Riley Permian Reports Fiscal Third Quarter 2021 Financial and Operating Results

OKLAHOMA CITY, Aug. 12, 2021 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or the "Company"), today reported financial and operational results for the fiscal third quarter ended June 30, 2021.

HIGHLIGHTS

• Increased total net equivalent production by 35% to 9.1 MBoe/d for the three months ended June 30, 2021, as compared to the same period in 2020, or by 10% quarter-over-quarter compared to fiscal second quarter 2021
• Generated cash flow from continuing operations of $58.8 million for the nine months ended June 30, 2021
• Reported a net loss of $21.5 million for the three months ended June 30, 2021, with Income from Operations of $19.3 million for the same period
• Reduced Cash Costs⁽¹⁾ per Boe by 7% quarter-over-quarter; realized a Cash Margin⁽¹⁾ of $35.11/Boe before derivative settlements or $25.80/Boe after derivative settlements
• Total cash capital expenditures before acquisitions of $40.1 million for the nine months ended June 30, 2021, which corresponds to 61% of Adjusted EBITDAX⁽¹⁾
• Generated Free Cash Flow⁽¹⁾ of $18.8 million for the nine months ended June 30, 2021
• Completed $47 million net capital raise in July 2021 with issuance of 1.67 million shares: secured funding for acceleration of Enhanced Oil Recovery ("EOR") program and increased estimated trading float by 77%
• Exited the third quarter with $6.9 million in cash and $97.5 million drawn on our credit facility; subsequently reduced credit facility borrowings to $62 million in July 2021
• Paid cash common dividends of $0.28 per share or $5.0 million in total on May 7, 2021
• Announced latest dividend, subsequent to the fiscal third quarter, of $0.28 per share or $5.5 million in total, which was paid August 6, 2021; current dividend⁽²⁾ implies a 5.8% annualized yield based on the August 6, 2021 closing price of $19.27 per share

Commenting on the fiscal third quarter performance, Bobby Riley, Chairman and CEO, said, "Riley Permian continued to perform well in the fiscal third quarterly both operationally and financially. We currently remain on track to achieve our best fiscal year performance in history across numerous operational and financial performance metrics. We were pleased to have completed a material capital raise during July 2021, which is notable given challenges in capital markets for smaller, exploration & production companies. We appreciate the support of investors who participated in the raise and for the support to accelerate our EOR program development, which has already begun. Finally, we were pleased to have paid last week our most recent dividend, continuing a standard of rewarding our shareholders through direct return of capital."

OPERATIONS UPDATE
Riley Permian brought online 7 gross (4.8 net) horizontal wells and drilled 1 gross (1 net) vertical injection well during the fiscal third quarter of 2021. Fiscal third-quarter oil production averaged 6.7 MBbls per day and total equivalent production averaged 9.1 MBoe per day, in line with our budgeted guidance previously disclosed.

The Company has accelerated development of its EOR project, which will now include 12 vertical injection wells in our 960- acre project area. The drilling rig for the vertical injection wells has been contracted and is scheduled to arrive during September 2021. The Company will conduct drilling, casing and logging operations on the injection wells through end of calendar year 2021. Water and gas line infrastructure has been ordered, and we anticipate installation during the calendar fourth quarter of 2021 and calendar first quarter of 2022. The physical infrastructure connection to the CO2 pipeline source, commonly called a tap, has a turnaround time of six to nine months due to the specialty nature of the product and supply chain constraints. Based on current estimates, we anticipate initiating water injection for the project during the calendar second quarter of 2022, which will continue for several months, such that the slower timing of the CO2 tap may not impact our planned development schedule. After the reservoir is sufficiently re-pressurized and the CO2 tap has been installed, we plan to initiate a combination of CO2 and water injection.

With regard to choice of CO2 and procurement, the EOR project will begin using natural CO2 given ease of availability, reliability and price. The Company is currently finalizing customary agreements with a reputable counterparty for both supply of CO2 product and for the CO2 tap connection. We maintain the optionality to potentially switch to using anthropogenic CO2 with this or subsequent project areas as sources become available at attractive economics. With the CO2 tap installed, Riley Permian will have access to a wider network of CO2 pipelines, creating flexibility for sourcing CO2, including the anthropogenic potential.

The Company continues to investigate numerous anthropogenic source possibilities in conjunction with carbon capture, utilization and sequestration ("CCUS") efforts, including ongoing discussions with several counterparties.   At the same time, we are monitoring potential changes to federal tax incentives and other regulations currently being discussed at the national and Texas state levels. We continue to believe that a possible CCUS project, with Riley Permian participating as a developer, has the potential to be an attractive opportunity by itself, as well as a synergistic opportunity with our core upstream business.

FINANCIALS UPDATE
The Company reported a Net Loss of $21.5 million and $81.3 million and Operating Income of $19.3 million and $33.0 million for the three months and nine months ended June 30, 2021, respectively. The Company generated Adjusted EBITDAX⁽¹⁾ and Adjusted Net Income⁽¹⁾ of $22.5 million and $7.6 million for the three months ended June 30, 2021, with Adjusted EBITDAX⁽¹⁾ of $65.4 million for the nine ended June 30, 2021, respectively.

Fiscal third quarter 2021 average realized prices, before derivative settlements were $64.55 per barrel of oil, $1.31 per Mcf of natural gas and $11.57 per barrel of natural gas liquids, resulting in a total equivalent price, before derivative settlements, of $50.18 per Boe.

Adjusted for derivative settlements, total equivalent price was $40.86 per Boe, corresponding to realized derivative losses of $9.31 per Boe or $7.7 million. The Company also incurred $27.7 million of unrealized derivative losses during the fiscal third quarter, which contributed to the Net Loss. By comparison, Riley Permian had $26.9 million of realized derivative gains and $7.0 million of unrealized derivative gains during fiscal 2020. The Company recognizes the inherent volatility of commodity prices and believes a regular hedging practice reduces fluctuations in its operating cash flows, leading to more efficient management of development activities and the overall business.

Riley Permian's total Cash Costs⁽¹⁾ for the fiscal third quarter of 2021 were $15.07 per Boe, representing a decrease of $1.11 per Boe or 7% compared to the fiscal second quarter. Third quarter Cash Costs⁽¹⁾ included lease operating expense ("LOE") of $6.95 per Boe (which include ad valorem expenses), cash G&A expenses of $4.25 per Boe (excluding share-based and unit- based compensation expense, shown after the effect of gross profit from contract services derived from management services agreements), production taxes of $2.45 per Boe and interest expense of $1.41 per Boe.

The Company realized a fiscal third quarter Cash Margin⁽¹⁾ of $35.11/Boe before derivative settlements or $25.80/Boe after derivative settlements.

The Company invested $21.8 million in drilling & completions capital expenditures during the fiscal third quarter, or $38.9 million fiscal 2021 year-to-date. Including additions to other property & equipment, the Company invested $40.1 million in capital expenditures year-to-date for fiscal 2021.

During the fiscal third quarter the Company paid cash common dividends of $0.28 per share or $5.0 million in total. Subsequent to the fiscal third quarter, during August 2021, the Company paid cash common dividends of $0.28 per share or $5.5 million in total.

As of June 30, 2021 Riley Permian had $6.9 million in cash and $97.5 million drawn on our credit facility. Subsequently, in July 2021, the Company completed a public capital raise resulting in approximately $47 million of net proceeds. As of August 6, 2021, the Company had $6.8 million in cash (after funding the August dividend), $62.0 million drawn on our credit facility, with $73.0 million of availability for future borrowing under the facility and approximately $80 million of total liquidity.

FISCAL FOURTH QUARTER 2021 OUTLOOK AND GUIDANCE
Based on current market conditions, the Company forecasts fiscal fourth quarter 2021 capital expenditures before acquisitions to total approximately $20 million to $26 million. Following the successful capital raise in July 2021, the Company accelerated the development of its EOR program with estimated fiscal fourth quarter 2021 capital expenditures before acquisitions related to drilling vertical injection wells, purchase of water and gas line infrastructure, and purchase of the CO2 connection equipment. Separately, certain drilling & completions capital expenditures are now forecasted to be invested during the fiscal fourth quarter 2021.

Riley Permian forecasts fiscal fourth quarter 2021 oil production to average 6.6 MBbls per day to 7.2 MBbls per day, with total equivalent production to average 8.7 MBoe per day to 9.6 MBoe per day. The Company forecasts full-year fiscal 2021 oil production to average 6.3 MBbls per day to 6.5 MBbls per day, with total equivalent production to average 8.4 MBoe per day to 8.6  MBoe per day.

The Company forecasts fourth fiscal quarter of 2021 LOE of approximately $6.90 to $7.80 per Boe (which include ad valorem taxes); cash G&A expenses of approximately $2.80 to $3.40 per Boe (excluding share-based and unit-based compensation expense, shown after the effect of gross profit from contract services derived from management services agreements), production taxes of approximately $2.50 to $2.80 per Boe, and interest expense of approximately $0.80 to 1.00 per Boe.

CONFERENCE CALL
Riley Permian management will host a conference call for investors and analysts on August 13, 2021 at 8:00 a.m. CT to discuss the Company's results. Interested parties are invited to participate by calling:

• U.S./Canada Toll Free, (844) 965-3268
• International, +1 (639) 491-2298
• Conference ID number 4234539

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 27, 2021 by calling:

• U.S./Canada Toll Free, (800) 585-8367
• International, +1 (416) 621-4642
• Conference ID number 4234539

About Riley Exploration Permian, Inc.
Riley Permian is an independent oil and natural gas company focused on steadily growing its reserves, production and cash flow per share through the acquisition, exploration, development and production of oil, natural gas, and natural gas liquids in the Permian Basin. For more information please visit www.rileypermian.com.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statements within the meaning of federal securities laws. All statements, other than historical facts, that address activities that the Company assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management's current beliefs, based on currently available information, as to the outcome and timing of future events, including the current adverse industry and macroeconomic conditions, commodity price volatility, production levels, the impact of the recent presidential and congressional elections on energy and environmental policies and regulations, any other potential regulatory actions (including those that may impose production limits in the Permian Basin), the impact and duration of the ongoing COVID-19 pandemic, acquisitions and sales of assets, future dividends, production, drilling and capital expenditure plans, need for financing, competitive position, growth potential, severe weather conditions (including the impact of the recent severe winter storms on production volumes), impact of impairment charges, price and availability of CO2, and effects of hedging arrangements. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of the Company.

These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, the risk that the Company may reduce, suspend or totally eliminate dividend payments in the future, whether variable or fixed, due to insufficient liquidity or other factors, potential adverse reactions or changes to the business or operations of the Company resulting from the recently completed merger, including the Company's future financial condition, results of operations, strategy and plans; changes in capital markets and the ability of the Company to finance operations in the manner expected; the risk that the Company's EOR and CCUS projects may not perform as expected or produce the anticipated benefits; the risks of oil and gas activities; and the fact that operating costs and business disruption may be greater than expected following the consummation of the merger.

Additional factors that could cause results to differ materially from those described above can be found in Riley Permian's Annual Report on Form 10-K for the year ended December 31, 2020 and in its subsequently filed Quarterly Reports on Form 10-Q, as well as in the Registration Statement on Form S-4 filed by the Company with the SEC and declared effective by the SEC on February 2, 2021, each of which is on file 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.

RILEY EXPLORATION PERMIAN, INC.
Definition of Non-GAAP Financial Measures as Calculated by the Company (Unaudited)

The non-GAAP financial measures of Adjusted Net Income, Adjusted EBITDAX, Cash G&A, Cash Costs and Cash Margin, and Free Cash Flow as defined and presented below, are intended to provide readers with meaningful information that supplements our financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). Further, these non-GAAP measures should only be considered in conjunction with financial statements and disclosures prepared in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP measures, such as net income or loss, operating income or loss or any other GAAP measure of financial position or results of operations. Adjusted Net Income, Adjusted EBITDAX, Cash G&A, Cash Costs and Cash Margin, and Free Cash Flow are presented herein and reconciled from their respective GAAP measures because of its wide acceptance by the investment community as financial indicators.

RILEY EXPLORATION PERMIAN, INC.
Calculation of Non-GAAP Measures

Adjusted Net Income

The following table provides a reconciliation of Net Loss to Adjusted Net Income for the periods indicated:

Adjusted EBITDAX

The following table provides a reconciliation from the GAAP measure of Net Income (Loss) to Adjusted EBITDAX.

Cash G&A:

The following table provides a calculation for Cash G&A for the periods indicated:

Cash Costs and Cash Margin per BOE:

The following table provides a calculation for Cash Costs and Cash Margin per BOE for the periods indicated:

Free Cash Flow

The following table provides a reconciliation of Cash Flow from Operations - Continuing Operations to Free Cash Flow for the periods indicated:

Investor Contact:
Philip Riley
405-438-0126
[email protected]

SOURCE Riley Exploration Permian, Inc.