REPX Navigates Revenue Dip with Strategic Investments, Debt Growth

TL;DR

**REPX is betting big on Permian expansion with increased debt and acquisitions, but declining revenue and rising costs make it a risky play.**

AI Summary

Riley Exploration Permian, Inc. (REPX) reported mixed financial results for the nine months ended September 30, 2025. Total revenues decreased to $294.703 million from $307.486 million in the prior year, a 4.16% decline, primarily due to lower oil and natural gas sales. Despite this, net income saw a slight decrease to $75.443 million from $77.969 million, a 3.24% reduction. The company experienced a significant increase in lease operating expenses, rising to $64.085 million from $51.793 million, a 23.73% jump. Depletion, depreciation, amortization, and accretion also increased to $65.915 million from $55.971 million. Strategic changes included substantial investments in oil and natural gas properties, with additions totaling $55.230 million, and a business combination acquisition of $117.827 million. Long-term debt increased significantly to $347.042 million from $249.494 million at December 31, 2024, reflecting increased borrowing from the Credit Facility. Current derivative assets surged to $10.566 million from $3.264 million, indicating increased hedging activity. The company's total assets grew to $1.191 billion from $993.501 million, while total liabilities increased to $624.841 million from $482.886 million.

Why It Matters

For investors, REPX's increased long-term debt to $347.042 million and higher lease operating expenses could signal rising operational costs and financial leverage, potentially impacting future profitability and dividend sustainability. The significant investment in oil and natural gas properties and a $117.827 million business combination acquisition suggest a growth-oriented strategy, but the 4.16% revenue decline raises questions about the immediate returns on these investments. In a competitive Permian Basin market, efficient capital deployment and cost control are crucial. Employees might see continued operational expansion, while customers could benefit from sustained production, though market volatility remains a key factor.

Risk Assessment

Risk Level: medium — The company's long-term debt increased by 39.1% to $347.042 million from $249.494 million at December 31, 2024, indicating higher financial leverage. Additionally, lease operating expenses rose by 23.73% to $64.085 million for the nine months ended September 30, 2025, compared to the prior year, suggesting increasing operational costs that could pressure margins.

Analyst Insight

Investors should closely monitor REPX's debt-to-equity ratio and cash flow from operations in upcoming quarters to assess its ability to service increased debt and fund ongoing capital expenditures. Evaluate the returns on the recent $117.827 million business combination and $55.230 million in oil and natural gas property additions to determine if these investments are translating into profitable growth.

Financial Highlights

debt To Equity

1.09

revenue

$294.703M

total Assets

$1.191B

total Debt

$367.042M

net Income

$75.443M

cash Position

$16.459M

revenue Growth

-4.16%

Revenue Breakdown

Key Numbers

• $294.703M — Total Revenues (Decreased from $307.486 million in 2024, a 4.16% decline)
• $75.443M — Net Income (Slightly decreased from $77.969 million in 2024, a 3.24% reduction)
• $64.085M — Lease Operating Expenses (Increased from $51.793 million in 2024, a 23.73% rise)
• $347.042M — Long-term Debt (Increased from $249.494 million at December 31, 2024, a 39.1% increase)
• $117.827M — Net Assets Acquired in Business Combination (Significant investment in the nine months ended September 30, 2025)
• $10.566M — Current Derivative Assets (Increased from $3.264 million at December 31, 2024, indicating increased hedging)
• $1.191B — Total Assets (Increased from $993.501 million at December 31, 2024)
• $624.841M — Total Liabilities (Increased from $482.886 million at December 31, 2024)
• $55.230M — Additions to Oil and Natural Gas Properties (Capital expenditure for the nine months ended September 30, 2025)
• $24.840M — Payment of Common Share Dividends (Paid for the nine months ended September 30, 2025)

Key Players & Entities

• Riley Exploration Permian, Inc. (company) — Registrant and primary entity in the filing
• Truist Bank (company) — Lender in the Credit Facility
• Permian Basin (location) — Primary operational area for oil and natural gas activities
• Yoakum County, Texas (location) — Location of Champions field
• Eddy County, New Mexico (location) — Location of Red Lake field
• SEC (regulator) — Securities and Exchange Commission
• NYSE American (exchange) — Exchange where common stock is registered
• FASB (regulator) — Financial Accounting Standards Board
• RRC (regulator) — Railroad Commission of Texas
• OPEC+ (organization) — Organization of the Petroleum Exporting Countries members and non-OPEC allies

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: The company's revenues and profitability are highly sensitive to fluctuations in the prices of oil and natural gas. For the nine months ended September 30, 2025, total revenues decreased by 4.16% to $294.703 million, partly due to lower sales prices. Significant price drops could materially impact financial performance and the ability to fund operations and capital expenditures.
• Increased Operating Expenses [medium — operational]: Lease operating expenses increased by 23.73% to $64.085 million for the nine months ended September 30, 2025, compared to $51.793 million in the prior year. This rise, along with increased depletion, depreciation, amortization, and accretion expenses, puts pressure on margins and operational efficiency.
• Rising Debt Levels [high — financial]: Long-term debt increased significantly by 39.1% to $347.042 million as of September 30, 2025, from $249.494 million at December 31, 2024, primarily due to increased borrowings under the Credit Facility. This higher leverage increases financial risk and interest expense.
• Business Combination Integration [medium — financial]: The company made a significant investment of $117.827 million in a business combination acquisition during the nine months ended September 30, 2025. Integrating this acquisition presents operational and financial risks, including potential challenges in realizing expected synergies and managing increased asset base.
• Environmental Regulations [medium — regulatory]: The company's operations are subject to stringent federal, state, and local environmental laws and regulations. Changes in these regulations, or increased compliance costs, could adversely affect operations and financial results. Asset retirement obligations increased to $59.118 million from $32.706 million.
• Hedging Effectiveness [medium — market]: The company has increased its hedging activities, as evidenced by the surge in current derivative assets to $10.566 million from $3.264 million. While hedging can mitigate price volatility, the effectiveness of these instruments and potential counterparty risks are ongoing considerations.

Industry Context

The oil and gas exploration and production sector is characterized by high capital intensity and significant exposure to commodity price volatility. Riley Exploration Permian operates within this dynamic environment, facing competition from both larger integrated companies and smaller independent producers. Industry trends include a focus on efficient production, managing environmental, social, and governance (ESG) factors, and adapting to evolving energy demand.

Regulatory Implications

The company is subject to extensive environmental regulations governing its exploration, production, and operational activities. Compliance with these regulations, including those related to emissions, waste disposal, and land use, requires ongoing investment and vigilance. Changes in regulatory frameworks or increased enforcement could lead to higher operating costs and potential liabilities.

What Investors Should Do

1. Monitor operating expense trends
2. Analyze debt structure and repayment capacity
3. Evaluate the success of the business combination
4. Assess hedging strategy effectiveness

Glossary

Lease operating expenses

Costs associated with the day-to-day operation of oil and gas wells, including labor, materials, and supplies. (These expenses increased significantly by 23.73% to $64.085 million, impacting profitability.)

Depletion, depreciation, amortization and accretion

Non-cash expenses that represent the reduction in the value of oil and gas reserves and equipment over time due to extraction and usage. (These costs increased to $65.915 million, reflecting higher production and asset base.)

Business combination

A transaction or event that brings together separate entities into a single reporting entity. (The company made a substantial acquisition of $117.827 million, impacting its asset base and debt.)

Credit Facility

A type of loan that allows a company to borrow money up to a certain limit, often used for working capital or general corporate purposes. (Increased borrowing under the Credit Facility contributed to the rise in long-term debt to $347.042 million.)

Derivative assets

Financial instruments whose value is derived from an underlying asset, index, or rate, used here likely for hedging commodity prices. (Current derivative assets increased to $10.566 million, indicating expanded use of hedging strategies.)

Successful efforts

An accounting method for oil and gas companies where exploration costs are capitalized only if they lead to the discovery of proved reserves. (This method is used to account for the company's significant oil and natural gas properties, valued at $1.002 billion.)

Year-Over-Year Comparison

Compared to the prior year period, Riley Exploration Permian reported a 4.16% decrease in total revenues to $294.703 million, primarily driven by lower oil and natural gas sales. While net income saw a slight reduction of 3.24% to $75.443 million, operating expenses, particularly lease operating expenses (up 23.73%) and depletion, depreciation, amortization, and accretion, have increased. The company has also significantly expanded its balance sheet through a business combination acquisition and a substantial increase in long-term debt, which rose by 39.1% to $347.042 million, indicating a more leveraged financial position.

Key Financial Figures

• $0.001 — ich registered Common stock, par value $0.001 REPX NYSE American Indicate by check

Filing Documents

• rep-20250930.htm (10-Q) — 1539KB
• q325311certificationofceop.htm (EX-31.1) — 10KB
• q325312certificationofcfop.htm (EX-31.2) — 9KB
• q3253211350certificationof.htm (EX-32.1) — 6KB
• q3253221350certificationof.htm (EX-32.2) — 5KB
• 0001001614-25-000058.txt ( ) — 9256KB
• rep-20250930.xsd (EX-101.SCH) — 71KB
• rep-20250930_cal.xml (EX-101.CAL) — 110KB
• rep-20250930_def.xml (EX-101.DEF) — 338KB
• rep-20250930_lab.xml (EX-101.LAB) — 802KB
• rep-20250930_pre.xml (EX-101.PRE) — 579KB
• rep-20250930_htm.xml (XML) — 1416KB

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 6 Condensed Consolidated Balance Sheets 6 Condensed Consolidated Statements of Operations 7 Condensed Consolidated Statements of Changes in Shareholders' Equity 8 Condensed Consolidated Statements of Cash Flows 9 Notes to the Condensed Consolidated Financial Statements 11 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 40 Item 4.

Controls and Procedures

Controls and Procedures 41

OTHER INFORMATION

Part II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 42 Item 1A.

Risk Factors

Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 5. Other Information 42 Item 6. Exhibits 43

Signatures

Signatures 44 2 Table of Contents DEFINITIONS As used in this Quarterly Report on Form 10-Q (the "Quarterly Report"), unless otherwise noted or the context otherwise requires, we refer to Riley Exploration Permian, Inc., together with its consolidated subsidiaries, as "Riley Permian," "REPX," "the Company," "Registrant," "we," "our," or "us." In addition, this Quarterly Report includes certain terms commonly used in the oil and natural gas industry, and the following are abbreviations and definitions of certain terms used within this Quarterly Report: Measurements. Bbl One barrel or 42 U.S. gallons liquid volume of oil or other liquid hydrocarbons Boe One stock tank barrel equivalent of oil, calculated by converting gas volumes to equivalent oil barrels at a ratio of 6 thousand cubic feet of gas to 1 barrel of oil and by converting NGL volumes to equivalent oil barrels at a ratio of 1 barrel of NGL to 1 barrel of oil Boe/d Stock tank barrel equivalent of oil per day Btu British thermal unit. One British thermal unit is the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit MBbl One thousand barrels of oil or other liquid hydrocarbons MBoe One thousand Boe MBoe/d One thousand Boe per day Mcf One thousand cubic feet of gas MMBtu One million British thermal units MMcf One million cubic feet of gas Abbreviations. ARO Asset Retirement Obligation ATM At-the-market equity sales program CODM Chief Operating Decision Maker as defined by the FASB under the Accounting Standards Codification 280. Together, the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Chief Accounting Officer form a collaborative team that functions as the CODM. Credit Facility A credit agreement among Riley Exploration - Permian, LLC, as borrower, and Riley Exploration Permian, Inc, as parent guarantor, with Truist Bank and certain lenders party thereto, as amended EOR Enhanced Oil Recovery ERC

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements RILEY EXPLORATION PERMIAN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, 2025 December 31, 2024 (In thousands, except share amounts) Assets Current Assets: Cash $ 16,459 $ 13,124 Accounts receivable, net 41,080 44,411 Prepaid expenses 2,378 1,592 Inventory 8,901 5,734 Current derivative assets 10,566 3,264 Total Current Assets 79,384 68,125 Oil and natural gas properties, net (successful efforts) 1,002,617 860,797 Other property and equipment, net 46,376 30,477 Non-current derivative assets 481 585 Equity method investment 37,294 22,811 Funds held in escrow 1,196 — Other non-current assets, net 23,990 10,706 Total Assets $ 1,191,338 $ 993,501 Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 12,155 $ 13,937 Accrued liabilities 30,829 33,918 Revenue payable 52,879 34,786 Current portion of long-term debt 20,000 20,000 Other current liabilities 11,445 20,123 Total Current Liabilities 127,308 122,764 Non-current derivative liabilities 321 414 Asset retirement obligations 59,118 32,706 Long-term debt 347,042 249,494 Deferred tax liabilities 85,918 76,547 Other non-current liabilities 5,134 961 Total Liabilities 624,841 482,886 Commitments and Contingencies (Note 15) Shareholders' Equity: Preferred stock, $ 0.0001 par value, 25,000,000 shares authorized; 0 shares issued and outstanding — — Common stock, $ 0.001 par value, 240,000,000 shares authorized; 22,009,159 and 21,482,555 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 22 21 Additional paid-in capital 315,549 310,232 Retained earnings 250,926 200,362 Total Shareholders' Equity 566,497 510,615 Total Liabilities and Shareholders' Equity $ 1,191,338 $ 993,501 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents RILEY EXPLORATION PERMIAN, INC. CONDENSED CONSOLIDATED STATEMENTS OF

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