Riley Exploration Permian, Inc.

Good day and welcome to Riley Exploration Permian First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the formal presentation, there will be an opportunity to ask questions. To ask a question, please press star 1. Please note that this conference is being recorded. It is now my pleasure to introduce your host, Philip Riley, our Chief Financial Officer. Good morning.

Welcome to our conference call covering our first quarter 2026 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 and 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 these appropriate GAAP measures can be found in our supplemental disclosure on our website. I'll turn the call over to Bobby.

Thank you, Philip. In March, we announced that Riley Permian would accelerate growth in 2026, which was a natural result from our multi-year positioning, including deliberate inventory expansion and infrastructure readiness. Our 2026 development plan was designed when the WTI spot price and one-year forward price were in the $60 range, and we saw meaningful value creation potential. at those price levels. Since then, the oil supply picture and price outlook have changed completely. We have increased confidence in achieving our planned targets and the corresponding value creation potential has increased significantly. Our first quarter results provide an initial round of momentum for the year ahead. We executed well. delivering production exceeding the high end of guidance while spending less than the low end of our capital guidance range. With our excess capital, we reduced debt by $8 million and returned $12 million to shareholders through our dividend and share repurchases. Our first quarter activity levels increased materially over fourth quarter 2025 levels, and second quarter activity will surpass first quarter, setting up for an accelerated growth. We forecast production growth continuing for each quarter through the year, culminating with full-year growth of 30% at our new midpoints guidance levels. As we look further out to next year, we see the potential to grow production 10% year-over-year with only a 5% increase in capex, at least as one scenario being considered. We believe this could be achieved given the wave of second-half 2026 volumes being generated. We have confidence in achieving this growth through accelerated development of both of our assets. In New Mexico, Targa has progressed on the engineering and design for the high-pressure truck line to their processing plants, which will begin construction upon final regulatory approval. The project timing remains on track with a scheduled commercial operations date in Q3. We will be ready from the upstream side with wells ready to turn in line immediately following the pipeline coming into service, which gets us closer to achieving our first earn-out payment. All of this activity is exciting, as is the potential to unlock value from this asset. In the meantime, and in parallel, We will continue to push forward with drilling and completions within our Texas assets, where we continue to drive efficiencies and where infrastructure is in a more mature stage of development. Texas will comprise the bulk of our volume growth in 2026, and New Mexico should contribute more growth thereafter. Briefly, on our ERCOT power project within our RPC joint venture, our first site, a 10-megawatt facility located in Ward County, Texas, is in the final commissioning stage with ERCOT. During the commissioning stage, we've been generating power into the real-time market and collecting a modest amount of revenue. We have a forecasted commercial operational date, for later this month, after which we can begin regularly participating in the day-ahead markets. Our second site is fully constructed and is in the early commissioning stage. Our final two sites are scheduled for late summer. Over at our Behind the Meter project at Champions, we're saving approximately $200,000 per month or more on avoided negative gas sales at recent prices. Between these two power projects, our thesis remains intact here, and we see this as one small way to counter the weak regional gas pricing that we're realizing on our upstream assets. As always in our capital allocation process, we plan for optionality. As the year progresses, we will monitor the macroeconomic backdrop and industry conditions, and we will maintain flexibility to speed up further or slow down should conditions deteriorate materially. Keep in mind the original accelerated plan was contemplated at a $60 price. These strong financial and operational results, along with the opportunities on the power side, as well as additional new opportunities we continue to evaluate, are the product of our exceptional operational, planning, and technical teams. To our employees and our investors, we believe Riley Permian is well positioned for an exciting 2026 and beyond, supported by our high-quality asset base and strong financial position. I'll now turn the call over to John Suter, our COO. Thank you, Bobby, and good morning. I'll briefly cover our first quarter operational results and how activity progressed through the quarter, and then I'll touch on how we're positioned as we move through the balance of the year. Safety remains foundational at Riley Permian. To start the year, our operations reported a zero total recordable incident rate, and we delivered 96% safe days. Turning to operations, Development activity ramped meaningfully in the first quarter and was concentrated primarily in Texas. On a net basis, we drilled 15.6 wells, started completions on 12.8 wells, and turned eight wells to sales. Importantly, we delivered this increased level of activity with strong capital discipline. Total capital spend was $47 million. which was below the guidance range, driven primarily by normal timing dynamics, including selective deferrals and infrastructure timing, and a small amount of activity mix changes that reduced spend without impacting our plan. From a production standpoint, net oil averaged 20.2 M barrels per day, and total equivalent production averaged 35.6 MBOE per day, exceeding the high end of guidance. Volumes were essentially flat quarter over quarter as strong development well contributions offset normal base decline. Winter storm fern caused disruptions across the Permian among midstream providers and producers alike in late January and into early February. We, on the other hand, experienced minimal downtime with little to no impact on quarterly volumes. Within the quarter, development well performance was particularly strong. Initial oil volumes exceeded forecasts, and the outperformance was driven more by well productivity than simply timing. As we look ahead, we'll continue executing the plan with a focus on safe, reliable operations and disciplined capital allocations. In the second quarter, activity is expected to increase from the first quarter, with two rigs running full-time and 16 to 18 planned completions by quarter end, 30% more than in Q1. This level of completion activity will contribute to a production ramp that we will see later in Q2 and drive strong full-year growth. Completions are expected to remain focused in Texas, while we work through gas takeaway sequencing in New Mexico, including the progress of the Targa gas pipeline project, which Bobby alluded to earlier. Looking into the back half of the year, our current plan contemplates releasing the New Mexico rig in the third quarter and continuing to drill in Texas with a return to New Mexico activity later in the year to align our completion cadence with infrastructure readiness, and set up the broader New Mexico program. Now let's move on to operational performance in Q1. Lateral drilling performance continued its multi-year upward trajectory. A higher median lateral feet per day in combination with a tighter distribution demonstrates repeatable, scalable execution. Consistent use of multi-well pads and zipper fracks materially reduced downtime and per well cost while improving overall operational consistency. We drilled a record spud to TD well for a 1.5 mile Yoakum County St. Andrews well in Champions at 4.28 days and a separate spud to rig release record at 5.79 days. We also successfully executed drilling and completing two more two-mile laterals, delivering the fastest drilled wells in the field at 1,456 lateral feet per day, validating the efficacy of longer-reach designs. Well costs as it relates to drilling and completions year-to-date have been relatively stable despite inflationary pressure on service prices primarily driven by efficiency in our operations. Diesel costs have obviously come up substantially in the last couple of months, driving many service companies to adjust pricing accordingly. Our ability to drill faster and complete more efficiently has allowed us to mostly outpace this increase thus far. LOE has gone up slightly quarter over quarter in Q1, when compared to Q4 2025, in part due to some elective workovers that were deferred from Q4. Bigger picture, it should also be noted that despite being up quarter over quarter on an LOE per BOE basis, we're still seeing a downward trend year over year, with a 10% reduction in cost when compared with Q1 of 2025. The elective work I previously mentioned was primarily in our Red Lake asset, where many of our older wells have found new life following mechanical interventions. These workovers have resulted in nearly 500 net barrels oil per day of relatively flat production, with some recent wells continuing to increase in oil cut. This is some of the most capitally efficient dollars we've spent, with economic metrics comparable to new drilled wells in the area. We estimate that to date, we've only realized 30% of the possible uplift of these older wells. And between the sizable inventory in our New Mexico asset and the combination of higher commodity pricing, the magnitude of unrealized production growth could be even greater. We've also mentioned in past calls our expectation of chemical costs coming down in New Mexico. It's part of a change in program we implemented in January. I'm happy to report that in just a few months, we've seen costs nearly cut in half on a per barrel basis compared to our 2025 monthly average spent. While we're starting to see that creep back up due to an increase in petrochemicals costs across the board, we're confident that the changes we've made will help minimize the effect going forward. Stepping back, the message is straightforward with several key takeaways. We're executing safely and efficiently while scaling activity with discipline. We delivered strong first quarter volumes and capital performance. We're seeing continued gains in drilling and completion execution that help offset service cost inflation. And finally, we're prioritizing Texas where infrastructure is ready while sequencing New Mexico activity around the target takeaway build-out to protect returns and preserve flexibility as we move through 2026. I'll now turn the call to Philip.