Riley Exploration Permian, Inc.

(1) Nature of Business

Riley Permian is a growth-oriented, independent oil and natural gas company focused on horizontal drilling of conventional oil-saturated and liquids-rich formations in the Permian Basin that produce long-term cash flows. The majority of our acreage is located in Yoakum County, Texas, which represents our Champions field and Eddy County, New Mexico, which represents our Red Lake field.

(2) Basis of Presentation

These unaudited condensed consolidated financial statements as of September 30, 2026, and for the three and nine months ended September 30, 2026, and 2025, include the accounts of Riley Permian and our consolidated subsidiaries and have been prepared in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated upon consolidation.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company's 2025 Annual Report.

These condensed consolidated financial statements have not been audited by an independent registered public accounting firm. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for fair presentation of the results of operations for the periods presented, which adjustments were of a normal recurring nature, except as disclosed herein. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of the results to be expected for the full-year ending December 31, 2026, for various reasons, including fluctuations in prices received for oil and natural gas, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, unpredictability of new tariffs, the current and future impacts of military conflicts, changes to the political environment under the current administration and other factors.

(3) Summary of Significant Accounting Policies

Significant Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Actual results may differ significantly from the Company’s estimates. Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include, but are not limited to, estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, accounts receivable, accrued capital expenditures and operating expenses, ARO, the fair value determination of acquired assets and assumed liabilities, certain tax accruals and the fair value of derivatives.

Accounts Receivable, net

Accounts receivable, net is summarized below:

As of December 31, 2024, the Company had accounts receivables, net from oil, natural gas and NGL sales of $33.6 million.

The Company estimates uncollectible amounts based on the length of time that the accounts receivable has been outstanding, historical collection experience and current and future economic and market conditions. Allowances for credit losses are recorded as reductions to the carrying values of the accounts receivable included in the Company’s condensed consolidated balance sheets and are recorded in administrative costs in our condensed consolidated statements of operations if failure to collect an estimable portion is determined to be probable.

Other Property and Equipment, net

Other property and equipment, net is summarized below:

Other Non-Current Assets, net

Other non-current assets, net consisted of the following:

(1)Deferred financing costs, net reflects costs associated with the Company's Credit Facility which are amortized over the term of the Credit Facility.

Accrued Liabilities

Accrued liabilities consisted of the following:

Other Current Liabilities

Other current liabilities consisted of the following:

Asset Retirement Obligations

Components of the changes in ARO for the nine months ended September 30, 2026, and the year ended December 31, 2025, are shown below:

(1)Current ARO is included within other current liabilities in our accompanying condensed consolidated balance sheets.

Revenue Recognition

The following table presents oil and natural gas sales, net disaggregated by product:

(1) The Company's oil, natural gas and NGL sales are presented net of GP&T costs. These costs, related to natural gas and NGLs, at times exceeded the price received and resulted in negative average realized prices.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40) Reporting Comprehensive Income-Expense Disaggregation Disclosures, which broadens the disclosures required for certain costs and expenses in the Company’s annual and interim consolidated financial statements. This ASU is effective prospectively for fiscal years beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact to disclosures related to our annual report for fiscal year 2027.

(4) Acquisitions and Divestitures

Silverback Acquisition

On July 1, 2025, the Company completed the acquisition of 100% of the ownership interests of Silverback Exploration II, LLC and its subsidiaries ("Silverback") which owns oil and natural gas assets and operations located primarily in the Yeso trend of the Permian Basin in Eddy County, New Mexico for approximately $123 million, which included approximately $120 million paid in cash and approximately $3 million of estimated fair value related to potential earnout payments ("Silverback Acquisition").

The Silverback Acquisition qualified as a business combination using the acquisition method of accounting. The assets acquired and liabilities assumed were recognized on the consolidated balance sheet at fair value as of the acquisition date. The fair value measurements of the oil and natural gas properties acquired and ARO assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs represent Level 3 measurements in the fair value hierarchy and include, but are not limited to, estimates of reserves, future development, future operating costs, future cash flows and the use of weighted average cost of capital. These inputs required the use of significant judgments and estimates at the date of valuation, and use of different estimates and judgments could yield different results.

The following presents the allocation of the total purchase price of the Silverback Acquisition to the identified assets acquired and liabilities assumed based on estimated fair value as of the closing date of the acquisition:

Cash consideration included deposits into escrow of $14.2 million at signing and $6.9 million at closing for title defects. As of September 30, 2026, $4.9 million of the closing escrow was returned to the Company and $2.0 million was paid to the sellers. The Company funded the acquisition with cash on hand and borrowings under our Credit Facility.

The Company may potentially pay the sellers quarterly earnout payments of up to $1.9 million per fiscal quarter during calendar years 2026 and 2027 if the NYMEX WTI quarterly average exceeds certain stated amounts set forth in the Purchase Agreement, ranging from $70 to $75 per barrel or higher. For the three months ended September 30, 2026, the average WTI was $85.68. The Company remeasured the fair value of its earnout payment liability at September 30, 2026, for the remaining 5 quarters and, as a result of an increase in the WTI forward strip pricing, a $2.5 million remeasurement loss was reflected in loss on acquisitions and divestitures, net in our condensed consolidated statements of operations, inclusive of the payout of $1.9 million, which was realized in the third quarter and subsequently paid in October 2026. For the nine months ended September 30, 2026, the Company made $2.8 million in earnout payments and recognized a remeasurement loss of $5.9 million. See additional information on the fair value measurement of the earnout payments in Note 7 - Fair Value Measurements.

Gain (loss) on acquisitions and divestitures, net consisted of the following:

(1) Represents sale of interest in non-operated wells and the recognition of escrow funds released subsequent to the expiration of the purchase price allocation measurement period.

Post-Acquisition Operating Results

The results of operations attributable to the Silverback Acquisition since the closing date of the acquisition have been included in the condensed consolidated statements of operations and include$17.9 million and $44.9 million of total revenues and$9.8 million and$23.4 millionof earnings, which represents total revenues less production taxes andlease operating expenses ("LOE"), for thethree and nine months ended September 30, 2026, respectively.

Pro Forma Operating Results (Unaudited)

The results of operations of the Silverback Acquisition have been included in the Company's condensed consolidated financial statements since the closing date of the acquisition. The following supplemental, unaudited pro forma combined financial information for thethree and nine months ended September 30, 2025, reflect the consolidated results of operations of the Company as if the Silverback Acquisition had occurred on January 1, 2024. The information below reflects pro forma adjustments based on available information and certain assumptions that the Company believes are factual and supportable. The unaudited pro forma information includes adjustments for (i) transaction costs being reclassified to the first quarter of 2024 instead of being recorded in the year ended December 31, 2025, (ii) depletion, depreciation and amortization expense and (iii) interest expense related to the financing for the Silverback Acquisition. In addition, the pro forma information has been effected for income taxes with a blended statutory rate of 25.7% for the three and nine months ended September 30, 2025.

The unaudited pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the Silverback Acquisition been completed as of January 1, 2024, and should not be taken as indicative of the Company's future combined results of operations. The actual results may differ significantly from that reflected in the unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma combined financial information and actual results.

(5) Oil and Natural Gas Properties

Oil and natural gas properties, net are summarized below:

Depletion expense for proved oil and natural gas properties was $29.6 million and $24.2 million, respectively, for the three months ended September 30, 2026, and 2025 and $77.6 million and $59.5 million, respectively, for the nine months ended September 30, 2026, and 2025.

Exploration costs were $2.1 million and $0.2 million, respectively, for the three months ended September 30, 2026, and 2025 and $3.5 million and $0.3 million, respectively, for the nine months ended September 30, 2026, and 2025. Exploration costs were primarily attributable to seismic data licensing and the expiration of oil and natural gas leases and permits.

(6) Derivative Instruments

Oil and Natural Gas Contracts

The Company uses commodity based derivative contracts to reduce exposure to fluctuations in oil and natural gas prices. While the use of these contracts partially limits the downside risk for adverse price changes, their use also partially limits future revenues from favorable price changes. We have not designated our derivative contracts as hedges for accounting purposes, and therefore changes in the fair value of derivatives are included and recognized in other income (expense) in our accompanying condensed consolidated statements of operations.

As of September 30, 2026, the Company’s oil and natural gas derivative contracts consisted of fixed price swaps, costless collars and basis swaps. The following table summarizes the open financial derivative positions as of September 30, 2026, related to our future oil and natural gas production:

Interest Rate Contracts

The Company entered into floating-to-fixed interest rate swaps, in which it will receive a floating market rate equal to one-month Chicago Mercantile Exchange Term Secured Overnight Financing Rate and will pay a fixed interest rate to manage future interest rate exposure related to the Company’s Credit Facility.

The following table summarizes the open interest rate derivative positions as of September 30, 2026:

Balance Sheet Presentation of Derivatives

The following tables present the location and fair value of the Company’s derivative contracts included in our accompanying condensed consolidated balance sheets:

The following table presents the components of the Company's gain (loss) on derivatives, net for the periods presented below:

(7) Fair Value Measurements

The FASB has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability.

The carrying values of financial instruments comprising cash, payables, receivables and advances from joint interest owners approximate fair values due to the short-term maturities of these instruments and are classified as Level 1 in the fair value hierarchy. The carrying value reported for the Credit Facility approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The fair value of the Senior Notes is based on estimates of current rates available for similar issuances with similar maturities and is classified as Level 2 in the fair value hierarchy. The oil and natural gas properties acquired and ARO assumed in the Silverback Acquisition in addition to the fair value of assets and liabilities when considered for impairment are considered Level 3 measurements.

Assets and Liabilities Measured on a Recurring Basis

The fair values of commodity derivatives and interest rate swaps are estimated using discounted cash flow calculations based on forward curves and are classified as Level 2 within the fair value hierarchy. The following table summarizes the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy:

Silverback Earnout Payments

The earnout payments in connection with the Silverback Acquisition were valued using a Monte Carlo simulation model that incorporated forward strip pricing as of September 30, 2026. The valuation process involved modeling the potential earnout payments over numerous scenarios based on WTI futures prices. The average expected value from the simulations was then discounted using the Company's weighted average cost of debt.

During the three months ended September 30, 2026, the Company paid $1.9 million based on the average WTI price during the second quarter. Based on the forward strip pricing as of September 30, 2026, the earnout payment liability increased from $5.6 million at June 30, 2026 to $6.2 million at September 30, 2026, which includes $1.9 million realized in the third quarter and subsequently paid in October 2026, and $4.3 million unrealized. The fair value of the unrealized earnout payments is considered a Level 3 measurement due to the unobservable inputs including volatility and the discount rate, as well as the detailed modeling required to estimate fair value. See Note 4 - Acquisitions and Divestitures for additional information on the earnout payments. The following table summarizes the changes in the fair value of our Silverback earnout payments, in addition to the range and arithmetic average of the significant unobservable inputs used in the Level 3 fair value measurement:

As of September 30, 2026, $4.7 million, which includes the realized earnout liability of $1.9 million for the third quarter of 2026, is accrued in other current liabilities and $1.6 million is accrued in other non-current liabilities in ouraccompanying condensed consolidated balance sheets.

Liabilities Not Measured on a Recurring Basis

The following table summarizes the fair value and carrying amount of the Company's financial instruments:

(1)The carrying value for the Senior Notes is shown net of unamortized discount and unamortized deferred financing costs.

The carrying value reported for the Credit Facility approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The fair value of the Senior Notes was determined utilizing a discounted cash flow approach. See Note 16 - Subsequent Events for additional information on the Credit Facility and Senior Notes.

(8) Equity Method Investment

RPC Power

RPC Power LLC ("RPC Power") is our power-focused joint venture with Conduit Power LLC, in which we have 50% ownership. The Company is currently involved intwo projects with RPC Power.

The first project provides a portion of our electric power needs for our field operations in our Champions field. This project consists oftwo sites located within the Company's operating area. The power generated and delivered by RPC Power is consumed by operating activities and not sold to the electric grid.

The second project is intended to provide power for the sale into ERCOT, the primary electric grid of Texas, with none of the generation consumed by Riley Permian ("Merchant Power Project"). This project consists offour sites located outside of the Company's operating area, but in the west Texas region.

As the Company has significant influence due to our ownership percentage, but lacks control, RPC Power is accounted for as an equity method investment. In November 2024, the Company signed the Second Amendment to the A&R LLC Agreement, which increased the capital commitment for each owner from $42.5 million to $51.5 million. As of September 30, 2026, the Company had invested $48.0 million in the joint venture, comprised of $45.7 million in cash and $2.3 million of contributed assets, which was reduced by distributions and the Company's share of losses and increased by our share of income in the joint venture.

During the nine months ended September 30, 2026, the Company contributed an additional $8.5 million to RPC Power. The Company has a remaining commitment to invest up to an additional $3.5 million, if required, to fund our portion of the future capital budget for the RPC Power joint venture. On December 31, 2025, RPC Power declared a $3 million dividend, of which $1.5 million was the Company's portion. The dividend was paid in January 2026.

See Note 9 - Transactions with Related Parties for further discussion of the contractual agreements between the Company and RPC Power and its affiliates and Note 15 - Commitments and Contingencies for additional information on future commitments.

The following table presents the Company's equity method investment activity:

(9) Transactions with Related Parties

RPC Power

The Company is party to a 10-year agreement with RPC Toll LLC, a wholly owned subsidiary of RPC Power ("RPC Toll"), which provides for the conversion of specified quantities of natural gas to electricity to power a portion of our oilfield operations in our Champions field ("Second A&R Tolling Agreement") in exchange for fixed and variable payments to RPC Toll for the electricity provided. The Second A&R Tolling Agreement commenced in June 2024 and expires in September 2034 unless extended by the parties. The Company also entered intotwo ancillary agreements that run concurrently with the Second A&R Tolling Agreement. The Company pays a fixed monthly fee for RPC Power's operational expertise and a designated return for RPC Power's capital invested in electrical connections.

The Company is party to a 10-year natural gas supply agreement ("A&R Supply Agreement") with RPC Merchant LLC, a wholly owned subsidiary of RPC Power ("RPC Merchant"), to supply natural gas to fuel the natural gas generators under the Merchant Power Project. The Company's commitment under the A&R Supply Agreement is contingent upon project start-up. Two sites were placed in service in May and September 2026. The price the Company receives for the gas volumes sold is variable which may result in negative sales prices and revenues. The remainingtwo sites are expected to be placed in service by the end of 2026.

The Company incurred LOE from RPC Power of approximately $2.1 million and $2.0 million for the three months ended September 30, 2026, and 2025 and approximately $6.2 million and $5.7 million for the nine months ended September 30, 2026, and 2025, respectively. As of September 30, 2026, and December 31, 2025, the Company had approximately $0.8 million and $0.7 million, respectively, accrued for RPC Power, which was included in accrued liabilities in our accompanying condensed consolidated balance sheets. The Company incurred net payments under the A&R Supply Agreement of$0.3 million for thethree and nine months ended September 30, 2026.

See additional information related to RPC Power in Note 8 - Equity Method Investment and Note 15 - Commitments and Contingencies for additional information on future commitments.

Consulting and Legal Fees

The Company has an engagement agreement with di Santo Law PLLC ("di Santo Law"), a law firm owned by Beth di Santo, a member of our Board of Directors, pursuant to which di Santo Law's attorneys provide legal services to the Company.

The Company incurred legal fees from di Santo Law of approximately$0.5 million and $0.6 million for the three months ended September 30, 2026, and 2025 and approximately $1.1 million and $1.3 million for the nine months ended September 30,

2026, and 2025, respectively. As of September 30, 2026, and December 31, 2025, the Company had approximately $0.4 million and $1.7 million, respectively, accrued for di Santo Law, which was included in other current liabilities in our accompanying condensed consolidated balance sheets.

(10) Long-Term Debt

The following table summarizes the Company's outstanding debt:

(1)See Note 16 - Subsequent Events for additional information.

(2)Unamortized discount and unamortized deferred financing costs are attributable to and amortized over the term of the Senior Notes.

(3)As of September 30, 2026, and December 31, 2025, the current portion of long-term debt reflects $20 million due on the Senior Notes over the next twelve months.

Credit Facility

As of September 30, 2026, Riley Exploration - Permian, LLC, as borrower, and the Company, as parent guarantor, are parties to a credit agreement with Truist Bank and certain lenders party thereto, as amended, which provides for a Credit Facility with a borrowing base of $425 million. On April 30, 2026, the Company entered into the eighteenth amendment to the Credit Facility, which increased the Company’s borrowing base from $400 million to $425 million and documented the Company's election to maintain commitments thereunder at $400 million. In addition, the eighteenth amendment shortens the springing maturity of the Credit Facility in advance of the Senior Notes from 181 days to 91 days, effectively extending the maturity date for the Credit Facility to January 2028, given the April 2028 stated maturity of the Senior Notes. Substantially all of the Company’s assets are pledged to secure the Credit Facility. See Note 16 - Subsequent Events for additional information on the Credit Facility.

The Credit Facility contains certain covenants, which, among other things, require the maintenance of (i) a total leverage ratio of not greater than 3.00 to 1.00 and (ii) a minimum current ratio of not less than 1.0 to 1.0 as of the last day of any quarter. The Credit Facility also contains a total leverage ratio for the regulation of Restricted Payments, as defined in the credit agreement after giving pro forma effect to such Restricted Payments, which includes payments to any holder of the Company's shares, would not exceed 2.50 to 1.00. If the Company's leverage ratio, after giving pro forma effect to such Restricted Payments (as defined in the Credit Agreement), is above 2.0 to 1.0, then an additional test of free cash flow is applied, and the Company will only be permitted to make such Restricted Payments if such payment does not exceed the Company's free cash flow. In addition to and after giving effect to such Restricted Payments, the availability of funds under the Company's Credit Facility must be greater than or equal to 20% of the elected commitments. The Company must maintain a minimum hedging requirement for oil based on our proved developed producing projected volumes on a rolling 24-month basis.

The following table summarizes the Credit Facility balances:

Senior Notes

On April 3, 2023, the Company (as issuer) completed our issuance of $200 million aggregate principal amount of 10.50% senior unsecured notes with final maturity in April 2028 pursuant to a note purchase agreement (the "Note Purchase Agreement"), with the Senior Notes issued at a 6% discount.

Interest is due and payable at the end of each quarter. In addition to interest, the Company will repay 2.50% of the original principal amount each quarter resulting in $5 million quarterly principal payments until the maturity of the Senior Notes. As of September 30, 2026, the Company had $20 million in current liabilities in our accompanying condensed consolidated balance sheets related to the quarterly principal payments due within the next 12 months.

The Note Purchase Agreement provides that after April 3, 2026, but on or prior to October 3, 2026, the Company may, at our option, redeem, at any time and from time to time some or all of the Senior Notes at 100% of the principal amount thereof plus a premium of 5.25% as set forth in the Note Purchase Agreement plus accrued and unpaid interest, if any. It further provides that after October 3, 2026, the Company may redeem some or all of the Senior Notes at 100% of the principal amount thereof plus accrued and unpaid interest, if any. The principal remaining outstanding at the time of maturity is required to be paid in full by the Company. Certain note features, including those discussed above, were evaluated and deemed to be remote. Due to the remote nature, the fair value of these features was estimated to be approximately zero.

The Senior Notes contain certain covenants, which, among other things, require the maintenance of (i) a total leverage ratio of not greater than 3.00 to 1.00 and (ii) an asset coverage ratio greater than 1.50 to 1.00. The Senior Notes also contain a total leverage ratio and an asset coverage ratio for Restricted Payments, as defined in the Note Purchase Agreement. The leverage ratio, after giving pro forma effect to such Restricted Payments, cannot exceed 2.00 to 1.00, and the asset coverage ratio, after giving effect to such Restricted Payments, must be greater than or equal to 1.50 to 1.00. In addition to and after giving effect to such Restricted Payments, the availability of funds under the Company's Credit Facility must be greater than or equal to 15% of the Aggregate Elected Commitment Amount, as defined in the Note Purchase Agreement. Upon issuance of the Senior Notes, the Company must maintain a minimum hedging requirement included within the Senior Notes for oil and natural gas based on our proved developed producing projected volumes for oil and natural gas on a rolling 18-month basis.

The Senior Notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The Note Purchase Agreement contains customary terms and covenants, including limitations on the Company’s ability to incur additional secured and unsecured indebtedness.

The following table summarizes the Company's interest expense:

During the nine months ended September 30, 2026, and 2025, the weighted average interest rate on the Credit Facility was 6.63% and 7.44%, respectively.

As of September 30, 2026, the Senior Notes had $3.3 million of unamortized discount and $1.4 million of unamortized deferred financing costs, resulting in an effective interest rate of 13.4% during the nine months ended September 30, 2026. As of December 31, 2025, the Senior Notes had $5.1 million of unamortized discount and $2.1 million of unamortized deferred financing costs, resulting in an effective interest rate of 13.4% during the year ended December 31, 2025.

As of September 30, 2026, the Company was in compliance with all covenants contained in the Credit Agreement and Note Purchase Agreement. See Note 16 - Subsequent Events for additional information on the Credit Facility and Senior Notes.

(11) Shareholders' Equity

Dividends

For the three and nine months ended September 30, 2026, and 2025, the Company declared quarterly dividends on our common stock of $0.40 and $0.38 per share, totaling approximately $8.8 million and $8.4 million, and $26.1 million and $24.9 million, respectively.

Stock-Based Compensation

In May 2026, at the Company's annual meeting of stockholders, the Company's stockholders approved the Second Amended and Restated 2021 Long Term Incentive Plan (the "A&R LTIP") which increased the total number of authorized shares available for issuance by 2,800,000. As of September 30, 2026, the A&R LTIP had 2,478,650 shares remaining that are available for future awards.

In March 2025, the Company introduced performance-based restricted stock awards to further align the compensation of the Company's executive officers with the long-term growth of the Company and the interests of its shareholders. Performance stock awards may be earned based on the Company’s achievement of total shareholder return ("TSR") relative to its peer group during the applicable three-year calendar year performance period. Performance stock awards granted in 2026 also included a modifier based on the Company's absolute TSR. Payouts for the executive officers can range from 0% to 200% of the target and have cliff-vesting after three years, with dividends paid on the number of shares that vest. As a result, the Company has reduced the remaining shares available to be granted as awards under the A&R LTIP by 168,406 shares for the 2025 awards and 245,642 shares for the 2026 awards (the full 200%), which assumes the highest percentage payout for the performance stock awards. The number of unvested shares of performance restricted stock used to calculate our fully diluted shares based on the Company's relative TSR ranking and absolute TSR as of September 30, 2026, and relative TSR ranking as of December 31, 2025, was 406,470 and 149,039, respectively.

The following table presents the assumptions related to performance shares granted:

The following table presents the Company's restricted stock activity during the nine months ended September 30, 2026, under the A&R LTIP:

For the three months ended September 30, 2026, and 2025, stock-based compensation expense was $4.2 million and $2.7 million, respectively. For the nine months ended September 30, 2026, and 2025, stock-based compensation expense was $10.4 million and $6.7 million, respectively. Stock-based compensation expense is included in general and administrative costs in the

Company's accompanying condensed consolidated statements of operations for the restricted stock awards granted under the A&R LTIP.

The following table presents unrecognized stock-based compensation expense expected to be recognized and the related weighted average recognition period associated with unvested shares as of September 30, 2026:

Share Repurchases

In December 2025, our Board of Directors approved a stock repurchase program (the “Repurchase Program”) authorizing the repurchase of up to $100 million of our common stock from time to time over a period of 24 months, including through open market purchases, through block trades, in privately negotiated transactions, or by other means, including through the use of trading plans, each in accordance with applicable securities laws and other restrictions. The Repurchase Program does not obligate us to purchase any common stock and may be suspended from time to time, modified, extended or discontinued by the Board at any time. No shares were purchased under the Repurchase Program during the three months ended September 30, 2026. During the nine months ended September 30, 2026,177,408 shares were purchased and subsequently retired. The remaining repurchase authority under the Repurchase Program at September 30, 2026, was $95 million.

(12) Income Taxes

The components of the Company's consolidated provision for income taxes from operations are as follows:

Beginning in the first quarter of 2026, the Company elected to change its interim income tax reporting methodology from the income statement method to the balance sheet method and will apply this method consistently for the remainder of the fiscal year. The change was made because of significant unrealized losses on derivative instruments recognized during the three months ended March 31, 2026, which are expected to reverse in future periods, and use of the income statement method would have caused a disproportionate amount of the related tax benefit to be recognized in the first quarter. Under the balance sheet method, interim income tax expense is based on changes in deferred tax assets and liabilities during the period, which the Company believes more appropriately reflects the allocation of the annual effective tax rate between current and deferred income tax expense. This change affects only the allocation of the interim income tax expense between current and deferred income tax expense and does not affect the Company’s full-year effective tax rate or total quarterly income tax expense.

A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate is as follows:

(1)State taxes in New Mexico and Texas make up the tax effect in this category.

Cash paid for income taxes was as follows:

The Company's federal income tax returns for the years subsequent to December 31, 2021, remain subject to examination. The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2020. The Company currently believes that all other significant filing positions are highly certain and that all of our other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on our consolidated financial statements. Therefore, the Company has not established any reserves for uncertain tax positions.

(13) Net Income Per Share

The Company calculated net income per share using the treasury stock method. The table below sets forth the computation of basic and diluted net income per share:

The following shares were excluded from the calculation of diluted net income per share due to their anti-dilutive effect:

(14) Segments

The Company’s oil and gas exploration and production activities are solely focused in the U.S. For financial reporting purposes, the Company aggregates our operating segments intoone reporting segment due to the similar nature of these operations.

The following table presents consolidated net income, the significant measure of profit and loss used by the CODM, as well as total assets, capital expenditures and our equity method investment for the Company's single reportable segment:

(1)Interest expense is shown gross of, or prior to the effect of interest income.

(2)There are no reconciling items between net income (loss) presented in our accompanying condensed consolidated statements of operations and segment net income (loss).

(3)Capital expenditures are accrual (activity-based) before acquisitions.

(15) Commitments and Contingencies

Legal Matters

Due to the nature of the Company's business, the Company may at times be subject to claims and legal actions. The Company accrues liabilities when it is probable that future costs will be incurred, and such costs can be reasonably estimated. Such accruals are based on developments to date and the Company’s estimates of the outcomes of these matters.

The Company did not recognize any material liability for legal matters as of September 30, 2026, or December 31, 2025. Management believes it is remote that the impact of such matters, individually or in the aggregate, will have a materially adverse effect on the Company’s financial position, results of operations, or cash flows.

Environmental Matters

The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. These laws, which are often changing, regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. The Company hadno material environmental liabilities as of September 30, 2026, or December 31, 2025.

Contractual Commitments

The Company is a party to a gas gathering, treating and processing agreement with Targa Northern Delaware LLC ("Targa") in Texas. Under the terms of the agreement, the Company agreed to deliver an annual minimum volume that expires the earlier of achieving a specified quantity of cumulative volumes delivered or by the contract expiration date in 2031.

The Company is party to a gas purchase agreement for the Company's New Mexico field with Targa, which was amended and restated (the "A&R Gas Purchase Agreement") in connection with the Company's sale to Targa of Dovetail Midstream, LLC, a wholly owned subsidiary of the Company that held certain midstream infrastructure projects in Eddy County, New Mexico. The agreement has a quarterly minimum volume commitment for the first 5 years of the 15-year term from the in-service date, which commenced on October 1, 2026.

The Company is a party to a 15-year water management services agreement ("Waterbridge Agreement") with Waterbridge Stateline LLC ("Waterbridge") to deliver a portion of its New Mexico produced water for disposal purposes within a specified dedicated area. During the first 7 years of the agreement, the Company has both annual and cumulative volume commitments to deliver minimum quantities of produced water. The in-service date occurred on September 15, 2026.

The Company is party to several contracts with RPC Power, our power-focused joint venture. See Note 8 - Equity Method Investment and Note 9 - Transactions with Related Parties for additional information related to RPC Power.

(16) Subsequent Events

Dividend Declaration

On October 14, 2026, the Board of Directors of the Company declared a cash dividend of $0.42 per share of common stock payable on November 11, 2026 to our shareholders of record at the close of business on October 28, 2026.

Senior Notes Payoff

On October 5, 2026, the Company voluntarily prepaid in full all of its outstanding Senior Notes issued pursuant to the Note Purchase Agreement. The Company prepaid the Senior Notes at 100% of the outstanding principal amount, which was $130 million, plus $0.2 million of accrued interest through the prepayment date. No prepayment premium was payable in connection with the prepayment. The Company funded the prepayment with borrowings under its existing Credit Facility. Upon completion of the prepayment, no Senior Notes remained outstanding and the Company’s obligations under the Note Purchase Agreement were satisfied and discharged, other than certain customary continuing obligations under the Note Purchase Agreement. In connection with the prepayment of the Senior Notes, the Company expects to recognize a non-cash loss on debt extinguishment of approximately $4.7 million related to the write-off of the remaining unamortized discount and deferred financing costs.

Credit Facility Redetermination

On October 29, 2026, the Company entered into an amended and restated credit agreement to the Credit Facility, which among other things, increased the Company's borrowing base from $425 million to $450 million and increased the elected commitments from $400 million to $450 million. The maturity date was also extended from December 2028 to October 2030. Additionally, the minimum hedging provision was amended to reduce the minimum hedging requirement for oil based on our proved developed producing projected volumes from 24 months to a rolling 18-month basis. The Company was in compliance with all covenants under the Credit Facility as of September 30, 2026.