Riley Exploration Permian, Inc. Q1 FY2026 earnings call

Bobby mentioned in March 2026 accelerated growth, first quarter results provided momentum, reduced debt and returned to shareholders, first quarter activity increased, forecast production growth continuing through the year. John covered first quarter operational results, development activity ramped in Texas, production exceeded guidance, winter storm had minimal impact, lateral drilling performance continued upward, well costs stable despite inflation, LOE up slightly but down year-over-year, older wells workovers resulted in production uplift, chemical costs in New Mexico cut in half then crept up.

First quarter production exceeded the high end of guidance while spending less than the low end of capital guidance range. Reduced debt by $8 million and returned $12 million to shareholders. Texas will comprise the bulk of volume growth in 2026 and New Mexico should contribute more growth thereafter.

Forecast production growth continuing each quarter through 2026, full year growth of 30% at new midpoint guidance levels. Next year potential to grow production 10% year-over-year with only 5% increase in CapEx. Second quarter capital spend $80 million, full year capital guidance range increased by $10 million, production volume guidance ranges raised by 5% to midpoint 22,500 barrels per day.

Oil supply picture and price outlook changed, structural gas egress constraints, seasonal midstream maintenance programs negatively affected gas pricing, diesel costs came up substantially driving service companies to adjust pricing.

Q: Congrats on a strong 1Q and 2026 update broadly. First, I wanted to focus on your activity plans as we're clearly in a very fluid situation in the Middle East. With today's revised activity plan and workovers and recognizing the strength of your -- and the growth of your program as it stands, how would you characterize your desire to further lean into this favorable environment from a workover perspective, nothing more? And then as you look out to 2027, is this level of activity a good run rate for the efficiency of your operations?

A: Bobby said would have to see significant drop to adjust direction, with efficiencies could add more wells, John said fast cycle times allow easy sustained growth.

Q: Sticking with the production question. My question is on your growth. I know, Bobby, for you or Philip, I know operationally and financially, you certainly have the ability to materially increase production if you choose. I'm just wondering how much is the decision and kind of the guide you talked about, how much is that influenced by -- you've had negative natural gas and NGL prices? And how much do other things like, I don't know, incremental takeaway or power fit into this growth decision?

A: Philip said gas frustrating but getting better, strip improving, gas price related to oil price, power not problem.

Q: Bobby or John, can you talk about the guidance of the production uplift in the sense of how much of the increase is due to timing versus performance-related issues with the wells that you're bringing on?

A: Bobby said acceleration due to timing and performance, wells completed exceed predrill forecast, John said drilled 2-mile laterals with uplift, Champions wells have superior early time performance.

Q: Curious as you kind of look at the differences between Champions and the Red Lake area with one rig kind of running in each. What's the difference, I guess, in kind of total drilling complete costs between the 2 assets? I think it's -- there's a lot of mix going on between these 2, and it seems like it's shifting a little bit throughout the year. So I just want to make sure I kind of pinpoint kind of the spend differences between the 2 assets.

A: John said typically 1.5 miles wells in Champions, New Mexico 1-mile laterals, cost $1 million more per lateral in New Mexico, Bobby said different working interests.

Q: I did hear you mention earlier that you had seen some modest pick up in non-op participation, I think, from adjacent partners. So I was just interested in that I had heard something I think from another operator and just thinking maybe the decision-making is a little different compared to -- in the current price environment compared to how public operators are approaching the environment.

A: Philip said in New Mexico forced pooling, got proposals from private operators, John said in New Mexico few operators drilling, Champions leading driller.