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- **Silverback Synergies Drive Growth**: 50%+ production exceedance in Q3 2025, with $100M upstream free cash flow over 9 months despite 14% lower oil prices.
- **Cost Efficiency Record**: 10% D&C cost savings in New Mexico, 30%+ LOE per BOE reductions post-acquisition, and $70K/month cost savings through water handling optimization.
- **2026 Flexibility**: Option to maintain 2025 volumes with 15% lower CapEx or grow 12-15% with flat CapEx, supported by $60/WTI hedges covering 60% of 2026 production.
- **Midstream Expansion**: $14M invested in New Mexico midstream project, targeting 2026 in-service date for high-pressure transmission line with potential third-party volume accretion.
- **Dividend Sustainability**: 31% of FCF allocated to dividends in 2025, with coverage at $55/WTI through sub-$100M upstream CapEx.

**【CEO Summary Section】**
- **Silverback Acquisition Success**: Achieved 50%+ production exceedance in September-October 2025 through strategic workovers and asset integration, driving $100M upstream free cash flow over 9 months despite 14% lower oil prices.
- **Free Cash Flow Growth**: Generated $39.4M upstream free cash flow in Q3 (73% of operating cash flow), with 64% year-to-date conversion despite lower oil prices.
- **Dividend Discipline**: Increased quarterly dividend to $0.40/share (5% growth), marking 19th consecutive payout.
- **2026 Outlook**: Potential to maintain 2025 oil volumes with 15% lower CapEx or grow 12-15% with flat CapEx, supported by $60/WTI hedges covering 60% of 2026 production.

**【CFO Financial Commentary】**
- **Q3 Financials**: Adjusted EBITDAX margin 59% (down 7pts vs Q2 due to Silverback integration costs), with LOE per BOE at $9 (6% QoQ increase). Upstream free cash flow conversion 73%.
- **Cost Efficiency**: Reduced D&C costs 10% in New Mexico; 2-year track record of 30%+ LOE per BOE reductions post-acquisition.
- **Capital Allocation**: Reinvested 27% of cash flow in Q3 (36% YTD), with 31% of FCF allocated to dividends. 2026 scenarios show dividend coverage at $55/WTI with sub-$100M upstream CapEx.
- **Midstream Investment**: $14M spent on New Mexico midstream project, targeting 2026 in-service date for high-pressure transmission line.

**【COO Operational Highlights】**
- **Production Growth**: Oil volumes +22% QoQ (1.38M to 1.69M bbls), total EBOE +34% QoQ (2.22M to 2.98M). Silverback asset contributed 50%+ production upside through workovers.
- **Cost Control**: LOE per BOE at $9 (5% YoY increase), maintained despite higher Silverback vertical well costs. Targeting 10-20% fixed cost reductions through integration.
- **Drilling Activity**: 8-10 gross wells drilled in Q4, with 3-5 completions to set up 2026. D&C cost savings of 10% secured for 2026 New Mexico program.
- **Midstream Progress**: Installed 40MMcf/d compression capacity, with low-pressure gathering lines expanding input capacity. Permitting underway for 2026 high-pressure transmission line.
- **Power Expansion**: Texas JV achieved 100% uptime in Q3; New Mexico behind-the-meter project in permitting phase with 10MW generators secured.

**【Q&A Highlights】**
- **Capital Allocation at $55/WTI**: Target upstream CapEx of $85M, maintaining volumes while covering dividend. Midstream project could be financed via third-party equity or debt.
- **Midstream Netback Impact**: Potential to capture ship-channel gas pricing through midstream contracts, with third-party volumes accreting value post-2026 in-service.
- **Workover Strategy**: Q3 workover spend $5M (59% of LOE), with $70K/month cost savings realized through water handling optimization. Long-term opportunity to unlock 300+ vertical wells in Silverback asset.
- **Drilling Flexibility**: 2026 Texas program (Jan-Jun) and New Mexico program (Jul-Dec) offer commodity price hedging via DUC inventory. 2026 D&C cost savings of 10% secured.
- **Financing Options**: Exploring project-level financing for midstream (bank debt, private equity), with 2026 in-service date for high-pressure transmission line.

Riley Exploration Permian, Inc. (REPX) Q3 2025 Earnings Call Transcript

Revenue

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