Riley Exploration Permian, Inc. · AMEX:REPX
Riley Exploration Permian — Q2 2021 Earnings Presentation
33 slides from Riley Exploration Permian's earnings presentation, May 11, 2021
Slide 1: Fiscal Second Quarter 2021 Operations and Financial Update
Fiscal Second Quarter 2021 Operations and Financial Update MAY 2021
Slide 2: Riley Permian at a Glance
Riley Permian at a Glance • New breed of small-cap E&P outperforming large- caps in operating and financial metrics • Low base-decline assets enable less capital- intensive reinvestment for maintenance and growth • Shareholder-focused capital allocation framework includes growing within moderate rei
Slide 3: Successful Completion of Reverse Merger
Successful Completion of Reverse Merger • Merger completed February 26, 2021; represented public debut for REP LLC Riley Exploration – Tengasco, Inc. • Management constituted primarily from REP LLC Permian LLC (“TGC”) (“REP LLC”) • New board with representation of 1 director from • Formed in 2016; •
Slide 4: Delivering First Quartile Performance
Delivering First Quartile Performance Comparing to E&Ps and Integrated Oils of All Sizes EBITDAX Margin Drillbit F&D Recycle Ratio 63 % $4.16 5.1x Proved R/P Yrs. Dividend Yield Net Leverage 22 3.3 % 1.2x EBITDAX margin based on LTM period through 3/31/21. Includes realized derivatives gains/losses
Slide 5: Capital Allocation Framework
Capital Allocation Framework Riley’s corporate objective is to prudently grow reserves, cash flow per share and dividends per share within the limits of capital allocation discipline EBITDAX Disciplined Allocation: Reinvestment for Growth ~65-70% Continued Focus on Dividends ~20-25% Interest / Debt
Slide 6: Competitive Benchmarking on Capital Allocation
Competitive Benchmarking on Capital Allocation Capex Dividends Debt Service • Many shale-focused • Nearly 70% of U.S. E&Ps / • The average U.S. E&P has companies have higher Integrated Oils are not 3.4x net debt leverage decline assets, requiring a paying a dividend and 40% net debt-to-TEV faster re
Slide 7: Riley's Dividend Information
Riley’s Dividend Information 10 consecutive quarters of returning cash to our shareholders Estimated Paid or Declared Absolute Dividend as a % of Adj. EBITDAX The payment of a regular $1.01 quarterly dividend has long $0.90 been a priority for Riley Permian, dating back to its predecessor entity as
Slide 8: Quote from Bobby Riley on asset base and dividend
“ Our solid asset base, strong balance sheet and manageable production profile supports our ability to generate free cash flow to maintain our quarterly dividend.” – Bobby Riley, Chairman & CEO Future dividends are subject to approval by the board of directors. 8
Slide 9: Committed to ESG Engagement
Committed to ESG Engagement Environmental Social Governance Energy transition viewed as an opportunity for Promoting a values-based culture Prioritizing long-term corporate sustainability engagement and new ventures, evidenced by and creating value for shareholders CCUS and ACO2 initiatives
Slide 10: Asset Overview
aN RILEY | PERMIAN Asset Overview
Slide 11: Overview of Conventional, Non-Shale Assets
Overview of Conventional, Non-Shale Assets • The San Andres’ moderate depth generally leads to lower drilling costs compared many of the Permian shale plays, including the Wolfcamp • The San Andres reservoirs have excellent natural permeability and porosity, which allows large volumes of fluids to m
Slide 12: Champions Asset is an Extension of a Giant Field
Champions Asset is an Extension of a Giant Field Conventional assets provide for low base-decline and low capital intensity Among the lowest finding & development costs for U.S. oil Platang Field reserves (“Champions”) • Riley’s core asset, “Champions” (part of the Platang Field) is a Multi-ye
Slide 13: Illustrative Well Characteristics for Riley Permian vs. Permian Shale
Illustrative Well Characteristics for Riley Permian vs. Permian Shale Oil Production and Decline Profiles Cumulative Oil Production Illustrative Well Drilling & (2018 Vintage) (2018 Vintages) Completion Cost, $MM 120% 250 Riley Permian Permian Shale Riley Permian Permian Shale 6.0 100% 200 Cumulativ
Slide 14: Reserves Summary (as of 9/30/20)
Reserves Summary (as of 9/30/20) • Proved reserves grew at a cumulative annual growth rate of nearly 60% from 2017 through 2020 3-Year Avg. Reserve and Capital Cost Metrics Total F&D Costs(2), $/Boe $4.76 • Grew reserves modestly by 4% or by 2MMBoe from 2019 to 2020, despite the extreme market chall
Slide 15: New Ventures: EOR and CCUS
New Ventures EOR and CCUS 15
Slide 16: Strategic Rationale for Entry into EOR and CCUS
Strategic Rationale for Entry into EOR and CCUS Enhanced Oil Carbon Capture, Utilization Recovery (EOR) and Sequestration (CCUS) • Extensive modeling and adjacent analog • International calls for lowering emissions operations provide a high degree of with an emphasis on carbon and CO2 confidence in
Slide 17: Ideal Candidate for EOR and CCUS Development
Ideal Candidate for EOR and CCUS Development • Riley’s asset is directly adjacent to several of the largest Select EOR Fields Adjacent to Riley Permian and most successful EOR projects in the U.S., including and CO2 Pipeline Network the Wasson Field, with individual units operated by some Co2 Pipeli
Slide 18: CCUS Process Overview
CCUS Process Overview Source & Capture Transport Use & Sequestration C02 Injection Well Riley Permian’s Focusing on anthropogenic sources Recycled C02 Pipelines Source Initial Focus removes existing CO2 from the Compression needed C02 atmosphere, meeting societal goals to 1500-2100 psi before C02 Re
Slide 19: Snapshot of Riley's EOR Pilot Project
Snapshot of Riley’s EOR Pilot Project • 960-acre unit will ultimately consist of 5 horizontal producers and up to 48 vertical injection wells Initial 960-Acre EOR Pilot Unit Unit • Initial permits in place • 3 wells already drilled and producing – 1 since May 2018 and 2 since May 2019 – with combine
Slide 20: Updated Results and Guidance
Updated Results and Guidance Results through March 31, 2021 [ insert footnotes here ] 20
Slide 21: FQ2 2021 Operations and Financial Highlights
FQ2 2021 Operations and Financial Highlights FQ2 2021 (3 Months) FY21 YTD (6 Months) • Production on target and 9% over prior 1/1/21 - 3/31/21 10/1/21 - 3/31/21 quarter despite two major storms • 50% of Adjusted EBITDAX full-year # of Hz. Wells Drilled & Completed 3 Gross / 2.4 Net 5 Gross / 2.5 Net
Slide 22: Gas Capacity and Storm Impacts on Production
Gas Capacity and Storm Impacts on Production Impacts of Increased Capacity on Gas Production and Corresponding Reduction in Flaring, Oct-20 through Mar-21 15,000 Flare Gas Sales Gas • Decreased flaring by 35% Q/Q due to increased pipeline 12,000 capacity as a result of midstream capacity improvement
Slide 23: Cash Margins and Operating Costs
Cash Margins and Operating Costs LOE Production Tax G&A (Cash) Interest Expense Cash Operating Margin $50.00 $45.64 11% improvement in Cash Margin Q-o-Q on account of higher-realized $45.00 Realized Price prices, partially offset by higher LOE and production taxes $40.00 $38.61 $39.52 Stable debt le
Slide 24: Updated Public Guidance for Fiscal Year 2021
Updated Public Guidance for Fiscal Year 2021 (Ending 9/30/21) Ne Delivering on Capital Previous Guidance Updated Guidance Variance and Notes Allocation Framework # of Hz. Wells Drilled & Completed 12 Gross / 9 Net 15 Gross / 10 Net 3 Additional non-op wells # of Hz. DUCs Completed 5 Gross / 4.7 Net
Slide 25: FY21 Free Cash Flow Sensitivity to Oil Prices
FY21 Free Cash Flow Sensitivity to Oil Prices • Limited forecasted variability in FY21 Dividend Debt Reduction FCF across a wide range of oil prices, owing to (i) 50% of fiscal year 30 completed as of March 31, and (ii) forecasted production for the remainder of FY21 is ~85% hedged Forecasted FCF, $
Slide 26: Appendix
Appendix [ insert footnotes here ] 26
Slide 27: Leadership Team
Leadership Team Bobby Riley, Chief Executive Officer and Chairman of the Board Mr. Riley was appointed as the Chairman of REP’s board of managers, President and Chief Executive Officer in June 2016. Mr. Riley also served as the Chief Executive Officer of REG from when it was founded in 2012 to May 1
Slide 28: Leadership Team (Cont'd.)
Leadership Team (Cont’d.) Corey Riley, Executive Vice President of Business Intelligence Mr. Riley joined REP in April of 2019 as Executive Vice President of Business Intelligence and is responsible for the strategies and technologies used by the organization to collect, integrate and analyze busine
Slide 29: Board of Directors
Board of Directors Bobby Riley (see previous slide) Mike Rugen (see previous slide) Brent Arriaga Mr. Arriaga is the Corporate Controller of Helix Energy Solutions Group, Inc., an offshore energy service company. Mr. Arriaga has over 20 years of experience in finance and accounting in the energy and
Slide 30: Commodity Hedging Information (Calendar Quarters Shown)
Commodity Hedging Information (Calendar Quarters Shown) Crude Oil Swaps Crude Oil Basis Swaps Natural Gas Swaps $/Bbl (Discount)/ $/MMBtu (Discount)/ Period Volume (Bbls) $/Bbl (1)(3) Period Volume (Bbls) Period Volume (MMBtu) Premium (1)(3) Premium (2)(3) Q2’21 435,000 $0.40 Q2’21 450,000 $2.97 Q2’
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBITDAX and Adjusted EBITDAX REPX defines “EBITDAX” as net income (loss) adjusted for certain cash and non-cash items, including depreciation, depletion, amortization and accretion, or DD&A, impairment of long-lived assets, provision for the carrying value of assets, explora
Slide 32: Non-GAAP Reconciliations (Cont'd.)
Non-GAAP Reconciliations (Cont’d.) Free Cash Flow REPX defines “Free Cash Flow” as Cash Flow from Operations less cash capital expenditures, incurred or committed, net. REPX believes that Free Cash Flow, which measures our additional cash from our business operations after capital spent or committed
Slide 33: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements This presentation contains projections and other forward-looking statements within the meaning of federal securities laws. These projections and statements reflect Riley Exploration Permian, Inc.’s (“Riley Permian”) current views with respect to
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