Conduit Power and Riley Permian Form Joint Venture to Build New Power Infrastructure

Rhea-AI Summary

Riley Exploration Permian and Conduit Power have entered a joint venture to develop on-site power generation utilizing captured flared natural gas in Yoakum County, Texas. The project aims to enhance operational efficiency by providing 20 megawatts of power, with Phase 1 delivering 10 MW expected by June 2023 and Phase 2 slated for late 2023 or early 2024. The initiative is designed to improve the reliability of power, reduce operational costs, and lower carbon emissions from the flaring process. The partnership aims to create a resilient power source amid an increasingly volatile power grid.

Positive

• Joint venture aims to improve operational efficiency with on-site power generation.
• Phase 1 expected to be operational by June 2023, enhancing power reliability.
• Project to capture flared natural gas, reducing carbon emissions significantly.

Negative

• Operational timelines for Phase 2 are uncertain, projected for late 2023 to early 2024.

 

Project to Utilize Captured Flare Gas for On-Site Power Generation

OKLAHOMA CITY and HOUSTON, March 2, 2023 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian") and Conduit Power, LLC ("Conduit"), a portfolio company of Grey Rock Investment Partners ("Grey Rock"), today announced that they entered into definitive agreements to form a joint venture that will own and operate on-site power generation utilizing captured flared natural gas (the "Project") to power Riley Permian's operations in Yoakum County, Texas. The Project will be completed in phases and will ultimately include 20 megawatts ("MW") of power. Phase 1 of the Project will provide 10 MW of on-site generation and is expected to be operational by June 2023, with an additional 10 MW in Phase 2 anticipated to be operational by late 2023 or early 2024.

Strategic Rationale:

• Improve Operations: Unreliable power quality can lead to lost revenue from production downtime and/or costly repairs. The new power infrastructure is expected to improve Riley Permian's operating resiliency with a consistent, baseload power source in an increasingly intermittent power grid.
• Control Costs: Vertically integrating Riley Permian's power need with a behind-the-meter solution will allow Riley Permian to better manage its long-term energy costs.
• Reduce Flaring and Emissions: At the completion of both phases, the Project will capture a substantial amount of natural gas currently flared, thereby allowing Riley Permian to reduce its CO₂ emissions.

Management Commentary:
"We sought Conduit as an aligned partner based on their expertise, which will help us navigate the complexities of the power industry," said Bobby Riley, CEO of Riley Permian. "Their team's depth of experience offered us a turnkey solution, including design, procurement, build and implementation. We believe this Project is indicative of the types of creative initiatives we pursue as a company, including those that enable higher operational control and situations that turn challenges into opportunities."

"We are excited to partner with Riley Permian and look forward to building and operating this new infrastructure that allows them to grow their operations in the Permian Basin," said Matt Whitaker, Conduit Managing Director. "Our customers benefit from controlling critical infrastructure, such as electric power, as a means to improving costs and operational efficiency. At Conduit, we provide a total power solution that enables our customers to increase reliability, lower power costs and reduce carbon emissions."

Advisors:
Kirkland & Ellis served as legal advisor for Riley Permian and Locke Lorde served as legal advisor for Conduit.

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.

About Conduit Power, LLC
Conduit provides customized full-service solutions to help commercial and industrial customers lower power procurement costs and improve the uptime and reliability of delivered power.  Conduit's offering includes turnkey design, procurement, and construction of electrical infrastructure, ongoing operations and maintenance of equipment, power procurement and brokerage, and asset financing.  Conduit's innovative, reliable, and dispatchable power reduces the carbon footprint of their customers while enabling further integration of additional renewable generation into their systems. Conduit is led by power and energy industry executives Matt Herpich, Travis Windholz, and Matt Whitaker, who have more than 50 years of combined experience across the power trading, power generation, renewables, battery storage, chemicals, and upstream exploration and production industries. The Conduit management team possesses a comprehensive technical, commercial, and analytical skillset that is critical in navigating a complex and dynamic power industry.  For more information, visit www.conduitpower.co.

About Grey Rock
Grey Rock Investment Partners is a private equity firm with more than $1.3 billion in asset value across its private equity fund platform. The firm invests across the energy value chain with private equity funds focusing on investments in natural resources, carbon capture, industrial electrification, and methane impact. For more information, visit www.grey-rock.com.

Investor / Media Contacts:
Riley Permian
Rick D'Angelo
IR@rileypermian.com 
405-438-0126

Conduit Power
Meredith Hargrove Howard
meredith@redbirdpr.com
210-737-4478

Grey Rock
Meredith Hargrove Howard
meredith@redbirdpr.com 
210-737-4478

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 any statements regarding the expected timetable, the results, effects, benefits and synergies of the transaction, future opportunities, future financial performance and condition, guidance and any other statements regarding Riley Permian's and Conduit's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance. 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 and the negatives thereof 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, Riley Permian and Conduit operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible to predict all risks, nor can the impact of all factors on the transaction 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, be assessed. Although the parties believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements made in this release are reasonable, there can be 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 those associated with general economic and business conditions; the risk that this project may not perform as expected or produce the anticipated benefits; changes in commodity prices; changes in the costs and results of operations; higher inflation and related impacts; material reductions in corporate liquidity and access to debt markets; uncertainties about estimates of reserves; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; public health crises, such as pandemics (including coronavirus (COVID-19)) and epidemics, and any related government policies and actions and the effects of such public health crises on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics; the competitiveness of alternate-energy sources or product substitutes; development of large carbon capture and offset markets; 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; risks relating to operations, including development drilling and testing results and performance of acquired properties and newly drilled wells; 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; and risks related to litigation. Additional risks and assumptions that could cause results to differ materially from those described above can be found in Riley Permian's 2021 Annual Report on Form 10-K  and in subsequent filings with the SEC, which are also available from its website at www.rileypermian.com under the "Investor" tab, and in other documents Riley Permian 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. Neither Riley Permian, Conduit, nor Grey Rock undertake, and expressly disclaim, any obligation or duty to update or revise any forward-looking statements based on new information, future events or otherwise.

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SOURCE Riley Exploration Permian, Inc.

FAQ

What is the joint venture between Riley Exploration Permian and Conduit Power?

The joint venture focuses on utilizing captured flared natural gas for on-site power generation, aiming to enhance operational efficiency.

When will the first phase of the power generation project start operating?

Phase 1 of the project is expected to be operational by June 2023.

How much power will the joint venture produce?

The joint venture aims to produce a total of 20 megawatts of power, with 10 megawatts from Phase 1.

What environmental benefits does the project offer?

The project will capture flared natural gas, significantly reducing carbon emissions associated with flaring.

What are the potential risks involved in the project for Riley Exploration Permian shareholders?

The timeline for Phase 2 could be subject to delays, impacting operational planning and shareholder expectations.