Riley Exploration Permian's Q1 2025: Key Contradictions in Midstream Development, ERCOT Projects, and Hedging Strategies

Midstream infrastructure development and timing, ERCOT power merchant project and status, Silverback asset motivation and strategic positioning, hedging strategy and cash flow management, midstream infrastructure investment and synergies are the key contradictions discussed in Riley Exploration Permian's latest 2025Q1 earnings call.



Financial Performance and Free Cash Flow:
- Riley Exploration Permian reported free cash flow of $39 million in Q1 2025, achieved by converting 54 million in operating cash flow before working capital.
- This strong financial performance was due to modest capital investing and effective debt reduction.

Acquisition and Strategic Growth:
- Riley Exploration Permian announced a strategic acquisition of Silverback Exploration for $142 million in cash, enhancing their long-term development potential.
- The acquisition expands the company's acreage in New Mexico, providing synergies in water disposal, gas takeaway, and power generation.

Operational Efficiency and Cost Management:
- The company achieved a total recordable incident rate of 0 and 93% safe days in Q1 2025, demonstrating operational excellence.
- Cost management was effective, with LOE per BOE for Q1 2025 at $8.34, down 8% from a year ago and 2% from Q4 2024.

Midstream Projects and Infrastructure:
- Riley Exploration Permian completed the first phase of their New Mexico gathering and compression project, commissioning the Birdie compressor station on time and on budget.
- This expansion supports future development and provides increased flexibility in managing costs and market conditions.