(1) | Q1 2023 derivative positions shown include January and February 2023 contracts, some of which have settled as of March 3, 2023. | ||||
SOURCE Riley Exploration Permian, Inc.
