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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Riley Exploration Permian / Equity Bottom-Up

<ul><li>Riley’s conventional asset base on the Northwest Shelf portion of the Permian Basin positions the company to efficiently allocate capital to grow the underlying reserve and production base while generating free cash flow that can be used to maintain a conservative balance sheet and support the common stock dividend.</li><li>Our modeling suggests that Riley could convert more than 50% of FY24/FY25 discretionary cash flow into free cash flow.</li><li>Our modeling suggests that estimated FY24/FY25 free cash flow provides more than 4.0x coverage of the current dividend </li></ul>

Riley’s conventional asset base on the Northwest Shelf portion of the Permian Basin positions the company to efficiently allocate capital to grow the underlying reserve and production base while generating free cash flow that can be used to maintain a conservative balance sheet and support the common stock dividend.Our modeling suggests that Riley could convert more than 50% of FY24/FY25 discretionary cash flow into free cash flow.Our modeling suggests that estimated FY24/FY25 free cash flow provides more than 4.0x coverage of the current dividend 

Riley Exploration Permian, Inc. -  Efficient Growth Results in High Free Cash Flow Conversion

<ul><li>We are updating our estimates to reflect average 2Q24 NYMEX reference prices of $80.66/bbl for oil and $2.32/MMBtu for natural gas.</li><li>Our 2Q24 adjusted EBITDA estimate is ~$74 million, based on estimated oil production of 14.6 MB/d.</li><li>Oil accounts for 70% of total estimated production and 99% of estimated revenue.</li></ul>

We are updating our estimates to reflect average 2Q24 NYMEX reference prices of $80.66/bbl for oil and $2.32/MMBtu for natural gas.Our 2Q24 adjusted EBITDA estimate is ~$74 million, based on estimated oil production of 14.6 MB/d.Oil accounts for 70% of total estimated production and 99% of estimated revenue.

Riley Exploration Permian, Inc. - Estimate Update

<ul><li>Riley’s asset base delivered 22% Y/Y organic growth in net operated oil production in FY23 from reinvesting about two-thirds of discretionary cash flow into the ground.</li><li>Solid growth reflects the manageable capital intensity of the company’s conventional oil-producing assets in the Permian Basin.</li><li>The midpoints of management’s FY24 capital and operating guidance imply that Riley expects to increase oil production ~10% Y/Y from a capital program that is ~10% lower than FY23.</li></ul>

Riley’s asset base delivered 22% Y/Y organic growth in net operated oil production in FY23 from reinvesting about two-thirds of discretionary cash flow into the ground.Solid growth reflects the manageable capital intensity of the company’s conventional oil-producing assets in the Permian Basin.The midpoints of management’s FY24 capital and operating guidance imply that Riley expects to increase oil production ~10% Y/Y from a capital program that is ~10% lower than FY23.

Riley Exploration Permian, Inc. - Strong Free Cash Flow Conversion

<div><div><div><div><ul style="list-style-type: disc;"><li><p>We are updating our 3Q23 estimates to reflect actual reference prices of $82.26/bbl for oil and $2.66/MMBtu for natural gas.</p></li><li><p>Our FY23 adjusted EBITDA estimate is $257 million, based on average oil and gas reference prices of $79.29/bbl and $2.69/MMBtu.</p></li><li><p>Riley’s 2Q23 production averaged 21.2 MBOE/d (71% oil), representing 109% Y/Y and 62% Q/Q gains. </p></li></ul></div></div></div></div>

We are updating our 3Q23 estimates to reflect actual reference prices of $82.26/bbl for oil and $2.66/MMBtu for natural gas.Our FY23 adjusted EBITDA estimate is $257 million, based on average oil and gas reference prices of $79.29/bbl and $2.69/MMBtu.Riley’s 2Q23 production averaged 21.2 MBOE/d (71% oil), representing 109% Y/Y and 62% Q/Q gains. 

Riley Exploration Permian, Inc. - Expect 2H23 Free Cash Flow Growth

<ul style="list-style-type: disc;"><li><p>Riley’s 2Q23 financial and operating results will include the impact of the $330-million New Mexico acquisition, which closed on April 3, 2023.</p></li><li><p>Around the time of the closing, the acquired assets were producing ~7.2 MBOE/d (58% oil / 81% liquids).</p></li><li><p>1Q23 production averaged ~13.2 MBOE/d. Riley’s 2Q23 production guidance range is 20.0-21.0 MBOE/d, representing a 56% Q/Q increase and a 101% Y/Y increase at the midpoints.</p></li></ul>

Riley’s 2Q23 financial and operating results will include the impact of the $330-million New Mexico acquisition, which closed on April 3, 2023.Around the time of the closing, the acquired assets were producing ~7.2 MBOE/d (58% oil / 81% liquids).1Q23 production averaged ~13.2 MBOE/d. Riley’s 2Q23 production guidance range is 20.0-21.0 MBOE/d, representing a 56% Q/Q increase and a 101% Y/Y increase at the midpoints.

Riley Exploration Permian, Inc. - New Mexico Acquisition to Lift 2Q23 Results

United States

Riley Exploration Permian, Inc. operates as an independent oil and natural gas company. The Company focuses on growth of its reserves, production, and cash flow through the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids. Riley Exploration Permian serves customers in the United States.

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Riley Exploration Permian (REPX US)

Riley Exploration Permian, Inc. - Efficient Growth Results in High Free Cash Flow Conversion

Riley’s conventional asset base on the Northwest Shelf portion of the Permian Basin positions the company to efficiently allocate capital to grow...

Water Tower Research

Riley Exploration Permian, Inc. - Estimate Update

We are updating our estimates to reflect average 2Q24 NYMEX reference prices of $80.66/bbl for oil and $2.32/MMBtu for natural gas.

Water Tower Research

Riley Exploration Permian, Inc. - Strong Free Cash Flow Conversion

Riley’s asset base delivered 22% Y/Y organic growth in net operated oil production in FY23 from reinvesting about two-thirds of discretionary cash...

Water Tower Research

Riley Exploration Permian, Inc. - Expect 2H23 Free Cash Flow Growth

We are updating our 3Q23 estimates to reflect actual reference prices of $82.26/bbl for oil and $2.66/MMBtu for natural gas.

Water Tower Research

Riley Exploration Permian, Inc. - New Mexico Acquisition to Lift 2Q23 Results

Riley’s 2Q23 financial and operating results will include the impact of the $330-million New Mexico acquisition, which closed on April 3, 2023.

Water Tower Research

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