REPX - Earnings call transcript Q3 2021 | Riley Exploration Permian, Inc.

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Operator

Good day. And thank you for standing by. Welcome to the Riley Permian Fiscal Third Quarter 2021 Earnings Conference Call. At this time all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator the I'd to like Instructions] conference to Riley. [Operator Philip hand over today, your speaker ahead. go Please

Philip Riley

to Kevin quarter myself, Vice Thank Permian's are on CFO; Bobby Pasha and and Chairman morning, Philip President; today And you, President and Mike Riley's CEO; Riley’s good the call Executive fiscal Riley's of conference earnings welcome third Riley, call. Riley, Strategy. Participating Riley, everyone. Riley Rugen,

other call statements materially conference cause within contains risks today's forward-looking reminder, in and Federal These statements to from meaning projections Laws. and a implied or are these the of differ As expressed actual results may the certain statements. of those uncertainties Securities that subjects

reconciliations earnings can found with appropriate We issued be release will also GAAP in be These referencing our afternoon. measures. certain yesterday measures non-GAAP

Additional to results now presentation filings. forward-looking call could to our found Bobby information differ Company's Mr. turn over factors full in CEO. is statements cautionary the on SEC that and I will the are our website. Chairman statements be The in cause the risk can on Riley, available investor

Bobby Riley

Permian, key our comments I a everyone Thank through morning us is today My for as you, X/XX will earnings months And we allocation second Kevin that nine February and Riley LLC, the capital the joining This remind and and XX, same on quarter. company. be Good discipline to time, call the Exploration fiscal public quarter call. operations focus is capital we to continue Philip. our quarterly measures shortly. another in cashflow, are XX/X many quarter. reverse reporting strongly performed a consecutive a you year, XX, on will providing a ending in merger number company. EMP the of Riley and our third morning. thank highlights on structure. of third June for financial which entered updates XXXX for this markets. across the companies we continue to today, grow public Unlike details including dividends. production, adhered to remain again, this XXXX, At

We on a the track continue EOR position. Champions to of our in on implementation progress project the XXX-acre acre

stated, previously COX from XXXX when properties. to Initially, anthropogenic follow have natural pipeline should in COX we being the available. calendar production water any to required is early be COX goal utilize market in able network, our in with our making tie By to link available early As the to ultimate to year ACOX created the to the offload directly summer.

ACOX to continue within capture network. opportunities this evaluate pipeline to We

elaborate, over our allocation part will Kevin Kevin we results pay of turn continue As to quarterly to the now capital I'll operational the call and financial review as of the quarter. to dividends structure. our

Kevin Riley

Thank to And everyone. morning Bobby. you, good

results XXXX. operational review position the quarter XX, June of that financial for with ending company, Bobby our the continued plan for Quality As while discipline. to maintaining strong assets, of growth allow capital financial combined mentioned the a

operational execution quarterly and the metrics, stock the the behave for often numerous history, are fiscal is company's year our on in financial volatile continued unpredictably, While prices and best dividends. across performance track performance including

quarter XX, quarter, in $XX operations results the the net $XX.X the same on as of June of non-cash the of included or the continuing three result year-to-date XXXX, period. months loss second at by million our a compared and in $XX.X by same June million X.X MBoe/d to oil to ended with production period ended for into loss quarter derivatives cashflow getting Now generated change XXXX. $XX.X from fiscal million months ended a of net unrealized reported XX, for The price. million total XXXX three fiscal XXXX, operations equivalent net we for We income months increased for in nine XX% losses XX; June from for XX% the compared over QX the to as

we August annualized X.X% and Oil quarter credit costs by X. our secured the for Recovery applies and to of generated our facility. We for million the net per Additionally, expenditures of settlements. quarter derivative to third The acquisitions per price a dividend the nine acceleration in was to The adjusted our $XX BOE fiscal realized float months XX% BOE July before XX, with cash of subsequent current in the August cash announced or X% or dividend after corresponds we cash the our with ended raise shares, million a $XX $XX.XX credit June our cash cashflow latest quarter-over-quarter of $X.XX we $XX.XX million on million XX yield borrowings million issuance nine $X.X X.XX the exited derivative We settlements ended million for capital to estimated July. by X capital $XX.XX $XX.X of trading reduced the our closing total, June which drawn EBITDAX. which the ending, per $XX.X on And increased $XX.X before free project subsequent funding of facility per margin BOE Enhanced million our in quarter months in on share. $X.X XX%. the reduced paid We which million based a of per and and of completed share

is to our planned of of and schedule. a Permian been budgeted COX COX tap finalizing COX using company accelerated injection September. the The reservoir for counterparty combination re-pressurized is been in and to on of The EOR and scheduled development and customary will reputable casing we given supply ease drilling, its regard Water both The with the which may project commonly brought with injection. water that timing current turnaround wells as connection. During XX has has a natural COX anthropogenic to to six Riley EOR constraints. slower the well calendar the one After Based wells will company due of impact of available injection conduct end months initiate gas to maintain of installation not chain arrive on calendar online product we the nine disclosed. has in year drilling calendar agreements now estimates, and of project vertical injection and and injection physical such for to and an net procurement, rig XXXX. seven plan been for The during XXXX. anticipate project, one the source, quarter guidance injection of COX economics. the first connection called quarter and project tap reliability The the the and for during is tap, areas pipeline we COX sufficiently which gross project tap supply line infrastructure include months several switch specialty COX with the of to will development vertical X.X has quarter area. potentially or infrastructure nature net to company the quarter, installed, fourth contracted time through of drilled the a XXXX sources gross the and vertical previously of availability, become price. the for has optionality begin product wells COX choice water using our currently this calendar subsequent a the horizontal during logging wells the XXX-acre XXXX, initiating ordered We line anticipate second operations continue our at attractive With COX and

efforts, for anthropogenic creating carbon wider regulations tax investigate same With flexibility the in of being to numerous capture, state incentives monitoring access conjunction and the other sourcing COX, time, with ongoing The Riley potential. possibilities to currently discussed utilization are at changes to anthropogenic potential source a the Permian and installed, COX and with network including company discussions COX tap several At sequestration national counterparties. pipelines, will including Texas the federal levels. we have continues

$XX the conditions believe opportunity We well market continue acceleration possible CCUS by the as on Based EOR the expenditures current our an completions million the the and that over attractive company before during be project, has XXXX. forecast fourth upstream developer, synergistic to to now with that, opportunity closing as with back to a Bobby forecasted itself, quarter of acquisitions for the to Permian invested drilling fiscal as certain business. Riley and participating of core to program, are quarter Separately, our XXXX be fiscal expenditures And with capital call I million. remarks. turn fourth capital a potential approximately $XX of a will

Bobby Riley

operating exceptionally and busy was generated and We flow flow, productive. past paid free closing, dividends. cash cash In our quarter

continue questions it Operator, remains the to grow we've again at you for to that out. you open Our framework laid capital for allocation up within time. your this time today. Thank may objective

Operator

from is of question with first [Operator Dingmann Instructions] And Securities. our line Neal the Truist

Neal Dingmann

on about forward pretty well obviously – Could quarter. By the my you growth? guys, return? you of a with Bobby, flow, thoughts, – even plan more free it little Would excess very paying the just you’re you sort the price. on capital mentioned and strong a and guys like a some capital just that is Can talk morning, for first is Kevin cash something you more question going already free you based you bit ahead. set, of capital would you talk mentioned capital bit cash a our just just it something you just just allocation, nice licensed numbers, about for some sounds Good little flow about, your you Could allocation. nice just had the take but today's very shareholder allocation more? talk dividend, use

Bobby Riley

is did our basically month. grow this statements capital spending capital to The based and our to to that last normal raise that goal activities, expected grow Neal, we which toward believe that our allocation made using the that EOR we of we allow made we've upon XX% growth. EBITDA for dividend. capital does in I laid production go our our out the we're development is roughly the XX%

how don't And it is production loan. exactly and we grow so number our know objective I our much, But have to that that down. internal dividend. But I to both our if say have our what is in

Kevin Riley

the to but are So that. not grow an allocation we growing absolute on looking necessarily percentage, amount,

Neal Dingmann

odd Good in lumpy, of obviously more us four business? Maybe wells. clarification. be got Absolutely. bit – Just traditional you've kind – drilling-wise? and region growth secondly, And in on there? of the about mean, same or on of recent out mix. the to yet, two, saw the Got it two I things. will One, be just kind anticipate activity-wise think just then I'm a just along being things maybe be I could the the plan in you of the kind know we you most And the you was asking quarter? to for talk level the I XQ just just talk just say activity you stay guide two some but saw XXXX that but do operational, Kevin, it. that guide could level same recent about of I not the plan, will know on give calendar should kind for I just we anticipate you quarter?

Kevin Riley

say, are for would or fiscal about talking Unclear. you I so? QX

Neal Dingmann

Kevin. exactly That's right,

Kevin Riley

Yes.

in specifically pay I'd been units. fiscal say the to there'll for lines little have ordered and activity for the we project. which to of material to having funding already addition materials and relates water as front, it up of the and QX, CapEx a which tap, injection So be have the COX to COX for the WAG for Initially procurement COX we're bit of pay more

So, business, EOR it but I as there will line relates saw upstream would our say we is capital ordinary be the in project. fiscal in to going additional spent core what be QX, to for activity-wise with

Neal Dingmann

forward, the Very balance guys this those lastly, good. thoughts talk that, to I about plans? can what sheet. you continue then just any Bobby to great good. nice just you Very going Hedging-wise, around the Kevin? just And that Or or have are think answer change to conservative

Kevin Riley

business but like We We fair right we protected good exposure in continue the going a amount the to have a monitor position upside. we’ve feel pretty to roll got off. which forward, now, things book we're as our hedge also of

to nothing but continue will We layer substantial. on,

Neal Dingmann

Very good. Again, guys. quarter, Thanks nice nice call.

Kevin Riley

you, Thank

Operator

[Operator the next Instructions] question Noel is line Brothers. Your from with Tuohy of Parks

Noel Parks

morning. Good

Bobby Riley

Noel. morning, Good

Noel Parks

a had questions. of I've couple

with something then closer the you're available you we of As point that what's straightforward project end a more or a scale complex? able the take give simple it you're I'm other and COX, how sense project. you thinking talking sense going most timeframe, kind years years long the particularly or what say Can of, get for terms for sort of Are might to have to of complex counterparties. give talking for at single-digit you arrangements be might Just implement? arrange? the be in anthropogenic of where you to mentioned And might something for just or for about potential to five – of large to spectrum a like simplest

Philip Riley

that. industrial the sure. building COX is that's Yes, the region. facilities existing network, where this to Lots region try and different can of miles of some of XX going industrial to An Noel, be you're one is so. example nearby pipeline, in in address a pipeline Philip. facility not simpler of kind types of that nearby a or connection connection I

for definitely yes. is be And I so, The And without specific this get that is ones to works going our objective think idea just those into are years, single examples. everyone. to in something

the federal a the to alluded or right credit, bit we As little the now. fluid mandates release, are the level press in

Congress, You've about new. competing levels or that $X.X being trillion. different talking got two trillion these of bills contemplated They're even $X incentives and for in something

as I people fluid, think remain a So, are those and little watching waiting.

could bit be one so, build, to maybe idea And We industrial day more project, partnering to greenfield. it'll include a a get options there's and there's off. if liked that On I and potentially that's guess speculative even larger of a with clarity something I the greener years bigger facility but there. some think cleaner different something helpful

more and I'd facilities nearby tie are think industrial on going existing I to So, focus the be you pretty into. to quick easy that

Noel Parks

have project, facilities to sufficient going forth? for address going you ramp that capacity something utility or to thanks. you Great, EOR is curious, and you're just install on to substations do with access power your site, the so or And be up as and have

Bobby Riley

at build the Well, time even we with facility. ourselves I on we may But we all we that sufficient to where site this we at and underground the this point look gas believe we're have facilities, injection generate supply. as also out power our infrastructure that power a with ourselves building the standpoint. right to facility some at now some But brought previously the now, had gathering power from

think to that So, we're from standpoint. I good go

Noel Parks

used nearby EOR Is me. COX type the fields your And the that one the just last the similar have for those were that Great. and alternated to projects In projects? that projects, done mostly WAG like method elsewhere? water

Bobby Riley

version migrate that block the used the we're that in common just assist in COX the through. so the most COX of straight contact of area finding it That's Yes. of method the involved. pathway so And San Andres that the additional rock will kind in instead and formation a water, a forms the

common So a practice. that's

Noel Parks

all Thanks. Great. for That's me.

Operator

Capital. Your from next Landstreet with of is line NXL Thomas the question

Thomas Landstreet

you morning, Thank Good gentlemen. my for question. taking

there. two though And aren't So credits that's Congress, not bills the lot there's XXQ even real the right? a of clarity defined, true in

Bobby Riley

we have would They say. new are existing? bills the I saying defined, or Are you in the

Thomas Landstreet

guess ignorance I me any forgive question my and for here. is,

confidence credits. of sequestration And what your opportunity. the model those just wondering great is have opportunity a you deal for obviously in the So with

your or how to they you there medium there? best that there credits done fair instance, the Have somewhat could much have question? case could opportunity and those Is where your that revenues, For others is case, on a we you quantify opportunity? out anything – a maybe have add

Bobby Riley

there. lawyers those are values or Yes. Federal available. The out summaries of have level credit publicly

of for year. to per and – for same the referenced a often permanent EOR, $XX it's $XX example, ton years For $XX in for the couple credit then that sequestration

Thomas Landstreet

$XX please. again, for what

Bobby Riley

Net per ton.

Thomas Landstreet

Okay.

Bobby Riley

COX.

Thomas Landstreet

XX.XX. divide translate it Mcf, by you that To an about to

comes it range. out somewhere $X.XX the So, in

Thomas Landstreet

Okay.

Bobby Riley

we're side good but trying a the it, to economics. ensure to got we've ways few There's that think upstream about

your OpEx. as So, COX a you've component cost of got

Thomas Landstreet

Yes.

Bobby Riley

the other could and you think we're the of on credits what potentially point monetize able to can ways. few is credits. it talking those be with a offset then the about have from about And you US revenue a its side, It be potential CC view to there

of taxpayer on to and ways such, options but or be needs to equity, this We've or currently other tax there's you you the to call pay credit. It's make be another either the don't it. direct partner taxpayer a the there's just be direct and items national way at last talked being to is is get a of for have to monetize level the that saying, credit. pay, one And which pushed financing that, so, discussed to need a taxpayer for a your the about of

Thomas Landstreet

Okay.

Philip Riley

period. One I’ll clarify other credits thing the for a for that XX-year are available you

bit up this day, about can a of COX. feet we've I cubic a XX-year math feet you'll think using like can cubic And you available, project what be a said, little and so, math million multiply And you see to do day, period. talked per using, for those it are amount you implies that you by of XX of

been assuming You times kind ITCs a type point. reasonable but of have and number wind, look also that get solar it years. PTCs, credits any of the extended some over those that of those be at may not extended We're at base case, in

Thomas Landstreet

Okay.

I a Congress. just credits you bills? two And of are do hunt worth might so the And to and the the So, math. of in you got those then the the kind do I XX on – any – that June of nature that of investment, or by then I find two give to you've sense down, them those top of go explanation are of sort get and credits? that did what that's bills the added Can tax way, gravy can so exciting

Philip Riley

more I'd of is this. of industry trillion disservice of those general they're the what's some key are a infrastructure related, some increase by $X.X working that But credit the and is all in I'd in potentially include if type some summarize is say an it components do social I'll looking worth in that say Yes, to general is I CCUS it in such. and for I the What more guess amounts. what spending try of are

just whether say $XX, ton, some the that but amount. $XX, not So one. some That's it amount, an be $XX, to increasing a

would Another pay. be direct one

Thomas Landstreet

Okay.

Philip Riley

there's just And then effectively. talked there improvements tax number Like looking just for we with other are a about credits. the of people measures that

Thomas Landstreet

Okay. very for much thank All that. And right. you

Philip Riley

for you question. your thank Yes,

Operator

do You Capital. with [Operator Instructions] question from follow-up Thomas line NXL the Landstreet have of a

Thomas Landstreet

Hey, it's me again.

Sorry. new way. by owner you. relatively the And I'm a Thank

invest their that there cetera. investors able Just – lot then a carbon, are of this you when attention you've curious attract but to to what sequester may got obviously hydrocarbons, out low are unfortunately, ESG in et

So, I'm curious is those restricted one, that motivation? you opportunity don't the investors to of of about thoughts that: new kind your a investing Two, are along curious what any feedback is of investors about type the to are part that if are getting Just there your any interest? mind. set from lines attract ESG what of say you

Philip Riley

there. Yes, got sure. we've ideas couple strategies general, In and of a

we're We to a gas low low-cost and First ourselves and for And position supply be supply there. provider ask there an on of foremost, want our decades believe And to need hydrocarbons to oil planet company. the we is to going the come. is goal curve.

emissions, such. We’re a time, a small clearly player, lower but same the are across countries obviously be on asking the for At want to lower the COX global planet and we supplier. low-cost the scale,

a asking Middle helps time, produce asked more barrel, that maybe those we oil. We're trying it's you here, if do a the potentially commodity you Biden to a can but the same in a one supplier a And it's and a carbon OPAC so, lower in Well, it's the day can at we he a bill, potentially carbon where two somehow East to as can product. create talking if right of of way barrel oil, hydrocarbons a product low barrel, live – referred a can produce but oil. negotiating right? to a about that maybe be more world if maybe blue stimulus only just he's needs. is carbon lot that So, cleaner thing, differentiated to we differentiating do sometimes green not think the pump no a doing President still then world you to together, link

Thomas Landstreet

sorry, So – is I there that apologize. anything

Philip Riley

of view capture We kind That's the around see clearly some of a of carbon excitement there. of initiatives. a high-level do lot

and pipeline you as in And and subsurface qualities, because what that sometimes capture it love so referring forth. Well, to world's there's not the overlook natural of is statistics So, about level our lot great suggest networks, such. I and out particular compliment sink. value. talk empty of high call think, our we you're creating U.S. EUR some geologic because, side capture, a the sink. to a need believe economic well is the proposition the positioned thirds At U.S. that that's just see a any you're carbon but when Yes, of fact believe economic the we there really properties create a some we harder the that that storage. of observers two the of holds a a saline it, the to People that of formations,

interesting because reliant You're putting can the in the totally be just subsidy. EUR We a you are that, not space. doing molecules on you're think the

economic that. EUR gas target To open creating finish an but appreciate asked are to and up to about and and I going try also making. exceptions ESG you we side. like answer, company, typically others do make the and long groups They think certain not did but the certainly You're investors. are the to efforts oil We're this on value sorry, I

those to folks. so, with And we'll to be friendly we obviously can what try do

Thomas Landstreet

there and those assume could working I going COX. is give color you're I to research of place how or there then those use Can how are [indiscernible] them couple finally, I a that look of go are any little doing, more seeking that some, a a And advanced. you Okay. on me are lab? which would companies what some is of course know are that are other do to

Bobby Riley

They endeavor, Channel. the Gulf different it the it for sequestration handful. challenging is including talked they're Yes, legacy on are one under EUR side, more sequestration, business talking And are us noble that's now. air Wasson the Oxy bits has projects field. be Ship this Gulf one They've this, of years is forms a a ExxonMobil long on can a like of of the permitted a with economics. I look I doing more I but And that Houston those anthropogenic, the there trying the other direct versus has oil in of across they with probably the Denbury their bit fields the said, Coast, focused, then EOR less capture. this doing focused an That's been couple about is That's about for Field. on analog for guess of directly Coast. been third last to been they and the fence companies line about couple talking a you're with biggest time. a that the squeeze are type the usually older to developed out trying mentioned in

Thomas Landstreet

Yes, okay. good That's comparable. a

what looking appreciate I that's was really I that. for. Okay,

Bobby Riley

for questions. Thanks the welcome. You're

Thomas Landstreet

Sure.

Operator

Instructions] [Operator

Operator

today's disconnect questions. in now further call, for no you conference lines. participating are there time that and Thank your this At ask you

Riley Exploration Permian (REPX) 14 Aug 212021 Q3 Earnings call transcript