Riley Permian Reports Calendar Third Quarter 2022 Financial and Operating Results
Riley Exploration Permian (REPX) reported strong third-quarter 2022 results, achieving an average oil production of 9.4 MBbls per day, a 36% year-over-year increase. The company posted a net income of $60 million, with operating cash flow of $55 million and a 14% rise in Adjusted EBITDAX to $51 million. Due to improved performance, REPX raised its dividend by 10%. Challenges include rising operational costs and service availability. For Q4 2022, REPX forecasts oil production growth of 2.5% and total equivalent production of 12.6 to 13.2 MBoe per day.
- Net income of $60 million marks a significant increase from previous quarters.
- Average oil production rose to 9.4 MBbls per day, exceeding guidance by 36%.
- Adjusted EBITDAX increased by 14% to $51 million, indicating strong operational efficiency.
- The dividend was increased by 10% due to strong financial performance.
- Total cash capital expenditures exceeded guidance at $37 million, mainly due to rising costs and additional workovers.
- Operational challenges include variable service company availability and slower inventory procurement.
OKLAHOMA CITY, Nov. 14, 2022 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian" or the "Company"), today reported financial and operating results for the third quarter ended September 30, 2022.
HIGHLIGHTS FOR THE THIRD QUARTER ENDING SEPTEMBER 30, 2022
- Averaged oil production of 9.4 MBbls per day, which exceeds the high end of guidance and represents an increase of
36% as compared year-over-year to the third quarter 2021 and an increase of13% as compared quarter-over-quarter to the second quarter 2022 - Began water injection on our EOR project during the third quarter and CO2 injection during the fourth quarter
- Reported net income of
$60 million , which includes$35 million of non-cash gain on derivative contracts and income from operations of$59 million - Generated
$51 million of Adjusted EBITDAX(1) and$55 million of operating cash flow, representing an increase of14% and25% , respectively, over the prior quarter - Incurred total accrual (activity-based) capital expenditures of
$37 million and total cash capital expenditures of$35 million - Paid dividends of
$0.31 per share for a total of$6 million during the third quarter and paid dividends of$0.34 per share in the fourth quarter - Completed change in fiscal year end to December 31st from September 30th
"During our calendar third quarter, we generated several record-high metrics, including oil and total production, cash flow from operations and earnings per share," said Riley Permian Chairman and CEO, Bobby Riley. "We continue to benefit from a decreased impact of financial hedges this quarter, relative to prior quarters and to 2021, and we see a continuation of that trend into 2023. Like others in our industry, we continue to manage a number of operational challenges, including variable service company availability, slower inventory procurement and generally increasing costs. We're pleased with the water injection phase of our EOR project and excited to have recently begun CO2 injection. Based on the strength of our results this year, we raised the dividend by ten percent, as declared in October 2022. Our liquidity profile also strengthened with the combination of lower borrowings on our credit facility and an increased borrowing base."
___________________ | |
(1) | See non-GAAP financial measures section for definition and reconciliation. |
Selected Operating and Financial Data | ||||||||||
(Unaudited) | Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||
Select Financial Data (in thousands): | ||||||||||
Oil and natural gas sales, net | $ 87,471 | $ 87,781 | $ 48,014 | $ 241,897 | $ 126,222 | |||||
Net income (loss) | $ 59,817 | $ 38,555 | $ 15,654 | $ 91,204 | $ (57,725) | |||||
Adjusted EBITDAX(1) | $ 51,240 | $ 44,797 | $ 24,505 | $ 130,520 | $ 70,206 | |||||
Production Data, net: | ||||||||||
Oil (MBbls) | 866 | 761 | 639 | 2,301 | 1,793 | |||||
Natural gas (MMcf) | 985 | 572 | 807 | 2,239 | 2,141 | |||||
Natural gas liquids (MBbls) | 140 | 70 | 109 | 303 | 306 | |||||
Total (MBoe) | 1,170 | 926 | 882 | 2,977 | 2,456 | |||||
Daily combined volumes (Boe/d) | 12,717 | 10,176 | 9,581 | 10,903 | 8,997 | |||||
Daily oil volumes (Bbls/d) | 9,413 | 8,363 | 6,940 | 8,428 | 6,569 | |||||
Average Realized Prices: | ||||||||||
Oil ($ per Bbl) | $ 92.40 | $ 108.41 | $ 68.95 | $ 97.74 | $ 63.76 | |||||
Natural gas ($ per Mcf) | 4.28 | 4.98 | 2.36 | 3.95 | 3.45 | |||||
Natural gas liquids ($ per Bbl) | 23.13 | 34.71 | 19.16 | 26.89 | 14.79 | |||||
Total average price ($ per Boe) | $ 74.76 | $ 94.80 | $ 54.46 | $ 81.26 | $ 51.39 | |||||
Average Realized Prices, including the effects | ||||||||||
Oil ($ per Bbl) | $ 75.80 | $ 77.31 | $ 52.30 | $ 73.63 | $ 51.97 | |||||
Natural gas ($ per Mcf) | 1.57 | 1.29 | 1.69 | 1.40 | 3.28 | |||||
Natural gas liquids ($ per Bbl)(3) | 23.13 | 34.71 | 19.16 | 26.89 | 14.79 | |||||
Total average price ($ per Boe) | $ 60.20 | $ 66.97 | $ 41.79 | $ 60.69 | $ 42.65 | |||||
Cash Costs ($ per Boe)(1) | $ 16.98 | $ 19.63 | $ 15.38 | $ 17.65 | $ 15.51 | |||||
Cash Margin ($ per Boe)(1) | $ 57.78 | $ 75.17 | $ 39.08 | $ 63.61 | $ 35.88 | |||||
Cash Margin, including derivative settlements ($ per Boe)(1) | $ 43.22 | $ 47.34 | $ 26.41 | $ 43.04 | $ 27.14 | |||||
_____________________ | |
(1) | See non-GAAP financial measures section for definition and reconciliation. |
(2) | The Company's calculation of the effects of derivative settlements includes losses on the settlement of its commodity derivative contracts. These losses are included under other income (expense) on the Company's condensed consolidated statements of operations. |
(3) | During the periods presented, the Company did not have any NGL derivative contracts in place. |
OPERATIONS AND DEVELOPMENT ACTIVITY UPDATE
Riley Permian averaged oil production of 9.4 MBbls per day for the three months ended September 30, 2022, representing an increase of
The Company turned to sales 7 gross (4.2 net) horizontal wells during the third quarter and 14 gross (10.8 net) horizontal well during the nine months ended September 30, 2022. On its EOR pilot project, the Company began water injection, and, subsequent to quarter end, in November 2022, the Company began CO2 injection.
The Company incurred
FINANCIAL RESULTS
For the three months ended September 30, 2022, the Company reported net income of
For the nine months ended September 30, 2022, the Company reported net income of
Third quarter 2022 average realized prices, before derivative settlements were
Riley Permian's total Cash Costs(1) for the third quarter of 2022 were
During the third quarter 2022, the Company paid common dividends of
As of September 30, 2022, the Company had
__________________ | |
(1) | See non-GAAP financial measures section for definition and reconciliation. |
FOURTH QUARTER 2022 OUTLOOK AND GUIDANCE
Based on currently scheduled development activity, the Company forecasts fourth quarter 2022 oil production to average 9.4 MBbls per day to 9.9 MBbls per day, with the midpoint average representing
The Company forecasts fourth quarter 2022 LOE of approximately
Based on current market conditions, management forecasts accrual basis capital expenditures of
___________________ | |
(1) | See non-GAAP financial measures section for definition. |
CONFERENCE CALL
Riley Permian management will host a conference call for investors and analysts on November 15, 2022 at 10:00 a.m. CT to discuss the Company's results. Interested parties are invited to participate by calling:
- U.S./Canada Toll Free, (888) 330-2214
- International, +1 (646) 960-0161
- Conference ID number 5405646
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 November 29, 2022 by calling:
- (800) 770-2030 or (647) 362-9199
- Conference ID number 5405646
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.
Investor Contact:
Rick D'Angelo
405-438-0126
IR@rileypermian.com
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 information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position and potential growth opportunities. Our 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 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, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business 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 we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this release are reasonable, we can give 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 the risks and uncertainties the Company is exposed to. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to: the volatility of oil, natural gas and NGL prices; the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 ("COVID-19") pandemic and any related variants), including reactive or proactive measures taken by governments, regulatory agencies and businesses related to the pandemic, and the effects of COVID-19 on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics; 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; severe weather and other risks that lead to a lack of any available markets; our ability to successfully complete mergers, acquisitions and divestitures; the risk that the Company's EOR project may not perform as expected or produce the anticipated benefits; risks relating to our operations, including development drilling and testing results and performance of acquired properties and newly drilled wells; any reduction in our borrowing base on our revolving credit facility from time to time and our ability to repay any excess borrowings as a result of such reduction; the impact of our derivative strategy and the results of future settlement; our ability to comply with the financial covenants contained in our credit agreement; conditions in the capital, financial and credit markets and our ability to obtain capital needed for development and exploration operations on favorable terms or at all; the loss of certain tax deductions; risks associated with executing our business strategy, including any changes in our strategy; inability to prove up undeveloped acreage and maintain production on leases; 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; risks related to litigation; evolving geopolitical and military hostilities in other areas of the world; and cybersecurity threats, technology system failures and data security issues. 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 September 30, 2021 filed 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.
Cautionary Statement Regarding Guidance
The estimates and guidance presented in this release are based on assumptions of current and future capital expenditure levels, prices for oil, natural gas and NGLs, available liquidity, indications of supply and demand for oil, well results, and operating costs. The guidance provided in this release does not constitute any form of guarantee or assurance that the matters indicated will be achieved. While we believe these estimates and the assumptions on which they are based are reasonable as of the date on which they are made, they are inherently uncertain and are subject to, among other things, significant business, economic, operational, and regulatory risks, and uncertainties, some of which are not known as of the date of the statement. Guidance and estimates, and the assumptions on which they are based, are subject to material revision. Actual results may differ materially from estimates and guidance. Please read the "Cautionary Statement Regarding Forward Looking Information" section above, as well as "Risk Factors" in our annual report on Form 10-K and our quarterly reports on Form 10-Q, which are incorporated herein.
Cautionary Statement Regarding Reserves
The reserves information as of September 30, 2022 in this press release, including standardized measure of future discounted cash flows and PV-10 value(1) are preliminary estimates that have not been audited or reviewed by Netherland, Sewell & Associates, Inc. or BDO USA, LLP and are subject to material revision. These are estimates that should not be regarded as a representation. Investors should not place undue reliance on these estimates.
_________________ | |
(1) | See non-GAAP financial measures section for definition and reconciliation. |
RILEY EXPLORATION PERMIAN, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Unaudited) | ||||
September 30, 2022 | December 31, 2021 | |||
(In thousands, except share amounts) | ||||
Assets | ||||
Current Assets: | ||||
Cash and cash equivalents | $ 17,908 | $ 8,317 | ||
Accounts receivable | 27,463 | 18,002 | ||
Prepaid expenses and other current assets | 3,377 | 4,902 | ||
Current derivative assets | 1,607 | 83 | ||
Total current assets | 50,355 | 31,304 | ||
Oil and natural gas properties, net (successful efforts) | 431,067 | 359,131 | ||
Other property and equipment, net | 4,822 | 3,174 | ||
Non-current derivative assets | — | 267 | ||
Other non-current assets, net | 4,307 | 2,293 | ||
Total Assets | $ 490,551 | $ 396,169 | ||
Liabilities and Shareholders' Equity | ||||
Current Liabilities: | ||||
Accounts payable | $ 10,854 | $ 7,737 | ||
Accounts payable - related parties | 122 | 164 | ||
Accrued liabilities | 28,785 | 12,874 | ||
Revenue payable | 17,768 | 11,370 | ||
Current derivative liabilities | 22,529 | 30,984 | ||
Other current liabilities | 3,003 | 947 | ||
Total Current Liabilities | 83,061 | 64,076 | ||
Non-current derivative liabilities | 2,423 | 9,515 | ||
Asset retirement obligations | 2,689 | 2,261 | ||
Revolving credit facility | 48,000 | 65,000 | ||
Deferred tax liabilities | 40,586 | 17,384 | ||
Other non-current liabilities | 1,138 | 95 | ||
Total Liabilities | 177,897 | 158,331 | ||
Commitments and Contingencies | ||||
Shareholders' Equity: | ||||
Preferred stock, | — | — | ||
Common stock, | 20 | 20 | ||
Additional paid-in capital | 273,821 | 271,737 | ||
Retained earnings (Accumulated deficit) | 38,813 | (33,919) | ||
Total Shareholders' Equity | 312,654 | 237,838 | ||
Total Liabilities and Shareholders' Equity | $ 490,551 | $ 396,169 | ||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(In thousands) | ||||||||
Revenues: | ||||||||
Oil and natural gas sales, net | $ 87,471 | $ 48,014 | $ 241,897 | $ 126,222 | ||||
Contract services - related parties | 600 | 600 | 1,800 | 1,800 | ||||
Total Revenues | 88,071 | 48,614 | 243,697 | 128,022 | ||||
Costs and Expenses: | ||||||||
Lease operating expenses | 8,813 | 5,686 | 23,705 | 17,407 | ||||
Production and ad valorem taxes | 5,826 | 2,575 | 14,854 | 7,347 | ||||
Exploration costs | 20 | 884 | 1,540 | 9,142 | ||||
Depletion, depreciation, amortization and accretion | 8,346 | 6,692 | 22,167 | 20,025 | ||||
General and administrative: | ||||||||
Administrative costs | 5,154 | 4,790 | 13,567 | 11,516 | ||||
Unit-based compensation expense | — | — | — | 276 | ||||
Share-based compensation expense | 704 | 751 | 2,274 | 6,101 | ||||
Cost of contract services - related parties | 89 | 147 | 263 | 329 | ||||
Transaction costs | — | 198 | 2,638 | 2,683 | ||||
Total Costs and Expenses | 28,952 | 21,723 | 81,008 | 74,826 | ||||
Income From Operations | 59,119 | 26,891 | 162,689 | 53,196 | ||||
Other Income (Expense): | ||||||||
Interest expense, net | (585) | (963) | (1,960) | (3,299) | ||||
Gain (loss) on derivatives | 17,600 | (14,987) | (44,395) | (75,286) | ||||
Total Other Income (Expense) | 17,015 | (15,950) | (46,355) | (78,585) | ||||
Net Income (Loss) from Continuing Operations Before Income Taxes | 76,134 | 10,941 | 116,334 | (25,389) | ||||
Income tax benefit (expense) | (16,317) | 3,937 | (25,130) | (13,539) | ||||
Net Income (Loss) from Continuing Operations | 59,817 | 14,878 | 91,204 | (38,928) | ||||
Discontinued Operations: | ||||||||
Gain (loss) from discontinued operations | — | 775 | — | (18,738) | ||||
Income tax benefit (expense) on discontinued operations | — | 1 | — | (59) | ||||
Gain (Loss) on Discontinued Operations | — | 776 | — | (18,797) | ||||
Net Income (Loss) | 59,817 | 15,654 | 91,204 | (57,725) | ||||
Dividends on preferred units | — | — | — | (574) | ||||
Net Income (Loss) Attributable to Common Shareholders/Unitholders | $ 59,817 | $ 15,654 | $ 91,204 | $ (58,299) | ||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(In thousands) | ||||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ 59,817 | $ 15,654 | $ 91,204 | $ (57,725) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating | ||||||||
(Gain) loss from discontinued operations | — | (776) | — | 18,797 | ||||
Oil and gas lease expirations | — | 732 | 1,465 | 8,923 | ||||
Depletion, depreciation, amortization and accretion | 8,346 | 6,692 | 22,167 | 20,025 | ||||
(Gain) loss on derivatives | (17,600) | 14,987 | 44,395 | 75,286 | ||||
Settlements on derivative contracts | (17,040) | (11,171) | (61,198) | (21,477) | ||||
Amortization of deferred financing costs | 175 | 170 | 548 | 498 | ||||
Unit-based compensation expense | — | — | — | 276 | ||||
Share-based compensation expense | 795 | 751 | 2,684 | 6,101 | ||||
Deferred income tax expense (benefit) | 15,884 | (4,223) | 23,202 | 13,352 | ||||
Changes in operating assets and liabilities | 4,921 | 4,430 | 5,885 | 6,130 | ||||
Net Cash Provided by Operating Activities - Continuing Operations | 55,298 | 27,246 | 130,352 | 70,186 | ||||
Cash Flows from Investing Activities: | ||||||||
Additions to oil and natural gas properties | (35,054) | (19,746) | (82,101) | (50,247) | ||||
Acquisitions of oil and natural gas properties | — | — | — | (445) | ||||
Additions to other property and equipment | (61) | (541) | (1,081) | (1,396) | ||||
Tengasco acquired cash | — | — | — | 859 | ||||
Net Cash Used in Investing Activities - Continuing Operations | (35,115) | (20,287) | (83,182) | (51,229) | ||||
Cash Flows from Financing Activities: | ||||||||
Deferred financing costs | (7) | (4) | (1,722) | (86) | ||||
Proceeds from revolving credit facility | — | — | 4,000 | 3,500 | ||||
Repayment under revolving credit facility | (13,000) | (37,500) | (21,000) | (41,000) | ||||
Payment of common share/unit dividends | (6,059) | (5,452) | (18,257) | (14,568) | ||||
Proceeds from issuance of common stock | — | 50,000 | — | 50,000 | ||||
Public offering costs | — | (3,316) | — | (3,316) | ||||
Payment of preferred unit dividends | — | — | — | (1,491) | ||||
Common stock repurchased for tax withholding | (9) | (514) | (600) | (514) | ||||
Purchase of common units under long-term incentive plan | — | — | — | (191) | ||||
Net Cash Provided by (Used in) Financing Activities - Continuing | (19,075) | 3,214 | (37,579) | (7,666) | ||||
Net Increase in Cash and Cash Equivalents from Continuing Operations | 1,108 | 10,173 | 9,591 | 11,291 | ||||
Cash Flows from Discontinued Operations: | ||||||||
Operating activities | — | — | — | 7 | ||||
Investing activities | — | — | — | 3,892 | ||||
Net Increase in Cash and Cash Equivalents from Discontinued Operations | — | — | — | 3,899 | ||||
Net Increase in Cash and Cash Equivalents | 1,108 | 10,173 | 9,591 | 15,190 | ||||
Cash and Cash Equivalents, Beginning of Period | 16,800 | 6,894 | 8,317 | 1,877 | ||||
Cash and Cash Equivalents, End of Period | $ 17,908 | $ 17,067 | $ 17,908 | $ 17,067 | ||||
OIL, NATURAL GAS AND NGL RESERVES
The Company prepared estimates of reserves using an average price equal to the unweighted arithmetic average of the first day of each month within the 12-month period ended September 30, 2022 of
SEC Pricing | NYMEX Pricing(2) | |||||||
Reserves as of September 30, 2022 | Proved | Total Proved | Proved | Total Proved | ||||
Oil (MBbls) | 30,479 | 51,417 | 29,892 | 50,378 | ||||
Natural gas (MMcf) | 66,127 | 96,584 | 65,018 | 94,713 | ||||
Natural gas liquids (MBbls) | 10,994 | 16,599 | 10,815 | 16,281 | ||||
Total (MBoe) | 52,494 | 84,113 | 51,543 | 82,444 | ||||
PV-10(1) (in thousands) | $ 1,120,244 | $ 1,571,033 | $ 711,402 | $ 874,147 | ||||
___________________
(1) | See non-GAAP measures section for definition and reconciliation. |
(2) | See table below for the NYMEX pricing used to prepare internal reserve estimates. |
Oil | Natural Gas | ||
($ per Bbl) | ($ per Mcf) | ||
October 2022-December 2022 | $ 78.35 | $ 6.87 | |
Calendar year 2023 | $ 72.13 | $ 5.44 | |
Calendar year 2024 | $ 66.63 | $ 4.74 | |
Calendar year 2025 | $ 63.25 | $ 4.58 | |
Calendar year 2026 | $ 60.72 | $ 4.45 | |
After 2026 | $ 59.76 | $ 4.87 |
OIL, NATURAL GAS AND NGL RESERVES, Continued
Estimates of reserves were prepared using an average price equal to the unweighted arithmetic average of the first day of each month within the 12-month period ended December 31, 2021 of
SEC Pricing | NYMEX Pricing(2) | |||||||
Reserves as of December 31, 2021 | Proved | Total Proved | Proved | Total Proved | ||||
Oil (MBbls) | 27,096 | 47,021 | 26,964 | 46,848 | ||||
Natural gas (MMcf) | 47,974 | 77,486 | 47,728 | 77,185 | ||||
Natural gas liquids (MBbls) | 7,949 | 13,471 | 7,910 | 13,423 | ||||
Total (MBoe) | 43,041 | 73,406 | 42,829 | 73,135 | ||||
PV-10(1) (in thousands) | $ 616,231 | $ 879,143 | $ 589,287 | $ 808,676 | ||||
___________________
(1) | Non-GAAP financial measure, which is defined and reconciled below. |
(2) | See table below for the NYMEX pricing used to prepare internal reserve estimates. |
Oil | Natural Gas | ||
($ per Bbl) | ($ per Mcf) | ||
Calendar year 2022 | $ 72.23 | $ 3.69 | |
Calendar year 2023 | $ 66.39 | $ 3.36 | |
Calendar year 2024 | $ 62.66 | $ 3.13 | |
Calendar year 2025 | $ 60.12 | $ 3.07 | |
After 2025 | $ 59.19 | $ 3.33 |
Reserve estimates above do not include any value for probable or possible reserves that may exist, nor do they include any value for undeveloped acreage. The reserve estimates represent our net revenue interest in our properties, all of which are located within the continental United States. NYMEX pricing does not comport with the reporting requirements of the SEC and should not be used as a substitute for or compared with estimates of proved reserves using SEC pricing.
DERIVATIVE CONTRACTS
The following table summarizes the open financial derivatives as of November 8, 2022, related to oil and natural gas production. Derivative positions in the table for calendar Q3 2022 are as of September 30, 2022(1).
Weighted Average Price | ||||||||
Calendar Quarter | Notional | Fixed | Put | Call | ||||
($ per unit) | ||||||||
Oil Swaps (Bbl) | ||||||||
Q4 2022 | 270,000 | $ 56.03 | $ — | $ — | ||||
Q1 2023 | 225,000 | $ 53.65 | $ — | $ — | ||||
Q2 2023 | 195,000 | $ 53.89 | $ — | $ — | ||||
Q3 2023 | 150,000 | $ 52.58 | $ — | $ — | ||||
Q4 2023 | 150,000 | $ 52.58 | $ — | $ — | ||||
Natural Gas Swaps (Mcf) | ||||||||
Q4 2022 | 540,000 | $ 3.26 | $ — | $ — | ||||
Oil Collars (Bbl) | ||||||||
Q4 2022 | 90,000 | $ — | $ 35.00 | $ 42.63 | ||||
Q1 2023 | 30,000 | $ — | $ 60.00 | $ 109.60 | ||||
Q2 2023 | 30,000 | $ — | $ 60.00 | $ 109.60 | ||||
Q1 2024 | 3,000 | $ — | $ 50.00 | $ 88.00 | ||||
Oil Basis (Bbl) | ||||||||
Q4 2022 | 240,000 | $ 0.41 | $ — | $ — | ||||
___________________
(1) | Q4 2022 derivative positions shown include October 2022 contracts, some of which have settled as of November 8, 2022. |
NON-GAAP MEASURES
The Company presents certain non-GAAP financial measures to supplement its financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The non-GAAP financial measures include Adjusted Net Income, Adjusted EBITDAX, Cash G&A, Cash Costs and Cash Margin per Boe, Free Cash Flow and PV-10. A reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure is presented below.
We believe that these non-GAAP measures presented, in conjunction with our financial and operating results prepared in accordance with GAAP, provide a more complete understanding of the Company's performance. We use these non-GAAP measures to compare our financial and operating performance with that of other companies in the oil and natural gas industry as well as our financial and operating performance for current and historical periods. These non-GAAP measures should not be considered in isolation or as a substitute for GAAP measures, such as net income (loss), operating income (loss), total costs and expenses, general and administrative expenses, net cash provided by operating activities or standardized measure of discounted future net cash flows or any other GAAP measure of financial position or results of operations.
As not all companies use the same calculation, our non-GAAP measures may not be comparable to similarly titled measures presented by other companies.
Adjusted Net Income: We define Adjusted Net Income as net income (loss) plus (gain) loss on discontinued operations, non-cash (gain) loss on derivatives, transaction costs and other, income tax expense related to our change in tax status and the changes in estimated income tax as a result of these adjustments. We believe that Adjusted Net Income is a widely followed measure of operating performance and is one of many metrics used by investors as well as our management team. For example, Adjusted Net Income can be used to assess our operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure and to assess the financial performance of our assets and our company without regard to capital structure or historical cost basis. The following table provides a reconciliation of Net Income (Loss) to Adjusted Net Income for the periods indicated:
Three Months Ended | Nine months ended | |||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||
(Unaudited, In thousands) | ||||||||||
Net Income (Loss) | $ 59,817 | $ 38,555 | $ 15,654 | $ 91,204 | $ (57,725) | |||||
(Gain) loss on discontinued operations | — | — | (776) | — | 18,797 | |||||
Non-cash (gain) loss on derivatives | (34,640) | (13,420) | 3,816 | (16,803) | 53,809 | |||||
Transaction costs and other | — | — | 458 | 2,638 | 2,943 | |||||
Income tax expense from change in tax status | — | — | — | — | 13,631 | |||||
Tax effect of adjustments(1) | 7,448 | 2,885 | (755) | 3,044 | 646 | |||||
Adjusted Net Income | $ 32,625 | $ 28,020 | $ 18,397 | $ 80,083 | $ 32,101 | |||||
___________________
(1) | Computed by applying a combined federal and state statutory rate of |
Adjusted EBITDAX: We define Adjusted EBITDAX as net income (loss) adjusted for (gain) loss on discontinued operations, exploration costs, depletion, depreciation, amortization and accretion, equity-based compensation expense, interest expense, non-cash (gain) loss on derivatives, income taxes and transaction costs and other. We believe Adjusted EBITDAX is useful to investors because it provides an effective way to evaluate our operating performance and compare the results of our operations from period to period as well as to other companies in the oil and natural gas industry without regard to our financing methods or capital structure. The following table provides a reconciliation from the GAAP measure of Net Income (Loss) to Adjusted EBITDAX.
Three Months Ended | Nine months ended | |||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||
(Unaudited, In thousands) | ||||||||||
Net Income (Loss) | $ 59,817 | $ 38,555 | $ 15,654 | $ 91,204 | $ (57,725) | |||||
(Gain) loss on discontinued operations | — | — | (776) | — | 18,797 | |||||
Exploration costs | 20 | 22 | 884 | 1,540 | 9,142 | |||||
Depletion, depreciation, amortization and accretion | 8,346 | 7,188 | 6,692 | 22,167 | 20,025 | |||||
Unit-based compensation expense | — | — | — | — | 276 | |||||
Share-based compensation expense | 795 | 828 | 751 | 2,684 | 6,101 | |||||
Interest expense, net | 585 | 697 | 963 | 1,960 | 3,299 | |||||
Non-cash (gain) loss on derivatives | (34,640) | (13,420) | 3,816 | (16,803) | 53,809 | |||||
Income tax expense (benefit) | 16,317 | 10,927 | (3,937) | 25,130 | 13,539 | |||||
Transaction costs and other | — | — | 458 | 2,638 | 2,943 | |||||
Adjusted EBITDAX | $ 51,240 | $ 44,797 | $ 24,505 | $ 130,520 | $ 70,206 | |||||
Cash G&A: Cash G&A is defined as general and administrative expense, excluding equity-based compensation, plus cost of contract services–related parties less contract services–related parties revenue. We believe Cash G&A is used by analysts and others in valuation, comparison and investment recommendations of companies in our industry to allow for analysis of Cash G&A spend without regard to equity-based compensation programs or amounts related to contract services. Administrative costs exclude equity-based compensation as those expenses are presented separately as components of general and administrative expense on our condensed consolidated statement of operations. The following table provides a calculation of Cash G&A for the periods indicated:
Three Months Ended | Nine months ended | |||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||
(Unaudited, In thousands) | ||||||||||
Administrative costs | $ 5,154 | $ 4,399 | $ 4,790 | $ 13,567 | $ 11,516 | |||||
Plus: Costs of contract services - related parties | 89 | 89 | 147 | 263 | 329 | |||||
Less: Contract services revenues - related parties | (600) | (600) | (600) | (1,800) | (1,800) | |||||
Total Cash G&A | $ 4,643 | $ 3,888 | $ 4,337 | $ 12,030 | $ 10,045 | |||||
Cash Costs and Cash Margin per Boe: Cash Costs is a non-GAAP financial measure that we use as an indicator of our total cash-based cost of production and operations. We define Cash Costs as lease operating expenses plus production and ad valorem taxes, Cash G&A(1), and interest expense. Management believes that Cash Costs is an important financial measure for use in evaluating the Company's operating and financial performance and for comparison to other companies in the oil and natural gas industry. We also believe this is a useful measure for investors in evaluating our results against other oil and natural gas companies. Cash Costs should be considered in addition to, rather than as a substitute for, Total Costs and Expenses on our condensed consolidated statement of operations. The following table provides a calculation of Cash Costs and Cash Margin for the periods indicated:
Three Months Ended | Nine months ended | |||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||
(Unaudited, In thousands, except per Boe amounts) | ||||||||||
Cash Costs: | ||||||||||
Lease operating expenses | $ 8,813 | $ 8,062 | $ 5,686 | $ 23,705 | $ 17,407 | |||||
Production and ad valorem taxes | 5,826 | 5,526 | 2,575 | 14,854 | 7,347 | |||||
Cash G&A(1) | 4,643 | 3,888 | 4,337 | 12,030 | 10,045 | |||||
Interest expense, net | 585 | 697 | 963 | 1,960 | 3,299 | |||||
Total Cash Costs | $ 19,867 | $ 18,173 | $ 13,561 | $ 52,549 | $ 38,098 | |||||
Total Production (MBoe) | 1,170 | 926 | 882 | 2,977 | 2,456 | |||||
Cash Margin ($ per Boe): | ||||||||||
Total average realized price ($ per Boe) | $ 74.76 | $ 94.80 | $ 54.46 | $ 81.26 | $ 51.39 | |||||
Less: | ||||||||||
Lease operating expenses | 7.53 | 8.71 | 6.45 | 7.96 | 7.09 | |||||
Production and ad valorem taxes | 4.98 | 5.97 | 2.92 | 4.99 | 2.99 | |||||
Cash G&A(1) | 3.97 | 4.20 | 4.92 | 4.04 | 4.09 | |||||
Interest expense, net | 0.50 | 0.75 | 1.09 | 0.66 | 1.34 | |||||
Total Cash Costs per Boe | 16.98 | 19.63 | 15.38 | 17.65 | 15.51 | |||||
Cash Margin per Boe | $ 57.78 | $ 75.17 | $ 39.08 | $ 63.61 | $ 35.88 | |||||
Settlements on derivatives ($ per Boe) | (14.56) | (27.83) | (12.67) | (20.57) | (8.74) | |||||
Cash Margin per Boe, including derivative settlements | $ 43.22 | $ 47.34 | $ 26.41 | $ 43.04 | $ 27.14 | |||||
______________________
(1) | A non-GAAP financial measure which is reconciled above. |
Free Cash Flow: Free Cash Flow is a measure that we use as an indicator of our ability to fund our development activities and generate excess cash for other corporate purposes. We define Free Cash Flow as Net Cash Provided by Operating Activities before changes in working capital and reduced by capital expenditures before acquisitions. Free Cash Flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities as a measure of our liquidity. The following table provides a reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for the periods indicated:
Three Months Ended | Nine months ended | |||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||
(Unaudited, In thousands) | ||||||||||
Net Cash Provided by Operating Activities | $ 55,298 | $ 44,159 | $ 27,246 | $ 130,352 | $ 70,186 | |||||
Exclude changes in working capital | (4,921) | (614) | (4,430) | (5,885) | (6,130) | |||||
Additions to oil and natural gas properties | (35,054) | (36,876) | (19,746) | (82,101) | (50,247) | |||||
Additions to other property and equipment | (61) | (92) | (541) | (1,081) | (1,396) | |||||
Free Cash Flow | $ 15,262 | $ 6,577 | $ 2,529 | $ 41,285 | $ 12,413 | |||||
PV-10: PV-10 is derived from the standardized measure of discounted future net cash flows ("Standardized Measure"), which is the most directly comparable financial measure under GAAP. PV-10 is a computation of the Standardized Measure on a pre-tax basis. PV-10 is equal to the Standardized Measure at the applicable date, before deducting future income taxes, discounted at an annual rate of
The following table provides a reconciliation of the Standardized Measure to PV-10 of the Company's estimated total proved reserves as of September 30, 2022 and December 31, 2021:
September 30, 2022 | December 31, 2021 | ||||
(Unaudited, In thousands) | |||||
Standardized measures of discounted future net cash flows | $ 1,241,720 | $ 703,469 | |||
Future income taxes, discounted at | 329,313 | 175,674 | |||
Present value of estimated future net revenues (PV-10) | $ 1,571,033 | $ 879,143 | |||
Adjustment using NYMEX pricing (1) | (696,886) | (70,467) | |||
PV-10 adjusted for pricing | $ 874,147 | $ 808,676 | |||
______________________
(1) | Adjustment to reflect the difference between SEC pricing used to calculate Standardized Measure and PV-10 at NYMEX pricing. |
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SOURCE Riley Exploration Permian, Inc.
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