Riley Exploration Permian, Inc.

Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the Riley Exploration Permian Inc. fourth quarter and full year 2025 earnings release and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Philip Riley, Chief Financial Officer. Please go ahead.

Good morning. Welcome to our conference call covering our fourth quarter 2025 and full year 2025 results. I'm Philip Riley, CFO. Joining me today are Bobby Riley, Chairman and CEO, and John Suter, COO. Yesterday, we published a variety of materials which can be found on our website under the Investors section. These materials in today's conference call contain certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. We'll also reference certain non-GAAP measures. The reconciliations to the appropriate GAAP measures can be found in our supplemental disclosure on our website. I'll now turn the call over to Bobby.

Thank you, Philip. 2025 was a transformation year for Riley Permian, and we look forward to discussing our fourth quarter results and our 2026 plan this morning. Over the course of the year, we made significant progress across several strategic initiatives, positioning us for long-term value creation. Through our Silverback acquisition, which closed in July, we enhanced depth and duration of our undeveloped inventory in our portfolio. Combined with our previous acquisitions in New Mexico and our legacy champions position, we have seven to eight years of high cash on cash return undeveloped inventory. In December, we sold our interest in our New Mexico midstream project to Targa, a best-in-class Fortune 500 midstream infrastructure company with a premier integrated asset network for $123 million in cash plus $60 billion in future potential earnouts. The project will provide flow assurance for our New Mexico gas production and enable us more robust development of our New Mexico assets as originally intended. This transaction eliminates all liabilities and future construction costs associated with the project, allowing us to focus more capital into the drill bit and less into infrastructure. The project is underway, and Target expects the project to be operational in the second half of 2026. We reduced our debt by $120 million during the fourth quarter. reinforcing our financial flexibility, and positioning the company to accelerate development in 2026. The disciplined groundwork laid in 2025, portfolio expansion, infrastructure build-out, and balance sheet improvement, sets the stage for more active and value-enhancing development program in 2026 and the years ahead. We authorized a stock repurchase program of up to $100 million of currently outstanding shares of the company's common stock and began repurchasing outstanding shares in January of this year. We repurchased approximately 152,000 shares at a weighted average price of $26.54. The decision for accelerated growth is not in response to the recent increase in oil price levels. but rather the results of Riley Permian's multi-year positioning and our long-term view on value creation. For 2026, we forecast over 20% year-over-year oil volume growth. While we are excited about this growth potential, we will remain flexible and ready to moderate activity and spend appropriately should an oil price environment deteriorate. I would like to thank our entire team for the success and transformation we realized in 2025. We're positioned for an exciting 2026 and beyond, thanks to our strong financial position and asset base. With that, I'll turn the call over to John Suter, our COO, for operational highlights, followed by Philip Riley, our CFO, who will review financial performance. Thank you, Bobby, and good morning. I'll briefly cover fourth quarter and full year results, followed by 2026 development plans. Beginning with the fourth quarter, our development activity was focused in Texas. Activity levels matched the ranges we provided in guidance with more drilling and completions than new wells turned to sales. Wells drilled but not turned to sales during the fourth quarter should come online over the first and second quarters of 2026. Oil production increased by more than 1,700 barrels oil per day, or 9% quarter over quarter. This was primarily from improving volumes from the new wells brought online earlier in 2025 that continued to increase, as well as from the three new wells turned to sales during the fourth quarter. Comparing the fourth quarter of 2025 to 2024, Oil production increased by 26%. As for the full year 2025, I'd like to begin by highlighting another year of excellence in safety here at Riley Permian. We achieved a total recordable incident rate of zero in 2025. We also achieved 95% safe days, a metric requiring no recordable incidents, vehicle accidents, or spills over 10 barrels. Full-year oil production increased by 15% year-over-year, while total equivalent production increased by 29%. The overwhelming majority of our full-year production increase was from pre-2025 development with modest contributions from 2025 new wells and smaller contributions from the silverback acquisition for the second half of the year, including the benefits of workover volumes as discussed last quarter. Full-year development activity counts were relatively modest compared to 2024 levels as we reduced activity mid-year last year following the oil price decline and our silverback acquisition. In total, we drilled 18 net wells in 2025, or 28% fewer than in 2024, and turned to sales 16.3 net wells, or 23% fewer than in 2024. I highlight these metrics for a couple of reasons. First, we achieved impressive organic volume growth with relatively limited activity. This is a testament to our high quality drilling portfolio. Volumes from the acquisition accounted for only 8% of total annual volumes. Second, this reinforces what Bobby discussed on framing our 2026 plans for significant increased activity relative to the lower activity in 2025 and readiness positioning with midstream and water takeaway projects. In Texas, we essentially held over 11,000 barrels oil per day of oil production flat year over year with only 10 net wells turned to sales, again demonstrating the productivity and efficiency of our wells. In New Mexico, production has been more consistent and reliable. Since commissioning the expansion of the compressor station in December, we've been able to send more gas to the high-pressure system increasing uptime and unburdening the low-pressure system by which the remainder of our gas is gathered. Overall, New Mexico oil production grew by 74%, or over 2,500 barrels oil per day, year over year, benefiting from just 6.3 net wells turned to sales and from the silverback volumes. New Mexico represents a growing share of our total company oil production, from 23% of the total in 2024 to 34% in 2025. That trend will continue into 2026 and beyond. The silverback acquisition continues to surpass by case expectations, producing at a 65% higher oil rate at year end than anticipated. This is primarily due to strategic workovers, including worldwide cleanouts, artificial lift optimization, and return to production operations. As for drilling and completion operations, we're down 25% in cost for lateral foot and red lake year over year. Similar results were achieved in Texas. with a 15% cost reduction for lateral foot in 2025. Both achievements were driven primarily by a focus on pad drilling, an increase in time spent drilling, and completion optimization. It should be noted that while completion optimization helped on the cost reduction side, we're also seeing it result in an increase in productivity. in both our Texas and New Mexico wells, with both sets of wells generally beating internal forecasts. We're also optimistic about future optimization that could further drive costs down, including increasing completed lateral length and testing new completion methodology in New Mexico. Let's now discuss our plans for 2026. Our current plans call for significant increases in activity and volume, with activity and spending being more concentrated during the first half of the year, while volumes may grow each successive quarter. On a full year basis, we're essentially running slightly more than an equivalent continuous one-rig program. In actuality, we have two rigs running for approximately three months through May, back down to one rig for the summer, down to zero potentially for the fall, before picking one up again later in the year. We picked up a second drilling rig last month that began drilling in New Mexico to complement the rig already running in Texas that was put in service October of last year. two-rig program allows us the ability to continue to grow our Texas production base while also setting the stage for more New Mexico asset development when the long-haul high-pressure line to Targa is completed in Q3. We'll begin to build volumes striving to meet our volume commitment payouts as per the terms of the sale of the midstream asset in Q4 2025. Both rigs have relatively short contract terms, allowing us to be flexible in the event market conditions change rapidly. We currently forecast drilling 46 to 53 gross wells, which may correspond to approximately 37 to 43 on a net basis. Net completions and wells turned to sales may be slightly higher as we have a small inventory of ducks to draw from, as I referenced during my commentary on fourth quarter activity. New wells turned to sales will focus in Texas during the first half of the year and transition to New Mexico for the second half. This is predicated on the Mexico gas infrastructure being completed and ready by that time, as Bobby described. Additionally, we've been working with partners to secure sufficient water disposal for this development plan. This will increase operating expenses, which we see impacted later in the year, while we're also tackling initiatives elsewhere to offset this increase. Philip, I'll now turn the call back to you.