OKLAHOMA
CITY, Aug. 10, 2022 /PRNewswire/ -- Riley
Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or
the "Company"), today reported financial and operating results for
the fiscal third quarter ended June 30,
2022.
HIGHLIGHTS FOR THE FISCAL THIRD QUARTER ENDING JUNE 30, 2022
- Averaged oil production of 8.4 MBbls per day, which exceeds the
high end of guidance and represents an increase of 24% as compared
year-over-year to the fiscal third quarter 2021 and 12% as compared
quarter-over-quarter to the fiscal second quarter 2022
- Reported net income of $39
million, which includes $13
million of non-cash gain on derivative contracts and income
from operations of $63 million
- Generated $45 million of Adjusted
EBITDAX(1) and $44 million
of operating cash flow, representing an increase of 29% and 47%,
respectively, over the prior quarter
- Incurred total accrual (activity-based) capital expenditures of
$34 million and total cash capital
expenditures of $37 million
- Paid dividends of $0.31 per share
for a total of $6 million
- Reported proved reserves of 79 MMBoe (64% oil) with a
standardized measure of future discounted cash flows of
$1,046 million
- PV-10 value(1) of total proved reserves and total
proved developed reserves of $1,098
million and $807 million,
respectively, as of June 30, 2022
based on NYMEX strip pricing
"In the fiscal third quarter, we generated record oil
production, revenue and operating cash flow," said Riley Permian
Chairman and CEO, Bobby Riley. "Our
cash flow benefited from a decreased impact of financial hedges
this past quarter, and we see a continuation of that trend for the
quarters and year ahead. We are experiencing increased costs like
many other companies in our industry, but we are proud of our
team's efforts to control costs where we can. Based on the strength
of our fiscal third quarter production, and given modest increased
activity plans, we are increasing previously released midpoint
guidance for oil production for the fiscal fourth quarter by 6% and
for the fiscal year by 4%. Related, we are increasing our midpoint
guidance for fiscal year capital expenditures by approximately 5%,
driven by increased activity and cost increases. We continue to
return a substantial portion of our cash flow to shareholders in
the form of dividends, and we see opportunity to pay down our debt
in the coming quarters, further strengthening our balance
sheet."
(1) Non-GAAP financial measure, which is
defined and reconciled below.
Selected Operating
and Financial Data
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
June 30,
2022
|
|
June 30,
2021
|
Select Financial
Data (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas
sales, net
|
|
$
87,781
|
|
$
66,645
|
|
$
41,549
|
|
$
211,076
|
|
$
100,622
|
Net income
(loss)
|
|
$
38,555
|
|
$
(7,168)
|
|
$
(21,501)
|
|
$
52,785
|
|
$
(81,320)
|
Adjusted
EBITDAX(1)
|
|
$
44,522
|
|
$
34,439
|
|
$
22,533
|
|
$
106,035
|
|
$
65,433
|
|
|
|
|
|
|
|
|
|
|
|
Production Data,
net:
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls)
|
|
761
|
|
675
|
|
612
|
|
2,104
|
|
1,702
|
Natural gas
(MMcf)
|
|
572
|
|
682
|
|
732
|
|
2,098
|
|
1,795
|
Natural gas liquids
(MBbls)
|
|
70
|
|
93
|
|
94
|
|
268
|
|
272
|
Total
(MBoe)
|
|
926
|
|
881
|
|
828
|
|
2,722
|
|
2,273
|
|
|
|
|
|
|
|
|
|
|
|
Daily combined volumes
(Boe/d)
|
|
10,176
|
|
9,791
|
|
9,100
|
|
9,969
|
|
8,325
|
Daily oil volumes
(Bbls/d)
|
|
8,363
|
|
7,497
|
|
6,726
|
|
7,707
|
|
6,234
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized
Prices:
|
|
|
|
|
|
|
|
|
|
|
Oil ($ per
Bbl)
|
|
$
108.41
|
|
$
92.44
|
|
$
64.55
|
|
$
92.91
|
|
$
54.29
|
Natural gas ($ per
Mcf)
|
|
4.98
|
|
2.62
|
|
1.31
|
|
3.50
|
|
3.12
|
Natural gas liquids ($
per Bbl)
|
|
34.71
|
|
26.71
|
|
11.57
|
|
30.72
|
|
9.70
|
Total average price ($
per Boe)
|
|
$
94.80
|
|
$
75.63
|
|
$
50.18
|
|
$
77.55
|
|
$
44.28
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized
Prices, including the effects
of derivative settlements(2):
|
|
|
|
|
|
|
|
|
|
|
Oil ($ per
Bbl)
|
|
$
77.31
|
|
$
66.60
|
|
$
51.84
|
|
$
66.50
|
|
$
51.16
|
Natural gas ($ per
Mcf)
|
|
1.29
|
|
1.25
|
|
1.39
|
|
1.31
|
|
3.22
|
Natural gas liquids ($
per Bbl)(3)
|
|
34.71
|
|
26.71
|
|
11.57
|
|
30.72
|
|
9.70
|
Total average price ($
per Boe)
|
|
$
66.97
|
|
$
54.78
|
|
$
40.86
|
|
$
55.44
|
|
$
42.02
|
|
|
|
|
|
|
|
|
|
|
|
Cash Costs ($ per
Boe)(1)
|
|
$
19.63
|
|
$
16.46
|
|
$
15.07
|
|
$
17.33
|
|
$
14.79
|
Cash Margin ($ per
Boe)(1)
|
|
$
75.17
|
|
$
59.17
|
|
$
35.11
|
|
$
60.22
|
|
$
29.49
|
Cash Margin, including
derivative settlements
($ per
Boe)(1)
|
|
$
47.34
|
|
$
38.32
|
|
$
25.80
|
|
$
38.11
|
|
$
27.23
|
(1)
|
Non-GAAP financial
measure, which is defined and reconciled below.
|
(2)
|
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 and expense on the
Company's consolidated statements of operations.
|
(3)
|
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 8.4 MBbls per day for the three
months ended June 30, 2022,
representing an increase of 24% as compared year-over-year to the
fiscal third quarter 2021 and 12% as compared quarter-over-quarter
to the fiscal second quarter 2022. The Company averaged total
equivalent production of 10.2 MBoe per day for the three months
ended June 30, 2022, an increase of
12% as compared to the same period in 2021 and 4% as compared to
the prior quarter.
Oil production represented 82% of the total equivalent
production for the fiscal third quarter of 2022, which compares to
77% of the total in the fiscal second quarter of 2022 and 74% in
the fiscal third quarter of 2021. Such changes are not indicative
of changing reservoir properties but rather reflect the impact of
curtailed natural gas production. Beginning in February 2022 and continuing through the fiscal
third quarter, the Company's primary midstream gas gathering and
processing counterparty underwent a temporary curtailment and
shutdown of their primary plant as part of an overall capacity
expansion project. While the processing plant project was expected,
the duration of the curtailment lasted longer than originally
anticipated, which negatively impacted sales of natural gas and
NGLs during this period and led to lower growth in natural gas and
NGL sales volumes as compared to oil sales volumes.
The Company's development activity during the fiscal third
quarter included drilling 5 gross (3.0 net) horizontal wells
(scheduled for completion in fiscal fourth quarter 2022), turning
to sales 5 gross (5.0 net) horizontal wells, drilling and
completing 1 gross (1.0 net) saltwater disposal well and
preparatory activity for 1 gross (1.0 net) horizontal well to be
drilled and completed during the fiscal fourth quarter. This
activity corresponds with previously provided guidance, with the
exception that 1 gross (1.0 net) well previously planned for
completion during the fiscal third quarter was officially completed
and brought online during the fiscal fourth quarter, while capital
expenditures were incurred for the well completion during the third
quarter. Such activity corresponds with $30.8 million in accrual basis drilling,
completions and facility capital expenditures, which also includes
capitalized workovers, midstream infrastructure and minor additions
to land and working interests.
The Company advanced its EOR pilot project in Yoakum County, Texas during the fiscal third
quarter, completing an additional three of the remaining five
injection wells. Such activity corresponded with $3.6 million of accrual basis capital
expenditures for the quarter. Subsequent to quarter end, in
July 2022, the Company completed the
remaining two injection wells with water injection initiated on all
six injection wells.
The Company incurred $34 million in total accrued capital
expenditures for the three months ended June
30, 2022, which compares to the Company's previously
released guidance of $28 million to
$33 million. Overages on accrued
capital expenditures compared to the Company's previously released
guidance are primarily related to the accelerated timing of the
saltwater disposal well drilled during the quarter, in addition to
higher costs being realized. During the quarter, the average
completed lateral length on the 5.0 horizontal wells turned to
sales was approximately 7,100 feet, with drilling and completion
costs of approximately $800 per
completed lateral foot. The current costs per completed lateral
length on similar wells has increased approximately 26% since the
start of this fiscal year, with the largest increase being
associated with completion costs. On a cash basis, the Company had
total capital expenditures of $37
million for the three months ended June 30, 2022.
FINANCIAL RESULTS
For the three months ended
June 30, 2022, the Company reported
net income of $39 million and
operating income of $63 million. The
Company generated Adjusted EBITDAX(1) of $45 million, operating cash flow from continuing
operations of $44 million and Free
Cash Flow(1) of $7
million.
For the nine months ended June 30,
2022 (fiscal year to date), the Company reported net income
of $53 million and operating income
of $137 million. The Company
generated Adjusted EBITDAX(1) of $106 million, operating cash flow from continuing
operations of $97 million (inclusive
of negative changes in working capital of $2
million) and Free Cash Flow(1) of $22 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.
(1) Non-GAAP financial measure, which is
defined and reconciled below.
FINANCIAL RESULTS, Continued
Fiscal third quarter 2022
average realized prices, before derivative settlements were
$108.41 per barrel of oil,
$4.98 per Mcf of natural gas and
$34.71 per barrel of natural gas
liquids, resulting in a total equivalent price, before derivative
settlements, of $94.80 per Boe. The
Company benefited from a favorable $1.65 per barrel positive differential to the WTI
index for the quarter. Adjusted for derivative settlements, total
equivalent price was $66.97 per Boe,
corresponding to realized derivative settlement losses of
$27.83 per Boe or $25.8 million. The Company reported a
$12.4 million loss on derivatives,
which includes the $25.8 million loss
on settlements and a $13.4 million
non-cash gain due to changes in the fair value of derivatives.
Total oil and natural gas sales revenue was $88 million for the fiscal third quarter 2022
with $62 million of oil and natural gas sales revenue net of
derivative settlements, representing quarter-over-quarter increases
of 32% and 28%, respectively, and year-over-year increases of 111%
and 83%, respectively. For the quarter, oil revenue represented 94%
of total revenue.
Riley Permian's total Cash Costs(1) for the fiscal
third quarter of 2022 were $18.2
million, representing an increase of 25% compared to the
fiscal second quarter of 2022. Lease operating expense ("LOE") was
$8.1 million, corresponding to the
low end of guidance and an 18% increase quarter-over-quarter.
Workover activity was unusually high during the fiscal third
quarter of 2022 with workover expense (a component of LOE)
approximately $1.4 million higher
than the average of the prior three quarters. Excluding workover
expense, LOE was lower than the prior two quarters, despite
materially increasing production. Cash G&A
expense(1) was $3.9
million, which was at the low end of guidance. Interest
expense was $0.7 million, essentially
flat with interest expense for the fiscal second quarter of 2022.
Production and ad valorem taxes increased 58% quarter-over-quarter
as a result of higher commodity prices and an increase in our
estimated property values, which increased our ad valorem tax
estimate. Accordingly, increases in production and ad valorem taxes
accounted for 55% of the total increase in Cash Costs
quarter-over-quarter. Excluding production and ad valorem taxes,
Cash Costs(1) increased 15% quarter-over-quarter, which
is consistent with the 13% quarter-over-quarter increase in oil
production.
Riley Permian increased margins significantly for the fiscal
third quarter of 2022, as compared to prior periods. Higher
production volumes and realized commodity prices more than offset
the impacts from the natural gas curtailment, loss on settlements
of derivatives and increased Cash Costs(1). Adjusted
EBITDAX(1) increased 29% quarter-over-quarter while
operating cash flow from continuing operations increased 47%
quarter-over-quarter. Compared to the fiscal third quarter of 2021,
Adjusted EBITDAX(1) increased by 98% and operating cash
flow from continuing operations increased by 113%.
During the fiscal third quarter 2022, the Company paid common
dividends of $0.31 per share or
$6 million. Subsequent to the quarter end, the Company paid
common dividends of $0.31 per share
in August 2022.
The Company completed an amendment to its credit facility during
the quarter which extended the maturity to April 2026 and increased the borrowing base to
$200 million. As of August 8, 2022, we had $61
million drawn and $139
million, or approximately 70%, of availability on the credit
facility.
(1) Non-GAAP financial measure, which is
defined and reconciled below.
REVISED FISCAL FOURTH QUARTER 2022 OUTLOOK AND
GUIDANCE
Based on current market conditions, the Company
forecasts drilling 4 gross (3.2 net), completing 7 gross (4.2 net)
and turning to production 7 gross (4.2 net) horizontal wells during
the fiscal fourth quarter 2022. Additional scheduled activity
includes capital workovers and midstream infrastructure. Management
forecasts accrual basis capital expenditures related to such
development activity of approximately $24
million to $28 million, which
also includes estimates for anticipated non-operated drilling and
completions, capital workovers, infrastructure, preparatory work
for the fiscal 2023 development program and minor additions to land
and existing working interests.
The Company forecasts fiscal fourth quarter 2022 oil production
to average 8.2 MBbls per day to 8.6 MBbls per day, with the
midpoint average representing 21% year-over-year growth. The
midstream gas gathering and processing expansion project has been
fully commissioned. Following completion of the expansion project
in mid July, the Company has realized a larger volume of
contractual, firm capacity, which has led to increased sales for
natural gas and NGLs and reduced flaring. However, despite the
physical and contractual increases in processing capacity, the
Company is currently producing natural gas in excess of our
contractual minimum processing capacity, which will lead to
continued, partial curtailment. Based on estimates of available gas
processing capacity, we forecast total equivalent production to
average 11.1 MBoe per day to 11.6 MBoe per day for the fiscal
fourth quarter.
The Company forecasts fiscal fourth quarter 2022 LOE of
approximately $8.0 million to
$10.0 million, with the low end
corresponding to fiscal third quarter actual results and the high
end accounting for costs associated with increased production
volumes and inflationary pressures. We forecast Cash G&A
expenses(1) for the fiscal fourth quarter of
approximately $4.1 million to
$4.7 million.
For its EOR pilot project, management forecasts spending
approximately $4 million to
$6 million of accrual basis capital
expenditures in the fiscal fourth quarter related to completion of
the remaining injection wells and the CO2 tap
installation. Based on anticipated delivery timing of compressors
needed for CO2 injection, the Company forecasts
beginning CO2 injection during late 2022 (calendar
fourth quarter 2022). Approximately $4
million of anticipated, accrual basis capital expenditures
for our EOR program, previously estimated to be incurred during
fiscal 2022, are now anticipated to be incurred in fiscal 2023.
In total, management forecasts total accrual basis capital
expenditures of $28 million to
$34 million for the fiscal fourth
quarter 2022.
REVISED FISCAL YEAR 2022 OUTLOOK AND
GUIDANCE
Incorporating actual, accrual basis capital
expenditures to date for the fiscal year, and combined with revised
fiscal fourth quarter guidance above, the Company forecasts
full-year fiscal 2022 accrual basis capital expenditures to total
approximately $109 million to
$115 million, with modest upward
revisions from previously provided estimates of $102 million to $111
million.
This total includes estimates of $93
million to $97 million for
drilling and completions, which compares to previous guidance of
$84 million to $89 million. We are forecasting an annual total
of 19 gross (15.0 net) wells drilled, completed and brought online
during fiscal year 2022. The forecasted capital expenditures
include $16 million to $18 million for our EOR program, down from
$18 million to $22 million forecasted previously.
We forecast full-year fiscal 2022 oil production to average 7.8
MBbls per day to 7.9 MBbls per day (corresponding to approximately
2.9 MMBbls), representing 22% to 24% growth from fiscal year 2021
average oil production and corresponding with upward revisions from
previously provided growth estimates of 17% to 22% during the prior
quarter. Further, we forecast that full-year fiscal 2022 total
equivalent production could average 10.3 MBoe per day to 10.4 MBoe
per day.
(1) Non-GAAP financial measure, which is
defined above.
CONFERENCE CALL
Riley Permian management will host a
conference call for investors and analysts on August 11, 2022 at 10:00
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 August 25,
2022 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
IR@rileypermian.com
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 September 30, 2021 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.
Cautionary Statement Regarding Reserves
The reserves information as of June 30,
2022 in this press release, including standardized measure
of future discounted cash flows and PV-10 value are preliminary
estimates that have not been audited or reviewed by Netherland,
Sewell & Associates, Inc. or BDO USA, LLP and are subject to material revision.
These are estimates that should not be regarded as a
representation. Investors should not place undue reliance on these
estimates.
Source: Riley Exploration Permian, Inc.
RILEY EXPLORATION
PERMIAN, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(Unaudited)
|
|
|
|
|
June 30,
2022
|
|
September 30,
2021
|
|
|
(In thousands,
except share amounts)
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
16,800
|
|
$
17,067
|
Accounts
receivable
|
|
32,821
|
|
17,473
|
Accounts receivable -
related parties
|
|
—
|
|
456
|
Prepaid expenses and
other current assets
|
|
3,029
|
|
1,730
|
Current derivative
assets
|
|
1,134
|
|
—
|
Total current
assets
|
|
53,784
|
|
36,726
|
Oil and natural gas
properties, net (successful efforts)
|
|
402,526
|
|
345,797
|
Other property and
equipment, net
|
|
4,407
|
|
3,183
|
Non-current derivative
assets
|
|
300
|
|
106
|
Other non-current
assets, net
|
|
4,814
|
|
2,419
|
Total
Assets
|
|
$
465,831
|
|
$
388,231
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
20,244
|
|
$
12,234
|
Accounts payable -
related parties
|
|
457
|
|
800
|
Accrued
liabilities
|
|
18,616
|
|
18,555
|
Revenue
payable
|
|
17,164
|
|
9,008
|
Current derivative
liabilities
|
|
50,298
|
|
42,144
|
Other current
liabilities
|
|
2,584
|
|
874
|
Total Current
Liabilities
|
|
109,363
|
|
83,615
|
Non-current derivative
liabilities
|
|
9,122
|
|
8,932
|
Asset retirement
obligations
|
|
2,211
|
|
2,306
|
Revolving credit
facility
|
|
61,000
|
|
60,000
|
Deferred tax
liabilities
|
|
24,702
|
|
11,628
|
Other non-current
liabilities
|
|
1,223
|
|
60
|
Total
Liabilities
|
|
207,621
|
|
166,541
|
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; 19,865,116 and 19,672,050
shares
issued and outstanding at June 30, 2022 and September 30, 2021,
respectively
|
|
20
|
|
20
|
Additional paid-in
capital
|
|
273,035
|
|
270,837
|
Accumulated
deficit
|
|
(14,845)
|
|
(49,167)
|
Total Shareholders'
Equity
|
|
258,210
|
|
221,690
|
Total Liabilities
and Shareholders' Equity
|
|
$
465,831
|
|
$
388,231
|
RILEY EXPLORATION
PERMIAN, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
(In
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
Oil and natural gas
sales, net
|
|
$
87,781
|
|
$
41,549
|
|
$
211,076
|
|
$
100,622
|
Contract services -
related parties
|
|
600
|
|
600
|
|
1,800
|
|
1,800
|
Total
Revenues
|
|
88,381
|
|
42,149
|
|
212,876
|
|
102,422
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
|
8,062
|
|
5,766
|
|
22,311
|
|
16,289
|
Production and ad
valorem taxes
|
|
5,526
|
|
2,017
|
|
12,033
|
|
6,061
|
Exploration
costs
|
|
22
|
|
2,785
|
|
2,131
|
|
8,682
|
Depletion,
depreciation, amortization and accretion
|
|
7,188
|
|
7,082
|
|
20,688
|
|
19,323
|
General and
administrative:
|
|
|
|
|
|
|
|
|
Administrative
costs
|
|
4,399
|
|
4,030
|
|
12,046
|
|
9,176
|
Unit-based
compensation expense
|
|
—
|
|
—
|
|
—
|
|
689
|
Share-based
compensation expense
|
|
553
|
|
779
|
|
2,521
|
|
5,353
|
Cost of contract
services - related parties
|
|
89
|
|
91
|
|
324
|
|
330
|
Transaction
costs
|
|
—
|
|
321
|
|
3,896
|
|
3,534
|
Total Costs and
Expenses
|
|
25,839
|
|
22,871
|
|
75,950
|
|
69,437
|
Income From
Operations
|
|
62,542
|
|
19,278
|
|
136,926
|
|
32,985
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(697)
|
|
(1,171)
|
|
(2,271)
|
|
(3,571)
|
Loss on
derivatives
|
|
(12,363)
|
|
(35,396)
|
|
(67,188)
|
|
(74,208)
|
Total Other
Expense
|
|
(13,060)
|
|
(36,567)
|
|
(69,459)
|
|
(77,779)
|
Net Income (Loss)
from Continuing Operations Before Income Taxes
|
|
49,482
|
|
(17,289)
|
|
67,467
|
|
(44,794)
|
Income tax
expense
|
|
(10,927)
|
|
(3,245)
|
|
(14,682)
|
|
(16,953)
|
Net Income (Loss)
from Continuing Operations
|
|
38,555
|
|
(20,534)
|
|
52,785
|
|
(61,747)
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations
|
|
—
|
|
(882)
|
|
—
|
|
(19,513)
|
Income tax expense on
discontinued operations
|
|
—
|
|
(85)
|
|
—
|
|
(60)
|
Loss on
Discontinued Operations
|
|
—
|
|
(967)
|
|
—
|
|
(19,573)
|
Net Income
(Loss)
|
|
38,555
|
|
(21,501)
|
|
52,785
|
|
(81,320)
|
Dividends on preferred
units
|
|
—
|
|
—
|
|
—
|
|
(1,491)
|
Net Income (Loss)
Attributable to Common Shareholders/Unitholders
|
|
$
38,555
|
|
$
(21,501)
|
|
$
52,785
|
|
$
(82,811)
|
RILEY EXPLORATION
PERMIAN, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
(In
thousands)
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
38,555
|
|
$
(21,501)
|
|
$
52,785
|
|
$
(81,320)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations
|
|
—
|
|
967
|
|
—
|
|
19,573
|
Oil and gas lease
expirations
|
|
—
|
|
2,785
|
|
2,053
|
|
8,615
|
Depletion,
depreciation, amortization and accretion
|
|
7,188
|
|
7,082
|
|
20,688
|
|
19,323
|
Loss on
derivatives
|
|
12,363
|
|
35,396
|
|
67,188
|
|
74,208
|
Settlements on
derivative contracts
|
|
(25,783)
|
|
(7,712)
|
|
(60,172)
|
|
(5,133)
|
Amortization of
deferred financing costs
|
|
182
|
|
168
|
|
655
|
|
483
|
Unit-based
compensation expense
|
|
—
|
|
—
|
|
—
|
|
689
|
Share-based
compensation expense
|
|
828
|
|
779
|
|
2,808
|
|
5,353
|
Deferred income tax
expense
|
|
10,212
|
|
4,254
|
|
13,074
|
|
17,185
|
Changes in operating
assets and liabilities
|
|
614
|
|
(1,523)
|
|
(2,092)
|
|
(135)
|
Net Cash Provided
by Operating Activities - Continuing Operations
|
|
44,159
|
|
20,695
|
|
96,987
|
|
58,841
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
Additions to oil and
natural gas properties
|
|
(36,876)
|
|
(21,750)
|
|
(76,058)
|
|
(38,882)
|
Acquisitions of oil
and natural gas properties
|
|
—
|
|
—
|
|
—
|
|
(171)
|
Additions to other
property and equipment
|
|
(92)
|
|
(792)
|
|
(1,137)
|
|
(1,172)
|
Tengasco acquired
cash
|
|
—
|
|
—
|
|
—
|
|
859
|
Net Cash Used in
Investing Activities - Continuing Operations
|
(36,968)
|
|
(22,542)
|
|
(77,195)
|
|
(39,366)
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
Deferred financing
costs
|
|
(1,690)
|
|
(7)
|
|
(1,989)
|
|
(135)
|
Proceeds from
revolving credit facility
|
|
1,000
|
|
—
|
|
9,000
|
|
5,500
|
Repayment under
revolving credit facility
|
|
(3,000)
|
|
—
|
|
(8,000)
|
|
(9,000)
|
Payment of common
share/unit dividends
|
|
(6,058)
|
|
(4,991)
|
|
(18,254)
|
|
(12,834)
|
Payment of preferred
unit dividends
|
|
—
|
|
—
|
|
—
|
|
(1,491)
|
Common stock
repurchased for tax withholding
|
|
(252)
|
|
—
|
|
(816)
|
|
—
|
Purchase of common
units under long-term incentive plan
|
|
—
|
|
—
|
|
—
|
|
(191)
|
Net Cash Used in
Financing Activities - Continuing Operations
|
|
(10,000)
|
|
(4,998)
|
|
(20,059)
|
|
(18,151)
|
Net Increase
(Decrease) in Cash and Cash Equivalents from Continuing
Operations
|
|
(2,809)
|
|
(6,845)
|
|
(267)
|
|
1,324
|
Cash Flows from
Discontinued Operations:
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
—
|
|
(220)
|
|
—
|
|
18
|
Investing
activities
|
|
—
|
|
3,897
|
|
—
|
|
3,892
|
Net Increase in Cash
and Cash Equivalents from Discontinued Operations
|
|
—
|
|
3,677
|
|
—
|
|
3,910
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
(2,809)
|
|
(3,168)
|
|
(267)
|
|
5,234
|
Cash and Cash
Equivalents, Beginning of Period
|
|
19,609
|
|
10,062
|
|
17,067
|
|
1,660
|
Cash and Cash
Equivalents, End of Period
|
|
$
16,800
|
|
$
6,894
|
|
$
16,800
|
|
$
6,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL, NATURAL GAS AND NGL RESERVES
The Company prepared
estimates of reserves using an average price equal to the
unweighted arithmetic average of the first day of each month within
the 12-month period ended June 30,
2022 of $85.82 per Bbl for oil
and $4.13 per Mcf for gas in
accordance with SEC guidelines. The Company also prepared estimates
of proved reserves as of June 30,
2022 using NYMEX pricing. Netherland, Sewell &
Associates, Inc. ("NSAI") is the Company's third-party reservoir
engineer, which prepares estimates of the Company's proved reserves
annually as of its fiscal year-end, in accordance with the rules
and regulations of the SEC. NSAI has not reviewed our proved
reserves at June 30, 2022 using SEC
or NYMEX pricing. A summary of these internal estimates as of
June 30, 2022 is presented below.
|
|
SEC
Pricing
|
|
NYMEX
Pricing(2)
|
Reserves as of June
30, 2022
|
|
Proved
Developed
Reserves
|
|
Total
Proved
Reserves
|
|
Proved
Developed
Reserves
|
|
Total
Proved
Reserves
|
Oil (MBbls)
|
|
28,786
|
|
50,165
|
|
28,688
|
|
50,029
|
Natural gas
(MMcf)
|
|
52,392
|
|
84,241
|
|
52,235
|
|
84,047
|
Natural gas liquids
(MBbls)
|
|
8,614
|
|
14,400
|
|
8,588
|
|
14,368
|
Total
(MBoe)
|
|
46,132
|
|
78,605
|
|
45,982
|
|
78,405
|
PV-10(1)
(in thousands)
|
|
$
908,852
|
|
$
1,316,834
|
|
$
806,780
|
|
$
1,097,713
|
|
(1) Non-GAAP financial
measure, which is defined and reconciled below.
(2) See table below for the
NYMEX pricing used to prepare internal reserve
estimates.
|
|
Oil
|
|
Natural Gas
|
|
($ per Bbl)
|
|
($ per Mcf)
|
July 2022-December
2022
|
$
100.56
|
|
$
5.78
|
Calendar year
2023
|
$
87.46
|
|
$
4.76
|
Calendar year
2024
|
$
79.01
|
|
$
4.38
|
Calendar year
2025
|
$
73.32
|
|
$
4.31
|
After 2025
|
$
71.30
|
|
$
4.70
|
OIL, NATURAL GAS AND NGL RESERVES, Continued
Estimates
of reserves were prepared using an average price equal to the
unweighted arithmetic average of the first day of each month within
the 12-month period ended September 30,
2021 of $57.64 per Bbl for oil
and $2.94 per Mcf for gas in
accordance with SEC guidelines. Additionally, the Company prepared
estimates of proved reserves as of September
30, 2021 using NYMEX pricing. The table below presents a
summary of our proved reserves as of September 30, 2021.
|
|
SEC
Pricing
|
|
NYMEX
Pricing(2)
|
Reserves as of
September 30, 2021
|
|
Proved
Developed
Reserves
|
|
Total
Proved
Reserves
|
|
Proved
Developed
Reserves
|
|
Total
Proved
Reserves
|
Oil (MBbls)
|
|
26,170
|
|
46,263
|
|
26,118
|
|
46,187
|
Natural gas
(MMcf)
|
|
46,173
|
|
76,019
|
|
46,087
|
|
75,899
|
Natural gas liquids
(MBbls)
|
|
7,650
|
|
13,229
|
|
7,635
|
|
13,208
|
Total
(MBoe)
|
|
41,516
|
|
72,163
|
|
41,434
|
|
72,045
|
PV-10(1)
(in thousands)
|
|
$
492,642
|
|
$
680,729
|
|
$
542,673
|
|
$
729,942
|
|
(1) Non-GAAP financial
measure, which is defined and reconciled below.
(2) See table below for the
NYMEX pricing used to prepare internal reserve
estimates.
|
|
Oil
|
|
Natural Gas
|
|
($ per Bbl)
|
|
($ per Mcf)
|
October 2021 - December
2021
|
$
74.48
|
|
$
5.90
|
Calendar year
2022
|
$
70.09
|
|
$
4.41
|
Calendar year
2023
|
$
64.01
|
|
$
3.47
|
Calendar year
2024
|
$
59.71
|
|
$
3.17
|
Calendar year
2025
|
$
56.65
|
|
$
3.02
|
After 2024
|
$
55.59
|
|
$
3.23
|
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 August
8, 2022, related to oil and natural gas production.
Derivative positions in the table for calendar Q3 2022 are as of
June 30, 2022(1).
|
|
|
|
Weighted Average
Price
|
Calendar
Quarter
|
|
Notional
Volume
|
|
Fixed
|
|
Put
|
|
Call
|
|
|
|
|
($ per unit)
|
Oil Swaps
(Bbl)
|
|
|
|
|
|
|
|
|
Q3 2022
|
|
270,000
|
|
$
56.03
|
|
$
—
|
|
$
—
|
Q4 2022
|
|
270,000
|
|
$
56.03
|
|
$
—
|
|
$
—
|
Q1 2023
|
|
225,000
|
|
$
53.65
|
|
$
—
|
|
$
—
|
Q2 2023
|
|
195,000
|
|
$
53.89
|
|
$
—
|
|
$
—
|
Q3 2023
|
|
150,000
|
|
$
52.58
|
|
$
—
|
|
$
—
|
Q4 2023
|
|
150,000
|
|
$
52.58
|
|
$
—
|
|
$
—
|
|
|
|
|
|
|
|
|
|
Natural Gas Swaps
(Mcf)
|
|
|
|
|
|
|
|
|
Q3 2022
|
|
540,000
|
|
$
3.26
|
|
$
—
|
|
$
—
|
Q4 2022
|
|
540,000
|
|
$
3.26
|
|
$
—
|
|
$
—
|
|
|
|
|
|
|
|
|
|
Oil Collars
(Bbl)
|
|
|
|
|
|
|
|
|
Q3 2022
|
|
117,000
|
|
$
—
|
|
$
37.31
|
|
$
59.43
|
Q4 2022
|
|
90,000
|
|
$
—
|
|
$
35.00
|
|
$
42.63
|
Q1 2024
|
|
3,000
|
|
$
—
|
|
$
50.00
|
|
$
88.00
|
|
|
|
|
|
|
|
|
|
Oil Basis
(Bbl)
|
|
|
|
|
|
|
|
|
Q3 2022
|
|
240,000
|
|
$
0.41
|
|
$
—
|
|
$
—
|
Q4 2022
|
|
240,000
|
|
$
0.41
|
|
$
—
|
|
$
—
|
|
|
|
|
|
|
|
|
|
(1) Q3 2022 derivative
positions shown include July 2022 contracts, some of which have
settled as of August 8, 2022.
|
NON-GAAP MEASURES
The Company presents certain
non-GAAP financial measures to supplement its financial statements
prepared in accordance with accounting principles generally
accepted in the United States
("GAAP"). The non-GAAP financial measures include Adjusted Net
Income, Adjusted EBITDAX, Cash G&A, Cash Costs and Cash Margin
per Boe, Free Cash Flow and PV-10. A reconciliation of each
non-GAAP measure to the most directly comparable GAAP financial
measure is presented below.
We believe that these non-GAAP measures presented, in
conjunction with our financial and operating results prepared in
accordance with GAAP, provide a more complete understanding of the
Company's performance. We use these non-GAAP measures to compare
our financial and operating performance with that of other
companies in the oil and natural gas industry as well as our
financial and operating performance for current and historical
periods. These non-GAAP measures should not be considered in
isolation or as a substitute for GAAP measures, such as net income
(loss), operating income (loss), total costs and expenses, general
and administrative expenses, net cash provided by operating
activities or standardized measure of discounted future net cash
flows or any other GAAP measure of financial position or results of
operations.
As not all companies use the same calculation, our non-GAAP
measures may not be comparable to similarly titled measures
presented by other companies.
Adjusted Net Income: We define Adjusted Net Income
as net income (loss) plus loss on discontinued operations, non-cash
(gain) loss on derivatives, transaction costs and other, income tax
expense related to our change in tax status and the changes in
estimated income tax as a result of these adjustments. We believe
that Adjusted Net Income is a widely followed measure of operating
performance and is one of many metrics used by investors as well as
our management team. For example, Adjusted Net Income can be used
to assess our operating performance and return on capital in
comparison to other independent exploration and production
companies without regard to financial or capital structure and to
assess the financial performance of our assets and our company
without regard to capital structure or historical cost basis. The
following table provides a reconciliation of Net Income (Loss) to
Adjusted Net Income for the periods indicated:
|
|
Three Months
Ended
|
|
Nine Months Ended
June 30,
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
2022
|
|
2021
|
|
|
(Unaudited, In
thousands)
|
Net Income
(Loss)
|
|
$
38,555
|
|
$
(7,168)
|
|
$
(21,501)
|
|
$
52,785
|
|
$
(81,320)
|
Loss on discontinued
operations
|
|
—
|
|
—
|
|
967
|
|
—
|
|
19,573
|
Non-cash (gain) loss
on derivatives
|
|
(13,420)
|
|
31,257
|
|
27,684
|
|
7,016
|
|
69,075
|
Transaction costs and
other
|
|
—
|
|
2,638
|
|
321
|
|
3,941
|
|
3,534
|
Income tax expense
from change in tax status
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13,631
|
Tax effect of
adjustments(1)
|
|
2,885
|
|
(7,288)
|
|
995
|
|
(2,356)
|
|
1,401
|
Adjusted Net
Income
|
|
$
28,020
|
|
$
19,439
|
|
$
8,466
|
|
$
61,386
|
|
$
25,894
|
|
(1) Computed by applying a
combined federal and state statutory rate of 21.5%, 21.5% and 21%
effective as of June 30, 2022, March 31, 2022 and June 30,
2021,
respectively. The Company was a
flow-through entity for federal and state income tax purposes for
the periods through February 26, 2021.
|
Adjusted EBITDAX: We define Adjusted EBITDAX as
net income (loss) adjusted for loss on discontinued operations,
exploration costs, depletion, depreciation, amortization and
accretion, equity-based compensation expense, interest expense,
non-cash (gain) loss on derivatives, income taxes and transaction
costs and other. We believe Adjusted EBITDAX is useful to investors
because it provides an effective way to evaluate our operating
performance and compare the results of our operations from period
to period as well as to other companies in the oil and natural gas
industry without regard to our financing methods or capital
structure. The following table provides a reconciliation from the
GAAP measure of Net Income (Loss) to Adjusted EBITDAX.
|
|
Three Months
Ended
|
|
Nine Months Ended
June 30,
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
2022
|
|
2021
|
|
|
(Unaudited, In
thousands)
|
Net Income
(Loss)
|
|
$
38,555
|
|
$
(7,168)
|
|
$
(21,501)
|
|
$
52,785
|
|
$
(81,320)
|
Loss on discontinued
operations
|
|
—
|
|
—
|
|
967
|
|
—
|
|
19,573
|
Exploration
costs
|
|
22
|
|
1,498
|
|
2,785
|
|
2,131
|
|
8,682
|
Depletion,
depreciation, amortization and accretion
|
|
7,188
|
|
6,633
|
|
7,082
|
|
20,688
|
|
19,323
|
Unit-based
compensation expense
|
|
—
|
|
—
|
|
—
|
|
—
|
|
689
|
Share-based
compensation expense
|
|
553
|
|
1,017
|
|
779
|
|
2,521
|
|
5,353
|
Interest expense,
net
|
|
697
|
|
678
|
|
1,171
|
|
2,271
|
|
3,571
|
Non-cash (gain) loss
on derivatives
|
|
(13,420)
|
|
31,257
|
|
27,684
|
|
7,016
|
|
69,075
|
Income tax expense
(benefit)
|
|
10,927
|
|
(2,114)
|
|
3,245
|
|
14,682
|
|
16,953
|
Transaction costs and
other
|
|
—
|
|
2,638
|
|
321
|
|
3,941
|
|
3,534
|
Adjusted
EBITDAX
|
|
$
44,522
|
|
$
34,439
|
|
$
22,533
|
|
$
106,035
|
|
$
65,433
|
Cash G&A: Cash G&A is defined as general and
administrative expense, excluding equity-based compensation, plus
cost of contract services–related parties less contract
services–related parties revenue. We believe Cash G&A is used
by analysts and others in valuation, comparison and investment
recommendations of companies in our industry to allow for analysis
of Cash G&A spend without regard to equity-based compensation
programs or amounts related to contract services. Administrative
costs exclude equity-based compensation as those expenses are
presented separately as components of general and administrative
expense on our condensed consolidated statement of operations. The
following table provides a calculation of Cash G&A for the
periods indicated:
|
|
Three Months
Ended
|
|
Nine Months Ended
June 30,
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
2022
|
|
2021
|
|
|
(Unaudited, In
thousands)
|
Administrative
costs
|
|
$
4,399
|
|
$
4,014
|
|
$
4,030
|
|
$
12,046
|
|
$
9,176
|
Plus: Costs of contract
services - related parties
|
|
89
|
|
85
|
|
91
|
|
324
|
|
330
|
Less: Contract services
revenues - related parties
|
|
(600)
|
|
(600)
|
|
(600)
|
|
(1,800)
|
|
(1,800)
|
Total Cash
G&A
|
|
$
3,888
|
|
$
3,499
|
|
$
3,521
|
|
$
10,570
|
|
$
7,706
|
Cash Costs and Cash Margin per Boe: Cash Costs is a
non-GAAP financial measure that we use as an indicator of our total
cash-based cost of production and operations. We define Cash Costs
as lease operating expenses plus production and ad valorem taxes,
Cash G&A(1), and interest expense. Management
believes that Cash Costs is an important financial measure for use
in evaluating the Company's operating and financial performance and
for comparison to other companies in the oil and natural gas
industry. We also believe this is a useful measure for investors in
evaluating our results against other oil and natural gas companies.
Cash Costs should be considered in addition to, rather than as a
substitute for, Total Costs and Expenses on our condensed
consolidated statement of operations. The following table provides
a calculation of Cash Costs and Cash Margin for the periods
indicated:
|
|
Three Months
Ended
|
|
Nine Months Ended
June 30,
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
2022
|
|
2021
|
|
|
(Unaudited, In
thousands, except per Boe amounts)
|
Cash
Costs:
|
|
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
|
$
8,062
|
|
$
6,830
|
|
$
5,766
|
|
$
22,311
|
|
$
16,289
|
Production and ad
valorem taxes
|
|
5,526
|
|
3,502
|
|
2,017
|
|
12,033
|
|
6,061
|
Cash
G&A(1)
|
|
3,888
|
|
3,499
|
|
3,521
|
|
10,570
|
|
7,706
|
Interest expense,
net
|
|
697
|
|
678
|
|
1,171
|
|
2,271
|
|
3,571
|
Total Cash
Costs
|
|
$
18,173
|
|
$
14,509
|
|
$
12,475
|
|
$
47,185
|
|
$
33,627
|
|
|
|
|
|
|
|
|
|
|
|
Total Production
(MBoe)
|
|
926
|
|
881
|
|
828
|
|
2,722
|
|
2,273
|
|
|
|
|
|
|
|
|
|
|
|
Cash Margin ($ per
Boe):
|
|
|
|
|
|
|
|
|
|
|
Total average realized
price ($ per Boe)
|
|
$
94.80
|
|
$
75.63
|
|
$
50.18
|
|
$
77.55
|
|
$
44.28
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
|
8.71
|
|
7.75
|
|
6.96
|
|
8.20
|
|
7.16
|
Production and ad
valorem taxes
|
|
5.97
|
|
3.97
|
|
2.44
|
|
4.42
|
|
2.67
|
Cash
G&A(1)
|
|
4.20
|
|
3.97
|
|
4.25
|
|
3.88
|
|
3.39
|
Interest expense,
net
|
|
0.75
|
|
0.77
|
|
1.42
|
|
0.83
|
|
1.57
|
Total Cash Costs per
Boe
|
|
19.63
|
|
16.46
|
|
15.07
|
|
17.33
|
|
14.79
|
Cash Margin per
Boe
|
|
$
75.17
|
|
$
59.17
|
|
$
35.11
|
|
$
60.22
|
|
$
29.49
|
|
|
|
|
|
|
|
|
|
|
|
Settlements on
derivatives ($ per Boe)
|
|
(27.83)
|
|
(20.85)
|
|
(9.31)
|
|
(22.11)
|
|
(2.26)
|
Cash Margin per Boe,
including derivative settlements
|
|
$
47.34
|
|
$
38.32
|
|
$
25.80
|
|
$
38.11
|
|
$
27.23
|
|
(1) A non-GAAP financial
measure which is reconciled above.
|
Free Cash Flow: Free Cash Flow is a measure that we
use as an indicator of our ability to fund our development
activities and generate excess cash for other corporate purposes.
We define Free Cash Flow as Net Cash Provided by Operating
Activities, before changes in working capital and reduced by
capital expenditures before acquisitions. Free Cash Flow should be
considered in addition to, rather than as a substitute for, net
cash provided by operating activities as a measure of our
liquidity. The following table provides a reconciliation of Net
Cash Provided by Operating Activities to Free Cash Flow for the
periods indicated:
|
|
Three Months
Ended
|
|
Nine Months Ended
June 30,
|
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
2022
|
|
2021
|
|
|
(Unaudited, In
thousands)
|
Net Cash Provided by
Operating Activities
|
|
$
44,159
|
|
$
29,995
|
|
$
20,695
|
|
$
96,987
|
|
$
58,841
|
Exclude changes in
working capital
|
|
(614)
|
|
507
|
|
1,523
|
|
2,092
|
|
135
|
Additions to oil and
natural gas properties
|
|
(36,876)
|
|
(10,171)
|
|
(21,750)
|
|
(76,058)
|
|
(38,882)
|
Additions to other
property and equipment
|
|
(92)
|
|
(28)
|
|
(792)
|
|
(1,137)
|
|
(1,172)
|
Free Cash
Flow
|
|
$
6,577
|
|
$
20,303
|
|
$
(324)
|
|
$
21,884
|
|
$
18,922
|
PV-10: PV-10 is derived from the standardized
measure of discounted future net cash flows ("Standardized
Measure"), which is the most directly comparable financial measure
under GAAP. PV-10 is a computation of the Standardized Measure on a
pre-tax basis. PV-10 is equal to the Standardized Measure at the
applicable date, before deducting future income taxes, discounted
at an annual rate of 10%, determined in accordance with GAAP. We
believe that the presentation of PV-10 is relevant and useful to
investors because it presents the discounted future net cash flows
attributable to our estimated net proved reserves prior to taking
into account future corporate income taxes, and it is a useful
measure for evaluating the relative monetary significance of our
oil and natural gas properties. We believe that securities analysts
and rating agencies use PV-10 in similar ways. Further, investors
may utilize the measure as a basis for comparison of the relative
size and value of our estimated reserves to other companies. We use
this measure when assessing the potential return on investment
related to our oil and natural gas properties. PV-10, however, is
not a substitute for the Standardized Measure. Our PV-10 and the
Standardized Measure do not purport to present the fair value of
our estimated oil and natural gas reserves.
The following table provides a reconciliation of the
Standardized Measure to PV-10 of the Company's estimated total
proved reserves as of June 30, 2022
and September 30, 2021:
|
|
June 30,
2022
|
|
|
September 30,
2021
|
|
|
(In
thousands)
|
Standardized measures
of discounted future net cash flows
|
|
$
1,046,203
|
|
|
$
552,936
|
Future income taxes,
discounted at 10%
|
|
270,631
|
|
|
127,793
|
Present value of
estimated future net revenues (PV-10)
|
|
$
1,316,834
|
|
|
$
680,729
|
Adjustment using NYMEX
pricing (1)
|
|
(219,121)
|
|
|
49,213
|
PV-10 adjusted for
pricing
|
|
$
1,097,713
|
|
|
$
729,942
|
|
(1) Adjustment to reflect the
difference between SEC pricing used to calculate Standardized
Measure and PV-10 at NYMEX pricing.
|
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SOURCE Riley Exploration Permian, Inc.