This article first appeared on GuruFocus .
Release Date: May 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Riley Exploration Permian Inc ( REPX ) exceeded production expectations, delivering results above the high end of guidance while spending less than the low end of capital guidance.
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The company reduced debt by $8 million and returned $12 million to shareholders through dividends and share repurchases.
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Riley Exploration Permian Inc ( REPX ) forecasts a 30% production growth for the full year, with a potential 10% year-over-year growth in 2027 with only a 5% increase in CapEx.
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The company is making significant progress on infrastructure projects, including the high-pressure trunk line in New Mexico, which is on track for a Q3 commercial operations date.
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Operational efficiencies have been achieved, with drilling and completion execution improving, helping to offset service cost inflation.
Negative Points
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Gas and NGL revenues were negative, reducing total net revenue by 9% due to structural gas egress constraints and seasonal midstream maintenance.
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The company reported a net loss of $70 million on a GAAP basis, driven by a $127 million loss on derivatives, most of which was unrealized.
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Operating costs and production taxes increased by $2 million, contributing to a decline in adjusted EBITDACs by $5 million quarter-over-quarter.
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There is a risk of timing issues around the completion of the Targa Gas Pipeline project, which could impact production outlook in the second half of 2026.
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Despite improvements, LOE per BOE increased slightly quarter-over-quarter due to elective workovers and inflationary pressures on service prices.
Q & A Highlights
Q: How would you characterize your desire to further lean into this favorable environment from a workover perspective, and is this level of activity a good run rate for the efficiency of your operations into 2027? A: Bobby Riley, CEO, mentioned that even at a $60 price level, they were not developing at the current pace. With efficiencies in drilling and completions, they could add another 5 to 10 wells. John Suter, COO, added that with their fast cycle times, they can drill 50+ wells a year with one rig, and a frack crew can handle up to 90 to 100 wells per year, indicating the efficiency of their operations.
Q: How should we think about the potential run-out of contingent payments from your midstream sales agreement? A: Philip Riley, CFO, stated they have a line of sight for early next year. They expect to hit the first earn-out of $30 million in the first half of 2027, with subsequent payments likely a year apart.
Q: How much is the decision to increase production influenced by negative natural gas and NGL prices, and how do other factors like incremental takeaway or power fit into this growth decision? A: Philip Riley, CFO, acknowledged the frustration with gas prices but noted improvements are expected with upcoming projects. Despite the challenges, margins and returns remain strong at $70-$80 oil. They have the necessary infrastructure and power solutions in place to support growth.
Q: Can you talk about the guidance of the production uplift in terms of timing versus performance-related issues with the wells? A: Bobby Riley, CEO, explained that the acceleration is partly due to timing, with two rigs running and a frack crew following closely. John Suter, COO, added that wells completed this year have exceeded pre-drill forecasts, contributing to the uplift.
Q: With plans to drill 42 to 48 net wells this year, how is your ground gain working to replace inventory? A: John Suter, COO, mentioned they are drilling wells on the east side of Champions and acquiring additional acreage. In New Mexico, they have few PUDs booked, and as they drill, they add reserves, with potential for additional leasing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
