UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


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

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


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

Commission file number 001-15555

Riley Exploration Permian, Inc.

(Exact name of registrant as specified in its charter)


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)

Registrant's telephone number, including area code: (405) 415-8699

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The total number of shares of common stock, par value $0.001 per share, outstanding as of ~~November 8, 2022~~May 2, 2023 was ~~20,160,230.~~20,182,205.


RILEY EXPLORATION PERMIAN, INC.
FORM 10-Q
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023
TABLE OF CONTENTS
		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements	68
	Condensed Consolidated Balance Sheets	68
	Condensed Consolidated Statements of Operations	79
	Condensed Consolidated ~~Statements~~Statement s of Changes in ~~Members'/~~Shareholders' Equity	910
	Condensed Consolidated Statements of Cash Flows	11
	~~Notes to the Condensed Consolidated Financial Statements~~	13
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2925
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3833
Item 4.	Controls and Procedures	3833
Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	4035
Item 1A.	Risk Factors	4035
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	42
~~Item 3.~~	~~Defaults Upon Senior Securities~~	42
~~Item 4.~~	~~Mine Safety Disclosures~~	42
Item 5.	Other Information	4235
Item 6.	Exhibits	4236

Signatures		39

~~Introductory Note~~

On August 16, 2022, the Company's Board of Directors (the "Board") acting by written consent resolved to amend and restate the Company's Second Amended and Restated Bylaws to change the Company's fiscal year period from October 1st through September 30th each year to January 1st through December 31st each year commencing with the 2022 calendar year (the "Bylaws Restatement"). On August 19, 2022, the holders of approximately 75% of our outstanding common stock acting by written consent approved the Bylaws Restatement and adopted the Third Amended and Restated Bylaws. In accordance with Rule 14c-2 under the Exchange Act, the aforementioned actions taken by written consent became effective on September 23, 2022. As a result, the Company's 2022 fiscal year is now the period from January 1, 2022 to December 31, 2022.

Unless the context requires otherwise or unless otherwise noted, all references in this Quarterly Report on Form 10-Q to the "Company," "Riley Permian," "REPX," "we," "us," or "our" are to Riley Exploration Permian, Inc., together with its consolidated subsidiaries.

Table of Contents

DEFINITIONS

~~The~~As used in this Quarterly Report on Form 10-Q (the "Quarter Report"), unless otherwise noted or the context otherwise requires, we refer to Riley Exploration Permian, Inc., together with its 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 on Form 10-Q:


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~~MMcf			One million ~~British thermal units~~cubic feet of gas
Abbreviations.
ARO			Asset Retirement Obligation
~~ASU~~			~~Accounting Standards Update~~

CO2			Carbon Dioxide


EOR			Enhanced Oil Recovery

~~ESG~~			~~Environmental, social, and governance~~
FASB			Financial Accounting Standards Board

~~GHG~~			~~Greenhouse Gas~~

~~LIBOR~~			~~London Interbank Offered Rate~~
~~LTIP~~			~~Long-Term Incentive Plan~~

NGL			Natural gas liquids



NYSE			New York Stock Exchange
Oil			Crude oil and condensate
RRC			Railroad Commission of Texas
SEC			Securities and Exchange Commission
~~SOFR~~			~~Secured Overnight Financing Rate~~

U.S. GAAP			Accounting principles generally accepted in the United States of America
WTI			West Texas Intermediate

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

~~Various statements contained in this~~This Quarterly Report on Form 10-Q ("Quarterly Report") ~~are~~contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as ~~defined by~~amended, and Section 21E of the ~~SEC.~~Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, contained in this Quarterly Report that include information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position and potential growth opportunities represent management's beliefs and assumptions based on currently available information and they do not consider the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “should,” “anticipates,” “expects,” “could,” “plans,” “estimates,” “projects,” “targets” or comparable terminology or by discussions of strategy or trends. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.

Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed under “Item ~~1A.~~2. Management's Discussion and Analysis of Financial Condition and Results of Operations” and "Part II, Item 1.A Risk ~~Factors”~~Factors" in this Quarterly Report and in our Annual Report on Form 10-K for the year ended ~~September 30, 2021.~~December 31, 2022. We continue to face many risks and uncertainties including, but not limited to:

•the volatility of oil, natural gas and NGL prices;

•the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 (“COVID-19”) pandemic and any related variants), including reactive or proactive measures taken by governments, regulatory agencies and businesses related to the pandemic, and the effects of COVID-19 on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics;

•regional supply and demand factors, any delays, curtailment delays or interruptions of production, and any governmental order, rule or regulation that may impose production limits;

•cost and availability of gathering, pipeline, refining, transportation and other midstream and downstream activities;

•severe weather and other risks that lead to a lack of any available markets;

•our ability to successfully complete mergers, acquisitions or divestitures;

•the inability or failure of the Company to successfully integrate the acquired assets into its operations and ~~divestitures;~~development activities;

•the potential delays in the development, construction or start-up of planned projects;

•the risk that the Company's EOR project may not perform as expected or produce the anticipated benefits;

•risks relating to our operations, including development drilling and testing results and performance of acquired properties and newly drilled wells;

•inability to prove up undeveloped acreage and maintain production on leases;

•any reduction in our borrowing base on our revolving credit facility from time to time and our ability to repay any excess borrowings as a result of such reduction;

•the impact of our derivative strategy and the results of future settlement;

•our ability to comply with the financial covenants contained in our revolving credit facility;

•changes in general economic, business or industry conditions, including changes in inflation rates, interest rates, and foreign currency exchange rates;

•conditions in the capital, financial and credit markets and our ability to obtain capital needed for development and exploration operations on favorable terms or at all;

•the loss of certain tax deductions;

•risks associated with executing our business strategy, including any changes in our strategy;

•~~inability to prove up undeveloped acreage and maintain production on leases;~~

•risks associated with concentration of operations in one major geographic area;

•legislative or regulatory changes, including initiatives related to hydraulic fracturing, emissions and disposal of produced water, which may be negatively impacted by regulation or legislation;

•the ability to receive drilling and other permits or approvals and rights-of-way in a timely manner (or at all), which may be restricted by governmental regulation and legislation;

•restrictions on the use of water, including limits on the use of produced water and a moratorium on new produced water well permits recently imposed by the RRC in an effort to control induced seismicity in the Permian Basin;

•changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; public health crisis, such as pandemics and epidemics, and any related government policies and actions and the effects of such public health crises on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics;

Table of Contents

•general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine and the global response to such conflict;

•risks related to litigation;

•~~actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments;~~ and

•cybersecurity threats, technology system failures and data security issues.

~~Table~~In light of ~~Contents~~

~~All~~such risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly ~~Report. You should~~Report, or if earlier, as of the date they were made. We do not ~~place undue reliance on these forward-looking statements. These forward-looking statements are subject~~intend to, ~~a number of risks, uncertainties~~ and ~~assumptions. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time~~disclaim any obligation to, ~~time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business~~update or ~~the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in~~revise any forward-looking statements ~~we may make. Although we believe that our plans, intentions and expectations reflected in or suggested~~unless required by the forward-looking statements we make in this Quarterly Report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied by the forward-looking statements.securities law.

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2022 December 31, 2021
(In thousands, except share amounts)
Assets
Current Assets:
Cash and cash equivalents $ 17,908 $ 8,317
Accounts receivable 27,463 18,002
Prepaid expenses and other current assets 3,377 4,902
Current derivative assets 1,607 83
Total current assets 50,355 31,304
Oil and natural gas properties, net (successful efforts) 431,067 359,131
Other property and equipment, net 4,822 3,174
Non-current derivative assets — 267
Other non-current assets, net 4,307 2,293
Total Assets $ 490,551 $ 396,169
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 10,854 $ 7,737
Accounts payable - related parties 122 164
Accrued liabilities 28,785 12,874
Revenue payable 17,768 11,370
Current derivative liabilities 22,529 30,984
Other current liabilities 3,003 947
Total Current Liabilities 83,061 64,076
Non-current derivative liabilities 2,423 9,515
Asset retirement obligations 2,689 2,261
Revolving credit facility 48,000 65,000
Deferred tax liabilities 40,586 17,384
Other non-current liabilities 1,138 95
Total Liabilities 177,897 158,331
Commitments and Contingencies (Note 14)
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; 20,181,872 and 19,836,885 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 20 20
Additional paid-in capital 273,821 271,737
Retained earnings (Accumulated deficit) 38,813 (33,919)
Total Shareholders' Equity 312,654 237,838
Total Liabilities and Shareholders' Equity $ 490,551 $ 396,169

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Table of Contents~~

RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In thousands, except per share/unit amounts)
Revenues:
Oil and natural gas sales, net $ 87,471 $ 48,014 $ 241,897 $ 126,222
Contract services - related parties 600 600 1,800 1,800
Total Revenues 88,071 48,614 243,697 128,022
Costs and Expenses:
Lease operating expenses 8,813 5,686 23,705 17,407
Production and ad valorem taxes 5,826 2,575 14,854 7,347
Exploration costs 20 884 1,540 9,142
Depletion, depreciation, amortization and accretion 8,346 6,692 22,167 20,025
General and administrative:
Administrative costs 5,154 4,790 13,567 11,516
Unit-based compensation expense — — — 276
Share-based compensation expense 704 751 2,274 6,101
Cost of contract services - related parties 89 147 263 329
Transaction costs — 198 2,638 2,683
Total Costs and Expenses 28,952 21,723 81,008 74,826
Income From Operations 59,119 26,891 162,689 53,196
Other Income (Expense):
Interest expense, net (585) (963) (1,960) (3,299)
Gain (loss) on derivatives 17,600 (14,987) (44,395) (75,286)
Total Other Income (Expense) 17,015 (15,950) (46,355) (78,585)
Net Income (Loss) From Continuing Operations Before Income Taxes 76,134 10,941 116,334 (25,389)
Income tax benefit (expense) (16,317) 3,937 (25,130) (13,539)
Net Income (Loss) From Continuing Operations 59,817 14,878 91,204 (38,928)

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Table of Contents~~

RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In thousands, except per share/unit amounts)
Discontinued Operations:
Gain (loss) from discontinued operations — 775 — (18,738)
Income tax benefit (expense) on discontinued operations — 1 — (59)
Gain (Loss) on Discontinued Operations — 776 — (18,797)
Net Income (Loss) 59,817 15,654 91,204 (57,725)
Dividends on preferred units — — — (574)
Net Income (Loss) Attributable to Common Shareholders/Unitholders $ 59,817 $ 15,654 $ 91,204 $ (58,299)
Net Income (Loss) per Share/Unit from Continuing Operations:
Basic $ 3.06 $ 0.77 $ 4.67 $ (2.29)
Diluted $ 3.05 $ 0.76 $ 4.65 $ (2.29)
Net Income (Loss) per Share/Unit from Discontinued Operations:
Basic $ — $ 0.04 $ — $ (1.09)
Diluted $ — $ 0.04 $ — $ (1.09)
Net Income (Loss) per Share/Unit:
Basic $ 3.06 $ 0.81 $ 4.67 $ (3.38)
Diluted $ 3.05 $ 0.80 $ 4.65 $ (3.38)
Weighted Average Common Shares/Units Outstanding:
Basic 19,546 19,434 19,530 17,218
Diluted 19,587 19,540 19,632 17,218


RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	(Unaudited)
	March 31, 2023		December 31, 2022
	(In thousands, except share amounts)
Assets
Current Assets:
Cash and cash equivalents	$	2,275	$	13,301
Accounts receivable	24,640		25,551

Prepaid expenses and other current assets	2,242		3,236
Inventory	7,892		8,886
Current derivative assets	1,637		20
Total current assets	38,686		50,994
Oil and natural gas properties, net (successful efforts)	472,722		440,102
Other property and equipment, net	20,012		20,023
Non-current derivative assets	939		—

Funds held in escrow	33,000		—
Other non-current assets, net	9,784		4,175
Total Assets	$	575,143	$	515,294
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable	$	17,002	$	3,939
Accounts payable - related parties	348		324
Accrued liabilities	21,518		35,582
Revenue payable	19,361		17,750


Current derivative liabilities	8,019		16,472
Other current liabilities	5,382		2,238
Total Current Liabilities	71,630		76,305
Non-current derivative liabilities	178		12
Asset retirement obligations	2,860		2,724
Revolving credit facility	89,000		56,000
Deferred tax liabilities	51,039		45,756
Other non-current liabilities	964		1,051
Total Liabilities	215,671		181,848
Commitments and Contingencies (Note 12)


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; 20,169,434 and 20,160,980 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	20		20
Additional paid-in capital	275,669		274,643
Retained earnings	83,783		58,783
Total Shareholders' Equity	359,472		333,446
Total Liabilities and Shareholders' Equity	$	575,143	$	515,294

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS'/SHAREHOLDERS' EQUITY
(Unaudited)
(In Thousands)
Nine Months Ended September 30, 2022
Members' Equity Shareholders' Equity
Common Stock
Units Outstanding Amount Shares Amount Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Total Shareholders' Equity
Balance, December 31, 2021 — $ — 19,837 $ 20 $ 271,737 $ (33,919) $ 237,838
Share-based compensation expense — — — — 1,061 — 1,061
Repurchased shares for tax withholding — — (13) — (339) — (339)
Issuance of common shares under long-term incentive plan, net — — 30 — — — —
Dividends declared — — — — — (6,154) (6,154)
Net loss — — — — — (7,168) (7,168)
Balance, March 31, 2022 — $ — 19,854 $ 20 $ 272,459 $ (47,241) $ 225,238
Share-based compensation expense — — — — 828 — 828
Repurchased shares for tax withholding — — (9) — (252) — (252)
Issuance of common shares under long-term incentive plan — — 20 — — — —
Dividends declared — — — — — (6,159) (6,159)
Net income — — — — — 38,555 38,555
Balance, June 30, 2022 — $ — 19,865 $ 20 $ 273,035 $ (14,845) $ 258,210
Share-based compensation expense, net — — — — 795 — 795
Repurchased shares for tax withholding — — — — (9) — (9)
Issuance of common shares under long-term incentive plan, net — — 317 — — — —
Dividends declared — — — — — (6,159) (6,159)
Net income — — — — — 59,817 59,817
Balance, September 30, 2022 — $ — 20,182 $ 20 $ 273,821 $ 38,813 $ 312,654


RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended March 31,
	2023		2022
	(In thousands, except per share amounts)
Revenues:
Oil and natural gas sales, net	$	66,412	$	66,645
Contract services - related parties	600		600
Total Revenues	67,012		67,245
Costs and Expenses:
Lease operating expenses	8,875		6,830
Production and ad valorem taxes	4,110		3,502
Exploration costs	332		1,498
Depletion, depreciation, amortization and accretion	9,083		6,633

General and administrative:
Administrative costs	5,467		4,014
Share-based compensation expense	1,114		1,017
Cost of contract services - related parties	110		85
Transaction costs	1,887		2,638
Total Costs and Expenses	30,978		26,217
Income From Operations	36,034		41,028
Other Income (Expense):
Interest expense, net	(1,016)		(678)
Gain (loss) on derivatives	5,755		(49,632)
Loss from equity method investment	(232)		—
Total Other Income (Expense)	4,507		(50,310)
Net Income (Loss) From Operations Before Income Taxes	40,541		(9,282)
Income tax (expense) benefit	(8,690)		2,114












Net Income (Loss)	$	31,851	$	(7,168)








Net Income (Loss) per Share:
Basic	$	1.62	$	(0.37)
Diluted	$	1.60	$	(0.37)
Weighted Average Common Shares Outstanding:
Basic	19,649		19,501
Diluted	19,910		19,501

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS'/SHAREHOLDERS' EQUITY- (Continued)
(Unaudited)
(In Thousands)
Nine Months Ended September 30, 2021
Members' Equity Shareholders' Equity
Common Stock
Units Outstanding Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Total Shareholders' Equity
Balance, December 31, 2020 1,568 $ 154,371 — $ — $ — $ — $ —
Purchase of common units under long-term incentive plan (3) (191) — — — — —
Dividends on preferred units — (574) — — — — —
Preferred units converted to common units 512 61,196 — — — — —
Dividends on common units — (3,770) — — — — —
Unit-based compensation expense — 276 — — — — —
Net loss from January 1, 2021 through February 26, 2021 — (19,117) — — — — —
Restricted common shares issued in exchange for common units issued under long-term incentive plan (24) — 198 — — — —
Common shares issued in exchange for common units (effected for 1-for-12 reverse stock split) (2,053) (192,191) 16,733 17 192,174 — 192,191
Common shares issued for business combination — — 891 1 26,391 — 26,392
Restricted common shares issued — — 3 — — — —
Share-based compensation expense — — — — 409 — 409
Dividends declared — — — — — (4,991) (4,991)
Net loss from February 27, 2021 through March 31, 2021 — — — — — (32,761) (32,761)
Balance, March 31, 2021 — $ — 17,825 $ 18 $ 218,974 $ (37,752) $ 181,240
Share-based compensation expense — — — — 779 — 779
Issuance of common shares under long-term incentive plan — — 197 — 4,165 — 4,165
Dividends paid — — — — — (55) (55)
Net loss — — — — — (21,501) (21,501)
Balance, June 30, 2021 — $ — 18,022 $ 18 $ 223,918 $ (59,308) $ 164,628
Share-based compensation expense — — — — 751 — 751
Repurchased shares for tax withholding — — (17) — (514) — (514)
Common stock sold to public, net of issuance costs — — 1,667 2 46,682 — 46,684
Dividends declared — — — — — (5,513) (5,513)
Net income — — — — — 15,654 15,654
Balance, September 30, 2021 — $ — 19,672 $ 20 $ 270,837 $ (49,167) $ 221,690


RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(In Thousands)

	Shareholders' Equity
Three Months Ended March 31, 2023	Common Stock
	Shares	Amount		Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
Balance, December 31, 2022	20,161	$	20	$	274,643	$	58,783	$	333,446
Share-based compensation expense	16	—		1,260		—		1,260
Repurchased shares for tax withholding	(8)	—		(234)		—		(234)

Dividends declared	—	—		—		(6,851)		(6,851)
Net income	—	—		—		31,851		31,851
Balance, March 31, 2023	20,169	$	20	$	275,669	$	83,783	$	359,472























	Shareholders' Equity
Three Months Ended March 31, 2022	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Shareholders' Equity
Balance, December 31, 2021	19,837	$	20	$	271,737	$	(33,919)	$	237,838
Share-based compensation expense	—	—		1,061		—		1,061
Repurchased shares for tax withholding	(13)	—		(339)		—		(339)
Issuance of common shares under long-term incentive plan, net	30	—		—		—		—
Dividends declared	—	—		—		(6,154)		(6,154)
Net loss	—	—		—		(7,168)		(7,168)
Balance, March 31, 2022	19,854	$	20	$	272,459	$	(47,241)	$	225,238

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents


RILEY EXPLORATION PERMIAN, INC.	RILEY EXPLORATION PERMIAN, INC.					RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS					CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)	(Unaudited)					(Unaudited)
		Nine Months Ended September 30,							Three Months Ended March 31,
		2022		2021					2023		2022
		(In thousands)					(In thousands)
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net income (loss)	Net income (loss)	$	91,204	$	(57,725)			Net income (loss)	$	31,851	$	(7,168)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:							Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss from discontinued operations		—		18,797

Oil and gas lease expirations	Oil and gas lease expirations	1,465		8,923				Oil and gas lease expirations	332		1,465
Depletion, depreciation, amortization and accretion	Depletion, depreciation, amortization and accretion	22,167		20,025				Depletion, depreciation, amortization and accretion	9,083		6,633

Loss on derivatives		44,395		75,286

(Gain) loss on derivatives								(Gain) loss on derivatives	(5,755)		49,632
Settlements on derivative contracts	Settlements on derivative contracts	(61,198)		(21,477)				Settlements on derivative contracts	(5,088)		(18,375)
Amortization of deferred financing costs		548		498

Unit-based compensation expense		—		276

Share-based compensation expense	Share-based compensation expense	2,684		6,101				Share-based compensation expense	1,260		1,017
Deferred income tax expense	Deferred income tax expense	23,202		13,352				Deferred income tax expense	5,283		(2,893)
Other								Other	424		191
Changes in operating assets and liabilities	Changes in operating assets and liabilities							Changes in operating assets and liabilities
Accounts receivable	Accounts receivable	(9,461)		(6,949)				Accounts receivable	911		(7,780)
Accounts receivable – related parties	Accounts receivable – related parties	—		(143)				Accounts receivable – related parties	—		(1,106)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,513		241				Prepaid expenses and other current assets	(1,276)		839

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	6,038		8,463				Accounts payable and accrued liabilities	(3,894)		4,643
Accounts payable - related parties	Accounts payable - related parties	(42)		800				Accounts payable - related parties	24		193
Inventory								Inventory	(5,031)		—

Revenue payable	Revenue payable	6,398		4,481				Revenue payable	1,611		2,067

Other current liabilities	Other current liabilities	1,439		(763)				Other current liabilities	3,235		637
Net Cash Provided by Operating Activities - Continuing Operations		130,352		70,186
Net Cash Provided by Operating Activities								Net Cash Provided by Operating Activities	32,970		29,995
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Additions to oil and natural gas properties	Additions to oil and natural gas properties	(82,101)		(50,247)				Additions to oil and natural gas properties	(34,986)		(10,171)
Acquisitions of oil and natural gas properties		—		(445)
Contributions to equity method investment								Contributions to equity method investment	(1,840)		—
Funds held in escrow								Funds held in escrow	(33,000)		—

Additions to other property and equipment	Additions to other property and equipment	(1,081)		(1,396)				Additions to other property and equipment	(109)		(28)
Tengasco acquired cash		—		859
Net Cash Used in Investing Activities - Continuing Operations		(83,182)		(51,229)

Net Cash Used in Investing Activities								Net Cash Used in Investing Activities	(69,935)		(10,199)

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:							Cash Flows from Financing Activities:
Deferred financing costs	Deferred financing costs	(1,722)		(86)				Deferred financing costs	(49)		(25)
Proceeds from revolving credit facility	Proceeds from revolving credit facility	4,000		3,500				Proceeds from revolving credit facility	33,000		3,000
Repayment under revolving credit facility		(21,000)		(41,000)
Payment of common share/unit dividends		(18,257)		(14,568)
Proceeds from issuance of common stock		—		50,000
Public offering costs		—		(3,316)
Payment of preferred unit dividends		—		(1,491)
Repayments under revolving credit facility								Repayments under revolving credit facility	—		(5,000)
Payment of common share dividends								Payment of common share dividends	(6,778)		(6,140)

Common stock repurchased for tax withholding	Common stock repurchased for tax withholding	(600)		(514)				Common stock repurchased for tax withholding	(234)		(339)
Purchase of common units under long-term incentive plan		—		(191)
Net Cash Used in Financing Activities - Continuing Operations		(37,579)		(7,666)
Net Increase in Cash and Cash Equivalents from Continuing Operations		9,591		11,291

Net Cash Provided by (Used in) Financing Activities								Net Cash Provided by (Used in) Financing Activities	25,939		(8,504)
Net Increase (Decrease) in Cash and Cash Equivalents								Net Increase (Decrease) in Cash and Cash Equivalents	(11,026)		11,292

Cash and Cash Equivalents, Beginning of Period								Cash and Cash Equivalents, Beginning of Period	13,301		8,317
Cash and Cash Equivalents, End of Period								Cash and Cash Equivalents, End of Period	$	2,275	$	19,609

Supplemental Disclosure of Cash Flow Information								Supplemental Disclosure of Cash Flow Information
Cash Paid For:								Cash Paid For:
Interest, net of capitalized interest								Interest, net of capitalized interest	$	788	$	490
Income taxes								Income taxes	$	—	$	—
Non-cash Investing and Financing Activities:								Non-cash Investing and Financing Activities:
Changes in capital expenditures in accounts payable and accrued liabilities								Changes in capital expenditures in accounts payable and accrued liabilities	$	2,870	$	15,044

Assets contributed to equity method investment								Assets contributed to equity method investment	$	2,272	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~

RILEY EXPLORATION PERMIAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited)
Nine Months Ended September 30,
2022 2021
(In thousands)
Cash Flows from Discontinued Operations:
Operating activities — 7
Investing activities — 3,892
Net Increase in Cash and Cash Equivalents from Discontinued Operations — 3,899
Net Increase in Cash and Cash Equivalents 9,591 15,190
Cash and Cash Equivalents, Beginning of Period 8,317 1,877
Cash and Cash Equivalents, End of Period $ 17,908 $ 17,067
Supplemental Disclosure of Cash Flow Information
Cash Paid For:
Interest, net of capitalized interest $ 1,866 $ 2,384
Non-cash Investing and Financing Activities - Continuing Operations:
Changes in capital expenditures in accounts payable and accrued liabilities $ 11,971 $ 10,576
Right of use assets obtained in exchange for operating lease liability $ 1,624 $ —
Preferred unit dividends $ — $ 574
Common stock issued in exchange for common units $ — $ 192,191
Assets acquired and liabilities assumed in business combination $ — $ 3,695
Common stock issued for business combination $ — $ 26,392
Preferred units converted to common units $ — $ 61,196
Non-cash Investing - Discontinued Operations:
Goodwill incurred in business combination $ — $ 19,013
Assets acquired and liabilities assumed in business combination $ — $ 2,824

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)Organization and Nature of Business

~~Organization~~

Riley Permian is a growth-oriented, independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and ~~NGLs~~NGL's in Texas and New Mexico. Our activities primarily include the horizontal development of the San Andres formation, a shelf margin deposit on the Northwest Shelf of the Permian Basin. Our acreage is primarily located on large, contiguous blocks in Yoakum County, Texas.

On ~~February 26, 2021~~April 3, 2023 (the “Closing Date”), ~~Riley Permian (f/k/a Tengasco, Inc.~~the Company completed its previously announced acquisition of oil and natural gas assets (the “New Mexico Acquisition”) from Pecos Oil & Gas, LLC (“~~Tengasco”)~~Pecos”), ~~consummated~~ a ~~merger, dated as of October 21, 2020, by and among Tengasco, Antman Sub, LLC, a newly formed~~ Delaware limited liability company and ~~wholly owned subsidiary~~an affiliate of ~~Tengasco (“Merger Sub”),~~Cibolo Energy Partners LLC. These unaudited condensed consolidated financial statements and ~~Riley Exploration – Permian, LLC (“REP LLC”). Merger Sub merged with and into REP LLC, with REP LLC~~accompanying notes do not include the assets acquired or operating activity from the New Mexico Acquisition as the ~~surviving company and as a wholly owned subsidiary of Tengasco (collectively, with the other transactions described~~acquisition was completed in the ~~Merger Agreement,~~second quarter of 2023. For further information regarding the ~~“Merger”). On the Closing Date, the Registrant changed its name from Tengasco, Inc. to Riley Exploration Permian, Inc.~~New Mexico Acquisition, see Note 13 - Subsequent Events.

(2)Basis of Presentation

~~On August 16, 2022, the Board acting~~Effective by ~~written consent resolved to amend and restate~~ the Company's Second Amended and Restated Bylaws to change the Company's fiscal year period from October 1st through September 30th each year to January 1st through December 31st each year commencing with the 2022 calendar year. On August 19, 2022, the holdersBoard of ~~approximately 75% of our outstanding Common Stock acting by~~Directors written consent approved the Bylaws Restatement and adopted the Third Amended and Restated Bylaws. In accordance with Rule 14c-2 under the Exchange Act, the aforementioned actions taken by written consent became effective on September 23, ~~2022. As a result,~~2022, the Company's ~~2022~~ fiscal year is now the period from January 1 ~~2022~~ to December 31, ~~2022.~~

~~As a result of~~beginning with the ~~change in the Company's fiscal~~ year ~~this document reflects the Company's Quarterly Report for the three and nine months~~ ended ~~September 30, 2022 and comparative information for the 2021 periods.~~December 31, 2022.

These unaudited condensed consolidated financial statements as of ~~September 30, 2022~~March 31, 2023 and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ include the accounts of Riley Permian and its wholly owned subsidiaries ~~REP LLC, Riley Permian Operating Company, LLC ("RPOC"), Tengasco Pipeline Corporation, Tennessee Land & Mineral Corporation, and Manufactured Methane Corporation,~~ and have been prepared in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated upon consolidation. The Merger was accounted for as a reverse merger and, as such, the historical operations of REP LLC are deemed to be those of the Company. Thus, the condensed consolidated financial statements included in this report reflect (i) the historical operating results of REP LLC prior to the Merger; (ii) the consolidated results of the Company following the Merger; (iii) the assets and liabilities of REP LLC at their historical cost; and (iv) the Company’s equity and earnings per share for all periods presented.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended ~~September 30, 2021 and the Company's Transition Report on Form 10-QT for the period ended~~ December 31, ~~2021.~~2022.

These condensed consolidated financial statements have not been audited by an independent registered public accounting firm. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for fair presentation of the results of operations for the periods presented, which adjustments were of a normal recurring nature, except as disclosed herein. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, ~~2022,~~2023, for various reasons, including as a result of the impact of fluctuations in prices received for oil and natural gas, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, the current and future impacts of the military conflict between Russia and Ukraine, the volatile inflationary environment in U.S. markets and other factors.

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

(3)Summary of Significant Accounting Policies

Significant Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Actual results may differ significantly from the Company’s estimates. Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include, but are not limited to, estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, accounts receivable, accrued capital expenditures and operating expenses, ARO, the fair value determination of acquired assets and assumed liabilities, certain tax accruals and the fair value of derivatives.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Accounts Receivable

Accounts receivable is summarized below:
September 30, 2022 December 31, 2021
(In thousands)
Oil, natural gas and NGL sales $ 26,380 $ 17,562
Joint interest accounts receivable 500 409
Other accounts receivable 583 31
Total accounts receivable $ 27,463 $ 18,002


	March 31, 2023		December 31, 2022


	(In thousands)
Oil, natural gas and NGL sales	$	23,804	$	24,136
Joint interest accounts receivable	728		793

Other accounts receivable	108		622
Total accounts receivable	$	24,640	$	25,551

The Company had no allowance for credit losses at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Other Non-Current Assets, Net

Other non-current assets consisted of the following:


	March 31, 2023		December 31, 2022


	(In thousands)
Deferred financing costs, net	$	2,413	$	2,556
Prepayments to outside operators	2,193		186
Right of use assets	1,232		1,370
Equity method investment	3,880		—
Other deposits	66		63

Total other non-current assets, net	$	9,784	$	4,175

Equity method investment. In January 2023, the Company entered into an agreement to form a joint venture created for the purpose of constructing a new power infrastructure for onsite power generation in Yoakum County, Texas using produced natural gas. RPC Power Holdco LLC, a wholly owned subsidiary of REPX, has a 30% investment in the joint venture, RPC Power LLC ("RPC Power"). The Company will contribute its portion of capital expenditures for construction of the onsite power generation. As of March 31, 2023, the Company invested $4.1 million, comprised of $1.8 million in cash and $2.3 million of contributed assets, which was reduced by a $0.2 million loss during the three months ended March 31, 2023.

The Company accounts for its corporate joint ventures under the equity method of accounting in accordance with FASB Accounting Standards Codification Topic 323 “Investments — Equity Method and Joint Ventures.” The Company applies the equity method of accounting to investments of less than 50% in an investee over which the Company exercises significant influence but does not have control. Under the equity method of accounting, the Company’s share of the investee’s earnings or loss is recognized in the condensed consolidated statement of operations.

Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions, material intercompany transactions and extent of ownership by an investor in relation to the concentration of other shareholdings.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

~~Other Non-Current Assets, Net~~

~~Other non-current assets consisted of the following:~~
September 30, 2022 December 31, 2021
(In thousands)
Deferred financing costs, net $ 2,519 $ 1,345
Prepayments to outside operators 248 690
Right of use assets 1,477 208
Other deposits 63 50
Total other non-current assets, net $ 4,307 $ 2,293

The Company incurred $1.7 million in financing costs related to the amendment of its revolving credit facility in April 2022. The Company extended certain existing leases and entered into a new lease during the nine months ended September 30, 2022, which resulted in additions to the right of use assets.

Accrued Liabilities

Accrued liabilities consisted of the following:


	March 31, 2023		December 31, 2022


	(In thousands)
Accrued capital expenditures	$	13,768	$	16,744
Accrued lease operating expenses	2,267		4,607

Accrued general and administrative costs	3,591		2,286




Accrued inventory	210		6,235
Accrued ad valorem tax	916		3,789
Other accrued expenditures	766		1,921
Total accrued liabilities	$	21,518	$	35,582

September 30, 2022 December 31, 2021
(In thousands)
Accrued capital expenditures $ 14,966 $ 5,618
Accrued lease operating expenses 4,315 2,534
Accrued general and administrative costs 4,750 3,404
Other accrued expenditures 4,754 1,318
Total accrued liabilities $ 28,785 $ 12,874

Other Current Liabilities

Other current liabilities consisted of the following:


	March 31, 2023		December 31, 2022


	(In thousands)
Advances from joint interest owners	$	170	$	192
Income taxes payable	4,601		1,194
Current ARO liabilities	71		314
Lease liabilities	540		538
Total other current liabilities	$	5,382	$	2,238

Asset Retirement Obligations

Components of the changes in ARO consisted of the following and is shown below:


	March 31, 2023		December 31, 2022

	(In thousands)
ARO, beginning balance	$	3,038	$	2,453
Liabilities incurred	21		358

Revision of estimated obligations	—		326
Liability settlements and disposals	(153)		(178)
Accretion	25		79
ARO, ending balance	2,931		3,038
Less: current ARO(1)	(71)		(314)
ARO, long-term	$	2,860	$	2,724

_____________________

(1)Current ARO is included within other current liabilities on the accompanying condensed consolidated balance sheets.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

~~Asset Retirement Obligations~~

~~Components of the changes in ARO for the nine months ended September 30, 2022 and the year ended December 31, 2021 are shown below:~~
September 30, 2022 December 31, 2021
(In thousands)
ARO, beginning balance $ 2,453 $ 2,434
Liabilities incurred 348 56
Revision of estimated obligations 326 —
Liability settlements and disposals (178) (58)
Accretion 54 21
ARO, ending balance 3,003 2,453
Less: current ARO(1)
(314) (192)
ARO, long-term $ 2,689 $ 2,261
~~_____________________~~

~~(1)Current ARO is included within other current liabilities on the accompanying condensed consolidated balance sheets.~~

~~Goodwill~~

At the closing of the Merger, the Company determined it had two reporting units, and the entire goodwill balance was included in the reporting unit acquired in the Merger (the "Kansas Reporting Unit"). The Company did not fully integrate the Kansas Reporting Unit in the Company's operations as it was deemed to be held for sale upon acquisition. The Company assessed the goodwill balance for impairment since the Company entered into a purchase and sale agreement ("PSA") in March 2021 for $3.5 million before closing adjustments. As the carrying value exceeded the implied fair value at the time of the closing of the Merger, the Company concluded the goodwill balance associated with the Kansas Reporting Unit was impaired and recognized a goodwill impairment loss, included within loss from discontinued operations on the condensed consolidated statement of operations, of $18.5 million for the nine months ended September 30, 2021. See further discussion in Note 12 - Discontinued Operations and Assets Held for Sale.

Revenue Recognition

The following table presents oil and natural gas sales disaggregated by product:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In thousands)									(In thousands)
Oil and natural gas sales:	Oil and natural gas sales:									Oil and natural gas sales:
Oil	Oil	$	80,017	$	44,026	$	224,895	$	114,314	Oil	$	64,974	$	62,376
Natural gas	Natural gas	4,216		1,908		8,855		7,381		Natural gas	523		1,789
Natural gas liquids	Natural gas liquids	3,238		2,080		8,147		4,527		Natural gas liquids	915		2,480
Total oil and natural gas sales, net	Total oil and natural gas sales, net	$	87,471	$	48,014	$	241,897	$	126,222	Total oil and natural gas sales, net	$	66,412	$	66,645

Recent Accounting Pronouncements

~~Recently Adopted Accounting Pronouncements~~

~~In December 2019,~~No new accounting pronouncements have been adopted or issued that would impact the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." This update is intended to simplify the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance and is effective for public business entities beginning after December 15, 2020 with early adoption permitted. The Company adopted this ASU effective October 1, 2021. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial ~~statements.~~

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

~~In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation~~statements of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates (e.g., LIBOR) that are expected to be discontinued. ASU 2020-04 allows, among other things, certain contract modifications, such as those within the scope of Topic 470 on debt, to be accounted for as a continuation of the existing contract. The Company adopted this ASU effective concurrent with the amendment of the Company's revolving credit facility in April 2022. See Note 9 - Revolving Credit Facility for additional information on the amendment of the revolving credit facility. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements.

Company.

(4)~~Acquisitions~~

~~Business Combination Between REP LLC and Tengasco~~

Immediately prior to the closing of the Merger on February 26, 2021, REP LLC converted all of its issued and outstanding Series A Preferred Units into common units of REP LLC. In connection with the Merger, holders of common units of REP LLC were entitled to receive, in exchange for each common unit, shares of common stock of Tengasco (which was renamed Riley Exploration Permian, Inc.), par value $0.001 per share (“Tengasco common stock”) based on the exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”), with cash paid in lieu of the issuance of any fractional shares. The Exchange Ratio was 97.796467 shares of Tengasco common stock for each common unit of REP LLC (as adjusted for the reverse stock split). Immediately prior to the closing of the Merger, Tengasco effected a one-for-twelve reverse stock split resulting in outstanding common stock of approximately 17.8 million shares including shares of Tengasco common stock issued in the Merger.

The combination between REP LLC and Tengasco qualified as a business combination with REP LLC being treated as the accounting acquirer. The assets acquired and liabilities assumed were recognized on the condensed consolidated balance sheet at fair value as of the acquisition date.

The consideration paid in the Merger by REP LLC as the accounting acquirer totaled approximately $26.4 million and was determined based on the closing price of Tengasco’s common stock on February 26, 2021 and the total number of shares outstanding immediately prior to the Merger. The Merger was structured as a tax-free reorganization for United States federal income tax purposes.

~~The following table summarizes the consideration for the Merger (presented in thousands, except stock price):~~



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

The Company incurred approximately $5.0 million of related costs for the Merger, of which $0.2 million and $2.6 million was expensed for the three and nine months ended September 30, 2021 as transaction costs on the condensed consolidated statements of operations.

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

The Company completed the determination of the fair value attributable to the assets acquired and liabilities assumed as of September 30, 2021. The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values on February 26, 2021 (in thousands):



~~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~~

~~The goodwill recognized was primarily attributable to a substantial increase in the stock price of Tengasco on the Closing Date, which increased the amount of the consideration transferred.~~

~~Pro Forma Operating Results (Unaudited)~~

The following unaudited pro forma combined results for the year ended September 30, 2021 reflect the consolidated results of operations of the Company as if the Merger had occurred on October 1, 2019. Subsequent to the Merger, the Company changed its fiscal year period from October 1st through September 30th each year to January 1st to December 31st each year commencing with the 2022 calendar year. The unaudited pro forma information includes adjustments for $3.6 million of transaction costs being reclassified to the fourth quarter of calendar year 2019 which were incurred during the year ended September 30, 2021. Additionally, the Company adjusted for $0.9 million of oil and natural gas property impairment that Tengasco recognized under the full-cost method of accounting, which would not have been recognized under the successful efforts method, during the three months ended December 31, 2020. Also, the unaudited pro forma information has been tax

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

effected using a 21% tax rate. The common stock was also adjusted for the conversion of the REP LLC preferred units into common units and retroactively adjusted for the Exchange Ratio and one-for-twelve reverse stock split.


	~~For the year ended September 30, 2021~~
	~~(In thousands, except per share/unit amounts)~~
	~~(Unaudited)~~
~~Total Revenues~~	$	~~151,036~~


~~Pro Forma Net Loss before Taxes~~	~~(29,871)~~
~~Pro forma income tax benefit~~	~~6,273~~
~~Pro Forma Net Loss~~	$	~~(23,598)~~
~~Net Loss per Share/Unit from Continuing Operations:~~
~~Basic~~	$	~~(1.88)~~
~~Diluted~~	$	~~(1.88)~~

~~Net Income per Share/Unit from Discontinued Operations:~~
~~Basic~~	$	~~0.02~~
~~Diluted~~	$	~~0.02~~

The unaudited pro forma combined financial information is for informational purposes only and was based off of the fiscal year period October 1st through September 30th as this was the fiscal year in effect at the time of the Merger. The unaudited pro forma financial information was not modified for the change in the Company's fiscal year. It is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the Merger been completed as of October 1, 2019 and should not be taken as indicative of the Company's future combined results of operations. The actual results may differ significantly from that reflected in the unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma combined financial information and actual results.

~~(5)~~Oil and Natural Gas Properties

Oil and natural gas properties are summarized below:


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022

		(In thousands)					(In thousands)
Proved	Proved	$	508,834	$	421,779	Proved	$	550,099	$	516,011
Unproved	Unproved	12,937		18,839		Unproved	11,109		12,770
Work-in-progress	Work-in-progress	26,008		13,534		Work-in-progress	54,273		45,169
		547,779		454,152			615,481		573,950
Accumulated depletion and amortization		(116,712)		(95,021)
Accumulated depletion, amortization and impairment						Accumulated depletion, amortization and impairment	(142,759)		(133,848)
Total oil and natural gas properties, net	Total oil and natural gas properties, net	$	431,067	$	359,131	Total oil and natural gas properties, net	$	472,722	$	440,102

Depletion and amortization expense for proved oil and natural gas properties was ~~$8.2~~$8.9 million and ~~$6.5~~$6.4 million, respectively, for the three months ended March 31, 2023 and 2022.

Exploration expense was $0.3 million and $1.5 million, respectively, for the three months ended March 31, 2023 and 2022.

On April 3, 2023, the Company closed on an acquisition of oil and natural gas assets. Transaction costs associated with the acquisition were approximately $1.9 million for the three months ended ~~September 30, 2022~~March 31, 2023. In connection with the acquisition, a deposit of $33 million was paid by the Company and ~~2021. Depletion and amortization expense for proved oil and natural gas properties was $21.7 million and $19.3 million for~~reflected as funds held in escrow on the ~~nine months ended September 30, 2022 and 2021, respectively.~~

~~Exploration expense was $20 thousand and $0.9 million for~~condensed consolidated balance sheet as of March 31, 2023. For further information regarding the three months ended September 30, 2022 and 2021, respectively, and $1.5 million and $9.1 million for the nine months ended September 30, 2022 and 2021, respectively. Exploration expense was primarily attributable to the expiration of oil and natural gas leases for the nine months ended September 30, 2022 and three and nine months ended September 30, 2021.

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

acquisition, see Note 13 - Subsequent Events.

~~(6)~~(5)Derivative Instruments

Oil and Natural Gas Contracts

The Company uses commodity based derivative contracts to reduce exposure to fluctuations in oil and natural gas prices. While the use of these contracts limits the downside risk for adverse price changes, their use also limits future revenues from favorable price changes. We have not designated our derivative contracts as hedges for accounting purposes, and therefore changes in the fair value of derivatives are included and recognized in other income (expense) in the condensed consolidated statement of operations.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

As of ~~September 30, 2022,~~March 31, 2023, the Company's oil and natural gas derivative instruments consisted of fixed price swaps, costless collars, and basis protection swaps. The following table summarizes the open financial derivative positions as of ~~September 30, 2022,~~March 31, 2023, related to oil and natural gas production:

Weighted Average Price
Calendar Quarter / Year Notional Volume Fixed Put Call
($ per unit)
Oil Swaps (Bbl)
Q4 2022 270,000 $ 56.03 $ — $ —
2023 720,000 $ 53.27 $ — $ —
Natural Gas Swaps (Mcf)
Q4 2022 540,000 $ 3.26 $ — $ —
Oil Collars (Bbl)
Q4 2022 90,000 $ — $ 35.00 $ 42.63
2023 — $ — $ — $ —
2024 3,000 $ — $ 50.00 $ 88.00
Oil Basis (Bbl)
Q4 2022 240,000 $ 0.41 $ — $ —

~~Interest Rate Contracts~~

The Company has entered into floating-to-fixed interest rate swaps, in which it receives a floating market rate equal to one-month LIBOR and pays a fixed interest rate, to manage interest rate exposure related to the Company's revolving credit facility.

~~The following table summarizes the open interest rate derivative positions as of September 30, 2022:~~

Open Coverage Period Notional Amount Fixed Rate
(In thousands)
Floating-to-Fixed Interest Rate Swaps
October 2022 - September 2023 $ 40,000 0.24 %


		Weighted Average Price
Calendar Quarter / Year	Notional Volume	Fixed		Put		Call
		($ per unit)
Oil Swaps (Bbl)

Q2 2023	468,000	$	66.65	$	—	$	—
Q3 2023	362,000	$	66.76	$	—	$	—
Q4 2023	302,000	$	66.18	$	—	$	—
2024	240,000	$	71.60	$	—	$	—

Natural Gas Swaps (Mcf)
Q2 2023	450,000	$	2.60	$	—	$	—
Q3 2023	450,000	$	2.60	$	—	$	—
Q4 2023	400,000	$	3.23	$	—	$	—
2024	1,500,000	$	3.43	$	—	$	—
2025	375,000	$	4.05	$	—	$	—

Oil Collars (Bbl)

Q2 2023	300,000	$	—	$	71.50	$	88.98
Q3 2023	330,000	$	—	$	68.64	$	88.85
Q4 2023	330,000	$	—	$	68.64	$	88.85
2024	1,621,000	$	—	$	61.12	$	84.39
2025	378,000	$	—	$	60.00	$	77.23

Natural Gas Collars (Mcf)
Q2 2023	300,000	$	—	$	2.55	$	3.20
Q3 2023	300,000	$	—	$	2.55	$	3.20
Q4 2023	300,000	$	—	$	3.12	$	4.07
2024	1,065,000	$	—	$	3.19	$	4.14
2025	255,000	$	—	$	3.65	$	4.95

Oil Basis (Bbl)

Q2 2023	360,000	$	1.28	$	—	$	—
Q3 2023	360,000	$	1.28	$	—	$	—
Q4 2023	360,000	$	1.28	$	—	$	—
2024	960,000	$	0.87	$	—	$	—

2017

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

Balance Sheet Presentation of Derivatives

The following tables present the location and fair value of the Company’s derivative contracts included in the condensed consolidated balance sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


		September 30, 2022							March 31, 2023
Balance Sheet Classification	Balance Sheet Classification	Gross Fair Value		Amounts Netted		Net Fair Value		Balance Sheet Classification	Gross Fair Value		Amounts Netted		Net Fair Value
		(In thousands)							(In thousands)
Current derivative assets	Current derivative assets	$	1,611	$	(4)	$	1,607	Current derivative assets	$	8,709	$	(7,072)	$	1,637
Non-current derivative assets	Non-current derivative assets	17		(17)		—		Non-current derivative assets	11,151		(10,212)		939
Current derivative liabilities	Current derivative liabilities	(22,533)		4		(22,529)		Current derivative liabilities	(15,091)		7,072		(8,019)
Non-current derivative liabilities	Non-current derivative liabilities	(2,440)		17		(2,423)		Non-current derivative liabilities	(10,390)		10,212		(178)
Total	Total	$	(23,345)	$	—	$	(23,345)	Total	$	(5,621)	$	—	$	(5,621)

		December 31, 2021							December 31, 2022
Balance Sheet Classification	Balance Sheet Classification	Gross Fair Value		Amounts Netted		Net Fair Value		Balance Sheet Classification	Gross Fair Value		Amounts Netted		Net Fair Value
		(In thousands)							(In thousands)
Current derivative assets	Current derivative assets	$	281	$	(198)	$	83	Current derivative assets	$	64	$	(44)	$	20
Non-current derivative assets	Non-current derivative assets	267		—		267		Non-current derivative assets	9		(9)		—
Current derivative liabilities	Current derivative liabilities	(31,182)		198		(30,984)		Current derivative liabilities	(16,516)		44		(16,472)
Non-current derivative liabilities	Non-current derivative liabilities	(9,515)		—		(9,515)		Non-current derivative liabilities	(21)		9		(12)
Total	Total	$	(40,149)	$	—	$	(40,149)	Total	$	(16,464)	$	—	$	(16,464)

The following table presents the components of the Company's gain (loss) on derivatives for the ~~three and nine months ended September 30, 2022 and 2021:~~periods presented below:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In thousands)									(In thousands)
Settlements on derivative contracts	Settlements on derivative contracts	$	(17,040)	$	(11,171)	$	(61,198)	$	(21,477)	Settlements on derivative contracts	$	(5,088)	$	(18,375)
Non-cash gain (loss) on derivatives	Non-cash gain (loss) on derivatives	34,640		(3,816)		16,803		(53,809)		Non-cash gain (loss) on derivatives	10,843		(31,257)
Gain (loss) on derivatives	Gain (loss) on derivatives	$	17,600	$	(14,987)	$	(44,395)	$	(75,286)	Gain (loss) on derivatives	$	5,755	$	(49,632)

~~(7)~~(6)Fair Value Measurements

The FASB has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability.

The carrying values of financial instruments comprising cash and cash equivalents, payables, receivables, and advances from joint interest owners approximate fair values due to the short-term maturities of these ~~instruments.~~instruments and are classified as Level 1 in the fair value hierarchy. The carrying value reported for the revolving line of credit ~~facility~~ approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The revolving line of credit is considered a Level 3 measurement.

Assets and Liabilities Measured on a Recurring Basis

The fair value of commodity derivatives are estimated using discounted cash flow calculations based upon forward curves and are classified as Level 2 in the fair value hierarchy. The following table presents the Company’s financial assets and

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

~~Assets and Liabilities Measured on a Recurring Basis~~

The fair value of commodity derivatives and interest rate swaps is estimated using discounted cash flow calculations based upon forward curves. The following table presents the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, by level within the fair value hierarchy:

September 30, 2022
Level 1 Level 2 Level 3 Total
(In thousands)
Financial assets:
Commodity derivative assets $ — $ 21 $ — $ 21
Interest rate assets $ — $ 1,607 $ — $ 1,607
Financial liabilities:
Commodity derivative liabilities $ — $ (24,973) $ — $ (24,973)
Interest rate liabilities $ — $ — $ — $ —
December 31, 2021
Level 1 Level 2 Level 3 Total
(In thousands)
Financial assets:
Commodity derivative assets $ — $ 187 $ — $ 187
Interest rate assets $ — $ 361 $ — $ 361
Financial liabilities:
Commodity derivative liabilities $ — $ (40,687) $ — $ (40,687)
Interest rate liabilities $ — $ (10) $ — $ (10)


	March 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial assets:
Commodity derivative assets	$	—	$	19,860	$	—	$	19,860

Financial liabilities:
Commodity derivative liabilities	$	—	$	(25,481)	$	—	$	(25,481)


	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial assets:
Commodity derivative assets	$	—	$	73	$	—	$	73

Financial liabilities:
Commodity derivative liabilities	$	—	$	(16,537)	$	—	$	(16,537)

~~(8)~~(7)Transactions with Related Parties

Contract Services

~~RPOC~~Riley Permian Operating Company, LLC ("RPOC") provides certain administrative services to Combo Resources, LLC ("Combo") and is also the contract operator on behalf of Combo in exchange for a monthly fee of $100 thousand and reimbursement of all third party expenses pursuant to a contract services agreement. Additionally, RPOC provides certain administrative and operational services to Riley Exploration Group, LLC ("REG") in exchange for a monthly fee of $100 thousand pursuant to a contract services agreement.

The following table presents revenues from and related cost for contract services for related parties:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In thousands)									(In thousands)
Combo	Combo	$	300	$	300	$	900	$	900	Combo	$	300	$	300
REG	REG	300		300		900		900		REG	300		300
Contract services - related parties	Contract services - related parties	$	600	$	600	$	1,800	$	1,800	Contract services - related parties	$	600	$	600

Cost of contract services	Cost of contract services	$	89	$	147	$	263	$	329	Cost of contract services	$	110	$	85

The Company had amounts ~~due~~payable to Combo of ~~$0.1~~$0.3 million and ~~$0.2~~$0.4 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, which are reflected in accounts payable - related parties, respectively, on the accompanying condensed consolidated balance

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

sheets. Amounts due to Combo reflect the revenue, net of any expenditures for wells and fees due under the contract services agreement, for Combo's net working interest in wells that the Company operates on Combo's behalf.

Consulting and Legal Fees

~~On January 25, 2022, the~~The Company ~~and~~has an engagement agreement with di Santo Law PLLC ("di Santo Law"), a law firm owned by Beth di Santo, a member of our Board of Directors, entered into an engagement letter that provides a monthly fixed fee in exchange for general corporate legal services. The agreement has an initial term of one year and provides for a monthly cash payment of $30 thousand and an aggregate one-time grant of 10,500 shares of restricted stock that vest in four equal installments at the end of each quarter in calendar year 2022. Priorpursuant to ~~entry into this agreement,~~which di Santo Law's attorneys ~~provided~~provide legal services to the ~~Company based on hourly rates.~~Company. The Company incurred legal fees from di Santo Law of approximately $0.2 million ~~and $0.5 million~~ for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021, respectively. The Company incurred legal fees from di Santo Law of approximately $0.5 million and $1.3 million for the nine months ended September 30, 2022 and 2021.~~2022. As of ~~September 30, 2022, there were no amounts due to di Santo Law. As of~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had approximately ~~$0.2 million accrued for di Santo Law. Such~~$20 thousand and zero in amounts ~~were included in accrued liabilities in the accompanying condensed consolidated balance sheets.~~

~~(9)Revolving Credit Facility~~

On September 28, 2017, REP LLC entered into a credit agreement (the "Credit Agreement") to establish a senior secured revolving credit facility with a syndicate of banks including SunTrust Bank, now Truist Bank as successor by merger, as administrative agent. Substantially all of the Company’s assets are pledged to secure the revolving credit facility. The revolving credit facility had an initial borrowing base of $25 million with a maximum facility amount of $500 million. On April 29, 2022, the Company amended its Credit Agreement to, among other things, increase the borrowing base from $175 million to $200 million, extend the maturity date to April 2026, replace LIBOR with SOFR and change the requirements for hedging to be based on utilization of the borrowing base and the Company's leverage ratio. On October 25, 2022, the Company amended its Credit Agreement to, among other things, increase the borrowing base from $200 million to $225 million and change the semi-annual redeterminations to April 1 and October 1 to align with the Company's new fiscal year end of December 31st..

The borrowing base is subject to periodic redeterminations, mandatory reductions and further adjustments from time to time. During these redetermination periods, the Company’s borrowing base may be increased or may be reduced in certain circumstances. The revolving credit facility allows for SOFR Loans and Base Rate Loans (each as defined in the Credit Agreement). The interest rate on each SOFR Loan will be the adjusted Term SOFR for the applicable interest period plus a margin between 2.75% and 3.75% (depending on the borrowing base utilization percentage). The annual interest rate on each Base Rate Loan will be the Base Rate for the applicable interest period plus a margin between 1.75% and 2.75% (depending on the borrowing base utilization percentage). The Company is also subject to an unused commitment fee of between 0.375% and 0.500% (depending on the borrowing base utilization percentage).

The Credit Agreement contains certain covenants, which, among other things, require the maintenance of (i) a total leverage ratio of not more than 3.25 to 1.0 and (ii) a minimum current ratio of not less than 1.0 to 1.0 as of the last day of any quarter. The Credit Agreement also contains a total leverage ratio for Restricted Payments, as defined in the Credit Agreement, after giving pro forma effect to such Restricted Payments, which includes payments to any holder of the Company's shares, would not exceed 2.50 to 1.0. If the Company's leverage ratio, after giving pro forma effect to such Restricted Payments (as defined in the Credit Agreement), is above 2.0 to 1.0, then an additional test of free cash flow is applied, and the Company will only be permitted to make such Restricted Payments if such payment does not exceed the Company's free cash flow. The Company is also required to limit its cash balance to less than $15 million or 10% of the borrowing base, whichever is greater. If the Company's cash balance exceeds this limit on the last business day of the month, the Company will be required to apply the excess to reduce its credit facility borrowings. The Credit Agreement also contains other customary affirmative and negative covenants and events of default. The Company's minimum hedging requirement is between 0% and 50% (depending on the borrowing base utilization percentage and leverage ratio as of the hedge evaluation date) of its proved developed producing ("PDP") volumes on a rolling 24-month basis. As of September 30, 2022, the Company's minimum hedging requirement was 0%.

2319

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

accrued for di Santo Law, which was included in accounts payable - related parties in the accompanying condensed consolidated balance sheets.

(8)Long-Term Debt

As of March 31, 2023, Riley Exploration - Permian, LLC ("REP LLC"), as borrower, and the Company, as parent guarantor, are parties to a credit agreement with Truist Bank and certain lenders party thereto, as amended, which provides for a borrowing base of $225 million (such agreement and the borrowing facility provided thereby, the “Credit Facility”). On February 22, 2023, the Company amended its Credit Facility to, among other things, allow for the issuance of unsecured senior notes of up to $200 million. On April 3, 2023, the Company amended its Credit Facility to, among other things, increase the borrowing base from $225 million to $325 million and completed its issuance of $200 million Senior Unsecured Notes due 2028 ("Senior Notes"). For more information on the amended Credit Facility and the issuance of the Senior Notes, see Note 13 - Subsequent Events.The Credit Facility is set to mature in April 2026. Substantially all of the Company’s assets are pledged to secure the Credit Facility.

The following table summarizes the Company's interest expense:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In thousands)									(In thousands)
Interest expense, net of capitalized interest		$	273	$	728	$	1,050	$	2,645
Interest expense										Interest expense	$	1,294	$	384
Capitalized interest										Capitalized interest	(615)		—
Amortization of deferred financing costs	Amortization of deferred financing costs	175		170		548		498		Amortization of deferred financing costs	192		191
Unused commitment fees	Unused commitment fees	137		65		362		156		Unused commitment fees	145		103
Total interest expense, net	Total interest expense, net	$	585	$	963	$	1,960	$	3,299	Total interest expense, net	$	1,016	$	678

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the weighted average interest rate on outstanding borrowings under the revolving credit facility was ~~5.88%~~7.86% and ~~3.10%~~7.17%, respectively.

As of ~~September 30,~~March 31, 2023 and December 31, 2022, the Company was in compliance with all covenants ~~contained in the Credit Agreement~~ and had ~~$48 million of~~ outstanding borrowings of $89 million and ~~$152~~$56 million, respectively, and $136 million and $169 million, respectively, available under the borrowing base.

~~(10)~~(9) ~~Members’/~~Shareholders' Equity

~~Public Offering of Common Stock~~

On June 30, 2021, the Company entered into an Underwriting Agreement (the "Underwriting Agreement") with Truist Securities, Inc., as the representative of the other several underwriters named in the Underwriting Agreement. On July 2, 2021, the Company issued 1,666,667 shares of common stock at a price to the public of $30.00 per share in accordance with the Underwriting Agreement. Net proceeds from the issuance were approximately $46.7 million, after deducting the underwriting fees and other offering costs incurred.

Dividends

For the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company declared quarterly dividends on its common stock totaling approximately $6.9 million and $6.2 million, ~~and $5.5 million,~~ respectively. ~~See Note 9 - Revolving Credit Facility for discussion over the Company's restrictions on certain payments, including dividends.~~

~~Share-Based and Unit-Based~~Equity-Based Compensation

~~In connection with the Merger, the Company shareholders adopted an omnibus~~The Company's long-term equity incentive plan the 2021 LTIP, for the employees, consultants and the directors of the Company and its affiliates who perform services for the Company. The holders of unvested restricted units issued under the 2018 LTIP were issued substitute awards under the 2021 LTIP at the closing of the Merger. Upon the closing of the Merger and after giving effect to the adjustment resulting from the one-for-twelve reverse stock split, the 2021 LTIP(the "2021 LTIP") had 1,387,022 shares of common stock available for issuance, of which ~~444,549~~434,920 shares remained available as of ~~September 30, 2022.~~

March 31, 2023. Subsequent to March 31, 2023, an amendment and restatement of the 2021 LTIP was approved at the Company's annual meeting of stockholders held on April 21, 2023. For more information, see Note 13 - Subsequent Events.

2420

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

2021 Long-Term Incentive Plan

The following table presents the Company's restricted stock activity during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 under the 2021 LTIP:


2021 Long-Term Incentive Plan	2021 Long-Term Incentive Plan				2021 Long-Term Incentive Plan
		Restricted Shares	Weighted Average Grant Date Fair Value			Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021		366,789	$	19.41
Unvested at December 31, 2022					Unvested at December 31, 2022	536,209	$	18.39
Granted	Granted	366,669	$	17.61	Granted	16,364	$	31.62
Vested	Vested	(96,838)	$	18.87	Vested	(47,957)	$	18.14
Forfeited	Forfeited	(3,625)	$	23.46	Forfeited	(365)	$	16.30
Unvested at September 30, 2022		632,995	$	18.45
Unvested at March 31, 2023					Unvested at March 31, 2023	504,251	$	18.63

For the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the total equity-based compensation expense is ~~$0.8~~$1.3 million and $1.0 million, respectively, for ~~both~~all periods and is included in general and administrative costs on the Company's condensed consolidated statement of operations for the restricted share awards granted under the 2021 LTIP. For the nine months ended September 30, 2022 and 2021, the total equity-based compensation expense of $2.7 million and $6.1 million, respectively, is included in general and administrative costs on the Company's condensed consolidated statement of operations for the restricted share awards granted under the 2021 LTIP. Approximately ~~$9.4~~$7.6 million of additional equity-based compensation expense will be recognized over the weighted average life of 3025 months for the unvested restricted share awards as of ~~September 30, 2022~~March 31, 2023 granted under the 2021 LTIP.

~~2018 Long-Term Incentive Plan~~

In connection with the Merger and in accordance with the Merger Agreement, each unvested restricted unit outstanding under the 2018 LTIP was converted into restricted shares of the Company under the 2021 LTIP. The holders of unvested restricted units issued under the 2018 LTIP were issued substitute awards under the 2021 LTIP at the closing of the Merger.

Total unit-based compensation expense of $0.3 million is for all of the issuances outstanding during the period of January 2021 through the date of the merger, February 26, 2021. Unit-based compensation expense is included in general and administrative costs on the Company's condensed consolidated statement of operations.

~~(11)~~(10)Income Taxes

REP LLC was organized as a limited liability company and treated as a flow-through entity for federal income tax purposes. As such, taxable income and any related tax credits were passed through to its members and included in their tax returns, even though such taxable income or tax credits may not have been distributed. In connection with the closingThe components of the ~~Merger, the~~ Company's ~~tax status changed from a limited liability company to a C-corporation. As a result, the Company is responsible~~consolidated provision for ~~federal and state~~ income taxes ~~and must record deferred tax assets and liabilities for the tax effects of any temporary differences that exist.~~from operations are as follows:


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Current income tax expense:
Federal	$	3,207	$	768
State	200		11
Total current income tax expense	$	3,407	$	779
Deferred income tax expense (benefit):
Federal	$	5,088	$	(2,894)
State	195		1
Total deferred income tax expense (benefit)	$	5,283	$	(2,893)
Total income tax expense (benefit)	$	8,690	$	(2,114)

2521

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

~~The components of the Company's consolidated provision for income taxes from continuing operations are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In thousands)
Current income tax expense:
Federal $ 142 $ 2 $ 1,442 $ 2
State 291 284 486 52
Total current income tax expense 433 286 1,928 54
Deferred income tax expense (benefit):
Federal 15,460 (6,427) 22,439 14,202
State 424 2,204 763 (717)
Total deferred income tax expense (benefit) 15,884 (4,223) 23,202 13,485
Total income tax expense (benefit) $ 16,317 $ (3,937) $ 25,130 $ 13,539

A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate is as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Tax at statutory rate 21.0 % 21.0 % 21.0 % 21.0 %
Nondeductible compensation 0.1 % (32.1) % 0.2 % (1.3) %
Transaction costs — % (47.7) % — % (2.1) %
Stock compensation — % 0.2 % (0.1) % (0.1) %
State income taxes, net of federal benefit 0.8 % 22.9 % 0.8 % (1.6) %
Change in tax status — % (0.5) % — % (53.4) %
Income subject to taxation by REP LLC's unitholders — % — % — % (15.8) %
Other (0.5) % — % (0.3) % — %
Effective income tax rate 21.4 % (36.2) % 21.6 % (53.3) %


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Tax at statutory rate	21.0	%	21.0	%
Nondeductible compensation	—	%	(0.4)	%

Share-based compensation	(0.4)	%	1.9	%
State income taxes, net of federal benefit	0.8	%	0.4	%



Effective income tax rate	21.4	%	22.9	%

The Company's federal income tax returns for the years subsequent to December 31, 2018 remain subject to examination. The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2017. The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions.

~~(12)~~(11)~~Discontinued Operations and Assets Held For Sale~~Net Income (Loss) Per Share

~~Kansas Reporting Unit~~The Company calculated net income or loss per share using the treasury stock method. The table below sets forth the computation of basic and diluted net income (loss) per share for the periods presented below:

~~On March 10, 2021,~~


	Three Months Ended March 31,
	2023		2022
	(In thousands, except per share)

Net income (loss)	$	31,851	$	(7,168)

Basic weighted-average common shares outstanding	19,649		19,501
Restricted shares	261		—
Diluted weighted average common shares outstanding	19,910		19,501

Basic net income (loss) per common share	$	1.62	$	(0.37)
Diluted net income (loss) per share	$	1.60	$	(0.37)

The following shares were excluded from the ~~Company entered into a PSA~~calculation of diluted net income (loss) per share due to ~~divest of~~their anti-dilutive effect for the Kansas Reporting Unit for an agreed upon purchase price of $3.5 million before certain closing adjustments. In addition, the Company also agreed to assign to the buyer its lease associated with Tengasco's former corporate office in Greenwood Village, Colorado. With Tengasco qualifying as a business and the Kansas Reporting Unit making up a significant portion of the assets of Tengasco, the Company concluded that the transaction met the requirements of assets held for sale and discontinued operations upon the acquisition date. The sale closed on April 2, 2021 for an adjusted purchase price of $3.3 million, after customary closing adjustments.periods presented:


	Three Months Ended March 31,
	2023	2022


Restricted shares	246,358	332,725

2622

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

~~The following table presents the components of the loss on discontinued operations reported in the condensed consolidated statements of operations for the periods ended September 30, 2021:~~

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2021
(In thousands)
Oil and natural gas sales $ — $ —
Total revenues — —
Lease operating expenses — 115
Goodwill impairment — 18,516
Total expenses — 18,631
Other income (expenses) 775 (107)
Gain (loss) from discontinued operations before income taxes 775 (18,738)
Income tax benefit (expense) 1 (59)
Gain (loss) from discontinued operations, net of tax $ 776 $ (18,797)

~~The Company did not have any discontinued operations during the three and nine months ended September 30, 2022.~~

~~(13)Net Income (Loss) Per Share/Unit~~

Net income (loss) per share/unit is calculated using a retroactive application of the Exchange Ratio and the one-for-twelve reverse stock split that occurred in conjunction with the Merger. The Company calculated net income or loss per share/unit using the treasury stock method.

~~The table below sets forth the computation of basic and diluted net income (loss) per share/unit for the three and nine months ended September 30, 2022 and 2021:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In thousands, except per share/unit)
Continuing Operations:
Net income (loss) - Diluted $ 59,817 $ 14,878 $ 91,204 $ (38,928)
Less: Dividends on preferred units — — — (574)
Net income (loss) attributable to common shareholders/unitholders - Basic(1)
$ 59,817 $ 14,878 $ 91,204 $ (39,502)
Basic weighted-average common shares/units outstanding 19,546 19,434 19,530 17,218
Effecting of dilutive securities:
Restricted shares/units 41 106 102 —
Diluted weighted-average common shares/units outstanding 19,587 19,540 19,632 17,218
Continuing Operations:
Basic net income (loss) per common share/unit $ 3.06 $ 0.77 $ 4.67 $ (2.29)
Diluted net income (loss) per common share/unit $ 3.05 $ 0.76 $ 4.65 $ (2.29)
~~_____________________________________________________~~

~~(1)Used in the basic and diluted net loss per share/unit calculation when the Company is in a net loss position.~~

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

For the three and nine months ended September 30, 2022 and 2021, the following shares/units were excluded from the calculation of diluted net income (loss) per share/unit due to their anti-dilutive effect:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In thousands)
Restricted shares/units 293 127 232 228

~~(14)~~(12)Commitments and Contingencies

~~Legal Matters~~Indemnification

The Company ~~was named as a defendant~~has agreed to indemnify its directors and certain of its officers, employees and agents with respect to claims and damages arising from acts or omissions taken in an adversary proceeding (the "Adversary Proceeding") commenced on October 25, 2021 in United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court"), by the Trustee of the Chapter 7 bankruptcy of the Hoactzin Partners, L.P. ("Hoactzin"). The complaint in the Adversary Proceeding alleges that in October of 2018, one year prior to the Hoactzin bankruptcy filing in October of 2019, Peter Salas ("Salas"), Chairman of the Board of Tengasco during the period of the purported fraudulent transfers, caused Hoactzin to transfer its working interests in certain wells on its Kansas acreage (the “Kansas Working Interests”) to the Company for an amount the complaint alleges was purportedly less than the reasonable equivalent value of such ~~Kansas Working Interests. The complaint includes avoidance actions and other causes of action in connection with the transfer of the Kansas Working Interests,~~capacity, as well as ~~other causes of action alleged related~~with respect to certain ~~transactions to which~~litigation.

In the ordinary course of business, the Company ~~was~~enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend the indemnified parties for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not ~~a party.~~determinable.

Legal Matters

Due to the nature of the Company's business, the Company may at times be subject to claims and legal actions. The ~~complaint also alleges~~Company accrues liabilities when it is probable that ~~Salas, Dolphin Direct Equity Partners, L.P. ("DDEP"), an entity substantially owned by Salas,~~future costs will be incurred, and such costs can be reasonably estimated. Such accruals are based on developments to date and the ~~Company are jointly and severally liable for the damages incurred by Hoactzin. In connection with the~~ Company’s ~~merger in February 2021, Salas resigned his position from the Company’s Board and no longer holds any position as an officer or director~~estimates of the ~~Company. On April 2, 2021,~~outcomes of these matters. The Company did not recognize any material liability as of March 31, 2023 and December 31, 2022. Management believes it is remote that the ~~Company closed on the sale~~impact of ~~all the assets it held in Kansas (of which the Kansas Working Interests were a small part) to a third party for an agreed upon purchase price of $3.3 million.~~

On October 13, 2022, the Company entered into a Compromise Settlement Agreement and Mutual General Release (the “Settlement Agreement”) with the Trustee for the bankruptcy estate for Hoactzin to resolve certain claims against the Company in the Adversary Proceeding. Under the terms of the Settlement Agreement, the Company will pay $80 thousand to the Trustee in full settlement and satisfaction of (a) all claims, causes of action, and damages that have been asserted against the Company or could be asserted against the Company in the Adversary Proceeding; and (b) all claims which might arise from or relate to any actions taken by the Company while acting in connection with Debtor.

The effectiveness of the Settlement Agreement is contingent upon its approval by the Bankruptcy Court. On October 13, 2022, the Trustee filed a motion to approve the Settlement Agreement with the Bankruptcy Court (the “Settlement Motion”). A hearing will be held on November 16, 2022 on the Settlement Motion. Should the Court decline to approve the proposed settlement, the Trustee's claims against Riley Permian would proceed to trial, absent a subsequent settlement approved by the Court. If the Bankruptcy Court grants the Settlement Motion, after Riley Permian makes the settlement payment contemplated under the Settlement Agreement, Riley Permian and the Trustee intend to file a joint motion requesting dismissal of the Adversary Proceeding with prejudice, as contemplated by the Settlement Agreement. The Settlement Agreementsuch matters will have noa materially adverse effect on the ~~Trustee’s claims against any~~Company’s financial position, results of ~~the other defendants in the Adversary Proceeding, including without limitation, those claims against Peter Salas, our former Chief Executive Officer.~~operations, or cash flows.

Environmental Matters

The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. These laws, which are often changing, regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. The Company had no material environmental liabilities as of ~~September 30, 2022~~March 31, 2023 or December 31, ~~2021.~~2022.

Contractual Commitments

~~Table of Contents~~

~~RILEY EXPLORATION PERMIAN, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

In October 2021, the Company executed ~~two agreements~~an agreement related to its EOR project. ~~The first~~This agreement is a CO2 purchase agreement with Kinder Morgan CO2 Company, LLC that has a primary term extending through the earlier of the total contract quantity delivered or December 31, 2025. The agreement also has a daily contract quantity for Kinder Morgan to deliver CO2 to the Company. ~~The second agreement is a connection agreement that also established a delivery point for the purchased CO~~2 ~~with the Cortez Pipeline Company.~~

In April 2022, the Company entered into a purchase agreement for pipe related to its 2023 drilling program. Under the agreement, the Company has commitments to purchase an additional approximately $10.1 million of pipe by first quarter of 2023.

In August 2022, the Company entered into a second amendment on its gas gathering and processing agreement with its primary midstream counterparty, Stakeholder Midstream LLC (“Stakeholder”). Stakeholder committed to expand their gathering and processing system with a commitment from the Company to deliver an annual minimum volume to Stakeholder’s gathering system for a minimum of seven years beginning on the in-service date of the expanded plant.

In January 2023, the Company entered into an agreement to form a joint venture with Conduit Power LLC. The Company is committed to contribute its portion of capital expenditures into the joint venture company, RPC Power. In conjunction with the formation of the joint venture, the Company entered into additional agreements with RPC Power or one of its subsidiaries. These agreements include RPC Power providing operational expertise on the implementation and management of the power generation for a monthly fee of $20 thousand and the Company committing to provide the natural gas needed to fuel the onsite power generators through 2028.

~~(15)~~(13)Subsequent Events

New Mexico Acquisition

On April 3, 2023 (the “Closing Date”), the Company completed its previously announced acquisition of oil and natural gas assets (the “New Mexico Acquisition”) from Pecos Oil & Gas, LLC (“Pecos”), a Delaware limited liability company and an affiliate of Cibolo Energy Partners LLC. The New Mexico Acquisition expands the Company's operations and adds significant drilling locations to the Company inventory.

Table of Contents

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The aggregate purchase price of the New Mexico Acquisition is $330 million, subject to customary purchase price adjustments pursuant to the purchase and sale agreement (the “Purchase Agreement”), and was funded through a combination of borrowings under the Company's revolving credit facility and proceeds from the issuance of $200 million of Senior Notes.

Due to the recent closing of the New Mexico Acquisition, the acquisition date fair value of the assets and liabilities of Pecos and certain other related disclosures were not yet available as of the date of this report. This acquisition will be accounted for as a business combination.

Issuance of Senior Notes

On the Closing Date, the Company (as “Issuer”) completed its issuance of $200 million aggregate principal amount of 10.50% Senior Unsecured Notes due 2028 pursuant to a note purchase agreement (the “Note Purchase Agreement”), which the Senior Notes were issued at a 6% discount. The net proceeds from the Senior Notes were used to fund a portion of the purchase price and related fees, costs and expenses for the New Mexico Acquisition.

The Issuer may, at its option, redeem, at any time and from time to time on or prior to April 3, 2026, some or all of the Senior Notes at 100% of the principal amount thereof plus the make-whole amount plus a premium of 5.25% as set forth in the Note Purchase Agreement plus accrued and unpaid interest, if any. After April 3, 2026, but on or prior to October ~~10, 2022,~~3, 2026, the Issuer may, at its option, redeem, at any time and from time to time some or all of the Senior Notes at 100% of the principal amount thereof plus a premium of 5.25% as set forth in the Note Purchase Agreement plus accrued and unpaid interest, if any. After October 3, 2026, the Issuer may redeem some or all of the Senior Notes at 100% of the principal amount thereof plus accrued and unpaid interest, if any. The principal remaining outstanding at the time of maturity is required to be paid in full by the Issuer.

The Senior Notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The Note Purchase Agreement contains customary terms and covenants, including limitations on the Company’s ability to incur additional secured and unsecured indebtedness.

Amendment to Credit Facility

On the Closing Date, the Company entered into the fourteenth amendment (the “Fourteenth Amendment”) to the Credit Facility to allow for the closing of the New Mexico Acquisition, including increasing the maximum facility amount to $1.0 billion and increasing the borrowing base to $325 million from $225 million and adding new lender parties to the syndicate, among other matters. The Company used borrowings from the Credit Facility to fund a portion of the purchase price and related fees, costs and expenses for the New Mexico Acquisition.

Amendment and Restatement of the 2021 LTIP

On April 21, 2023 at the Company's annual meeting of stockholders, the Company's stockholders approved the Amended and Restated 2021 Long Term Incentive Plan (the "A&R LTIP") that increased the total number of shares of Common Stock, par value $0.001 per share, by 950,000 shares that may be utilized for awards pursuant to the Plan from 1,387,022 to 2,337,022. The A&R LTIP is described in further detail in the Company's definitive proxy statement for the Annual Meeting filed with the Securities and Exchange Commission on March 22, 2023.

Dividend Declaration

On April 11, 2023, the Board of Directors of the Company declared a cash dividend of $0.34 per share of common stock payable on ~~November 7, 2022~~May 9, 2023 to its shareholders of record at the close of business on ~~October 24, 2022.~~

~~On October~~April 25, 2022, the Company amended its Credit Agreement to, among other things, increase the borrowing base from $200 million to $225 million and change the semi-annual redetermination dates to April 1 and October 1 to align with the Company's new fiscal year end of December 31st.

2023.

2824

.Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of ~~the Company’s financial condition and results of operations should be read in conjunction with~~ the Company’s condensed consolidated financial statements and related notes thereto presented in this report as well as the Company's audited consolidated financial statements and related notes included in the Company's Annual Report for the fiscal year ended ~~September 30, 2021 and the Company's Transition Report on Form 10-QT for the period ended~~ December 31, ~~2021.~~2022. The following discussion contains “forward-looking statements” that reflect the Company’s future plans, estimates, beliefs and expected performance. The Company’s actual results could differ materially from those discussed in these forward-looking statements. See "Cautionary Statement Regarding Forward-Looking Statements" and "Part II. Item 1A. Risk Factors" below and the information set forth in the Risk Factors under Part I,I. Item 1A of the Company's Annual Report for the fiscal year ended ~~September 30, 2021.~~December 31, 2022.

Overview

We operate in the upstream segment of the oil and natural gas industry and are focused on steadily growing conventional reserves, production and cash flow through the acquisition, exploration, development and production of oil, natural gas and NGLs primarily in the Permian Basin in West Texas. The Company’s activities are primarily focused on the San Andres Formation, a shelf margin deposit on the ~~Central Basin Platform and~~ Northwest ~~Shelf.~~Shelf of the Permian Basin. We intend to continue to develop our reserves and increase production through development drilling and exploration activities and through acquisitions that meet our strategic and financial objectives.

Financial and Operating Highlights

Financial and operating results reflect the following:

•Increased total net equivalent production by ~~33%~~34% to ~~12.7~~13.2 MBoe/d for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to the ~~same period in 2021 and 21% to 10.9 MBoe/d for the nine~~three months ended ~~September 30,~~March 31, 2022 ~~as compared to the same period in 2021~~

•During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, 7 gross ~~(4.2 net) and 14 gross (10.8~~(5.3 net) horizontal wells brought online to production ~~respectively~~

•Realized average combined price on production sold of ~~$74.76~~$56.04 per Boe, before derivative settlements, during the three months ended ~~September 30, 2022,~~March 31, 2023, including ~~$92.40~~$72.76 per barrel for oil

•Generated cash flow from operations of ~~$130.4 million for the nine months ended September 30, 2022~~

•~~Total accrued capital expenditures of $36.7 million and $96.5~~$33.0 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively~~March 31, 2023

•Incurred total accrual (activity based) capital expenditures before acquisitions of $41.9 million for the three months ended March 31, 2023

•Paid cash dividends on common shares of ~~$6.1~~$6.8 million during the three months ended ~~September 30, 2022,~~March 31, 2023, and announced latest dividend of $0.34 per share with a record date of ~~October 24, 2022, which was~~April 25, 2023, to be paid on ~~November 7, 2022,~~May 9, 2023, for a total of ~~$6.7~~$6.9 million

•Exited the ~~third~~ quarter with ~~$17.9~~$2.3 million in cash and ~~$48.0~~$89.0 million drawn on our revolving credit facility

2925

.Table of Contents

Recent Developments

~~Fiscal Year Change~~

On August 16, 2022, the Company's Board acting by written consent resolved to amend and restate the Company's Second Amended and Restated Bylaws to change the Company's fiscal year period from October 1st through September 30th each year to January 1st through December 31st each year commencing with the 2022 calendar year. On August 19, 2022, the holders of approximately 75% of our outstanding Common Stock acting by written consent approved Bylaws Restatement and adopted the Third Amended and Restated Bylaws. In accordance with Rule 14c-2 under the Exchange Act, the aforementioned actions taken by written consent became effective on September 23, 2022. As a result, the Company's 2022 fiscal year will now be the period from January 1, 2022 to December 31, 2022.

Market Conditions, Commodity Prices and Interest Rates

U.S. and global markets ~~are experiencing~~have experienced heightened volatility following impactful geopolitical events, consistent evidence of widespread inflation, as well as increased fears of an economic recession. ~~However, commodity prices~~Recent measures have ~~continued~~been taken by the U.S. Federal Reserve to ~~remain high during~~combat persistent inflation by increasing interest rates throughout 2022 and into the first ~~nine months~~quarter of ~~2022 due~~2023. The global banking sector has experienced material disruptions which has also contributed to ~~OPEC+ and other oil and natural gas producers not rapidly increasing production levels, as well as from~~market volatility. Further, the ~~recovery in demand related to the COVID-19 pandemic. The~~ full-scale military invasion of Ukraine by Russian troops has continued unabated since February 2022 coupled with related economic sanctions imposed on Russia further exacerbating supply shortages, leading to disruptions in the credit and capital markets, including significant uncertainty in commodity prices, during ~~the first nine months of 2022.~~

~~In addition, global markets~~2022 and into 2023. Prices for oil and natural gas are ~~experiencing significant inflation attributable to a number of factors. Certain of our capital expenditures~~determined primarily by prevailing market conditions, which have been and ~~expenses are affected by general inflation and we expect costs for the remainder of 2022 to~~could continue to be volatile. However, OPEC+ recently cut output in an attempt to create a ~~function of supply and demand. Specifically, costs~~floor for ~~oilfield equipment and services continue to experience impacts from significant inflation, which we expect to continue for the foreseeable future.~~

In response to inflation concerns, the U.S. Federal Reserve initiated a monetary tightening policy in 2022, sharply increasing interest rates in June, July, September and November 2022 with public estimates of potential further increasesoil prices, causing an increase in the ~~future. The Company's floating-rate credit facility will be impacted by such rate increases.~~

oil price per barrel.

The combination of geopolitical events, inflation and the rising rate environment has led to increasing forecasts of a U.S. or global recession. Any such recession could prolong market volatility or cause a decline in commodity prices, among other potential impacts.

The Company cannot estimate the length or gravity of the future impact these events will have on the Company's results of operations, financial position, liquidity and the value of oil and natural gas reserves.

New Mexico Acquisition

On April 3, 2023, the Company closed on the New Mexico Acquisition. The aggregate purchase price of the New Mexico Acquisition was $330 million, subject to customary purchase price adjustments pursuant to the Purchase Agreement, and was funded through a combination of borrowings under the Company's revolving credit facility and proceeds from the issuance of $200 million of Senior Notes.

Power Joint Venture

In January 2023, the Company entered into an agreement to form a joint venture created for the purpose of constructing a new power infrastructure for onsite power generation using produced natural gas. The Company has an initial 30% investment in the joint venture company, RPC Power, and is committed to providing its portion of capital expenditures. Construction on phase 1 of the project is expected to be completed in June 2023 with Phase 2 of the project expected to be operational by late 2023 or early 2024.

3026

.Table of Contents

Results of Operations

Comparison for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022.

The following table sets forth selected operating data for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenues (in thousands):	Revenues (in thousands):									Revenues (in thousands):
Oil sales	Oil sales	$	80,017	$	44,026	$	224,895	$	114,314	Oil sales	$	64,974	$	62,376
Natural gas sales	Natural gas sales	4,216		1,908		8,855		7,381		Natural gas sales	523		1,789
Natural gas liquids sales	Natural gas liquids sales	3,238		2,080		8,147		4,527		Natural gas liquids sales	915		2,480
Oil and natural gas sales, net	Oil and natural gas sales, net	$	87,471	$	48,014	$	241,897	$	126,222	Oil and natural gas sales, net	$	66,412	$	66,645

Production Data, net:	Production Data, net:									Production Data, net:
Oil (MBbls)	Oil (MBbls)	866		639		2,301		1,793		Oil (MBbls)	893		675
Natural gas (MMcf)	Natural gas (MMcf)	985		807		2,239		2,141		Natural gas (MMcf)	949		682
Natural gas liquids (MBbls)	Natural gas liquids (MBbls)	140		109		303		306		Natural gas liquids (MBbls)	134		93
Total (MBoe)	Total (MBoe)	1,170		882		2,977		2,456		Total (MBoe)	1,185		881

Daily combined volumes (Boe/d)	Daily combined volumes (Boe/d)	12,717		9,581		10,903		8,997		Daily combined volumes (Boe/d)	13,169		9,791
Daily oil volumes (Bbls/d)	Daily oil volumes (Bbls/d)	9,413		6,940		8,428		6,569		Daily oil volumes (Bbls/d)	9,922		7,497

Average Realized Prices:	Average Realized Prices:									Average Realized Prices:
Oil ($ per Bbl)	Oil ($ per Bbl)	$	92.40	$	68.95	$	97.74	$	63.76	Oil ($ per Bbl)	$	72.76	$	92.44
Natural gas ($ per Mcf)	Natural gas ($ per Mcf)	4.28		2.36		3.95		3.45		Natural gas ($ per Mcf)	0.55		2.62
Natural gas liquids ($ per Bbl)	Natural gas liquids ($ per Bbl)	23.13		19.16		26.89		14.79		Natural gas liquids ($ per Bbl)	6.83		26.71
Combined ($ per Boe)	Combined ($ per Boe)	$	74.76	$	54.46	$	81.26	$	51.39	Combined ($ per Boe)	$	56.04	$	75.63

Average Realized Prices, including derivative settlements:(1)	Average Realized Prices, including derivative settlements:(1)									Average Realized Prices, including derivative settlements:(1)
Oil ($ per Bbl)	Oil ($ per Bbl)	$	75.80	$	52.30	$	73.63	$	51.97	Oil ($ per Bbl)	$	67.06	$	66.60
Natural gas ($ per MMBtu)		1.57		1.69		1.40		3.28
Natural gas ($ per Mcf)										Natural gas ($ per Mcf)	0.55		1.25
Natural gas liquids ($ per Bbl)	Natural gas liquids ($ per Bbl)	23.13		19.16		26.89		14.79		Natural gas liquids ($ per Bbl)	6.83		26.71
Combined ($ per Boe)	Combined ($ per Boe)	$	60.20	$	41.79	$	60.69	$	42.65	Combined ($ per Boe)	$	51.74	$	54.78

_____________________

(1)The Company's calculation of the effects of derivative settlements includes losses on the settlement of its commodity derivative contracts. These losses are included under other income (expense) on the Company’s condensed consolidated statements of operations.

3127

.Table of Contents

Oil and Natural Gas Revenues

Our revenues are derived from the sale of our oil and natural gas production, including the sale of NGLs that are extracted from our natural gas during processing. Revenues from product sales are a function of the volumes produced, product quality, market prices, and gas Btu content. Our revenues from oil, natural gas and NGL sales do not include the effects of derivatives. Our revenues may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices. The Company’s total oil and natural gas revenue, net ~~increased $39.5 million and $115.7~~decreased $0.2 million, or ~~82% and 92%~~0.3%, for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to the ~~same periods in 2021.~~three months ended March 31, 2022. The Company’s realized average combined price on its production for the three ~~and nine~~ months ended ~~September 30, 2022 increased~~March 31, 2023 decreased by ~~$20.30 and $29.87,~~$19.59 per Boe, or ~~37% and 58%, respectively,~~26% compared to the ~~same periods in 2021.~~three months ended March 31, 2022.

Oil revenues

•For the three months ended ~~September 30, 2022,~~March 31, 2023, oil revenues increased by ~~$36.0~~$2.6 million, or ~~82%~~4%, compared to the ~~same period in 2021.~~three months ended March 31, 2022. Of the increase, ~~$20.3~~$20.2 million was attributable to an increase in volume, partially offset by a $17.6 million decrease in our realized ~~price and $15.7 million was attributable to an increase in volume.~~price. Volumes increased by ~~36%~~32%, while realized prices ~~increased~~decreased by ~~34%~~21% compared to the ~~same period in 2021.~~

•~~For the nine~~three months ended September 30, 2022, oil revenues increased by $110.6 million, or 97%, compared to the same period in 2021. Of the increase, $78.2 million was attributable to an increase in our realized price and $32.4 million was attributable to an increase in volume. Volumes increased by 28%, while realized prices increased by 53% compared to the same period in 2021.March 31, 2022.

•Oil volumes increased during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 due to production from new wells and workovers performed on existing wells. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we brought online 7 gross ~~(4.2 net) and 14 gross (10.8~~(5.3 net) horizontal ~~wells, respectively.~~wells.

•The average WTI price ~~increased~~decreased by ~~$22.48 and $33.91~~$19.25 per Bbl during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the ~~same periods in 2021.~~three months ended March 31, 2022, respectively.

Natural gas revenues

•For the three months ended ~~September 30, 2022,~~March 31, 2023, natural gas revenues ~~increased~~decreased by ~~$2.3~~$1.3 million, compared to the ~~same period~~three months ended March 31, 2022. Of the decrease, $2 million was attributable to a decrease in ~~2021,~~realized prices, partially offset by $0.7 million attributable to ~~$4.2 million from $1.9 million.~~an increase in volume. Volumes increased by ~~22%~~39%, while realized prices ~~increased~~decreased by ~~$1.92 per Mcf compared to the same period in 2021.~~

•For the nine months ended September 30, 2022, natural gas revenues increased by $1.5 million, compared to the same period in 2021, to $8.9 million from $7.4 million. Volumes increased by 5%, while realized prices increased by $0.50 per Mcf compared to the same period in 2021.

•~~Natural gas sales volumes increased during the three months ended September 30, 2022 compared to the same period in 2021 due to production from new wells and workovers performed on existing wells.~~79%.

•The average Henry Hub price ~~increased~~decreased by ~~$3.67 and $3.14~~$2.03 per Mcf during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to the ~~same periods in 2021.~~three months ended March 31, 2022.

Natural gas liquids revenues

•For the three months ended ~~September 30, 2022,~~March 31, 2023, NGL revenues ~~increased~~decreased by ~~$1.1~~$1.6 million compared to the ~~same period~~three months ended March 31, 2022. Of the decrease, $2.7 million was attributable to a decrease in ~~2021,~~realized price, partially offset by $1.1 million attributable to ~~$3.2 million from $2.1 million.~~an increase in volume. Volumes increased by ~~29%~~44%, while realized prices ~~increased $3.97 per Bbl compared to the same period in 2021.~~decreased by 74%.

•For the nine months ended September 30, 2022, NGL revenues increased by $3.6 million, compared to the same period in 2021, to $8.1 million from $4.5 million. Volumes remained flat, while realized prices increased $12.10 per Bbl compared to the same period in 2021.

•
~~NGL sales volumes increased during the three months ended September 30, 2022 compared to the same period in 2021 due to production from new wells and workovers performed on existing wells.~~

.~~Table of Contents~~

Contract Services - Related Party

The following table presents the Company's revenue and costs associated with its contract services - related party transactions:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In thousands)									(In thousands)
Contract services - related parties(1)	Contract services - related parties(1)	$	600	$	600	$	1,800	$	1,800	Contract services - related parties(1)	$	600	$	600
Cost of contract services - related parties(2)	Cost of contract services - related parties(2)	89		147		263		329		Cost of contract services - related parties(2)	110		85
Contract services revenues, net of costs		$	511	$	453	$	1,537	$	1,471
Gross profit from contract services										Gross profit from contract services	$	490	$	515

_____________________

(1)The Company’s contract services - related parties revenue is derived from master ~~services~~service agreements with related parties to provide certain administrative support services.

(2)The Company's cost of contract services - related parties represents costs specifically attributable to the master service agreements the Company has in place with the respective related parties.

.Table of Contents

Costs and Expenses

The following table presents the Company's operating costs and expenses and other (income) expenses:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Costs and Expenses:	Costs and Expenses:	(In thousands)								Costs and Expenses:	(In thousands)
Lease operating expenses	Lease operating expenses	$	8,813	$	5,686	$	23,705	$	17,407	Lease operating expenses	$	8,875	$	6,830
Production and ad valorem taxes	Production and ad valorem taxes	$	5,826	$	2,575	$	14,854	$	7,347	Production and ad valorem taxes	$	4,110	$	3,502
Exploration costs	Exploration costs	$	20	$	884	$	1,540	$	9,142	Exploration costs	$	332	$	1,498
Depletion, depreciation, amortization and accretion	Depletion, depreciation, amortization and accretion	$	8,346	$	6,692	$	22,167	$	20,025	Depletion, depreciation, amortization and accretion	$	9,083	$	6,633

Administrative costs	Administrative costs	$	5,154	$	4,790	$	13,567	$	11,516	Administrative costs	$	5,467	$	4,014
Equity-based compensation		704		751		2,274		6,377
Share-based compensation										Share-based compensation	1,114		1,017
General and administrative expense	General and administrative expense	$	5,858	$	5,541	$	15,841	$	17,893	General and administrative expense	$	6,581	$	5,031

Transaction costs	Transaction costs	$	—	$	198	$	2,638	$	2,683	Transaction costs	$	1,887	$	2,638
Interest expense, net	Interest expense, net	$	585	$	963	$	1,960	$	3,299	Interest expense, net	$	1,016	$	678
(Gain) loss on derivatives	(Gain) loss on derivatives	$	(17,600)	$	14,987	$	44,395	$	75,286	(Gain) loss on derivatives	$	(5,755)	$	49,632
Loss from equity method investment										Loss from equity method investment	$	232	$	—
Income tax expense (benefit)	Income tax expense (benefit)	$	16,317	$	(3,937)	$	25,130	$	13,539	Income tax expense (benefit)	$	8,690	$	(2,114)

Lease Operating Expenses

~~Lease operating expenses~~ ("LOE")

LOE are the costs incurred in the operation and maintenance of producing properties. Expenses for compression, direct labor, saltwater disposal and materials and supplies comprise the most significant portion of our lease operating expenses. Certain operating cost components, such as direct labor and materials and supplies, generally remain relatively fixed across broad production volume ranges, but can fluctuate depending on activities performed during a specific period. For instance, repairs to our pumping equipment or surface facilities or subsurface maintenance result in increased production expenses in periods during which they are performed. Certain operating cost components, such as compression and saltwater disposal associated with completion water, are variable and increase or decrease as hydrocarbon production levels and the volume of completion water disposal increases or decreases.

The Company’s LOE increased by ~~$3.1~~$2.0 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the ~~same period in 2021.~~three months ended March 31, 2022. For the three months ended ~~September 30, 2022, $1.7 million of~~March 31, 2023, the increase was driven by a $2.3 million increase due to higher production and a $1.1 million increase due to higher workover ~~expense as additional workovers~~expense. These increases were ~~performed in the 2022 period and $2.3 million of the increase was attributable to costs~~

.~~Table of Contents~~

~~associated with new wells and additional production volumes,~~ partially offset by a ~~$0.9~~$1.4 million decrease ~~attributable~~in LOE expense due to efficiencies ~~on existing wells.~~

~~The Company’s LOE increased by $6.3 million for the nine months ended September 30, 2022 compared~~related to ~~the same period in 2021. For the nine months ended September 30, 2022, $4.3 million of the increase was attributable to costs associated with new wells~~utility rates, field payroll, and additional production volume and $4.0 million of the increase was due to higher workover expense as additional workovers were performed in the 2022 period, partially offset by a $2.0 million decrease attributable to efficiencies on existing wells.saltwater disposal charges.

Production and Ad Valorem Tax Expense

Production taxes are paid on produced oil, natural gas and NGLs based on a percentage of revenues at fixed rates established by federal, state or local taxing authorities. In general, the production taxes we pay correlate to changes in our oil, natural gas and NGL revenues. We are also subject to ad valorem taxes in the counties where our production is located. Ad valorem taxes are generally based on the valuation of our oil and natural gas properties, which also trend with oil and natural gas prices and vary across the different counties in which we operate.

Production and ad valorem taxes increased by ~~$3.3 million and $7.5~~$0.6 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to the ~~same periods in 2021. Production taxes increased primarily due to increases in our oil and natural gas sales, net, as discussed above.~~three months ended March 31, 2022. Ad valorem taxes increased for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 based on higher estimated property values for the current taxable ~~period.~~period, which was partially offset by a decrease in production taxes of approximately $0.1 million.

.Table of Contents

Exploration Expense

Exploration expense consists of expiration of unproved leasehold and geological and geophysical costs which include seismic survey costs. The following table presents exploration expense by area for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~the three months ended March 31, 2022:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2022			2021		2022		2021			Three Months Ended March 31,
		(In thousands, except acreage data)										2023		2022
				(In thousands, except acreage data)
Exploration expense(1)	Exploration expense(1)	$	—		$	732	$	1,465	$	8,923	Exploration expense(1)	$	332	$	1,465
Geological and geophysical costs	Geological and geophysical costs	20			152		75		219		Geological and geophysical costs	—		33
Total exploration expense	Total exploration expense	$	20		$	884	$	1,540	$	9,142	Total exploration expense	$	332	$	1,498

Expired net acres - Texas	Expired net acres - Texas	—			25		626		1,552		Expired net acres - Texas	157		626
Expired net acres - New Mexico	Expired net acres - New Mexico	—			2,171		518		15,334		Expired net acres - New Mexico	—		518
Net acres renewed after expiration(2)	Net acres renewed after expiration(2)	21			19		38		417		Net acres renewed after expiration(2)	—		8

_____________________

(1)For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, exploration expense includes ~~$1.3~~$0.3 million and ~~$0.2 million~~zero related to expiration of unproved leasehold costs in Texas and New Mexico, respectively. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, exploration expense included ~~$3.3~~$1.3 million and ~~$5.6~~$0.2 million related to expiration of unproved leasehold costs in Texas and New Mexico, respectively.

(2)The Company did not renew any net acreage after expiration in New Mexico during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~

2022.

Depletion, Depreciation, Amortization and Accretion Expense

Depletion, depreciation and amortization is the systematic expensing of the capitalized costs incurred to acquire, explore and develop oil, natural gas and NGLs. All costs incurred in the acquisition, exploration and development of properties (excluding costs of surrendered and abandoned leaseholds, delay lease rentals, dry holes and overhead related to exploration activities) are capitalized. Capitalized costs are depleted using the units of production method.

Accretion expense relates to ARO. We record the fair value of the liability for ARO in the period in which the liability is incurred (at the time the wells are drilled or acquired) with the offset to property cost. The liability accretes each period until it is settled or the well is sold, at which time the liability is removed.

Depletion, depreciation, amortization and accretion expense increased by ~~$1.7 million and $2.1~~$2.5 million for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, respectively, compared to the ~~same periods for 2021.~~three months ended March 31, 2022. The increase for the three ~~and~~

.~~Table of Contents~~

~~nine~~ months ended ~~September 30, 2022~~March 31, 2023 was primarily due to higher production, partially offset by a lower depletion rate. The depletion rate is a function of capitalized cost and related underlying reserves. The lower depletion rate was primarily driven by an increase in reserves as a result of the Company's drilling activity and improved commodity prices.production.

General and Administrative Expense ("G&A")

G&A expenses include corporate overhead such as payroll and benefits for our corporate staff, ~~equity-based~~share-based compensation expense, office rent for our headquarters, audit and other fees for professional services and legal compliance. G&A expenses are reported net of overhead recoveries.

Total G&A expense increased by ~~$0.3 million and decreased by $2.1~~$1.6 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to the ~~same periods for 2021.~~three months ended March 31, 2022. Administrative costs, which include payroll, benefits and non-payroll costs, increased by ~~$0.4 million and $2.1~~$1.5 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to the ~~same periods for 2021. The increase in administrative costs was~~three months ended March 31, 2022, primarily ~~attributable~~due to increased employee count, professional services, insurance, and technology ~~and investor relations~~ costs. Equity-based compensation expense decreased by $4.1 million for the nine months ended September 30, 2022 compared to the same period in 2021. The higher equity-based compensation during the nine months ended September 30, 2021 relates to restricted shares awarded to certain employees following completion of the Merger that immediately vested.

Transaction Costs

Transaction costs represent costs incurred on successful or unsuccessful business combinations or unsuccessful property acquisitions. The transaction costs of ~~$2.6~~$1.9 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 primarily relate to the New Mexico Acquisition that closed April 3, 2023. During the three months ended March 31, 2022, the transaction costs of $2.6 million primarily relate to a potential business combination and related financing that the Company pursued but ultimately chose not to consummate due to changing market conditions. ~~During the nine months ended September~~

30 ~~2021, the transaction costs~~

.Table of ~~$2.7 million primarily relate to costs incurred on the Merger with Tengasco in February 2021.~~Contents

Interest Expense

Interest expense ~~decreased~~increased by ~~$0.4 million and $1.3~~$0.3 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the ~~same periods for 2021. Interest expense decreased due to~~three months ended March 31, 2022. The Company had a ~~lower~~higher outstanding average balance on the ~~Company's~~ revolving credit facility as well as ~~the capitalized interest related to the Company's EOR project, partially offset by~~ an increase in interest rates, during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 when compared to the ~~same periods for 2021.~~three months ended March 31, 2022.

Gain/Loss on Derivatives

The Company recognizes settlements and changes in the fair value of its derivative contracts as a single component within other income (expense) on its condensed consolidated statements of operations. We have oil and natural gas derivative contracts, including fixed price swaps, basis swaps and collars, that settle against various indices. The following table presents the components of the Company's gain (loss) on derivatives for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In thousands)									(In thousands)
Settlements on derivative contracts	Settlements on derivative contracts	$	(17,040)	$	(11,171)	$	(61,198)	$	(21,477)	Settlements on derivative contracts	$	(5,088)	$	(18,375)
Non-cash gain (loss) on derivatives	Non-cash gain (loss) on derivatives	34,640		(3,816)		16,803		(53,809)		Non-cash gain (loss) on derivatives	10,843		(31,257)
Gain (loss) on derivatives	Gain (loss) on derivatives	$	17,600	$	(14,987)	$	(44,395)	$	(75,286)	Gain (loss) on derivatives	$	5,755	$	(49,632)

Our earnings are affected by the changes in value of our derivative portfolio between periods and the related cash received or paid upon settlement of our derivatives. To the extent the future commodity price outlook declines between periods, we will have mark-to-market gains, while future commodity price increases between measurement periods result in mark-to-market losses.

.~~Table of Contents~~

The gain (loss) on derivatives for the three months ended March 31, 2023 and 2022 was $5.8 million and $(49.6) million, respectively. The non-cash gain on derivatives for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~$17.6 million, which increased from a loss position~~driven by ~~$32.6 million~~new contracts entered into during the quarter and higher contract pricing when compared to ~~the same period in 2021.~~forward pricing at March 31, 2023. The non-cash loss on derivatives for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$44.4 million, which decreased~~driven by ~~$30.9 million~~lower contract pricing when compared to ~~the same period in 2021.~~forward pricing at March 31, 2022. The ~~change in the non-cash gain (loss) on derivatives was impacted by the~~ decrease in total contract volumes for our open derivative contracts and the change in the estimated forward-looking oil and natural gas prices used at the end of the period to calculate the fair value of the open derivative contracts for the three and nine months ended September 30, 2022 compared to the same periods in 2021. The increase in the loss on settlements on derivatives was due to the ~~increase~~decrease in oil and natural gas prices for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to ~~the same periods in 2021. For example, the average WTI price was $93.06 per Bbl for~~ the three months ended ~~September 30, 2022 compared to $70.58 per Bbl for the same period in 2021.~~

March 31, 2022.

Income Tax Expense (Benefit)

The Company became a taxable entity as a result of its Merger with Tengasco on February 26, 2021. See further discussion in Note 4 - Acquisitions to the Company's condensed consolidated financial statements included herein. While REP LLC was organized as a limited liability company, taxable income passed through to its unit holders. Accordingly, a provision for federal and state corporate income taxes has been made for the operations of the Company beginning February 27, 2021 in the accompanying condensed consolidated financial statements. Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. Upon consummation of the Merger in February 2021, the Company established a $13.6 million provision for deferred income taxes with the conversion to a C-corporation. The majority of this deferred tax liability was established by a change in tax status which primarily was attributable to the oil and natural gas properties. See Note 1110 - Income Taxes to the Company's ~~condensed~~ consolidated financial statements included herein for further discussion of income taxes.


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2022			2021			2022			2021				2023			2022
		(In thousands)													(In thousands)
Current income tax expense	Current income tax expense	$	433		$	286		$	1,928		$	54		Current income tax expense	$	3,407		$	779
Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	15,884			(4,223)			23,202			13,485			Deferred income tax expense (benefit)	5,283			(2,893)
Total income tax expense (benefit)	Total income tax expense (benefit)	$	16,317		$	(3,937)		$	25,130		$	13,539		Total income tax expense (benefit)	$	8,690		$	(2,114)

Effective income tax rate	Effective income tax rate	21.4		%	(36.2)		%	21.6		%	(53.3)		%	Effective income tax rate	21.4		%	22.9		%

Liquidity and Capital Resources

The business of exploring for, developing and producing oil and natural gas is capital intensive. Because oil, natural gas and NGL reserves are a depleting resource, like all upstream operators, we must make capital investments to grow and even sustain production. The Company’s principal liquidity requirements are to finance its operations, fund capital expenditures and

.Table of Contents

acquisitions, make cash distributions and satisfy any indebtedness obligations. Cash flows are subject to a number of variables, including the level of oil and natural gas production and prices, and the significant capital expenditures required to more fully develop the Company’s oil and natural gas properties. Historically, our primary sources of capital funding and liquidity have been our cash on hand, cash flow from operations and borrowings under our revolving credit facility. At times and as needed, we may also issue debt or equity securities, including through transactions under our shelf registration statement filed with the SEC. In April 2023, the Company amended its Credit Facility to increase the borrowing base and issued Senior Notes to fund the New Mexico Acquisition. We estimate the combination of the sources of capital discussed above will continue to be adequate to meet our short and long-term liquidity needs.

Cash on hand and operating cash flow can be subject to fluctuations due to trends and uncertainties that are beyond our control. Likewise, our ability to issue equity and obtain credit facilities on favorable terms may be impacted by a variety of market factors as well as fluctuations in our results of operations. For further discussion of risks related to our liquidity and capital resources, see "Item 1A. Risk Factors."

Working Capital

Working capital is the difference in our current assets and our current liabilities. Working capital is an indication of liquidity and potential need for short-term funding. The change in our working capital requirements is driven generally by

.~~Table of Contents~~

changes in accounts receivable, accounts payable, commodity prices, credit extended to, and the timing of collections from customers, the level and timing of spending for expansion activity, and the timing of debt maturities. As of ~~September 30, 2022,~~March 31, 2023, we had a working capital deficit of ~~$32.7~~$32.9 million compared to a deficit of ~~$32.8~~$25.3 million as of December 31, ~~2021.~~2022. The working capital deficit at ~~September 30, 2022~~March 31, 2023 reflects ~~$22.5~~$8.0 million in current derivative liabilities compared to ~~$31.0~~$16.5 million in current derivative liabilities at December 31, ~~2021.~~2022. As of ~~September 30, 2022, we had an additional $9.3~~March 31, 2023, our accounts payable increased by $13.1 million ~~in accrued capital expenditures, $2.4 million in accrued ad valorem taxes~~primarily due to ~~the projected increase in property taxes in 2022, and $3.1 million in accrued G&A and LOE.~~increased capital activity. We utilize our ~~revolving credit facility~~Credit Facility and cash on hand to manage the timing of cash flows and fund short-term working capital deficits. Our current derivative assets and liabilities represent the mark-to-market value as of ~~September 30, 2022~~March 31, 2023 of future commodity production which will settle on a monthly basis through the end of their contractual terms. This aligns with the receipt of oil and natural gas revenues on a monthly basis.

Cash Flows

The following table summarizes the Company’s cash flows from continuing operations:


		Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021				2023		2022
		(In thousands)						(In thousands)
Statement of Cash Flows Data from Continuing Operations:	Statement of Cash Flows Data from Continuing Operations:						Statement of Cash Flows Data from Continuing Operations:
Net cash provided by operating activities	Net cash provided by operating activities	$	130,352	$	70,186		Net cash provided by operating activities	$	32,970	$	29,995
Net cash used in investing activities	Net cash used in investing activities	$	(83,182)	$	(51,229)		Net cash used in investing activities	$	(69,935)	$	(10,199)
Net cash used in financing activities		$	(37,579)	$	(7,666)
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	$	25,939	$	(8,504)

Operating Activities

The Company’s net cash provided by operating activities ~~increased by $60.2 million or 86% to $130.4~~was relatively flat at $33.0 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 from ~~$70.2~~$30.0 million for the same period in 2021. The increase was primarily driven by an increase in revenues of $115.7 million, partially offset by an increase of $39.7 million on settlements for commodity derivative contracts and an increase in operating expenses of $15.6 million, which excludes non-cash expenses such as equity-based compensation, expiration of unproved leasehold costs, and depreciation, depletion, accretion and amortization expense.three months ended March 31, 2022.

Investing Activities

The Company's cash flows used in investing activities increased by ~~$32.0~~$59.7 million ~~or 62%~~ to ~~$83.2~~$69.9 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 from ~~$51.2~~$10.2 million for the ~~same period in 2021.~~three months ended March 31, 2022. The increase was primarily due to funds held in escrow associated with the Company's New Mexico Acquisition of $33.0 million for the three months ended March 31, 2023, with no comparable item for the three months ended March 31, 2022. Additionally, the Company incurred higher capital spending of ~~$31.9~~$24.8 million related to ~~the Company's~~ increased ~~drilling and completion~~ activity ~~and EOR project~~ during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 compared to the ~~same period~~three months ended March 31, 2022. The Company also contributed 1.8 million to its equity method investment in ~~2021.~~RPC Power.

Financing Activities

Net cash flow provided by financing activities were $25.9 million for the three months ended March 31, 2023 compared to net cash flow used in financing activities ~~increased by $29.9 million or 390% to $37.6~~of $8.5 million for the ~~nine~~three months ended ~~September 30, 2022 from $7.7 million for the same period in 2021.~~March 31, 2022. During the ~~nine~~three months

.Table of Contents

ended ~~September 30, 2022,~~March 31, 2023, the Company had a ~~net paydown~~draw on its revolving credit facility of ~~$17.0~~$33.0 million, used to fund the escrow for the New Mexico Acquisition, which compares to a net paydown of ~~$37.5~~$2.0 million for the same period in 2021. In addition, the Company distributed an additional $3.7 million of dividends on common stock during the nine months ended September 30, 2022 compared to the same period in 2021. The Company issued $46.7 million of equity, net of offering costs, during the nine months ended September 30, 2021. These proceeds were primarily used to paydown amounts outstanding on the revolving credit facility. There was no equity issued in 2022.

Revolving Credit Facility

The Company's borrowing base was ~~$200~~$225 million with outstanding borrowings of ~~$48~~$89 million on ~~September 30, 2022,~~March 31, 2023, representing available borrowing capacity of ~~$152~~$136 million. See further discussion in Note 98 - ~~Revolving Credit Facility~~Long-Term Debt to the Company's condensed consolidated financial statements included herein.

On ~~April 29, 2022,~~February 22, 2023, the Company amended its Credit ~~Agreement~~Facility to, among other things, allow for the issuance of Senior Notes of up to $200 million. On April 3, 2023, the Company amended its Credit Facility to, among other things, increase the borrowing base from ~~$175~~$225 million to ~~$200 million, extend~~$325 million. For more information on the ~~maturing date to April 2026, replace LIBOR with~~amended Credit Facility and the ~~SOFR and change the requirements for hedging to be based on utilization~~issuance of the ~~borrowing base and the Company's leverage ratio.~~

.Senior Notes, see Note 13 - Subsequent Events.~~Table of Contents~~

On October 25, 2022, the Company amended its Credit Agreement to, among other things, increase the borrowing base from $200 million to $225 million and change the semi-annual redeterminations to April 1 and October 1 to align with the Company's new fiscal year end of December 31st..

Distributions

For the three months ended ~~September 30, 2022,~~March 31, 2023, the Company authorized and declared a quarterly dividend totaling approximately ~~$6.2~~$6.9 million, with ~~$6.1~~$6.7 million paid in cash and ~~$0.1~~$0.2 million payable to restricted shareholders upon vesting.

Contractual Obligations

In January 2023, the Company entered into an agreement to form a joint venture with Conduit Power LLC. The Company ~~has commitments~~is committed to contribute its portion of capital expenditures into the joint venture company, RPC Power. In conjunction with ~~its primary midstream counterparty and has~~the formation of the joint venture, the Company entered into ~~purchase commitments throughout~~additional agreements with RPC Power or one of its subsidiaries. These agreements include RPC Power providing operational expertise on the ~~nine months ended September 30, 2022.~~implementation and management of the power generation for a monthly fee of $20 thousand and the Company committing to provide the natural gas needed to fuel the onsite power generators through 2028. See Note 1412 - Commitments and Contingencies in our notes to the condensed consolidated financial statements.

Critical Accounting Estimates

The ~~discussion~~Company's critical accounting policies and ~~analysis~~estimates are described in "Critical Accounting Estimates" within "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 1 of the ~~Company’s financial condition and results of operations are based upon~~Notes to the ~~Company’s unaudited~~Consolidated Financial Statements in Riley Permian's Annual Report on Form 10-K for the year ended December 31, 2022. The accounting estimates used in preparing our interim condensed consolidated financial statements ~~and accompanying notes included herein, which have been prepared~~for the three months ended March 31, 2023 are the same as those described in ~~accordance with U.S. GAAP. The preparation~~Riley Permian's Annual Report.

See Note 3 - Summary of ~~financial statements requires the Company to make estimates and assumptions that affect the amounts reported~~Significant Accounting Policies in the ~~unaudited condensed~~Company's consolidated financial statements in "Item 15. Exhibits and ~~accompanying notes. These estimates and assumptions may also affect disclosure~~Financial Statement Schedules" for a full discussion of ~~contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.~~

Changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates and assumptions used in preparation of the Company’s unaudited condensed consolidated financial statements and it is at least reasonably possible these estimates could be revised in the near term and these revisions could be material.

~~Certain~~our significant accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. The Company evaluates its estimates and assumptions on a regular basis. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Significant items subject to such estimates and assumptions include, but are not limited to, estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, accounts receivable, accrued capital expenditures and operating expenses, ARO, the fair value determination of

acquired assets and assumed liabilities, certain tax accruals and the fair value of derivatives. Actual results may differ from these estimates and assumptions used in preparation of the Company’s unaudited condensed consolidated financial statements included herein.policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management establishes and maintains disclosure controls and procedures (as defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~SEC’s~~Securities and Exchange Commission’s rules and forms. Such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. We ~~have~~ evaluated the effectiveness of our disclosure controls and procedures as of ~~the end of the period covered by this Quarterly Report,~~March 31, 2023, with the participation of our CEO and CFO, as well as other key members of our management. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2022.~~March 31, 2023.

3833

.Table of Contents

Changes in ~~internal control over financial reporting~~Internal Control Over Financial Reporting

There ~~have been~~were no changes in our internal control over financial reporting ~~that occurred for~~during the ~~quarter ending September 30, 2022~~three months ended March 31, 2023 that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

.~~Table of Contents~~

PART II. OTHER INFORMATION.

Item 1. Legal Proceedings

From time to time, we may be involved in various legal proceedings and claims in the ordinary course of business. AsThe ultimate outcome of ~~September 30, 2022, and through~~ the ~~filing date of this Quarterly Report, we do not believe the ultimate resolution of~~ any such ~~actions~~proceedings or ~~potential actions~~claims, and any resulting impact on us, cannot be predicted with certainty. The Company believes that the amount of ~~which we are currently aware~~the liability, if any, ultimately incurred with respect to any such proceedings or claims will not have a material adverse effect on our ~~consolidated~~ financial ~~position or~~condition, liquidity, capital resources, results of ~~operations.~~operations or cash flows.

Refer to ~~Part I,~~"Part I. Item 3 - Legal ~~Proceedings~~Proceedings" of Riley Permian's Annual Report on Form 10-K for the ~~fiscal~~ year ended ~~September 30, 2021,~~December 31, 2022, and "Part I. Item 1. Note 1412 - Commitments and ~~Contingencies~~Contingencies" in the notes to the unaudited condensed consolidated financial statements set forth in ~~Part I, Item 1 of~~ this Quarterly Report on Form 10-Q (which is ~~hereby~~ incorporated by reference herein), for ~~a description of material legal proceedings.~~additional information.

Item 1A. Risk Factors

~~We are subject to certain risks and hazards due~~

In addition to the nature of the business activities we conduct. We may experience additional risks and uncertainties not currently known to us. Furthermore, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect us. Any such risk may materially and adversely affect our business, financial condition, cash flows and results of operations. Other than any risks describedinformation set forth in this Quarterly Report, ~~there have been no material changes to~~ the ~~risk factors described~~risks that are discussed in ~~our~~the Company's Annual Report on Form 10-K for the year ended ~~September 30, 2021.~~

~~Risks Related to our~~December 31, 2022, under the headings "Part I. Item 1. and Item 2. Business

~~A Terrorist attack or armed conflict~~ and Properties," “Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and "Part II. Item 1A. Risk Factors," should be carefully considered, as such risks could ~~harm our business.~~

~~Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States or other countries may adversely~~materially affect the United States and global economies and could prevent us from meeting our financial and other obligations. If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for oil and natural gas causing a reduction in our revenues. Oil and natural gas related facilities could be direct targets of terrorist attacks, and our operations could be adversely impacted if infrastructure integral to our customers’ operations is destroyed or damaged. Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all

Recent regulatory restrictions on use of produced water and a moratorium on new produced water disposal wells in the Permian Basin to stem rising seismic activity and earthquakes could increase our operating costs and adversely impact our business, results of operations and financial condition.

In September 2021, the RRC curtailed the amount of produced water companies were permitted to inject into some wells near Midland and Odessa in the Permian Basin, and has since indefinitely suspended some permits there and expanded the restrictions to other areas. These actions were taken in an effort to control induced seismic activity and recent increases in earthquakes in the Permian Basin, which have been linked by the U.S. and local seismologists to wastewater disposal in oil fields. These restrictions on the disposal of produced water and a moratorium on new produced water disposal wells could result in increased operating costs, requiring us or our service providers to truck produced water, recycle it or dispose of it by other means, all of which could be costly. We or our service providers may also need to limit disposal well volumes, disposal rates and pressures or locations, or require us or our service providers to shut down or curtail the injection of produced water into disposal wells. These factors may make drilling activity in the affected parts of the Permian Basin less economical and adversely impact our business, results of operations and financial condition.

~~Designation as “critical infrastructure” could subject us to additional regulation, including potential weatherization requirements.~~

In response to Winter Storm Uri, the February 2021 winter weather event that caused widespread power failure to Texas’ power grid for several days, the Texas legislature drafted new legislation designed to prepare for, prevent and respond to weather emergencies and power outages. On November 30, 2021, the RRC adopted rules to designate certain natural gas facilities as critical infrastructure. While the RRC did not adopt rules related to other sections of the legislation requiring such designees to implement weatherization measures, it is expected that the RRC will initiate a rulemaking at a later date for such purposes.

.~~Table of Contents~~

Under the new rules, “critical gas suppliers” include, but are not limited to, gas wells, oil leases that produce gas, natural gas pipeline facilities, underground natural gas storage facilities and saltwater disposal facilities. “Critical customers,” which are a subset of critical gas suppliers, are facilities that require electricity to operate. The rules allow for certain facilities to apply for an exception to critical designation, but exclude certain types of highly critical facilities from eligibility for such exception.

If we are designated as a “critical gas supplier” or “critical customer,” we would become subject to additional regulation and compliance costs, including potential future operating and capital costs required to weatherize our assets.

~~Enhanced scrutiny on ESG matters could have an adverse effect on the Company’s operations.~~

Enhanced scrutiny on ESG matters related to, among other things, concerns raised by advocacy groups about climate change, hydraulic fracturing, natural gas flaring, GHG emissions, waste disposal, oil spills, and explosions of natural gas transmission pipelines may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines, and enforcement interpretations. These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens, increased risk of litigation, and adverse impacts on the Company’s access to capital. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance, and the public may engage in the permitting process, including through intervention in the courts. Negative public perception could cause the permits the Company requires to conduct its operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct its business.

~~We may be unable to quickly adapt to changes in market/investor priorities.~~

Historically, one of the key drivers in the unconventional resource industry has been growth in production and reserves. With historical volatility in oil and natural gas prices and the likelihood that rising interest rates will increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers. Such shifts in focus sometimes require changes in planning and resource management, which may not occur instantaneously. Any delay in responding to such changes in market sentiment or perception may result in the investment community having a negative sentiment regarding our business plan, potential profitability and our ability to operate in a manner deemed "efficient," which may have a negative impact on the price of our common stock.

The adoption of climate change legislation or regulations restricting emissions of "greenhouse gases" could result in increased operating costs and reduced demand for the oil, NGL and natural gas we produce, while potential physical effects of climate change could disrupt our operations and cause us to incur significant costs in preparing for or responding to those effects.

Restrictions on GHG emissions that may be imposed could adversely affect the oil and gas industry. The adoption of legislation or regulatory programs to reduce GHG emissions could require us to incur increased operating costs, such as costs to purchase and operate emissions control systems, acquire emissions allowances or comply with new regulatory requirements. Any GHG emissions legislation or regulatory programs applicable to power plants or refineries could also increase the cost of consuming, and thereby reduce demand for, the oil, NGL and natural gas we produce. Consequently, legislation and regulatory programs to reduce GHG emissions could have an adverse effect on ourCompany's business, financial condition ~~and results of operations.~~

.~~Table of Contents~~

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

~~Unregistered Sales of Equity Securities~~

~~None.~~

~~Issuer Repurchases of Equity Securities~~

~~Our common stock repurchase activity for~~or future results. There has been no material change in the ~~nine months ended September 30,~~Company's risk factors that were described in the Company's 2022 ~~was as follows:~~

Quarter Ending
Total Number of Shares Purchased(1)
Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs
Q1 12,640 $ 26.81 — —
Q2 8,576 $ 25.08 — —
Q3 341 $ 25.02 — —
~~_____________________~~

~~(1)These amounts reflect the shares received by us from employees for the payment of personal income tax withholding~~Annual Report on vesting transactions. The acquisition of the surrendered shares was not part of a publicly announced program to repurchase shares of our Common Stock. Any shares repurchased by the Company for personal tax withholdings are immediately retired upon repurchase.Form 10-K.

~~Item 3. Defaults Upon Senior Securities~~

~~Not applicable.~~

~~Item 4. Mine Safety Disclosures~~

~~Not applicable.~~

Item 5. Other Information

~~Not applicable.~~

None.

Item 6. Exhibits


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).~~

.~~Table of Contents~~


~~3.3~~3.2			Third Amended and Restated Bylaws of Riley Exploration Permian, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 23, 2022).
4.1			Note Purchase Agreement, dates as of April 3, 2023, among Riley Exploration - Permian, LLC, as Issuer, Riley Exploration Permian, Inc., as Parent, each of the subsidiaries of the Issuer party thereto as guarantors, each of the holders from time to time party thereto, and U.S. Bank Trust Company, National Association, as agent for the holders (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2023).
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).

.~~Table of Contents~~


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†0†			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).

.~~Table of Contents~~


10.28			Eleventh Amendment to the Credit Agreement dated as of April 29, 2022, 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 May 2, 2022).
10.29			Twelfth Amendment to the Credit Agreement dated as of October 25, 2022, 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 26, 2022).
10.30			Thirteenth Amendment to the Credit Agreement dated as of February 22, 2023, 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 10.2 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on February 27, 2023).
10.31			Purchase and Sale Agreement dated February 22, 2023 by and between Pecos Oil & Gas, LLC, as Seller, and Riley Exploration - Permian, LLC, as Purchaser (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 February 27, 2023).
10.32			Fourteenth Amendment to the Credit Agreement dated as of April 3, 2023, 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 April 4, 2023).
10.33			Riley Exploration Permian, Inc. 2021 Long Term Incentive Plan, as amended and restated as of April 21, 2023 (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 April 24, 2023).
10.34			Form of Restricted Stock Agreement (Time Vesting - Named Executive Officers), as amended and restated as of April 21, 2023 (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 April 24, 2023).
10.35			Form of Restricted Stock Agreement (Non-Employee Director), as amended and restated as of April 21, 2023 (Incorporated by reference from Exhibit 10.3 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 24, 2023).
10.36			Form of Common Stock Award Agreement, as amended and restated as of April 21, 2023 (Incorporated by reference from Exhibit 10.4 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 24, 2023).



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

* Filed herewith.

† Compensatory plan or arrangement.

.~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	RILEY EXPLORATION PERMIAN, INC.

Date: ~~November 14, 2022~~May 10, 2023	By:	/s/ Bobby D. Riley
		Bobby D. Riley
		Chief Executive Officer

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


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


October 2022 - September 2023	$	40,000	0.24	%


	Three Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2021
	(In thousands)
Oil and natural gas sales	$	—	$	—
Total revenues	—		—
Lease operating expenses	—		115
Goodwill impairment	—		18,516
Total expenses	—		18,631
Other income (expenses)	775		(107)
Gain (loss) from discontinued operations before income taxes	775		(18,738)
Income tax benefit (expense)	1		(59)
Gain (loss) from discontinued operations, net of tax	$	776	$	(18,797)


Quarter Ending	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs
Q1	12,640	$	26.81	—	—
Q2	8,576	$	25.08	—	—
Q3	341	$	25.02	—	—