Riley Exploration Permian, Inc 10-Q, filed Feb 14, 2022

Riley Exploration Permian, Inc. (REPX)

10-Q 2022-02-14 For: 2021-12-31

Added on April 09, 2026

About this 10-Q

Riley Exploration Permian, Inc filed this 10-Q on February 14, 2022, covering the quarter ended December 31, 2021.

Headline figures

Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $57.25M; up 148.8% from $23.01M a year earlier
Net income: $21.4M; compared with a net loss of $7.94M a year earlier
Diluted EPS: $1.09; compared with -$0.71 a year earlier

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Delaware						87-0267438
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

29 E. Reno Avenue, Suite 500 Oklahoma City, Oklahoma						73104
(Address of Principal Executive Offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001	REPX	NYSE American


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o


RILEY EXPLORATION PERMIAN, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements	6
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations	7
	Condensed Consolidated Statements of Changes in Members'/Shareholders' Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35

Signatures


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.
Abbreviations.
ARO			Asset Retirement Obligation.
ASU			Accounting Standards Update.

CO2			Carbon Dioxide.




FASB			Financial Accounting Standards Board



LIBOR			London Interbank Offered Rate.

NGL			Natural gas liquids.



NYSE			New York Stock Exchange.
Oil			Crude oil and condensate.
SEC			Securities and Exchange Commission.


U.S. GAAP			Accounting principles generally accepted in the United States of America.


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	December 31, 2021		September 30, 2021
	(In thousands, except share amounts)
Assets
Current Assets:
Cash and cash equivalents	$	8,317	$	17,067
Accounts receivable	18,002		17,473
Accounts receivable - related parties	—		456
Prepaid expenses and other current assets	4,902		1,730
Current derivative assets	83		—
Total current assets	31,304		36,726
Oil and natural gas properties, net (successful efforts)	359,131		345,797
Other property and equipment, net	3,174		3,183
Non-current derivative assets	267		106
Other non-current assets, net	2,293		2,419
Total Assets	$	396,169	$	388,231
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable	$	7,737	$	12,234
Accounts payable - related parties	164		—
Accrued liabilities	12,874		19,355
Revenue payable	11,370		9,008


Current derivative liabilities	30,984		42,144
Other current liabilities	947		874
Total Current Liabilities	64,076		83,615
Non-current derivative liabilities	9,515		8,932
Asset retirement obligations	2,261		2,306
Revolving credit facility	65,000		60,000
Deferred tax liabilities	17,384		11,628
Other non-current liabilities	95		60
Total Liabilities	158,331		166,541
Commitments and Contingencies (Note 13)


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; 19,836,885 and 19,672,050 shares issued and outstanding at December 31, 2021 and September 30, 2021, respectively	20		20
Additional paid-in capital	271,737		270,837
Accumulated deficit	(33,919)		(49,167)
Total Shareholders' Equity	237,838		221,690
Total Liabilities and Shareholders' Equity	$	396,169	$	388,231


	December 31, 2021		September 30, 2021


	(In thousands)
Oil, natural gas and NGL sales	$	17,562	$	17,008
Joint interest accounts receivable	409		413
Realized derivative receivable	—		42
Other accounts receivable	31		10
Total accounts receivable	$	18,002	$	17,473


	Three Months Ended December 31,
	2021		2020
	(In thousands)
Oil and natural gas sales:
Oil	$	50,623	$	22,107
Natural gas	2,705		119
Natural gas liquids	3,322		188
Total oil and natural gas sales, net	$	56,650	$	22,414



Tengasco common stock price	$	29.64
Tengasco common stock - issued and outstanding as of February 26, 2021	891
Total consideration	$	26,392



Assets
Cash and cash equivalents	$	860
Account receivable	325
Prepaid and other current assets	759
Total current assets	1,944

Oil and gas properties	4,525
Other property and equipment	91
Right of use assets	42
Other non-current assets	4
Deferred tax assets	2,987


Total assets acquired	9,593

Liabilities
Accounts payable	130
Accrued liabilities	409
Current lease liabilities, operating	42
Current lease liabilities, financing	68
Total current liabilities	649

Asset retirement obligations	1,565


Total liabilities assumed	2,214

Net identifiable assets acquired	7,379
Goodwill	19,013
Net assets acquired	$	26,392


	Three Months Ended December 31, 2020

	(In thousands, except per share/unit amounts)

Total Revenues		$	23,014


Pro Forma Net Income (Loss) before Taxes		(6,647)
Pro forma income tax benefit (expense)		1,396
Pro Forma Net Income (Loss)		$	(5,251)
Net Income (Loss) per Share/Unit from Continuing Operations:
Basic		$	(0.30)
Diluted		$	(0.30)


		Weighted Average Price
Calendar Quarter	Notional Volume	Fixed		Put		Call
		($ per unit)
Oil Swaps (Bbl)
Q1 2022	345,000	$	57.47	$	—	$	—
Q2 2022	345,000	$	57.47	$	—	$	—
Q3 2022	270,000	$	56.03	$	—	$	—
Q4 2022	270,000	$	56.03	$	—	$	—
2023	720,000	$	53.27	$	—	$	—

Natural Gas Swaps (Mcf)
Q1 2022	360,000	$	3.26	$	—	$	—
Q2 2022	540,000	$	3.26	$	—	$	—
Q3 2022	540,000	$	3.26	$	—	$	—
Q4 2022	540,000	$	3.26	$	—	$	—

Oil Collars (Bbl)
Q1 2022	90,000	$	—	$	35.00	$	42.63
Q2 2022	90,000	$	—	$	35.00	$	42.63
Q3 2022	90,000	$	—	$	35.00	$	42.63
Q4 2022	90,000	$	—	$	35.00	$	42.63

Oil Basis (Bbl)
Q1 2022	240,000	$	0.41	$	—	$	—
Q2 2022	240,000	$	0.41	$	—	$	—
Q3 2022	240,000	$	0.41	$	—	$	—
Q4 2022	240,000	$	0.41	$	—	$	—


Open Coverage Period	Notional Amount		Fixed Rate
	(In thousands)
Floating-to-Fixed Interest Rate Swaps


January 2022 - September 2023	$	40,000	0.24	%


RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended December 31,
	2021		2020

	(In thousands, except per share/unit amounts)
Revenues:
Oil and natural gas sales, net	$	56,650	$	22,414
Contract services - related parties	600		600
Total Revenues	57,250		23,014
Costs and Expenses:
Lease operating expenses	7,419		4,568
Production and ad valorem taxes	3,005		1,289
Exploration costs	611		424
Depletion, depreciation, amortization and accretion	6,867		5,990
General and administrative:
Administrative costs	3,633		2,445
Unit-based compensation expense	—		413
Share-based compensation expense	951		—
Cost of contract services - related parties	150		148
Transaction costs	1,258		1,049
Total Costs and Expenses	23,894		16,326
Income From Operations	33,356		6,688
Other Income (Expense):
Interest expense	(896)		(1,235)
Loss on derivatives	(5,193)		(13,909)
Total Other Income (Expense)	(6,089)		(15,144)
Net Income (Loss) Before Income Taxes	27,267		(8,456)
Income tax benefit (expense)	(5,869)		515


	December 31, 2021		September 30, 2021

	(In thousands)
ARO, beginning balance	$	2,434	$	2,326
Liabilities incurred	56		113


Liability settlements and disposals	(58)		(92)
Accretion	21		87
ARO, ending balance	2,453		2,434
Less: current ARO(1)	(192)		(128)
ARO, long-term	$	2,261	$	2,306


	Three Months Ended December 31,
	2021		2020
	(In thousands)
Fair value of net asset (liability), beginning of period	$	(50,970)	$	21,921
Loss on derivatives	(5,193)		(13,909)
Settlements on derivatives	16,014		(5,173)
Fair value of net asset (liability), end of period	$	(40,149)	$	2,839


	Three Months Ended December 31,
	2021		2020
	(In thousands)
Combo	$	300	$	300
REG	300		300
Contract services - related parties	$	600	$	600

Cost of contract services	$	150	$	148


	December 31, 2021
Balance Sheet Classification	Gross Fair Value		Amounts Netted		Net Fair Value
	(In thousands)
Current derivative assets	$	281	$	(198)	$	83
Non-current derivative assets	267		—		267
Current derivative liabilities	(31,182)		198		(30,984)
Non-current derivative liabilities	(9,515)		—		(9,515)
Total	$	(40,149)	$	—	$	(40,149)

	September 30, 2021
Balance Sheet Classification	Gross Fair Value		Amounts Netted		Net Fair Value
	(In thousands)
Current derivative assets	$	186	$	(186)	$	—
Non-current derivative assets	228		(122)		106
Current derivative liabilities	(42,330)		186		(42,144)
Non-current derivative liabilities	(9,054)		122		(8,932)
Total	$	(50,970)	$	—	$	(50,970)


	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial assets:
Commodity derivative assets	$	—	$	187	$	—	$	—
Interest rate assets	$	—	$	361	$	—	$	—
Financial liabilities:
Commodity derivative liabilities	$	—	$	(40,687)	$	—	$	—
Interest rate liabilities	$	—	$	(10)	$	—	$	—

	September 30, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial assets:
Commodity derivative assets	$	—	$	308	$	—	$	—
Interest rate assets	$	—	$	106	$	—	$	—
Financial liabilities:
Commodity derivative liabilities	$	—	$	(51,336)	$	—	$	—
Interest rate liabilities	$	—	$	(48)	$	—	$	—


2021 Long-Term Incentive Plan
	Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at September 30, 2021	228,369	$	15.35
Granted	174,575	$	23.46
Vested	(36,155)	$	13.80
Forfeited	—	$	—
Unvested at December 31, 2021	366,789	$	19.41


Exhibit Number			Description

2.1			Agreement and Plan of Merger, by and among Tengasco, Inc., Antman Sub, LLC, and Riley Exploration - Permian, LLC, dated as of October 21, 2020 (incorporated by reference from Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 22, 2020).
2.2			Amendment No. 1 to Agreement and Plan of Merger, by and among Tengasco, Inc., Antman Sub, LLC, and Riley Exploration - Permian, LLC, dated as of January 20, 2021 (incorporated by reference from Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 22, 2021).
3.1			First Amended and Restated Certificate of Incorporation of Riley Exploration Permian, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 1, 2021, Registration No. 333-253750).
3.2			Second Amended and Restated Bylaws of Riley Exploration Permian, Inc. (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on March 1, 2021, Registration No. 333-253750).


10.1			Credit Agreement dated as of September 28, 2017, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.1 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.2			First Amendment to Credit Agreement dated as of February 27, 2018, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.3			Second Amendment to Credit Agreement dated as of November 9, 2018, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.3 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.4			Third Amendment to Credit Agreement dated as of April 3, 2019, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.4 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.5			Fourth Amendment to Credit Agreement dated as of October 15, 2019, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.5 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.6			Fifth Amendment to Credit Agreement dated as of May 7, 2020, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.6 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.7			Sixth Amendment to Credit Agreement dated as of August 31, 2020, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.7 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.8			Seventh Amendment and Consent to Credit Agreement dated as of October 21, 2020, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.8 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.9			Eighth Amendment to Credit Agreement dated as of March 5, 2021, by and among Riley Exploration Permian, Inc., Riley Exploration - Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission on May 17, 2021).
10.10			Ninth Amendment to Credit Agreement dated as of May 5, 2021, by and among Riley Exploration Permian, Inc., Riley Exploration - Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission on May 17, 2021).
10.11			Tenth Amendment to the Credit Agreement dated as of October 12, 2021, by and among Riley Exploration Permian, Inc., Riley Exploration - Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October 14, 2021).
10.12			Form of Indemnity Agreement (incorporated by reference from Exhibit 10.14 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on January 21, 2021, Registration No. 333-250019).
10.13			Form of Independent Director Agreement (incorporated by reference from Exhibit 10.13 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on January 21, 2021, Registration No. 333-250019).


10.14†			Riley Exploration Permian, Inc. 2021 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 25, 2021).
10.15†			Form of Common Stock Award Agreement (incorporated by reference from Exhibit 10.10 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).
10.16†			Form of Restricted Stock Agreement (Time Vesting) (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8, as filed with the Securities and Exchange Commission on March 1, 2021, Registration No. 333- 253750).
10.17†			Form of Substitute Restricted Stock Agreement (Time Vesting) (incorporated by reference from Exhibit 4.5 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on March 1, 2021, Registration No. 333-253750).
10.18†			Form of Restricted Stock Agreement (Non-Employee Director) (incorporated by reference from Exhibit 4.6 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on March 1, 2021, Registration No. 333-253750).
10.19†			Employment Agreement dated effective as of March 15, 2021 by and between Riley Exploration Permian, Inc. and Corey Riley (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).
10.20†			Employment Agreement dated effective as of March 15, 2021 by and between Riley Exploration Permian, Inc. and Philip Riley (incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).
10.21†			Employment Agreement dated April 1, 2019 by and between Riley Exploration – Permian, LLC and Bobby D. Riley and assigned by Riley Exploration – Permian, LLC to Riley Permian Operating Company, LLC on June 8, 2019 (incorporated by reference from Exhibit 10.9 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.22†			Amendment No. 1 to Employment Agreement dated October 1, 2020 by and between Riley Permian Operating Company, LLC and Bobby D. Riley (incorporated by reference from Exhibit 10.10 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.23†			Amendment No. 2 to Employment Agreement dated March 15, 2021 by and between Riley Permian Operating Company, LLC and Bobby D. Riley (incorporated by reference from Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).
10.24†			Employment Agreement dated April 1, 2019 by and between Riley Exploration – Permian, LLC and Kevin Riley and assigned by Riley Exploration – Permian, LLC to Riley Permian Operating Company, LLC on June 8, 2019 (incorporated by reference from Exhibit 10.11 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019)
10.25†			Amendment No. 1 to Employment Agreement dated March 15, 2021 by and between Riley Permian Operating Company, LLC and Kevin Riley (incorporated by reference from Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).
10.26			Second Amended and Restated Registration Rights Agreement dated October 7, 2020 by and among Riley Exploration – Permian, LLC, Riley Exploration Group, Inc., Yorktown Energy Partners XI, L.P., Boomer Petroleum, LLC, Bluescape Riley Exploration Holdings LLC, Bluescape Riley Acquisition Company LLC, Bobby D. Riley, Kevin Riley and Corey Riley (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No. 333-250019).
10.27†			Employment Agreement dated effective as of January 25, 2022 by and between Riley Exploration Permian, Inc. and Amber Bonney (incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 27, 2022).



31.1*			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*			Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*			Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


101.INS*			XBRL Instance Document
101.SCH*			XBRL Taxonomy Extension Schema Document
101.CAL*			XBRL Taxonomy Calculation Linkbase Document
101.DEF*			XBRL Taxonomy Definition Linkbase Document
101.LAB*			XBRL Taxonomy Label Linkbase Document
101.PRE*			XBRL Taxonomy Presentation Linkbase Document


	RILEY EXPLORATION PERMIAN, INC.

Date: February 14, 2022	By:	/s/ Bobby D. Riley
		Bobby D. Riley
		Chief Executive Officer

	By:	/s/ Philip Riley
		Philip Riley
		Chief Financial Officer