Riley Exploration Permian (REPX +1.07%) is an independent oil and gas producer focused on the Permian Basin, mainly in West Texas and Southeast New Mexico. On August 6, 2025, the company released its Q2 2025 results. The headline news was a significant earnings beat, with GAAP EPS of $1.44, topping analyst expectations of $0.99. However, GAAP revenue missed consensus by $1.51 million, landing at $85 million. This represents a decline from $105.3 million (GAAP) in Q2 2024. The period highlighted continued strong operational execution, prudent spending, and an expansion of future drilling opportunities through a major asset acquisition. The company maintained its regular dividend, underscoring a focus on generating sustainable free cash flow (non-GAAP) even as it navigated infrastructure constraints and lower commodity prices.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.02 | $0.99 | N/A | |
| EPS (GAAP) | $1.44 | $1.28 | -12.5% | |
| Revenue (GAAP) | $85 million | $86.51 million | $105.3 million | (19.3%) |
| Adjusted EBITDAX | $59 million | $73 million | (19.0%) | |
| Total Free Cash Flow (Non-GAAP) | $18 million | $38 million | (52.6%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Success Factors
Riley Exploration Permian is an oil and gas exploration and production company with operations centered in the Permian Basin, one of the most prolific hydrocarbon regions in the U.S. The company operates nearly all its acreage, focusing chiefly on two areas: Yoakum County, Texas, and Eddy County, New Mexico. The company manages more than 58,000 net acres as of December 31, 2024, and over 600 producing wells, with its business built around efficient resource extraction, cost control, and infrastructure ownership.
Recent strategy has emphasized disciplined capital spending, optimization of free cash flow, and sustained dividend payments. Core success factors for Riley include managing market price volatility through hedging, maintaining operational efficiency despite fluctuating commodity prices, and expanding its asset base via targeted acquisitions. The recent purchase of Silverback’s undeveloped acreage in the Yeso trend exemplifies its focus on securing future drilling inventory while reinforcing existing infrastructure and power assets.
Quarter Highlights and Financial Developments
The second quarter saw several notable developments. The company reported GAAP EPS of $1.44, far exceeding analyst expectations by $0.45 per share. This outperformance was helped by effective hedging programs and selective capital allocation. However, GAAP revenue came in below consensus as lower realized oil, gas, and natural gas liquids (NGL) prices weighed on sales. Net oil and natural gas sales were $85.394 million, a decrease of 18.9% year-over-year as both commodity pricing and local infrastructure constraints limited output and affected realized prices.
Production volumes remained stable. Average daily oil production reached 15,187 barrels, up 3% from Q2 2024. Total equivalent production, which combines oil, gas, and NGLs into a single volume measurement, held steady at 24,352 barrels of oil equivalent per day. The company voluntarily slowed the pace of well completions and deferred some sales, turning 40% fewer wells to sales in the first half of 2025 compared to the same period in 2024. Management cited weak pricing and the need to optimize for longer-term free cash flow as reasons for this cautious approach.
Infrastructure bottlenecks in the Permian Basin affected production. As CEO Bobby Riley noted, “We experienced constraints with infrastructure, like many operators in the Permian Basin, which impacted our second quarter production.” In response, the company invested in midstream and compression facilities, commissioning new gas handling capacity in New Mexico and deploying $22 million in infrastructure upgrades during Q2 2025.
Hedging supported earnings, with the company realizing higher oil prices due to derivative gains. The average realized oil price, including the impact of hedges, was $66.10 per barrel, which offset some of the weakness in underlying market prices. Gas prices remained low, sometimes even negative after gathering and processing costs, highlighting the region’s infrastructure challenges. Riley Permian reported an average realized natural gas price of $(0.39) per Mcf, net of gathering, processing, and transportation costs. Riley recognized a $19 million net derivative gain—$5 million realized in cash and $14 million from non-cash mark-to-market adjustments.
LOE was $19 million, or $8.52 per barrel of oil equivalent produced, compared to $8.67 per barrel in Q2 2024. General and administrative (G&A) expense came in at $6 million, Capital expenditures were $28 million. The company recognized a $1.2 million impairment charge (GAAP).
The Silverback acquisition, which closed in July 2025 for $142 million, was a significant event for the company. This deal added more than 300 undeveloped horizontal drilling locations in New Mexico, expanding inventory for future growth and offering strategic synergies with existing infrastructure. The estimate of more than 300 undeveloped locations is based on management's disclosure in connection with the Silverback Acquisition, which was announced in May 2025 and closed in July 2025. Quarterly results do not yet reflect Silverback’s impact. However, management expects these assets will drive higher production and cash flow in future periods, though they also raise the company’s leverage and increase the need for continued cost discipline.
Progress was also made on power self-generation projects. The RPC Power joint venture supplied approximately 65% of field energy needs, with investments continuing in on-site generation and battery storage.
The company kept its regular dividend unchanged at $0.38 per share. Cash payout totaled $8 million, consistent with Q1 2025. This reflects management’s intent to return capital to shareholders while maintaining sufficient flexibility to fund operations and growth projects.
Looking Ahead
Management provided forward guidance for Q3 2025, Q4 2025, and full-year 2025. Production is projected to increase sharply in Q3 and Q4 2025, driven by contributions from the Silverback assets. Total production in Q3 2025 is expected to range between 29,800 and 30,600 barrels of oil equivalent per day, up from the previous quarter. Oil output is forecast to be between 17,300 and 17,800 barrels per day in Q3 2025. Upstream capital expenditures are set to range from $16 million to $24 million in Q3 2025 while LOE should remain between $8.90 and $9.90 per Boe in Q3 2025. Full-year 2025 guidance calls for total production of 27.0 to 28.0 thousand barrels of oil equivalent per day, and oil volumes of 16.5 to 17.0 thousand barrels per day. Capital spending for full-year 2025 is forecast at $113 million to $146 million, with only six months of Silverback contributions factored in.
Investors should watch several key risks for the company going forward. Integration of the new assets from the Silverback acquisition, successful completion of midstream infrastructure projects, and continued cost control in a volatile pricing environment are essential for long-term success. The company’s debt rose to $401 million as of August 1, 2025, following the acquisition. Interest expense is anticipated to climb as a result. Guidance identifies the potential for further delays or impacts from ongoing infrastructure projects. Revenue and cash flow remain highly sensitive to swings in oil, gas, and NGL prices. However, hedging remains in place for much of the forecasted production, with oil prices hedged for 70% of forecasted PDP volumes and 57% of total oil volumes for the remainder of 2025, helping to manage near-term downside exposure. The quarterly dividend was maintained at $0.38 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
