Riley Permian Q3 Production Rises 30%, Free Cash Flow Hits $42M

Riley Exploration Permian, Inc. (NYSE American: REPX) reported a 30% year-over-year increase in third-quarter 2026 production, while oil output rose 38%, as higher volumes supported $42 million of Total Free Cash Flow and further debt reduction. The upstream producer also outlined modestly higher production levels for the fourth quarter and plans to begin testing additional San Andres development at its Red Lake asset in 2027.

Total production averaged 42.0 thousand barrels of oil equivalent per day during the quarter, including 25.4 thousand barrels of oil per day. Oil accounted for 61% of equivalent production.

Adjusted EBITDAX, a non-GAAP measure, was $117 million. Riley Permian generated $111 million of cash provided by operating activities, or $108 million before changes in working capital. Total accrual-based capital expenditures were $53 million, compared with $66 million on a cash basis, and the company invested another $2 million in its power-focused joint venture, RPC Power.

Texas activity leads third-quarter completions

Completion activity and wells turned to sales were concentrated in Texas during the quarter. Riley Permian drilled 4.1 net wells, completed 6.5 and turned 11.9 net wells to sales in the state. In New Mexico, it drilled 4.5 net wells and completed 1.4, with no wells turned to sales during the period.

The company operates in the Northwest Shelf of the Permian Basin, primarily across the Champions field in Yoakum County, Texas, and the Red Lake field in Eddy County, New Mexico. As of Sept. 30, it estimated that its acreage contained about 400 net undeveloped locations, including roughly 70 at Champions and 330 at Red Lake. Those estimates include potential San Andres locations that remain subject to further technical and commercial evaluation.

Riley Permian reduced debt by $28 million during the quarter, ending September with debt equal to 0.8 times last-12-month Adjusted EBITDAX. LTM Adjusted EBITDAX totaled $324 million. In October, the company prepaid all outstanding 10.5% unsecured senior notes.

The company also amended and restated its credit agreement in late October, increasing the borrowing base to $450 million from $425 million and elected commitments to $450 million from $400 million. The facility’s maturity was extended to October 2030 from December 2028. Pro forma for the senior-notes repayment and amended facility, liquidity was $232 million, comprising $27 million of cash and $205 million of undrawn capacity.

Riley Permian increased its quarterly cash dividend by 5% to $0.42 per share, payable in November. It paid $0.40 per share, or $8 million in total, during the third quarter. Future dividends remain subject to board approval.

Fourth-quarter production guidance

For the fourth quarter, management expects oil production of 25.5 thousand to 26.5 thousand barrels per day and total equivalent production of 42.5 thousand to 43.5 thousand barrels of oil equivalent per day.

The company plans to drill and complete 13 to 17 net operated wells and turn 14 to 18 net operated wells to sales. It also anticipates zero to one net non-operated well.

Fourth-quarter upstream capital expenditures are projected at $60 million to $70 million, with another $14 million to $16 million allocated to infrastructure and other spending. Total capital expenditures are therefore expected to range from $74 million to $86 million, while a planned $2 million investment in the power joint venture brings total expected investments to $76 million to $88 million.

Lease operating expenses are forecast at $8.75 to $9.75 per barrel of oil equivalent. Production and ad valorem taxes are expected to equal 7.5% to 8.5% of revenue, while administrative costs are projected at $2.00 to $2.50 per barrel of oil equivalent.

Red Lake infrastructure and San Andres plans

New gathering and high-pressure trunkline infrastructure built by Targa in Eddy County entered service in October and began receiving natural gas volumes. Riley Permian said the infrastructure should reduce constraints in New Mexico and support additional development activity.

The company is also evaluating the San Andres formation as a potential extension of its Red Lake inventory. Its preliminary geological work identifies potential spacing of up to four horizontal wells per square mile. Riley Permian plans to include six San Andres horizontal wells in its 2027 drilling program, beginning development activity in the second quarter and coordinating the wells with established Paddock and Blinebry targets.

Management cautioned that potential San Andres locations and spacing remain under evaluation and do not constitute proved reserves or establish commercial viability. Development will depend on drilling results, economics, available capital, infrastructure and regulatory approvals, and there is no assurance that identified locations will be drilled.

Results and future plans also remain exposed to volatility in oil, natural gas and natural gas liquids prices, regional pricing differentials, transportation and processing constraints, cost inflation, permitting requirements and well performance. Riley Permian’s concentration in the Northwest Shelf, along with execution risks tied to acquired assets and future development, could also cause actual production and financial results to differ from management’s projections.