Riley Exploration Permian today reported financial and operating results for the fourth quarter and year ended December 31, 2023.

FOURTH QUARTER 2023 HIGHLIGHTS

• Averaged 19.9 MBoe/d of total equivalent production (oil production of 13.6 MBbls/d)
• Generated $66 million of operating cash flow or $54 million of operating cash flow before changes in working capital
• Incurred total accrual (activity-based) and cash capital expenditures before acquisitions of $25 million and $21 million, respectively
• Generated Free Cash Flow(1) of $33 million
• Paid dividends of $0.36 per share in the fourth quarter for a total of $7 million
• Reduced debt outstanding by $30 million
• Initiated temporary operations on baseload power generation owned by our joint venture, RPC Power LLC

FULL YEAR 2023 HIGHLIGHTS

• Averaged 18.6 MBoe/d of total equivalent production (oil production of 13.2 MBbls/d), which included contribution from the New Mexico Acquisition properties for three of four quarters in 2023
• Generated $207 million of operating cash flow
• Incurred $136 million for both total accrual (activity-based) and cash capital expenditures before acquisitions
• Generated Free Cash Flow(1) of $70 million
• Paid dividends of $1.38 per share for a total of $28 million
• Reported proved reserves as of December 31, 2023 of 108 MMBoe (62% oil); proved developed ("PDP") reserves of 60 MMBoe (61% oil and 56% of proved reserves)

2024 GUIDANCE HIGHLIGHTS

• Full year 2024 guidance for oil production of 14.0 – 15.0 MBbls/d, corresponding to approximately 10% year-over-year growth at the midpoint
• Full year 2024 guidance for total production of 21.0 – 22.5 MBoe/d, corresponding to approximately 17% year-over-year growth at the midpoint, benefiting from the anticipated addition of natural gas processing capacity through the year
• Full year 2024 guidance for activity-based investing expenditures before acquisitions of $115 - 130 million, corresponding to an approximate 10% year-over-year reduction at the midpoint

(1) A non-GAAP financial measure

Bobby D. Riley, Chief Executive Officer, President and Chairman of the Board, said:
"We had outstanding operational and financial performance for 2023. This success continues to demonstrate our established track record of growth through both organic development and strategic acquisitions. Over the full year, the Company achieved a remarkable 49% growth in oil production and 62% total production growth year-over-year, which includes the impact of the New Mexico Acquisition for nine months of 2023.

"Our production growth on our legacy assets encompassed a 22% year-over-year increase organically and demonstrates our continued ability to achieve annual organic volume growth. Furthermore, our Free Cash Flow(1) experienced a year-over-year increase of 26%, and we increased our dividend by 9%. The Company increased proved reserves by 39%, primarily attributed to the New Mexico Acquisition, complemented by a robust development program.

"Looking ahead to 2024, our objective is to achieve a 10% growth in oil production while concurrently reducing capital expenditures by 10%. Our focus is on executing efficient operations and implementing cost-saving measures, which we believe will be the most impactful aspect of our 2024 plan."

OPERATIONS AND DEVELOPMENT ACTIVITY UPDATE

During the fourth quarter, the Company drilled 6 gross operated horizontal wells, including 4 in Texas and 2 in New Mexico. The Company completed 4 gross operated horizontal wells and turned to sales 2 gross operated horizontal wells.

For the full year 2023, the Company drilled 23 gross operated horizontal wells, including 17 gross wells in Texas and 6 gross wells in New Mexico. The Company completed 18 gross operated horizontal wells and turned to sales 18 gross operated horizontal wells.

RESERVES

Estimates of Riley Permian's proved reserves as of December 31, 2023 were prepared by Ryder Scott Company, L.P., the Company's third-party reservoir engineer, using the SEC pricing methodology Proved reserves at year-end 2023 of 108 MMBoe increased by 30 MMBoe or 39% over year-end 2022 reserves. Oil represents 62% of Riley Permian's total proved reserves. Proved developed reserves ("PDP") increased by 23% to 60 MMBoe, corresponding to 56% of total proved reserves. Proved undeveloped reserves ("PUD") increased to 48 MMBoe, a 66% increase over year-end 2022. At December 31, 2023, standardized measure of discounted cash flows and PV-10(1) were $1,260 million and $1,584 million, respectively.

The net proved reserve additions resulted in a reserve replacement ratio (defined as the sum of extensions and discoveries, revisions, acquisitions and divestitures, divided by annual production) of 543% for the year ended December 31, 2023. The organic reserve replacement ratio (defined as the sum of extensions and discoveries and revisions, divided by annual production) was 159%.

Acquisitions were the primary contributor to the increase in reserves at 26 MMBoe. The Company had extensions and discoveries to proved reserves of 23 MMBoe, which consisted of 8 MMBoe added to PDP as a result of drilling successful wells that were previously classified as unproved locations, and 15 MMBoe added to PUDs as a result of drilling successful wells offsetting locations that were previously unproven locations. The Company had downward revisions of previous estimates of 12 MMBoe, which are primarily attributable to the removal of PUDs due to changes in the Company's development schedule. Consistent with SEC guidelines, PUDs are limited to those locations that are reasonably certain to be developed within five years.

2024 GUIDANCE

Riley Permian is providing first quarter detailed guidance and select full year 2024 activity guidance based on currently scheduled development activity and current market conditions. The average working interest on gross operated wells drilled is subject to change and may have corresponding impacts on investing expenditures. 

The Company anticipates a notable increase in sales of processed natural gas and NGLs from its Yoakum County, Texas, operations during the second quarter of 2024, corresponding with a capacity expansion at our midstream counterparty's processing plant. Full-year 2024 guidance for total equivalent production volumes incorporates this anticipated increase in natural gas and NGL sales. Further, this anticipated increase leads to a disproportionately larger growth forecast for total equivalent production (17% growth year-over-year at the guidance midpoint) relative to the growth forecast for oil production alone (10% growth year-over-year at the guidance midpoint). The completion and timing of the plant capacity expansion is outside of the Company's control, and delays in the plant being fully operational could lead to lower actual results for the Company's total equivalent production volumes due to lower natural gas and natural gas liquids processed.

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