Riley Permian Reports Fiscal Third Quarter 2021 Financial and Operating Results
Riley Exploration Permian (REPX) reported a net loss of $21.5 million for Q3 2021, despite a 35% increase in total net equivalent production year-over-year, reaching 9.1 MBoe/d. The company generated $58.8 million in cash flow from continuing operations in the first nine months of 2021, with total oil and gas sales of $100.6 million. EOR program development is underway, supported by a $47 million capital raise in July 2021. The latest cash dividend of $0.28 per share reflects a 5.8% yield. Forward guidance for Q4 2021 anticipates oil production averaging 6.6 to 7.2 MBbls per day.
- Increased total net equivalent production by 35% YoY to 9.1 MBoe/d.
- Generated cash flow from continuing operations of $58.8 million YTD.
- Completed a $47 million capital raise in July 2021 to enhance EOR program.
- Paid cash dividends of $0.28 per share, implying a 5.8% annualized yield.
- Reported a net loss of $21.5 million for Q3 2021.
- Realized derivative losses of $7.7 million, contributing to overall net loss.
- Cash costs per BOE increased to $15.07, reflecting a $1.11 rise from Q2 2021.
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 by10% 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 to61% 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 by77% - 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 a5.8% 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."
____________________ |
(1) Non-GAAP financial measure, which is defined and reconciled below. |
(2) Future dividends subject to approval by the board of directors. |
Selected Operating and Financial Data | ||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Select Financial Data (in thousands): | ||||||||||||||||
Oil and natural gas sales, net | $ | 41,549 | $ | 4,969 | $ | 100,622 | $ | 57,824 | ||||||||
Net Income (Loss) | (21,501) | (27,984) | (81,320) | 40,228 | ||||||||||||
Adjusted EBITDAX(1) | $ | 22,533 | $ | 14,602 | $ | 65,433 | $ | 54,130 | ||||||||
Production Data, net (in thousands): | ||||||||||||||||
Oil (MBbls) | 612 | 487 | 1,702 | 1,564 | ||||||||||||
Natural gas (MMcf) | 732 | 400 | 1,795 | 1,162 | ||||||||||||
Natural gas liquids (MBbls) | 94 | 61 | 272 | 181 | ||||||||||||
Total (MBoe)(2) | 828 | 615 | 2,273 | 1,939 | ||||||||||||
Daily combined volumes (BOE/d)(2)(3) | 9,100 | 6,757 | 8,325 | 7,077 | ||||||||||||
Daily oil volumes (BO/d)(3) | 6,726 | 5,350 | 6,234 | 5,706 | ||||||||||||
Average Prices:(2)(4) | ||||||||||||||||
Oil ($ per Bbl) | $ | 64.55 | $ | 12.63 | $ | 54.29 | $ | 38.08 | ||||||||
Natural gas ($ per Mcf) | 1.31 | (1.85) | 3.12 | (0.87) | ||||||||||||
Natural gas liquids ($ per Bbl) | 11.57 | (7.31) | 9.70 | (3.94) | ||||||||||||
Combined ($ per BOE), before derivative settlements | $ | 50.18 | $ | 8.08 | $ | 44.28 | $ | 29.82 | ||||||||
Oil, including derivative settlements ($ per Bbl) | $ | 51.84 | $ | 42.76 | $ | 51.16 | $ | 50.98 | ||||||||
Natural gas, including derivative settlements ($ per MMbtu) | 1.39 | (1.85) | 3.22 | (0.87) | ||||||||||||
Natural gas liquids, including derivative settlements ($ per Bbl)(5) | 11.57 | (7.31) | 9.70 | (3.94) | ||||||||||||
Average price, including derivative settlements ($ per BOE) | $ | 40.86 | $ | 31.95 | $ | 42.02 | $ | 40.22 | ||||||||
Cash Costs per BOE | $ | 15.07 | $ | 10.31 | $ | 14.79 | $ | 14.61 | ||||||||
Cash Margin per BOE, before derivative settlements | $ | 35.11 | $ | (2.23) | $ | 29.49 | $ | 15.21 | ||||||||
Cash Margin per BOE, after derivative settlements | $ | 25.80 | $ | 21.62 | $ | 27.23 | $ | 25.61 | ||||||||
____________________________ | |
(1) | Non-GAAP financial measure, which is defined and reconciled below. |
(2) | One BOE is equal to six Mcf of natural gas or one Bbl of oil or NGL based on the approximate energy equivalency. This is an energy content correlation and does not reflect value or price relationship between the commodities. |
(3) | For the three months ended June 30, 2021 and 2020, respectively average net sales (BOE/d) was derived by dividing the total MBoe by 91 days. For the nine months ended June 30, 2021 and 2020, respectively, average net sales (BOE/d) was derived by dividing the total MBoe by 273 days and 274 days. |
(4) | Average prices shown in table reflect prices both before and after the effects of REPX's settlements of our commodity derivative contracts. REPX's calculation of such effects includes both gains or losses on cash settlements for commodity derivatives. The impact of these cash settlements are included in other income and expense on the Company's Statement of Operations. |
(5) | The Company uses commodity based derivative contracts to reduce exposure to fluctuations in crude oil and natural gas prices. As of June 30, 2021, the Company was not engaged in any natural gas liquids derivative contracts. |
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
Fiscal third quarter 2021 average realized prices, before derivative settlements were
Adjusted for derivative settlements, total equivalent price was
Riley Permian's total Cash Costs(1) for the fiscal third quarter of 2021 were
__________________ |
(1) Non-GAAP financial measure, which is defined and reconciled below. |
The Company realized a fiscal third quarter Cash Margin(1) of
The Company invested
During the fiscal third quarter the Company paid cash common dividends of
As of June 30, 2021 Riley Permian had
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
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
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. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
June 30, 2021 | September 30, 2020 | |||||||
(In thousands, except share amounts) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 6,894 | $ | 1,660 | ||||
Accounts receivable | 15,673 | 10,128 | ||||||
Accounts receivable – related parties | 1,995 | 55 | ||||||
Prepaid expenses and other current assets | 2,460 | 1,752 | ||||||
Current derivative assets | 226 | 18,819 | ||||||
Total Current Assets | 27,248 | 32,414 | ||||||
Oil and natural gas properties, net (successful efforts) | 328,882 | 310,726 | ||||||
Other property and equipment, net | 2,761 | 1,801 | ||||||
Non-current derivative assets | 107 | 3,102 | ||||||
Other non-current assets, net | 3,828 | 2,949 | ||||||
Total Assets | $ | 362,826 | $ | 350,992 | ||||
Liabilities, Series A Preferred Units, and Members'/Shareholders' Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 8,735 | $ | 4,739 | ||||
Income taxes payable | 140 | — | ||||||
Accrued liabilities | 17,148 | 8,746 | ||||||
Revenue payable | 7,438 | 4,432 | ||||||
Advances from joint interest owners | 266 | 254 | ||||||
Current derivative liabilities | 36,251 | — | ||||||
Other current liabilities | 544 | 392 | ||||||
Total Current Liabilities | 70,522 | 18,563 | ||||||
Non-current derivative liabilities | 11,236 | — | ||||||
Asset retirement obligations | 2,337 | 2,268 | ||||||
Revolving credit facility | 97,500 | 101,000 | ||||||
Deferred tax liabilities | 16,570 | 1,834 | ||||||
Other non-current liabilities | 33 | 418 | ||||||
Total Liabilities | 198,198 | 124,083 | ||||||
Series A Preferred Units | — | 60,292 | ||||||
Commitments and Contingencies | ||||||||
Members' Equity | — | 166,617 | ||||||
Shareholders' Equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 18 | — | ||||||
Additional paid-in capital | 223,918 | — | ||||||
Accumulated deficit | (59,308) | — | ||||||
Total Shareholders' Equity | 164,628 | — | ||||||
Total Liabilities, Series A Preferred Units, and Members'/Shareholders' Equity | $ | 362,826 | $ | 350,992 | ||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands, except per share/unit amounts) | ||||||||||||||||
Revenues: | ||||||||||||||||
Oil and natural gas sales, net | $ | 41,549 | $ | 4,969 | $ | 100,622 | $ | 57,824 | ||||||||
Contract services – related parties | 600 | 1,050 | 1,800 | 3,150 | ||||||||||||
Total Revenues | 42,149 | 6,019 | 102,422 | 60,974 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Lease operating expenses | 5,754 | 3,760 | 17,323 | 15,517 | ||||||||||||
Production taxes | 2,029 | 293 | 5,027 | 2,808 | ||||||||||||
Exploration costs | 2,785 | 6,757 | 8,682 | 9,231 | ||||||||||||
Depletion, depreciation, amortization and accretion | 7,082 | 5,028 | 19,323 | 16,020 | ||||||||||||
General and administrative: | ||||||||||||||||
Administrative costs | 4,030 | 1,936 | 9,176 | 8,669 | ||||||||||||
Unit-based compensation expense | — | 291 | 689 | 650 | ||||||||||||
Share-based compensation expense | 779 | — | 5,353 | — | ||||||||||||
Cost of contract services - related parties | 91 | 97 | 330 | 403 | ||||||||||||
Transaction costs | 321 | 15 | 3,534 | 42 | ||||||||||||
Total Costs and Expenses | 22,871 | 18,177 | 69,437 | 53,340 | ||||||||||||
Income (Loss) From Operations | 19,278 | (12,158) | 32,985 | 7,634 | ||||||||||||
Other Income (Expense): | ||||||||||||||||
Interest expense | (1,171) | (1,302) | (3,571) | (4,086) | ||||||||||||
Gain (loss) on derivatives | (35,396) | (14,205) | (74,208) | 36,999 | ||||||||||||
Total Other Income (Expense) | (36,567) | (15,507) | (77,779) | 32,913 | ||||||||||||
Net Income (Loss) From Continuing Operations Before Income Taxes | (17,289) | (27,665) | (44,794) | 40,547 | ||||||||||||
Income tax expense | (3,245) | (319) | (16,953) | (319) | ||||||||||||
Net Income (Loss) From Continuing Operations | (20,534) | (27,984) | (61,747) | 40,228 | ||||||||||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands, except per share/unit amounts) | ||||||||||||||||
Discontinued Operations: | ||||||||||||||||
Loss from discontinued operations | (882) | — | (19,513) | — | ||||||||||||
Income tax benefit on discontinued operations | (85) | — | (60) | — | ||||||||||||
Loss on discontinued operations | (967) | — | (19,573) | — | ||||||||||||
Net Income (Loss) | (21,501) | (27,984) | (81,320) | 40,228 | ||||||||||||
Dividends on preferred units | — | (890) | (1,491) | (2,631) | ||||||||||||
Net Income (Loss) Attributable to Common Shareholders/Unitholders | $ | (21,501) | $ | (28,874) | $ | (82,811) | $ | 37,597 | ||||||||
Net Income (Loss) per Share/Unit from Continuing Operations: | ||||||||||||||||
Basic | $ | (1.15) | $ | (2.32) | $ | (4.25) | $ | 3.02 | ||||||||
Diluted | $ | (1.15) | $ | (2.32) | $ | (4.25) | $ | 2.43 | ||||||||
Net Loss per Share/Unit from Discontinued Operations: | ||||||||||||||||
Basic | $ | (0.05) | $ | — | $ | (1.32) | $ | — | ||||||||
Diluted | $ | (0.05) | $ | — | $ | (1.32) | $ | — | ||||||||
Net Income (Loss) per Share/Unit: | ||||||||||||||||
Basic | $ | (1.20) | $ | (2.32) | $ | (5.57) | $ | 3.02 | ||||||||
Diluted | $ | (1.20) | $ | (2.32) | $ | (5.57) | $ | 2.43 | ||||||||
Weighted Average Common Share/Units Outstanding: | ||||||||||||||||
Basic | 17,786 | 12,469 | 14,872 | 12,454 | ||||||||||||
Diluted | 17,786 | 12,469 | 14,872 | 16,571 | ||||||||||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Nine Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(In thousands) | ||||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | (81,320) | $ | 40,228 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Loss from discontinued operations | 19,573 | — | ||||||
Oil and gas lease expirations | 8,615 | 7,288 | ||||||
Depletion, depreciation, amortization and accretion | 19,323 | 16,020 | ||||||
(Gain) Loss on derivatives | 74,208 | (36,999) | ||||||
Settlements on derivative contracts | (5,133) | 20,161 | ||||||
Amortization of deferred financing costs | 483 | 484 | ||||||
Unit-based compensation expense | 689 | 650 | ||||||
Share-based compensation expense | 5,353 | — | ||||||
Deferred income tax expense | 17,185 | 319 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (5,545) | 5,643 | ||||||
Accounts receivable – related parties | (1,940) | 159 | ||||||
Prepaid expenses and other current assets | (534) | (424) | ||||||
Other non-current assets | — | 82 | ||||||
Other liabilities | (6) | — | ||||||
Accounts payable and accrued liabilities | 5,042 | (2,784) | ||||||
Income taxes payable | (170) | — | ||||||
Revenue payable | 3,006 | (1,199) | ||||||
Advances from joint interest owners | 12 | (119) | ||||||
Net Cash Provided By Operating Activities - Continuing Operations | 58,841 | 49,509 | ||||||
Cash Flows From Investing Activities: | ||||||||
Additions to oil and natural gas properties | (38,882) | (41,228) | ||||||
Acquisition of oil and natural gas properties | (171) | (4,806) | ||||||
Additions to other property and equipment | (1,172) | (168) | ||||||
Tengasco acquired cash | 859 | — | ||||||
Net Cash Used In Investing Activities - Continuing Operations | (39,366) | (46,202) | ||||||
Cash Flows From Financing Activities: | ||||||||
Deferred financing costs | (135) | (293) | ||||||
Proceeds from revolving credit facility | 5,500 | 14,000 | ||||||
Repayment under revolving credit facility | (9,000) | (7,000) | ||||||
Payment of common share/unit dividends | (12,834) | (12,500) | ||||||
Payment of preferred unit dividends | (1,491) | — | ||||||
Purchase of common units under long-term incentive plan | (191) | (322) | ||||||
Net Cash Used In Financing Activities - Continuing Operations | (18,151) | (6,115) | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents from Continuing Operations | 1,324 | (2,808) | ||||||
RILEY EXPLORATION PERMIAN, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS – (Continued) | ||||||||
(Unaudited) | ||||||||
Nine Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(In thousands) | ||||||||
Cash Flows from Discontinued Operations: | ||||||||
Operating activities | 18 | — | ||||||
Investing activities | 3,892 | — | ||||||
Net Increase in Cash and Cash Equivalents from Discontinued Operations | 3,910 | — | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 5,234 | (2,808) | ||||||
Cash and Cash Equivalents, Beginning of Period | 1,660 | 3,726 | ||||||
Cash and Cash Equivalents, End of Period | $ | 6,894 | $ | 918 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Cash Paid For: | ||||||||
Interest | $ | 2,864 | $ | 3,129 | ||||
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.
I. | Adjusted Net Income: We define "Adjusted Net Income" as Net Loss plus, when applicable, unrealized loss on derivative contracts; impairment expense; transaction costs; the loss of discontinued operations; income tax expense related to a change in tax status; and the associated changes in estimated income tax. |
Our Adjusted Net Income measure provides additional information that may be used to further understand our operations. Adjusted Net Income is one of several metrics that we use as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. Certain items excluded from Adjusted Net Income are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted Net Income, as used by us, may not be comparable to similarly titled measures reported by other companies. We believe that Adjusted Net Income is a widely followed measure of operating performance and is one of many metrics used by our management team and by other users of our consolidated financial statements. 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. | |
II. | Adjusted EBITDAX: The non-GAAP financial measure of Adjusted EBITDAX (as defined below), as calculated by us below, is intended to provide readers with meaningful information that supplements our financial statements prepared in accordance with 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 EBITDAX is presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator. |
Riley Permian defines "Adjusted EBITDAX" as net income (loss) adjusted for certain cash and non-cash items, including depletion, depreciation, amortization and accretion, or DD&A, impairment expense, provision for the carrying value of assets, loss on discontinued operations, exploration expenses, unrealized loss (gain) commodity derivative contracts, premiums paid for derivatives that settled during the period, unit-based and share-based compensation expense, amortization of debt discount and debt issuance costs included in interest expense, interest expense, income taxes, transaction costs and restructuring costs. | |
We believe Adjusted EBITDAX is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within Riley Permian's industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital, hedging strategy and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. | |
III. | Cash G&A: Cash G&A is defined as general and administrative expense less share-based and unit-based compensation and contract services–related parties revenue plus cost of contract services–related parties. |
IV. | Cash Costs and Cash Margin: 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 taxes, cash G&A, and interest expense. Management believes that Cash Costs is an important financial measure for use in evaluating the Company's operating and financial performance. Cash Costs should be considered in addition to, rather than as a substitute for, Total Costs and Expenses. |
Cash Margin per BOE is a non-GAAP financial measure that we use to evaluate our operating performance on a per BOE basis. We define Cash Margin per BOE as average realized price (before derivative settlements) per BOE less cash costs per BOE. | |
V. | 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 Cash Flow from Continuing Operations, less capital expenditures before acquisitions. |
Management believes that Free Cash Flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. |
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:
Three Months Ended June 30, 2021 | ||||||||
Amounts | Amounts per Share | |||||||
(In thousands) | ||||||||
Net Loss | $ | (21,501) | $ | (1.21) | ||||
Loss on discontinued operations | (967) | (0.05) | ||||||
Unrealized loss on derivatives | 27,684 | 1.56 | ||||||
Transaction costs | 321 | 0.02 | ||||||
Income tax expense adjusted for the above adjustments | (1,163) | (0.07) | ||||||
Income tax expense | 3,245 | 0.18 | ||||||
Adjusted Net Income | $ | 7,619 | $ | 0.43 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 17,786 | |||||||
Diluted | 17,786 | |||||||
Adjusted EBITDAX
The following table provides a reconciliation from the GAAP measure of Net Income (Loss) to Adjusted EBITDAX.
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands) | ||||||||||||||||
Net Income (Loss) | $ | (21,501) | $ | (27,984) | $ | (81,320) | $ | 40,228 | ||||||||
Loss on discontinued operations | 967 | — | 19,573 | — | ||||||||||||
Exploration expense | 2,785 | 6,757 | 8,682 | 9,231 | ||||||||||||
Depletion, depreciation, amortization and accretion | 7,082 | 5,028 | 19,323 | 16,020 | ||||||||||||
Unit-based compensation expense | — | 291 | 689 | 650 | ||||||||||||
Share-based compensation expense | 779 | — | 5,353 | — | ||||||||||||
Interest expense | 1,171 | 1,302 | 3,571 | 4,086 | ||||||||||||
Unrealized (gain)/loss on derivatives | 27,684 | 28,874 | 69,075 | (16,838) | ||||||||||||
Income tax expense | 3,245 | 319 | 16,953 | 319 | ||||||||||||
Transaction costs | 321 | 15 | 3,534 | 42 | ||||||||||||
Restructuring costs | — | — | — | 392 | ||||||||||||
Adjusted EBITDAX | $ | 22,533 | $ | 14,602 | $ | 65,433 | $ | 54,130 | ||||||||
Cash G&A:
The following table provides a calculation for Cash G&A for the periods indicated:
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands) | ||||||||||||||||
Administrative costs | $ | 4,030 | $ | 1,936 | $ | 9,176 | $ | 8,669 | ||||||||
Plus: Costs of contract services - related parties | 91 | 97 | 330 | 403 | ||||||||||||
Less: Contract services revenues - related parties | 600 | 1,050 | 1,800 | 3,150 | ||||||||||||
Total Cash G&A | $ | 3,521 | $ | 983 | $ | 7,706 | $ | 5,922 | ||||||||
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:
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands, except per BOE) | ||||||||||||||||
Cash Costs: | ||||||||||||||||
Lease Operating Expenses | $ | 5,754 | $ | 3,760 | $ | 17,323 | $ | 15,517 | ||||||||
Production Taxes | 2,029 | 293 | 5,027 | 2,808 | ||||||||||||
Cash G&A(1) | 3,521 | 983 | 7,706 | 5,922 | ||||||||||||
Interest Expense | 1,171 | 1,302 | 3,571 | 4,086 | ||||||||||||
Total Cash Costs | $ | 12,475 | $ | 6,338 | $ | 33,627 | $ | 28,333 | ||||||||
Total Production (MBoe)(2)(3) | 828 | 615 | 2,273 | 1,939 | ||||||||||||
Cash Margin (per BOE): | ||||||||||||||||
Average Realized Price, before derivative settlements | $ | 50.18 | $ | 8.08 | $ | 44.28 | $ | 29.82 | ||||||||
Less: | ||||||||||||||||
Lease Operating Expenses | 6.95 | 6.11 | 7.62 | 8.00 | ||||||||||||
Production Taxes | 2.45 | 0.48 | 2.21 | 1.45 | ||||||||||||
Cash G&A | 4.25 | 1.60 | 3.39 | 3.05 | ||||||||||||
Interest Expense | 1.42 | 2.12 | 1.57 | 2.11 | ||||||||||||
Total Cash Costs (per BOE) | $ | 15.07 | $ | 10.31 | $ | 14.79 | $ | 14.61 | ||||||||
Cash Margin per BOE, before derivative settlements | $ | 35.11 | $ | (2.23) | $ | 29.49 | $ | 15.21 | ||||||||
Realized gain (loss) on derivatives per BOE | $ | (9.31) | $ | 23.85 | $ | (2.26) | $ | 10.40 | ||||||||
Cash Margin per BOE, after derivative settlements | $ | 25.80 | $ | 21.62 | $ | 27.23 | $ | 25.61 | ||||||||
____________________ | |
(1) | A non-GAAP financial measure which is reconciled above. |
(2) | Represents reported sales volumes. |
(3) | Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equals one barrel of oil equivalent (BOE). |
Free Cash Flow
The following table provides a reconciliation of Cash Flow from Operations - Continuing Operations to Free Cash Flow for the periods indicated:
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
(In thousands) | ||||||||||||||||
Cash Flow from Operations - Continuing Operations | $ | 20,695 | $ | 13,257 | $ | 58,841 | $ | 49,509 | ||||||||
Additions to Oil & Natural Gas Properties | (21,749) | (7,516) | (38,882) | (41,228) | ||||||||||||
Additions to Other Properties and Equipment | (792) | (115) | (1,172) | (168) | ||||||||||||
Free Cash Flow | $ | (1,846) | $ | 5,626 | $ | 18,787 | $ | 8,113 | ||||||||
Investor Contact:
Philip Riley
405-438-0126
IR@rileypermian.com
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SOURCE Riley Exploration Permian, Inc.
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