Riley Exploration Permian Inc
For the period ended Dec 31, 2024. Filed Mar 5, 2025.
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FY2024 · Filed Mar 5, 2025
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| FORM | 10-K |
|---|
For the fiscal year ended December 31, 2024
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
Commission file number 001-15555
(Exact name of registrant as specified in its charter)
| Delaware | 87-0267438 |
|---|---|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 29 E. Reno Avenue, Suite 500 Oklahoma City, Oklahoma | 73104 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant's telephone number, including area code:(405)415-8699
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.001 | REPX | NYSE American |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yeso No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x Noo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x Noo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | o | Accelerated filer | x |
|---|---|---|---|
| Non-accelerated filer | o | Smaller reporting company | x |
| Emerging growth company | o | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.1D-01(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso Nox
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
Aggregate market value of the voting common equity held by non-affiliates of registrant as of June 30, 2024 was approximately $254.5 million.
The total number of shares of common stock, par value $0.001 per share, outstanding as of February 28, 2025 was 21,505,338.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Annual Report on Form 10-K ("Annual Report"), to the extent not set forth herein, is incorporated herein by reference from the registrant's definitive proxy statement relating to the Annual Meeting of Stockholders to be held in 2025, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report relates.
| RILEY EXPLORATION PERMIAN, INC. | ||
|---|---|---|
| TABLE OF CONTENTS | ||
| Page | ||
| Part I | ||
| Items 1 and 2. | Business and Properties | 8 |
| Item 1A. | Risk Factors | 27 |
| Item 1B. | Unresolved Staff Comments | 56 |
| Item 1C. | Cybersecurity | 56 |
| Item 3. | Legal Proceedings | 58 |
| Item 4. | Mine Safety Disclosures | 58 |
| Part II | ||
| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 59 |
| Item 6. | Selected Financial Data | 60 |
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 60 |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 72 |
| Item 8. | Financial Statements and Supplementary Data | 72 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | 72 |
| Item 9A. | Controls and Procedures | 72 |
| Item 9B. | Other Information | 75 |
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 75 |
| Part III | ||
| Item 10. | Directors, Executive Officers and Corporate Governance | 76 |
| Item 11. | Executive Compensation | 76 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 76 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 76 |
| Item 14. | Principal Accountant Fees and Services | 76 |
| Part IV | ||
| Item 15. | Exhibits and Financial Statements Schedules | 77 |
| Signatures | 81 | |
DEFINITIONS
As used in this Annual Report, unless otherwise noted or the context otherwise requires, we refer to Riley Exploration Permian, Inc., together with its subsidiaries, as "Riley Permian," "REPX," "the Company," "Registrant," "we," "our," or "us." In addition, this Annual Report includes certain terms commonly used in the oil and natural gas industry, and the following are abbreviations and definitions of certain terms used within this Annual Report on Form 10-K:
| Measurements. | |
|---|---|
| Bbl | One barrel or 42 U.S. gallons liquid volume of oil or other liquid hydrocarbons |
| Boe | One stock tank barrel equivalent of oil, calculated by converting gas volumes to equivalent oil barrels at a ratio of 6 thousand cubic feet of gas to 1 barrel of oil and by converting NGL volumes to equivalent oil barrels at a ratio of 1 barrel of NGL to 1 barrel of oil |
| Boe/d | Stock tank barrel equivalent of oil per day |
| Btu | British thermal unit. One British thermal unit is the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit |
| MBbl | One thousand barrels of oil or other liquid hydrocarbons |
| MBoe | One thousand Boe |
| MBoe/d | One thousand Boe per day |
| Mcf | One thousand cubic feet of gas |
| MMBoe | One million Boe |
| MMBtu | One million British thermal units |
| MMcf | One million cubic feet of gas |
| Abbreviations. | |
| ARO | Asset Retirement Obligation |
| BLM | Bureau of Land Management |
| Credit Facility | A credit agreement among Riley Exploration - Permian, LLC, as borrower, and Riley Exploration Permian, Inc, as parent guarantor, with Truist Bank and certain lenders party thereto, as amended |
| CO2 | Carbon Dioxide |
| CWA | Clean Water Act |
| DD&A | Depreciation, depletion and amortization |
| EOR | Enhanced Oil Recovery |
| EPA | Environmental Protection Agency |
| ERCOT | Electric Reliability Council of Texas |
| ESG | Environmental, social, and governance |
| FERC | Federal Energy Regulatory Commission |
| GHG | Greenhouse Gas |
| IRS | Internal Revenue Service |
| NGA | Natural Gas Act of 1938 |
| NGL | Natural gas liquids |
| NGPA | Natural Gas Policy Act of 1978 |
| NMOCD | New Mexico Oil Conservation Division |
| NYMEX | New York Mercantile Exchange |
| NYSE | New York Stock Exchange |
| Oil | Crude oil and condensate |
| RRC | Railroad Commission of Texas |
| SEC | Securities and Exchange Commission |
| Senior Notes | The Company's unsecured 10.5% senior notes due April 2028 |
| SWD | Saltwater Disposal Well |
| WTI | West Texas Intermediate |
| Terms and Definitions. | |
|---|---|
| Developed oil and natural gas reserves | Developed oil and natural gas reserves are reserves of any category that can be expected to be recovered: (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. |
| Development project | A development project is the means by which petroleum resources are brought to the status of economically producible. As examples, the development of a single reservoir or field, an incremental development in a producing field or the integrated development of a group of several fields and associated facilities with a common ownership may constitute a development project. |
| Development well | A well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive. |
| Differential | An adjustment to the price of oil or natural gas from an established spot market price to reflect differences in the quality and/or location of oil or natural gas. |
| Economically producible | The term economically producible, as it relates to a resource, means a resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. The value of the products that generate revenue shall be determined at the terminal point of oil and natural gas producing activities. The terminal point is generally regarded as the outlet valve on the lease or field storage tank. |
| Exploratory well | A well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well. |
| Operator | The individual or company responsible for the exploration and/or production of an oil or natural gas well or lease. |
| Play | A geographic area with hydrocarbon potential. |
| Proved oil and natural gas reserves | Proved oil and natural gas reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for estimation. The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence the project, within a reasonable time. |
| Proved undeveloped reserves | Proved undeveloped reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having proved undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Under no circumstances shall estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty. |
| PV-10 | The present value of estimated future gross revenue to be generated from the production of estimated net proved reserves, net of estimated production and future development costs, using prices and costs in effect as of the date indicated (unless such prices or costs are subject to change pursuant to contractual provisions), without giving effect to non-property related expenses such as general and administrative expenses, debt service and future income tax expenses or to depreciation, depletion and amortization, discounted using an annual discount rate of 10 percent. While this measure does not include the effect of income taxes as it would in the use of the standardized measure calculation, it does provide an indicative representation of the relative value of the applicable company on a comparable basis to other companies and from period to period. |
| Reserves | Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations). |
|---|---|
| Reserve additions | Changes in proved reserves due to revisions of previous estimates, extensions, discoveries, improved recovery, and other additions and purchases of reserves in-place. |
| Reserve life | A measure of the productive life of an oil or natural gas property or a group of properties, expressed in years. |
| Royalty interest | An interest in an oil and natural gas lease that gives the owner of the interest the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the owner to pay any portion of the costs of drilling or operating the wells on the leased acreage. Royalties may be either landowner's royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner. |
| Standardized measure | The present value, discounted at 10% per year, of estimated future net revenues from the production of proved reserves, computed by applying sales prices used in estimating proved oil and natural gas reserves to the year-end quantities of those reserves in effect as of the dates of such estimates and held constant throughout the productive life of the reserves and deducting the estimated future costs to be incurred in developing, producing, and abandoning the proved reserves (computed based on year-end costs and assuming continuation of existing economic conditions). Future income taxes are calculated by applying the appropriate year-end statutory federal and state income tax rates with consideration of future tax rates already legislated, to pre-tax future net cash flows, net of the tax basis of the properties involved and utilization of available tax carryforwards related to proved oil and natural gas reserves. |
| Working interest | An interest in an oil and natural gas lease that gives the owner of the interest the right to drill for and produce oil and natural gas from the leased acreage and requires the owner to pay a share of the costs of drilling and production operations. |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report 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 "Exchange Act"). All statements, other than statements of historical fact, contained in this Annual Report that include information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position and potential growth opportunities represent management's beliefs and assumptions based on currently available information and they 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” or comparable terminology or by discussions of strategy or trends. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.
These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various factors, including those set forth in this Annual Report under "Item 1A. Risk Factors," in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Annual Report. Because of such risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date of this Annual Report, or if earlier, as of the date they were made. We do not intend to, and disclaim any obligation to, update or revise any forward-looking statements unless required by securities law.
SUMMARY RISK FACTORS
Risks Related to Our Business, Operations, and Strategy
Recent regulatory restrictions on use of produced water in the Permian Basin could adversely impact our business, results of operations and financial condition.
Enhanced scrutiny on ESG matters could have an adverse impact on our operations.
An extended decline in commodity prices may adversely affect our business, financial condition, results of operations, ability to meet our capital expenditure obligations and financial commitments, and the value of our reserves.
We may be unable to obtain required capital or financing on satisfactory terms in order to fund our exploration and development and midstream project, which could lead to a decline in our reserves.
Our exploration and development efforts may not be profitable or achieve our targeted returns.
Development risks with our planned midstream project may cause cost overruns, delays or prevent completion of the projects, and even if completed, may not perform as anticipated.
Properties we acquire may not produce as projected and may subject us to liabilities.
Uncertainties could materially alter the occurrence or timing of drilling of our identified drilling locations.
Reserve estimates depend on many assumptions that may turn out to be inaccurate.
We are vulnerable to risks associated with operating in one major geographic area.
We may not be able to access on commercially reasonable terms or otherwise truck transportation, pipelines, gas gathering, transmission, storage and processing facilities to market our oil and natural gas production.
Our estimated proved undeveloped reserves may not be ultimately developed or produced if their development is costlier or more time consuming than expected.
We may be unable or fail to successfully integrate acquired assets into our operations and development activities.
Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline.
Our undeveloped acreage must be drilled before lease expirations to hold the acreage by production, which could result in a substantial lease renewal cost or loss of our lease and prospective drilling opportunities.
Funding through capital market transactions may be difficult and expensive due to our small public float, low market capitalization, and limited operating history.
Covenants in our Credit Facility and Senior Notes may restrict our business and financing activities and our ability to declare dividends.
We may not be able to generate sufficient cash to service all of our indebtedness.
Our derivative activities could result in financial losses or could reduce our earnings.
Our joint ventures expose us to risks which are outside our control.
Risks Related to the Oil and Natural Gas Industry
Conservation measures, alternative sources of energy and technological advances could reduce demand for oil, natural gas and NGLs.
Shortages or cost increases related to equipment, supplies or qualified personnel could delay or cause us to incur significant expenditures that are not provided for in our capital budget, which could have a material adverse effect on our business, financial condition or results of operations.
Negative public perception regarding us and/or our industry could have an adverse effect on our operations.
General domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine, the Israel-Hamas conflict, and the global response to such conflicts may negatively impact us.
Risks Related to Public Health, Acts of God, and Cybersecurity
Our business and operations may be adversely affected by public health crises, such as pandemics and epidemics.
Power outages or limits and increased energy costs could have a material adverse effect on us.
Extreme weather conditions could adversely affect our business and operations.
Our business could be negatively affected by security threats, including cybersecurity threats, and other disruptions.
Risks Related to Legal, Regulatory, and Tax Matters
Regulations related to environmental, occupational health and safety, and pipeline integrity management could adversely affect the cost, manner or feasibility of conducting our operations.
We are responsible for the decommissioning, plugging, abandonment, and reclamation costs for our facilities.
Increased regulation of our oil and natural gas assets as well as our planned midstream project could cause our revenues to decline and operating expenses to increase.
Regulatory initiatives relating to hydraulic fracturing, regulation of greenhouse gases, water conservation, seismic activity, weatherization, or protection of certain species of wildlife or of sensitive environmental areas could result in increased costs and/or decreased production.
New or increased taxes or fees on oil and natural gas extraction or production or changes in our effective tax rate, could adversely impact us.
Risks Related to Our Common Stock
The market price of our common stock may be volatile, which could cause the value of an investment in our stock to decline.
If we fail to continue to meet NYSE American listing requirements, our common stock could be delisted from trading, which would decrease the liquidity of our common stock and ability to raise additional capital.
Our quarterly cash dividends, if any, may vary significantly both quarterly and annually.
Our Board of Directors may modify or revoke our dividend policy at any time at its discretion.
Available cash for dividends depends primarily on our cash flow and not solely on our profitability, which may prevent us from paying dividends, even during periods in which we record net income.
Risks Related to the Company
Our business and operations could be adversely affected if we lose key personnel.
Our executive officers, directors and principal stockholders have the ability to control or significantly influence all matters submitted to the Company’s stockholders for approval.
Conflicts of interest could arise in the future between us, on the one hand, and certain of our stockholders and their respective affiliates.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.