Riley Permian Q2 2026 earnings: Production growth nearly doubles revenue

Riley Permian (NYSE American: REPX) reported Q2 2026 revenue of $165.9 million, up 94% from $85.4 million a year earlier, while GAAP diluted EPS increased to $4.11 from $1.44. Total production rose 41% to 34.3 MBoe/d, but Total Free Cash Flow fell to $6.3 million as cash capital expenditures increased. GAAP net income also benefited from a $69 million non-cash derivative gain, making the adjusted results important for interpreting profitability.

Core earnings data

Revenue growth reflected both higher oil production and a higher realized oil price before derivative settlements. Oil production increased 40% to 21.2 MBbls/d, while the average realized oil price rose to $94.28 per barrel from $62.17; reported natural gas and NGL prices remained negative due to regional pricing and transportation costs.

Adjusted EBITDAX and Total Free Cash Flow are non-GAAP measures. Adjusted net income was $33 million, or $1.54 per diluted share; the release did not provide comparable Q2 2025 figures for these two adjusted metrics.

Production increased despite New Mexico constraints

Texas remained Riley Permian’s largest producing region and recorded the faster growth rate, while New Mexico production also increased year over year despite midstream disruptions. The company drilled 24 gross operated wells, completed 18 and turned 15 to sales during the quarter.

An unplanned outage at a third-party facility created processing limitations, reduced gas takeaway capacity and forced temporary well shut-ins in April and May. Riley Permian estimated that the disruptions reduced second-quarter production by approximately 1.9 MBbls/d. Oil production recovered to 24.4 MBbls/d in June.

The company expects a new Targa gathering and high-pressure pipeline system in Eddy County, New Mexico, to enter service in the fourth quarter of 2026. The project is intended to reduce exposure to the type of processing and takeaway constraints experienced during Q2.

Derivative gains lifted GAAP profit while spending constrained free cash flow

GAAP earnings were materially higher than adjusted earnings because derivatives contributed a $33 million net gain. That amount consisted of a $69 million non-cash fair-value gain on open contracts, partly offset by a $36 million realized loss on derivative settlements. Consequently, GAAP net income of $87.4 million and EPS of $4.11 were well above adjusted net income of $33 million and adjusted EPS of $1.54.

Cash generation did not rise as quickly as GAAP profit. Operating cash flow was $63.5 million, or $75 million before working-capital changes, while total cash capital expenditures reached $68.3 million. Total Free Cash Flow therefore declined to $6.3 million from $17.8 million a year earlier.

Lease operating expense increased to $29.4 million, or $9.44 per Boe, including $11 million of workover expense. Management said the workovers were intended to capitalize on high oil prices and supplement volumes affected by operational disruptions.

Riley Permian increased debt by $26 million during the quarter, bringing principal debt to $273 million at June 30. The company ended the quarter with $20.7 million in cash and a debt-to-last-twelve-month Adjusted EBITDAX ratio of 1.0 times. It also paid approximately $9 million in dividends and repurchased about $1 million of stock.

Guidance

Riley Permian raised its full-year oil-production outlook and increased planned capital expenditures and total investments. The prior numerical ranges were not included in the release, so the size of those revisions cannot be quantified. Third-quarter guidance calls for more than 20% sequential oil-production growth and the largest quarterly production increase of 2026.

The full-year investment range includes $9 million to $10 million for the RPC Power joint venture. Management said the updated oil guidance implies approximately 30% year-over-year oil-production growth in 2026.

Recent insider transactions

Over the reported six-month period, insiders purchased 239,138 shares across nine transactions and sold 1,648,236 shares across 12 transactions. That produced net selling of 1,409,098 shares, equal to 25.70% of the reported 4.07 million insider shares held. The latest ten reported transactions consist of seven zero-price stock awards and three sales; these records alone do not establish insiders’ views of the company’s outlook.

Risks investors should monitor

• Midstream constraints: The Q2 outage and takeaway limitations reduced production by an estimated 1.9 MBbls/d. Continued recovery depends partly on existing third-party infrastructure and the planned fourth-quarter start of the Targa system.
• Negative regional gas economics: Riley Permian realized negative prices of $4.12 per Mcf for natural gas and $4.71 per barrel for NGLs before derivative settlements. Waha pipeline constraints and allocated gathering, processing and transportation costs could continue to offset production benefits.
• Higher spending and debt: Cash capital expenditures exceeded quarterly operating cash flow, Total Free Cash Flow fell to $6.3 million and principal debt increased to $273 million. The updated full-year investment plan requires continued operating and financing capacity.
• Derivative cash settlements: The company recorded a $36 million realized derivative loss even as higher oil prices supported revenue. Its oil price including derivative settlements was $74.25 per barrel, compared with $94.28 before settlements.

Summary

Riley Permian’s Q2 2026 results combined substantial production and revenue growth with a wider gap between GAAP earnings and cash economics. Higher oil volumes and pricing lifted operating performance, but derivative settlements, workover activity and increased capital spending limited free cash flow and contributed to higher debt. The next major tests are execution of the planned third-quarter production ramp and progress toward relieving New Mexico infrastructure constraints in the fourth quarter.