REPX - Earnings call transcript Q4 2021 | Riley Exploration Permian, Inc.

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Operator

Good morning. My name is Lilian and I will be your conference operator today. At this time, I would like to welcome everyone to Riley Permian Fiscal Fourth Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator CFO. Riley, Philip

may begin your conference. You

Philip Riley

you fiscal fourth good to conference morning our to Welcome everyone. quarter Thank call. and and year full

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

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

results today information differ SEC risk Additional statement be on the factors CEO; Chairman on call to call full myself, our The available Riley, Participating Bobby. Strategy. EVP that and President; about company’s could the the on in cause Kevin Riley’s statements can presentation found to Riley, will are in and CFO Philip and over I forward-looking cautionary is of investor filings. our the Riley’s Bobby turn Riley, now website.

Bobby Riley

you, joining call. us thank today you Philip. for the and on Good Thank morning

year. began February, completed capital reporting We’re was the and that our strong that operational metrics in fourth report our with Riley guidance another pleased now progress and completed for EOR fiscal eventful our project Permian we this and Tengasco year fiscal an year. July, in to in fiscal on we’re which merger It raised the fall we met quarter

team shortly operating from we You of and across our will number record metrics. hear that reported results financial a

have operations same dividends. for the growth, We encouraged from we growth. prefers that our warranted significant time, to of gas flow. growth achieved the At scale, shareholders cost believe oil cash form past growth improve by achieved our the market growth flow investor this of We structure of back allocating been in companies and while cash year. support while our to recognize and proud reinvestment is organic the larger We we we the not pursue continued are many over

including XXXX. progress Finally, optimistic storage we to during have on projects continued in projects, property we’re first our in our initiating project our developing for permanent CCUS efforts and

meaningful advisors. providers and efforts COX diligence dil regulatory equipment and source, from discussions having capture We’re with with -- counterparties

We are economic attractive results. will the I with regulatory returns that for construct the levels. turn regulations the Kevin commercial review state arrangements improvement to operational over seeking provide federal call Riley to environment in should to change at potential or now current

Kevin Riley

Thank you, Bobby, everyone. and to morning good

plan operational XXXX full for ended I mentioned, September September quarter Bobby review XX, XX, fourth and for results XXXX. the to the As year ended fiscal

our allow the As last continued of our previously of mentioned on assets call, for the position financial company, capital maintaining discipline. with while the growth quality strong combined

year and To proved performance I results by for to review Our our results fourth metrics. execution the the for XXXX during will be financial numerous company’s quarter fiscal best XX, fiscal XXXX. across fiscal ending operational September year the full start, followed fiscal year,

oil. day, The MMBoe, approved developed which year-over-year MMBoe. XX% increased Associates. to increased year, of approved the For XX.X completion and our to an net increase the we to MMBoe, investing towards in to invested and MMBoe an We other capital, just expenditures which Netherland, XXXX, X% doing wells workovers was crude by XX% online same and Boe which as of horizontal compared total for finished consisted compared third-party XX% reserves gross costs XX.X by the the We production which increase XX% & total XXX our is the of total to year-over-year net We XXXX. was reserves XX.X capital Sewell reduced reserves XX.X issued XX year, and report for million, $XX.X drilling operating of our lease by during capitalized by of cash remaining. XX% per period our as company year, increase by X.X per MBoe to XX% we brought XX full

XX% our for net to to three XXth September MBoe for by total fourth same X% per X.X XXXX. Now or quarter quarter-over-quarter the quarter ending September to the in XX, increased months We ended results. day third as by XXXX production equivalent XXXX compared our period compared our

including for and of team’s well costs, with vary company Philip to October our During results. Since do of though quarter-to-quarter, relating the with to Company the reduced X.X capital injection Boe workovers. compared agreement purchase of agreement continued company of Kinder I Morgan million. still as financial the has we delivery on an $X.XX vertical installed of an injection agreements The wells calendar wells. being Riley from period and program. XXXX, and well has gross control to which will the the establishment XXXX. Company our cost on and drilled the from as effort XXXX, COX by testament re-pressurize of Pipeline project X, total increased as as the progress lines. installation connection its executed XQ line COX COX same the a and to to to and lease is $XX the the summer improvement able benefit review over COX. in cost operating horizontal planned the invested XXXX commenced cash Cortez to turn for as to acknowledge in lease quarter, currently of relating COX reservoir point operating including in during anticipate will of XXXX, has sufficiently the two for initiate now We the the Also, We tap sale our EOR company The quarter-over-quarter. impact has to water by scale, Permian, six of in on six company water Riley October continue a may brought expenditures net costs We injection for XX% or X% been call until per pilot the six

Philip Riley

of with an limit efficient to be a to smaller metrics. in financial you, everyone’s to results Thank try aim I’ll instead all time, Today number and stating the standard of highlight Kevin. effort

reporting net fourth quarter, income the we For million. $XX.X of are

year, million For reported approximately and cash growth Most approximately with Switching quarter million, On loss million, flow. income operating our cash million driven EBITDAX largest $XX $XX which year non-GAAP adjusted $XX.X million the flow, for $X.X our production. we flow for about net the from in ladder $XX $XX operations. to here representing overall of the this the These of the year, nearly our only loss resemble operating of were measures, million free losses. amounts flow of derivatives million an we with driver closely $XX of $XX.X of had and we and realized the million higher of cash the for XX% quarter was cash generated year. by fiscal

prices this Our Index year, of up revenue is materially sales oil course. largely oil were and driven by

period owing oil year but largely the that our price price for the only reducing the to we fiscal was year-over-year. year-over-year XX% up For derivatives, year, were is Including derivatives, our X%, year, also up impact. this not oil hedged realized last fact realized effect of only

price was the quarter $XX For our barrel. recent realized

our be largely midpoint XXXX, this disclosed. fiscal fourth of oil will For approximately production calendar the and current at hedged XX% guidance still quarter quarter first the

derivatives XXXX, position to quarter, our XXXX. bit by calendar in restructure year. XX,XXX to per we This this calendar more chose allowing X% XXXX to calendar some moving about X% hedges, exposure barrels For reduced oil a per month

a Final when materially anticipated third current a quarter oil and down on lower about hedge So many quarters hedging operating look again allowing in quarter using current about investors in fourth while -- for levels provides which volumes when far for cash down we more And volumes is XX% guidance. that quarter cost guidance. the with and quarter first third want. we potential are for the the leads hedge here XXXX our anticipate calendar upside collar, levels, today Average about of exposure to XX% at the about you current above wider in quarters, volumes XX% protection calendar and which positions. quarter, current to drop and percentage where are XX% calendar volumes know we often levels, is price midpoint forecasted our combined of collars the also derivatives midpoint forecasted at second more from downside note about growth

now to costs operating for that. Kevin repeat won’t Moving I the some on so quarter. discussed LOEs,

that note here a reporting matter changed make one there. we Just slight

ad to per with be we taxes that’s in past. We’re On that now the one G&A, reported $X.XX attribute are more excluding services, contract the consistent we the of peers measure is non-GAAP million excluding for insurance production other to valorem anticipated the change effects or effort made taxes. services, reporting. from share-based $X.X as number aligned with defined and than from expenses, quarter This in LLP and we of an last compensation the that we quarter from an average more benefiting grouped professional G&A is cash now higher was matters. for cash revenues We Boe. categories, Those including and

did of amortization expense non-cash alluded expense or materialize of Total Interest $X.XX dollars not believe financing fiscal this carbon and may as opportunities costs. the fiscal quarter which of our efforts is earlier, financing includes amortization time now per interest fourth costs. We’re more as and initiatives, for year. such XX% $XXX,XXX amounts Boe, advisory for to deferred income spending capture actionable decrease from provided statement Bobby previously this into a which quarter. we deferred was in third include Guidance more

After $XXX,XXX hedged of flows losses of you $XX.XX, have on believe statement for a add amortization you cash cash When had price for we quarter, total you the costs the on analysis other compare get Based and was the derivative ad of cash a margins taxes, presented valorem and Boe fourth in taxes you’ll various get for and and then for deferred unhedged $XX.XX these highest both of to we costs just realized $XX.XX on a before $XX.XX. Boe Permian and that release, average earnings per we of cash among derivatives. cash the fiscal discussed, margin financing included then margin realized see a quarter. the over calculations margins of companies, quarter production per compile As an $XX basis. of of our

our see and analysis for comparison. this presentation can You

and cash Moving allocation. flow to flow on cash

used for with CapEx, excess pay allocated the For flow debt down. to year XX% of dividends, operating we to X% cash XX%

million fiscal quarter we the fiscal in year expenditures or fourth drilling $XX million during XXXX. completions and quarter cash $XX.X the had capital For for

then of Within some $X.XX property the per capital related investments. million have including additions share, our to office, availability million points following we to here, $XX, was we our had to We turn At in of our about borrowing million other, $X trucks small field in new field our credit it dividend and back was of million which million facility, other on in as guidance. and Xth, increase to a raised base December I’ll total. October, $XXX XX% forward $X.X Kevin Final $X $XX point, equipment in XX% workovers. about drawn a October. about discuss this and And

Kevin Riley

over and activity accrued market being XX million program. drilling total XXXX to cash operated day day average production I quarter per to per day. $XX Boe around million of as We land We expenditures company’s The XXXX to EOR with anticipated $X.XX operated. on per the This correspond fiscal to level approximately growth this growth recently barrels to Boe to XXXX Based infrastructure, average $X includes compensation XX XX% conditions, accrued XXXX believe our X.XXXX levels. fiscal fiscal X.XXXX may quarter expenditures Boe the during current expense. of approximately net fiscal due forecasts for to company year which attainable level XX% quarter. approximately is and investment the and remarks. the now non-operated, first Thank amounts the in year equivalent to full production XXXX Company X.XXXX wells the forecasts of million. and oil forecasts $XX total barrels acquisitions X.XXXX per $XX year give additions now total plan PDP XX% development I production of coming with share-based workovers, and of to of its before unit-based gross interests, full low XXXX to Boe, fiscal base declined call to in Boe, capital XX.X investments which to for Riley XXXX first XXX per excluding to year company full will LOE Boe first day, existing and turn working XXX fiscal million, acquisitions G&A commenced be before wells forecasts completion, quarter per per you, per over $XX production, capital to expenses and year. the program. well minor drill year company the approximately Philip. our to estimates net Bobby gross to guidance to company The and year for for current capital capital as will Permian XX.X closing

Bobby Riley

summary, prior we reserves, In excellent Kevin. year free fiscal delivered the and solid dividends. the an you, we and Thank flow, quarter production, company overall flow to grew cash year. operating Comparing this another cash year, believe

year shared end earlier the results on with capital Our were we consistent in year. allocation the framework

today. forecasting you year you and Operator, Thank your up again time for CCUS projects. growth about and we’re may production another material our we’re open now for EOR your questions. forward, of Looking it for support excited and

Operator

Please ahead. from Dingmann question first Your from Securities. go Truist Instructions] [Operator you. comes Thank Neal

open. line Your is

Jordan Levy

Really for your longer around I terms I should discussed for progress all. the wanted timing of to I think we kind project Good to coming steps comments a to vertical lined related if I progressing your the versus see are EOR could the water on get and how you you morning you of have how on the the get drilled remarks your that from next Jordan in things project? Nice more agreement that start the there both the and thoughts EOR quarter. the view have and It’s and with and talked the to been injection and Neal. see COX near-term wanted prepared six term nice to perspective that up pipelines. project. Levy out on injections expectations

Bobby Riley

Riley. Okay. I’ll Bobby is question. This take that

phase new injection start intend XXXX. of re-pressuring in making we once year as initial start reservoir for are the and two testing the QX to effect lines the or injection a currently several wells I presentation, and six The we get we’re pressure reasons. final we We better fiscal drilling early is place kind tie-ins think to as for under of water the as the can we start the of One indicated of ground. COX injection months have plan that we that in wellhead do completed our QX injection. water three where or just the have in to so to

and for ahead it’s how But, overall, ultimate of far we then is just can recovery the profiles continue injectivity the bit to a other construction tap maximize The the to coming in scrape schedule, or from analyze schedule the project. water from as and as Kinder say is in on the the and underway I’d getting the ground Morgan.

So that felt at overall, we about we say, where not behind your hope being question. I and are good answered would But I all. very

Jordan Levy

first initiatives. with to that Yeah. events way. sequestration all maybe And for and next other the that project and Curious what venture been new around You the seems Absolutely. my to on done there, timeline so initiating been how of move you has that a have discussing get certainly question, could sometime this level thing? optimism carbon It going high capture the Curious what mentioned needs like? process far next that earlier, look sort for year.

Philip Riley

This Yeah. Philip is Thanks Riley. Jordan.

As and equipment also with we hosts with the and in release, guys we’re press regulatory noted middle, the different in parties, in and the such. this various the working advisors source remarks makers themselves, beginning

a multivariable solve a trying -- decision to equation, tree branches. different we’re is bit do We’re what of a

at get profound if this a seen contingent an we’ve have to what we it’s recently, accurate, comes most up example to impact there new of in not new intermediary structure. law as the you could least direct include while XXQ we’re Washington, debated being need would it it law, you to the And do where necessarily tax don’t credit. the world, monetize trying that We’re just that in potential quick is, way acknowledging on any where what aspect that a out pay help credit. in to an upon completely a that’s And a

future we and would another having being that. significant For anticipate way cash the foreseeable tax to don’t exposure so we monetize want

use You tax can equity.

perhaps a and someone with can different the credit that a else may fee-for-service have want themselves. do than tax model You

if direct that, direct credit just example you that’s have that. the you where, pay, so And do if -- that then don’t one eliminates have

providers, prices across working are we’re as to equipment So how can this be just to and are -- return constructive But we’d having now think that up careful of timing. pushing you guidance happy where to we to be you trying imagine, with industry. constraints many with supply the where I about going any just outcomes. the got I reinforced we chain not areas the optimize that give specific of on we’re talks right

trying costs where forward keep sharing us. still look soon. look to project But those We’re manageable we information for to more attractive to

Jordan Levy

of Maybe curious makes in, talk could a to both that the be appears looks on around sense. know and around sneak side, pretty one to if XX that XQ the and more if million to that that I how on and side, activity XXXX lot could $XX that I specifics talked which wells. your thing? just of maybe some to the cadence with XQ the million That kind But sort loaded more could a D&C get and just I’m perspective assumptions from of gross, XX.X guidance, you $XX some into of net EOR you

Philip Riley

perspective? a You cadence say from

Jordan Levy

Yes, sir.

Philip Riley

Okay.

Sorry.

said development pick from at laid it point, don’t earlier, of commence we have perspective XXXX September we’ll that program. commenced, down drilled and up rig So end back the and and that four the started wells, We I drilling. February, our like till at D&C the

the place. in wells injection drilled pick as capital first EOR for back and of we’ll capital surface up that Q we’ve most being two. in wells, think the started infrastructure spent the I more lines and and being then in we’ve drill an laying the perspective, is the injection six From well, remaining operated June put

So, the some brought then, I year, anticipated the work one non-op there’s already during anticipate spring. been online, the others guess, till and which don’t we has of

Jordan Levy

That and Got my quarter answers questions all guys. you. nice

Operator

White comes from John from next ROTH Your go question Please Capital. ahead.

is line Your open.

John White

lot Good on you’d impressive. talk if in market, increases across new morning, any other you those eight, comments are price your seeing I and spectrum? are wonder could add guys, seeing the and liked your frac good you of the presentation, and any reserves, were slide In very you about to complete congratulations. number I the report. tightness, those want numbers any costs drilling A

Kevin Riley

This question. that John. I’ll Absolutely. Kevin. address is

So in new to have the XXXX and for of lined we crews budgets fortunately, tie calendar as starting year. a the the that out do have frac the harder being tighter booked the market, it lot is of service providers are getting with companies in But up. up most for XXXX, up especially those

more rig increases the So this slight nothing between that delay seeing cost we’re -- or -- now much our four to QX, wells but previous bringing and drills, than and say, drilled see anticipating weeks not date. quarter, or new starting three they’ve all release from, weeks completion there been all From so we on we’re current in perspective, completed now substantial. in QX, wasn’t online, they’re fiscal fiscal

per this foot fiscal depth remaining wells we’re look on you seeing by If D&C X% total maybe up year. and a basis, for between the is XX% measured go cost per foot

John White

are… Okay. Well, you

Kevin Riley

that below that is levels a at in peak seen level past. we’ve the remains the Still

John White

[ph] it XX, calls, the September what Yeah. their pass said consistent I of will That’s you. on Appreciate. pretty Thank on. course. Bio with

Kevin Riley

and back the June. From to we of bought pre-buy steel able most that and for whole perspective, program we the drill were in casing tubulars a

continued bit So we’re increases. little from protected price a

John White

very it Well, nice nice and a quarter move. Nice pass on. I’ll -- again, quarter

Kevin Riley

you. Thank

Operator

from question Parks next [Operator Brothers. go ahead. Your Please Tuohy comes from Instructions] Noel

Your is open. line

Noel Parks

Hello.

Bobby Riley

Noel. morning, Good

Noel Parks

ingredients quick little some made a little you had down what could about quarter, in one? Just on into you questions, drill LOE bit a of bit the that may talk of more just few progress the the you a

Bobby Riley

and a was fluctuate that, why workover that’s driver. that’s like in had primary quarter just quarter-to-quarter we less of the pumps LOE the the previously and -- of based the timing function just that out But they during just going could workover noted driver kind Largest expenses. put activity, not was and upon quarter the

Noel Parks

around forward what curve were there’s able like, you and Great. either am I what mentioned And you to you great using liquidity don’t going of looking the those wider whether be I a in look start thinking to have enough do want. would to sense that collars especially

So, any extra on that be great? would detail

Philip Riley

is swaps This Yeah. Hi, of use is the can Noel. there collars hedging. Philip. that some meant What I for instead of we

You on of the a With price. call straddle familiar creating in basically so and premium that higher volatility, you and the advantage options around basically put increased option in the got collar you with embedded the can you’re take current there. the

the spread a we’ve those the an you instead spread. a price a kind above example spread you exposure, your maybe same stay could even at hybrid and or collar recent downside so just $XX got ability spot protecting $XX $XX And below seen above some say, operating is $XX that while far you’ve price, gives $XX time levels, of there of At that’s do around our costs. foot where current maybe the some the with a

Noel Parks

then attractive. the that balance is Right. floor still And pretty in good $XX sheet shape, Right.

Philip Riley

we see Right. That’s it. Right. how

Noel Parks

thing I the refresh my prices That’s think agreement going a sort will that about Kinder with memory, Morgan, Got of and sale just of for be a to one it. COX pricing. is price what oil is to And is going purchase tied and being COX you Got forward? difficult that just lot that it. can fluctuate

Kevin Riley

we have to three-year neighborhood Yeah. off oil But got are X% Sure. of WTI. tied the a It about and It’s price. in small with term. a That’s a starting can. amount there a it’s we floor. It’s

Noel Parks

Okay.

you of WTI? kind did what so say And

Kevin Riley

X.X. X,

Noel Parks

it. Got

Kevin Riley

years. for And three

Noel Parks

Great. I have. all That’s Okay.

Operator

Please Morris Growth. question next Walter go from comes The from Baraboo ahead.

open. is line Your

Walter Morris

solid the finish strong fiscal to to XXXX. and year and projections gentleman Excellent

you developed give reserves strip? John would reserve have up us up number impressive using As a those NAV XX%. White growth XX% and current indicated, Can for prove rough reserves

Philip Riley

will to tomorrow Philip afternoon. I you filed guess, XX-K, which I’d Riley. is point our be Yeah. This

in very back there. numbers Netherland, there, we’ll Sewell have of the the Towards

outcome. to happy Ask you but that, the patient hope be for with you’re

Walter Morris

Okay. Thank you, Philip.

Operator

further back in for to I Bobby queue. Bobby have any you turn Riley Mr. over have questions We remarks? closing any remarks. Riley, do no closing the call

Bobby Riley

the a today in lot, we’ll No. time That’s just dialing I we’re ship for the and guys. going it. appreciate way Thanks everybody’s going. keep

Operator

today’s for call. your you Thank concludes conference participation. This

now You may disconnect.

Riley Exploration Permian (REPX) 14 Dec 212021 Q4 Earnings call transcript