Riley Exploration Permian, Inc.

What they do

The company drills, completes and produces oil, natural gas and NGLs from operated wells in Texas and New Mexico. In the second quarter of 2026 it drilled 24 gross (19.9 net) wells and turned 15 gross (13.9 net) wells to sales, all in Texas. All of its wells turned to sales in the quarter were in Texas; no New Mexico wells were completed or turned to sales in the period.

Revenue drivers

• Texas oil production — Texas produced 15.8 MBbls/d of oil in Q2 2026, the largest oil volume by state, up from 11.1 MBbls/d in Q2 2025.
• New Mexico oil production — New Mexico produced 5.4 MBbls/d of oil in Q2 2026, up from 4.1 MBbls/d a year earlier, though no New Mexico wells were completed or turned to sales in the quarter.
• Natural gas and NGLs — Q2 2026 realized prices were $(4.12) per Mcf of natural gas and $(4.71) per barrel of NGL before gathering, processing and transportation costs; negative gas realizations at Waha were driven by regional pipeline constraints.

Recent performance

Q2 2026 revenue was $166 million with operating income of $87 million and net income of $87 million, or $4.11 per diluted share. Total equivalent production was 34.3 MBoe/d, including 21.2 MBbls/d of oil. Operating cash flow was $64 million and Adjusted EBITDAX was $80 million. Total capital expenditures before acquisitions were $87 million on an accrual basis and $68 million on a cash basis. Average realized oil price before derivative settlements was $94.28 per barrel.

Strategy

Management said it continued executing the growth strategy outlined earlier in 2026, with oil production near the high end of guidance. The company increased full-year oil production guidance, which it says implies approximately 30% year-over-year growth in 2026. It expects the largest production increase of the year in the third quarter, with oil production growing more than 20% sequentially. It also revised full-year 2026 guidance to reflect higher forecasted oil production and total capital expenditures and investments.

Risks

• Produced water disposal restrictions — The NMOCD and RRC have imposed stricter wastewater injection requirements and, in certain Permian areas, suspended new disposal well permits, which could force the company to truck, recycle or otherwise dispose of produced water at higher cost.
• Water transport counterparty failure — A 15-year agreement with a third party to transport committed produced water volumes from New Mexico operations begins in the second half of 2026, and termination or counterparty failure could force well shut-ins or reduced drilling.
• ESG-related regulatory and permitting pressure — Scrutiny over climate change, hydraulic fracturing, flaring, GHG emissions, waste disposal and spills could lead to new laws and permit delays or restrictions that raise costs and limit access to capital.
• Negative natural gas realizations — Realized natural gas prices were negative before gathering, processing and transportation costs in Q2 2026 because Waha pricing was hurt by ongoing regional pipeline constraints.

Outlook

Management guided to higher full-year 2026 oil production, implying approximately 30% year-over-year growth, and to higher total capital expenditures and investments. It expects the largest production increase of the year in the third quarter, with oil production up more than 20% sequentially, and said the activity underway positions the company for growth through the remainder of 2026 and into 2027.