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What changed in Riley Exploration Permian, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Riley Exploration Permian, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+288 added−284 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-05)

Top changes in Riley Exploration Permian, Inc.'s 2025 10-K

288 paragraphs added · 284 removed · 200 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

129 edited+48 added−45 removed279 unchanged
Biggest changeOur activities are subject to all of the operating risks associated with drilling for, producing, gathering and compressing oil and natural gas, including the risk of fire, explosions, blowouts, surface cratering or other cratering, uncontrollable flows of natural gas, oil, well fluids and formation water, pipe or pipeline failures, processing or transportation capacity constraints or disruptions, damages to pipelines, compressor stations and related equipment, abnormally pressured formations, casing collapses, reservoir damage and environmental hazards such as oil, produced water or chemical spills, natural gas leaks, ruptures or discharges of toxic gases. 35 Table of Contents Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for: • injury or loss of life; • exposure to or release of hazardous substances; • medical monitoring; • natural resources damages; • employee/employer liabilities and risks, including wrongful termination, discrimination, labor organizing, retaliation claims, and general human resource related matters; • damage to and destruction of property, natural resources and equipment; • pollution and other environmental hazards or damage; • abnormally pressured formations, fires or explosions or natural disasters; • mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse; • regulatory investigations, injunctions, fines, and penalties; • landowner claims for property damage and restoration costs; • suspension of our operations; • repair, corrective action, and remediation costs.
Biggest changeAny of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for: • injury or loss of life; • exposure to or release of hazardous substances; • medical monitoring; • natural resources damages; • employee/employer liabilities and risks; • damage to and destruction of property, natural resources and equipment; • pollution and other environmental hazards or damage; • abnormally pressured formations, fires or explosions or natural disasters; • mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse; • regulatory investigations, injunctions, fines, and penalties; • landowner claims for property damage and restoration costs; • suspension of our operations; • repair, corrective action, and remediation costs.
The market price of our common stock may also fluctuate significantly in response to the following factors, some of which are beyond our control: • our operating and financial performance and drilling locations, including reserve estimates; • actual or anticipated fluctuations in our quarterly results of operations, and financial indicators, such as net income, cash flow and revenues; • our failure to meet revenue, reserves or earnings estimates by research analysts or other investors; • sales of our common stock by the Company or other stockholders, or the perception that such sales may occur; • the public reaction to our press releases, other public announcements, and filings with the SEC; • strategic actions by our competitors or competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel; • publication of research reports about us or the oil and natural gas exploration and production industry generally; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • the failure of research analysts to cover our common stock; • increases in market interest rates or funding rates, which may increase our cost of capital; • changes in market valuations of similar companies; • changes in accounting principles, policies, guidance, interpretations or standards; • additions or departures of key management personnel; • actions by our stockholders; • commencement or involvement in litigation; • general market conditions, including fluctuations in commodity prices; • political conditions in oil and natural gas producing regions; • domestic and international economic, legal and regulatory factors unrelated to our performance; and • the realization of any risks described under this “ Risk Factors ” section.
The market price of our common stock may also fluctuate significantly in response to the following factors, some of which are beyond our control: • our operating and financial performance and drilling locations, including reserve estimates; • actual or anticipated fluctuations in our quarterly results of operations, and financial indicators, such as net income, cash flow and revenues; • our failure to meet revenue, reserves or earnings estimates by research analysts or other investors; • sales or purchases of our common stock by the Company or other stockholders, or the perception that such sales or purchases may occur; • the public reaction to our press releases, other public announcements, and filings with the SEC; • strategic actions by our competitors or competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel; • publication of research reports about us or the oil and natural gas exploration and production industry generally; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • the failure of research analysts to cover our common stock; • increases in market interest rates or funding rates, which may increase our cost of capital; • changes in market valuations of similar companies; • changes in accounting principles, policies, guidance, interpretations or standards; • additions or departures of key management personnel; • actions by our stockholders; • commencement or involvement in litigation; • general market conditions, including fluctuations in commodity prices; • political conditions in oil and natural gas producing regions; • domestic and international economic, legal and regulatory factors unrelated to our performance; and • the realization of any risks described under this “ Risk Factors ” section.
Challenges and risks presented by joint venture structures not otherwise present with respect to our wholly-owned subsidiaries and direct operations, include: • our joint ventures may fail to generate the expected financial results, and the return may be insufficient to justify our investment of effort and/or funds; • we may not control the joint ventures or our venture partners may hold veto rights over certain actions; • the level of oversight, control and access to management information we are able to exercise with respect to these operations may be lower compared to our wholly-owned businesses, which may increase uncertainty relating to the financial condition of these operations, including the credit risk profile; • we may experience impasses or disputes with our joint venture partners on certain decisions, which could require us to expend additional resources to resolve such impasses or disputes, including litigation or arbitration; • we may not have control over the timing or amount of distributions from the joint ventures; 42 Table of Contents • our joint venture partners may have business or economic interests that are inconsistent with ours and may take actions contrary to our interests; • our joint ventures may enter into business outside of our core business exposing us to unforeseen risks; • our joint venture partners may become insolvent or bankrupt, or may otherwise fail to fund capital contributions or fail to fulfill their obligations as partners, which may require us to infuse our own capital into the venture or seek additional financing; • the arrangements governing our joint ventures may contain restrictions on the conduct of our business and may contain certain conditions or milestone events that may never be satisfied or achieved; • we may suffer losses as a result of actions taken by our venture partners with respect to our joint ventures; • our joint venture partners may experience a change of control or a change in management, which could adversely impact the relationship between the joint venture partners and us; • it may be difficult for us to exit joint ventures if an impasse arises or if we desire to sell our interest for any reason; and • we may be forced to sell our interest or acquire our partner’s interest at time we otherwise would not have elected to do so as a result of the arrangements governing our joint ventures.
Challenges and risks presented by joint venture structures not otherwise present with respect to our wholly-owned subsidiaries and direct operations, include: • our joint ventures may fail to generate the expected financial results, and the return may be insufficient to justify our investment of effort and/or funds; • we may not control the joint ventures or our venture partners may hold veto rights over certain actions; • the level of oversight, control and access to management information we are able to exercise with respect to these operations may be lower compared to our wholly-owned businesses, which may increase uncertainty relating to the financial condition of these operations, including the credit risk profile; • we may experience impasses or disputes with our joint venture partners on certain decisions, which could require us to expend additional resources to resolve such impasses or disputes, including litigation or arbitration; • we may not have control over the timing or amount of distributions from the joint ventures; • our joint venture partners may have business or economic interests that are inconsistent with ours and may take actions contrary to our interests; • our joint ventures may enter into business outside of our core business exposing us to unforeseen risks; • our joint venture partners may become insolvent or bankrupt, or may otherwise fail to fund capital contributions or fail to fulfill their obligations as partners, which may require us to infuse our own capital into the venture or seek additional financing; • the arrangements governing our joint ventures may contain restrictions on the conduct of our business and may contain certain conditions or milestone events that may never be satisfied or achieved; • we may suffer losses as a result of actions taken by our venture partners with respect to our joint ventures; • our joint venture partners may experience a change of control or a change in management, which could adversely impact the relationship between the joint venture partners and us; • it may be difficult for us to exit joint ventures if an impasse arises or if we desire to sell our interest for any reason; and • we may be forced to sell our interest or acquire our partner’s interest at time we otherwise would not have elected to do so as a result of the arrangements governing our joint ventures.
While no comprehensive climate change legislation has been implemented at the federal level, the EPA, the BLM, and states or groupings of states have pursued legal initiatives in recent years that seek to reduce GHG emissions through efforts that include consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.
While no comprehensive climate change legislation has been implemented at the federal level, the EPA, the BLM, and states or groupings of states have pursued legal initiatives in recent years that seek to reduce GHG emissions through efforts that include consideration of cap-and-trade programs, carbon taxes, GHG reporting, permitting, and tracking programs and regulations that directly limit GHG emissions from certain sources.
In the course of our due diligence, we may not review every well, pipeline or associated facility. We cannot necessarily observe structural and environmental problems, such as pipe corrosion or groundwater contamination, when a review is performed. We may be unable to obtain contractual indemnities from the seller for liabilities created prior to our purchase of the property.
In the course of our due diligence, we may not review every well, pipeline or associated facility. We cannot necessarily observe structural and environmental problems, such as pipe corrosion or subsurface or groundwater contamination, when a review is performed. We may be unable to obtain contractual indemnities from the seller for liabilities created prior to our purchase of the property.
Our cash flow from operations and access to capital are subject to a number of variables, including: • our proved reserves; • the level of hydrocarbons we are able to produce from existing wells and the timing of such production; • the prices at which our production is sold; • operating, maintenance and general and administrative costs and other expenses; • the availability of takeaway capacity; • the level and timing of maintenance and expansion capital expenditures we make; • required regulatory and third-party approvals; • availability and cost of third-party service providers; 29 Table of Contents • regulatory action affecting the supply of, or demand for, hydrocarbons and the rates that we can charge for our production; • the availability and price of alternative and competing fuel sources, the rates of growth of alternative energy sources and the consumer adoption of alternative energy sources; • Credit Facility and/or investor requirements; • our ability to acquire, locate and produce new reserves; and • our ability to borrow under our Credit Facility.
Our cash flow from operations and access to capital are subject to a number of variables, including: • our proved reserves; • the level of hydrocarbons we are able to produce from existing wells and the timing of such production; • the prices at which our production is sold; • operating, maintenance and general and administrative costs and other expenses; • the availability of takeaway capacity; • the level and timing of maintenance and expansion capital expenditures we make; • required regulatory and third-party approvals; • availability and cost of third-party service providers; • regulatory action affecting the supply of, or demand for, hydrocarbons and the rates that we can charge for our production; • the availability and price of alternative and competing fuel sources, the rates of growth of alternative energy sources and the consumer adoption of alternative energy sources; 31 Table of Contents • Credit Facility and/or investor requirements; • our ability to acquire, locate and produce new reserves; and • our ability to borrow under our Credit Facility.
If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline. We may not generate sufficient cash to support any dividend to our common stockholders.
If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline. We may not generate sufficient cash to support any dividend or stock buybacks for our common stockholders.
Business decisions or other actions or omissions of the joint venture partners, controlling equity holders, management or other persons or entities who control them may adversely affect the value of our investment, result in litigation or regulatory action against us and otherwise damage our reputation.
Business or operational decisions or other actions or omissions of the joint venture partners, controlling equity holders, management or other persons or entities who control them may adversely affect the value of our investment, result in litigation or regulatory action against us and otherwise damage our reputation.
As a result of this concent ration, a number of our properties could experience any of the same conditions at the same time and, when compared to other companies that have a more diversified portfolio of properties, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints or disruptions, market limitations, water shortages or other drought or extreme weather related conditions or interruption of the processing or transportation of oil, natural gas or NGLs.
As a result of this concent ration, a number of our properties could experience any of the same conditions at the same time and, when compared to other companies that have a more diversified portfolio of properties, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints or disruptions, electric power limitations, market limitations, water shortages or other drought or extreme weather related conditions or interruption of the processing or transportation of oil, natural gas or NGLs.
Among other things, these provisions: 55 Table of Contents • allow the authorized number of directors to be changed only by resolution of the Board; • after a certain date, limit the manner in which stockholders can remove directors from the Board; • establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the Board; • after a certain date, require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by written consent; • limit who may call stockholder meetings; • authorize the Board to issue preferred stock without stockholder approval, which could be used to institute a shareholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the Board; and • after a certain date, require the approval of the holders of at least 66 2/3% of the votes that all the stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
Among other things, these provisions: • allow the authorized number of directors to be changed only by resolution of the Board; • after a certain date, limit the manner in which stockholders can remove directors from the Board; • establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the Board; • after a certain date, require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by written consent; • limit who may call stockholder meetings; • authorize the Board to issue preferred stock without stockholder approval, which could be used to institute a shareholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the Board; and • after a certain date, require the approval of the holders of at least 66 2/3% of the votes that all the stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
We may, from time to time, be a claimant or defendant to various legal proceedings, disputes and claims arising in the course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.
We may, from time to time, be a claimant or defendant to various legal proceedings, disputes and claims arising in the course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, contested permit proceedings, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.
Exploration, development, production and sale of oil and natural gas are subject to extensive federal, state, local and international regulation. We may be required to make large expenditures to comply with governmental regulations.
Exploration, development, production and sale of oil and natural gas are subject to extensive federal, tribal, state, local and international regulation. We may be required to make large expenditures to comply with governmental regulations.
Conservation measures and technological advances could reduce demand for oil, natural gas and NGLs. Our industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.
Energy conservation measures and technological advances could reduce demand for oil, natural gas and NGLs. Our industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.
Further, many factors may curtail, delay, or cancel our scheduled drilling projects, including the following: • delays and increased costs imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, greenhouse gas emissions, and hydraulic fracturing; • pressure or irregularities in geological formations; • increases in the cost of, or shortages or delays in availability of drilling rigs and qualified personnel for hydraulic fracturing activities; • shortages of or delays in obtaining water resources, suitable proppant, and chemicals in sufficient quantities for use in hydraulic fracturing activities; • equipment failures or accidents; • lack of available gathering facilities or delays in construction of gathering facilities; • lack of available capacity or disruptions in operation of interconnecting transmission pipelines and processing facilities; • adverse weather conditions, such as tornadoes, droughts, ice storms, and extreme freeze events; • lack of available treatment or disposal options for oil and natural gas waste, including produced water; • environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment; • issues or challenges related to permitting under and compliance with environmental and other governmental regulations; • declines or volatility in oil, natural gas, and NGL prices; 43 Table of Contents • limited availability of financing at acceptable terms; • title problems or legal disputes regarding leasehold rights; and • limitations in the market for oil, natural gas, and NGLs.
Further, many factors may curtail, delay, or cancel our scheduled drilling projects, including the following: • delays and increased costs imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, permitting and control of greenhouse gas and other air emissions, and hydraulic fracturing; • pressure or irregularities in geological formations; • increases in the cost of, or shortages or delays in availability of drilling rigs and qualified personnel for hydraulic fracturing activities; • shortages of or delays in obtaining water resources, suitable proppant, and chemicals in sufficient quantities for use in hydraulic fracturing activities; • equipment failures or accidents; • lack of available gathering facilities or delays in construction of gathering facilities; • lack of available capacity or disruptions in operation of interconnecting transmission pipelines and processing facilities; • adverse weather conditions, such as floods, tornadoes, droughts, ice storms, and extreme freeze events; • lack of available treatment, recycling or disposal options for oil and natural gas waste, including produced water; • environmental hazards, such as oil and produced water and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment; • issues or challenges related to permitting under and compliance with environmental and other governmental regulations; • declines or volatility in oil, natural gas, and NGL prices; • limited availability of financing at acceptable terms; • title problems or legal disputes regarding leasehold rights; and • limitations in the market for oil, natural gas, and NGLs.
The level of our indebtedness could affect our operations in several ways, including the following: • a significant portion of our cash flow could be used to service the indebtedness; • a high level of debt would increase our vulnerability to general adverse economic and industry conditions; • the covenants contained in our Credit Facility and Senior Notes limit our ability to borrow additional funds, dispose of assets, pay dividends and make certain investments; and • a high level of debt could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes, or other purposes.
The level of our indebtedness could affect our operations in several ways, including the following: • a significant portion of our cash flow could be used to service the indebtedness; • a high level of debt would increase our vulnerability to general adverse economic and industry conditions; • the covenants contained in our Credit Facility and Senior Notes limit our ability to borrow additional funds, dispose of assets, pay dividends, execute stock buybacks and make certain investments; and • a high level of debt could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes, or other purposes.
As of December 31, 2024, approximately 5% of our net leasehold acreage was undeveloped or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas, regardless of whether such acreage contains proved reserves.
As of December 31, 2025, approximately 5% of our net leasehold acreage was undeveloped or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas, regardless of whether such acreage contains proved reserves.
These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operation and capital costs, which could have a material adverse effect on our business, financial condition and results of operations. Our business could be negatively affected by security threats, including cybersecurity threats, and other disruptions.
These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operation and capital costs, which could have a material adverse effect on our business, financial condition and results of operations. Our business could be negatively affected by security threats and disruptions, including electronic, cybersecurity or physical threats, and other disruptions.
Fish and Wildlife Service, and analogous state agencies, such as the New Mexico Environment Department and the Texas Commission on Environmental Quality, and state oil and natural gas commissions, such as the New Mexico Oil Conservation Division and the Railroad Commission of Texas, have the power to enforce compliance with these laws and regulations and the permits issued under them.
Fish and Wildlife Service, and analogous state agencies, such as the New Mexico Environment Department and the Texas Commission on Environmental Quality, and state oil and natural gas commissions, such as the New Mexico Oil Conservation Commission, The New Mexico Oil Conservation Division, the New Mexico State Land Office, and the Railroad Commission of Texas, have the power to enforce compliance with these laws and regulations and the permits issued under them.
At December 31, 2024, the majority of our total estimated proved reserves were attributable to properties located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, an area in which industry activity has increased rapidly.
At December 31, 2025, the majority of our total estimated proved reserves were attributable to properties located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, an area in which industry activity has increased rapidly.
Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Business—Regulation of the Oil and Gas Industry.” A change in the jurisdictional characterization of our natural gas assets or planned midstream project by federal, tribal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our natural gas assets, which may cause our revenues to decline and operating expenses to increase.
Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Business—Regulation of the Oil and Natural Gas Industry.” A change in the jurisdictional characterization of our natural gas assets by federal, tribal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our natural gas assets, which may cause our revenues to decline and operating expenses to increase.
Future sales or the availability for sale of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities.
Future sales or repurchases or the availability for sale or repurchase of substantial amounts of our common stock in the public market, or the perception that such sales or repurchases could occur, could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities.
In the future, we may not be able to access adequate funding under our Credit Facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide 39 Table of Contents additional funding to cover the defaulting lender’s portion.
In the future, we may not be able to access adequate funding under our Credit Facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover the defaulting lender’s portion.
We are unable to predict sudden changes in a counterparty’s creditworthiness or ability to perform. Even if we do accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions. 40 Table of Contents During periods of declining commodity prices, our derivative contract receivable positions could generally increase, which increases our counterparty credit exposure.
We are unable to predict sudden changes in a counterparty’s creditworthiness or ability to perform. Even if we do accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions. During periods of declining commodity prices, our derivative contract receivable positions could generally increase, which increases our counterparty credit exposure.
Fuel and other energy conservation measures, alternative fuel requirements, prioritization of advancements in renewable energy production, increasing consumer demand for alternatives to oil, natural gas and NGLs, and technological advances in fuel economy and energy generation devices could reduce demand for oil, natural gas and NGLs.
Fuel and other energy conservation measures, alternative fuel requirements, prioritization of advancements in renewable energy production, increasing consumer demand for low-carbon alternatives to oil, natural gas and NGLs, and technological advances in fuel economy and energy generation devices could reduce demand for oil, natural gas and NGLs.
While changes in U.S. presidential administrations could increase or lessen the relative impacts of climate policies and regulations on the oil and natural gas industry, the adoption and implementation of any international, federal or state legislation or regulations that require additional reporting of GHGs or otherwise restrict or impose taxes, fees or limits on emissions of GHGs could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
While changes in U.S. presidential administrations and the policy priorities they implement could increase or lessen the relative impacts of climate policies and regulations on the oil and natural gas industry, the adoption and implementation of any international, federal or state legislation or regulations that require additional reporting of GHGs or otherwise restrict or impose taxes, fees or limits on emissions of GHGs could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Historically, one of the key drivers in the unconventional resource industry has been growth in production and reserves. With historical volatility in oil and natural gas prices and the potential for rising interest rates will increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers.
Historically, one of the key drivers in the unconventional resource industry has been growth in production and reserves. With historical volatility in oil and natural gas prices and the potential for rising interest rates which may increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers.
Our Credit Facility limits the amounts we can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine in accordance with the terms of the agreement. The borrowing base depends on, among other things, projected revenues from, and asset values of, the proved oil and natural gas properties securing our loan.
Our Credit Facility limits the amounts we can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine in accordance with the terms of the agreement. The borrowing base depends on, among other things, 40 Table of Contents projected revenues from, and asset values of, the proved oil and natural gas properties securing our loan.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock. 54 Table of Contents Risks Related to the Company If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock. Risks Related to the Company If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
These factors include the following: • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • private and government investment in, regulatory incentives for, and purchaser and consumer preferences for non-fossil fuel energy production; • changes in applicable laws and regulations; • the price and quantity of foreign imports, including foreign oil; • the actions by members of OPEC+; • political, economic, and military conditions in or affecting other producing countries, including embargoes or conflicts in the Middle East, Africa, South America and Russia; • the level of global oil and natural gas exploration and production activity; • the level of global oil and natural gas inventories; • prevailing prices on local price indices in the areas in which we operate; • the cost of producing and delivering oil and natural gas and conducting other operations; • the recovery rates of new oil, natural gas and NGL reserves; • lead times associated with acquiring equipment and products, and availability of qualified personnel; • late deliveries of supplies; • technical difficulties or failures; • the proximity, capacity, cost, and availability of gathering and transportation facilities; • localized and global supply and demand fundamentals and transportation availability; • localized and global weather conditions and events; • public health concerns such as pandemic diseases; • technological advances affecting energy consumption, including advances in exploration, development and production technologies; • shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, natural gas, and NGLs; • uncertainty in capital and commodities markets and the ability of companies in our industry to raise equity capital and debt financing; • the price and availability of alternative fuels; and • domestic, local, and foreign governmental regulation, taxes and tariffs. 28 Table of Contents Lower commodity prices will reduce our cash flows and borrowing ability.
These factors include the following: • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • private and government investment in, regulatory incentives for, and purchaser and consumer preferences for non-fossil fuel energy production; • changes in applicable laws and regulations; • the price and quantity of foreign imports, including foreign oil; • the actions by members of OPEC+; • political, economic, and military conditions in or affecting other producing countries, including embargoes or conflicts in the Middle East, Africa, South America and Russia; • the level of global oil and natural gas exploration and production activity; • the level of global oil and natural gas inventories; • prevailing prices on local price indices in the areas in which we operate; • the cost of producing and delivering oil and natural gas and conducting other operations; • the recovery rates of new oil, natural gas and NGL reserves; • lead times associated with acquiring equipment and products, and availability of qualified personnel; • late deliveries of supplies; • technical difficulties or failures; • the proximity, capacity, cost, and availability of gathering and transportation facilities; • localized and global supply and demand fundamentals and transportation availability; • localized and global weather conditions and events; • public health concerns such as pandemic diseases; • technological advances affecting energy consumption, including advances in exploration, development and production technologies; • shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, natural gas, and NGLs; • uncertainty in capital and commodities markets and the ability of companies in our industry to raise equity capital and debt financing; • the price and availability of alternative fuels; and • domestic, local, and foreign governmental regulation, taxes and tariffs.
FERC regulation may indirectly impact gathering services not directly subject to FERC regulation. FERC’s policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on interstate open access 48 Table of Contents transportation, ratemaking, capacity release, and market center promotion may indirectly affect intrastate markets.
FERC regulation may indirectly impact gathering services not directly subject to FERC regulation. FERC’s policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on interstate open access transportation, ratemaking, capacity release, and market center promotion may indirectly affect intrastate markets.
If our drilling results are less than anticipated or we are unable to execute our drilling program because of capital constraints, lease expirations, access to gathering systems, and/or commodity prices decline, the return on our investment in these areas may not be as attractive as we anticipate.
If our drilling results are less than anticipated or we 33 Table of Contents are unable to execute our drilling program because of capital constraints, lease expirations, access to gathering systems, and/or commodity prices decline, the return on our investment in these areas may not be as attractive as we anticipate.
Further, our ability to pay dividends to our stockholders will be restricted and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments, and our common stockholders could experience a partial or total loss of their investment.
Further, our ability to pay dividends to our stockholders or execute stock buybacks will be restricted and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments, and our common stockholders could experience a partial or total loss of their investment.
In addition, the actual amount of cash we will have available for dividends will depend on other factors, some of which are beyond our control, including: • our debt service requirements and other liabilities; • our ability to borrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay dividends; • fluctuations in our working capital needs; • restrictions on dividends contained in any of our debt agreements; • the cost of acquisitions, if any; and • other business risks affecting our cash levels.
In addition, the actual amount of cash we will have available for dividends or stock buybacks will depend on other factors, some of which are beyond our control, including: • our debt service requirements and other liabilities; • our ability to borrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay dividends or execute stock buybacks; • fluctuations in our working capital needs; • restrictions on dividends or stock buybacks contained in any of our debt agreements; • the cost of acquisitions, if any; and • other business risks affecting our cash levels.
The prices we receive for our production will be determined to a significant extent by factors affecting the local and regional supply of and demand for oil and natural gas, including the adequacy of the pipeline and processing infrastructure in the region to process and transport our production and that of other producers.
The prices we receive for our production will be determined to a significant extent by factors affecting the local and regional supply of and demand for oil and natural gas, including the adequacy of the pipeline and processing infrastructure in the region to process and transport our production in the areas in which we operate and that of other producers.
In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, removal, plugging, abandonment, and reclamation costs and we will be responsible for the payment of the balance of such costs. SEC rules could limit our ability to book additional proved undeveloped reserves in the future.
In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, removal, plugging, abandonment, and reclamation costs and we will be responsible for the payment of the balance of such costs. 48 Table of Contents SEC rules could limit our ability to book additional proved undeveloped reserves in the future.
Under the Energy Policy Act of 2005, FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including civil penalty authority under the NGA to impose penalties for current violations of up to $1.0 million per day for each violation.
Under the EP Act of 2005, FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including civil penalty authority under the NGA to impose penalties for current violations of up to $1.0 million per day for each violation.
In the event we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. The price of our common stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research.
In the event we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. 53 Table of Contents The price of our common stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research.
We may be unable to make accretive acquisitions or successfully integrate acquired businesses or assets, and any inability to do so may disrupt our business and hinder our ability to grow. In the future we may make acquisitions of oil and natural gas properties or businesses that complement or expand our current business.
We may be unable to make accretive acquisitions or successfully integrate acquired businesses or assets, and any inability to do so may disrupt our business and hinder our ability to grow. We have made, and in the future we may continue to make, acquisitions of oil and natural gas properties or businesses that complement or expand our current business.
We will be required to comply with larger company disclosure obligations beginning with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. The loss of smaller reporting company status and compliance with such larger company disclosure obligations may increase our legal and financial compliance costs.
We were required to comply with larger company disclosure obligations beginning with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. The loss of smaller reporting company status and compliance with such larger company disclosure obligations may increase our legal and financial compliance costs.
Our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to, among other things: • incur indebtedness; • issue certain equity securities, including preferred equity securities; • incur certain liens or permit them to exist; • engage in certain fundamental changes, including mergers or consolidations; • make certain investments, loans, advances, guarantees and acquisitions; • sell or transfer assets; • enter into sale and leaseback transactions; • redeem or repurchase shares from our stockholders; • pay dividends to our stockholders unless certain tests under the Credit Facility and Senior Notes are satisfied; • make certain payments of junior indebtedness; • enter into certain types of transactions with our affiliates; • enter into certain restrictive agreements; • make certain amendments to our governing documents; • make certain accounting changes; and • enter into swap agreements and hedging arrangements.
Our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to, among other things: • incur indebtedness; • issue certain equity securities, including preferred equity securities; • incur certain liens or permit them to exist; • engage in certain fundamental changes, including mergers or consolidations; • make certain investments, loans, advances, guarantees and acquisitions; • sell or transfer assets; • enter into sale and leaseback transactions; • redeem or repurchase shares from our stockholders; • pay dividends to our stockholders; • make certain payments of junior indebtedness; • enter into certain types of transactions with our affiliates; • enter into certain restrictive agreements; • make certain amendments to our governing documents; • make certain accounting changes; and • enter into swap agreements and hedging arrangements.
The inability or failure of our significant purchasers to meet their obligations to us or their insolvency or liquidation may materially adversely affect our financial condition and results of operations. We may incur substantial losses and be subject to substantial liability claims as a result of our operations.
The inability or failure of our significant purchasers to meet their obligations to us or their insolvency or liquidation may materially adversely affect our financial condition and results of operations. 36 Table of Contents We may incur substantial losses and be subject to substantial liability claims as a result of our operations.
In addition, declines in oil, natural gas and NGL prices may increase the likelihood that some of these working interest owners, particularly those that are smaller and less established, are not able to fulfill their joint activity obligations.
In addition, declines in oil, natural gas and NGL prices may increase the likelihood that some of these 35 Table of Contents working interest owners, particularly those that are smaller and less established, are not able to fulfill their joint activity obligations.
Such agreements may require each party to indemnify the other against certain claims regardless of the negligence or other fault of the indemnified party; however, many states place limitations on contractual indemnity agreements, particularly agreements that indemnify a party against the consequences of its own negligence.
Such agreements may require each party to 51 Table of Contents indemnify the other against certain claims regardless of the negligence or other fault of the indemnified party; however, many states place limitations on contractual indemnity agreements, particularly agreements that indemnify a party against the consequences of its own negligence.
We may be required to assume the risk of the physical and environmental condition of the properties in addition to the risk that the properties may not perform in accordance with our expectations. Reserve estimates depend on many assumptions that may turn out to be inaccurate.
We may be required to assume the risk of the physical and environmental condition of the properties in addition to the risk that the properties may not perform in accordance with our expectations. 32 Table of Contents Reserve estimates depend on many assumptions that may turn out to be inaccurate.
Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.” In addition, our cost of drilling, completing, and operating wells is often uncertain before drilling commences.
Any material inaccuracies in reserve estimates or 43 Table of Contents underlying assumptions will materially affect the quantities and present value of our reserves.” In addition, our cost of drilling, completing, and operating wells is often uncertain before drilling commences.
Any such liabilities, penalties, suspensions, terminations or regulatory changes could materially adversely affect our financial condition and results of operations. 47 Table of Contents We are responsible for the decommissioning, removal, plugging, abandonment, and reclamation costs for our facilities.
Any such liabilities, penalties, suspensions, terminations or regulatory changes could materially adversely affect our financial condition and results of operations. We are responsible for the decommissioning, removal, plugging, abandonment, and reclamation costs for our facilities.
Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures and liabilities under applicable environmental and health and safety laws and regulations.
Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures 47 Table of Contents and liabilities under applicable environmental and health and safety laws and regulations.
While reporting on ESG metrics remains voluntary, access to capital and investors is likely to favor companies with robust ESG programs in place. Finally, increasing concentrations of GHG in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, extreme temperatures and other climatic events.
While reporting on ESG metrics remains voluntary, access to capital and investors is likely to favor companies with robust ESG programs in place. 50 Table of Contents Finally, increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, extreme temperatures and other climatic events.
The amount of any dividend will depend on the amount of cash we generate from operations, which will fluctuate from quarter to quarter based on, among other things: • the volumes of crude oil, natural gas and NGLs that we produce; • market prices of crude oil, natural gas and NGLs and their effect on our drilling and development plan; • the levels of our operating expenses, maintenance expenses and general and administrative expenses; • regulatory action affecting: 53 Table of Contents • the supply of, or demand for, crude oil, natural gas and NGLs; • our operating costs or our operating flexibility; • prevailing economic conditions; and • adverse weather conditions.
The amount of any dividend or stock buybacks will depend, among other factors, on the amount of cash we generate from operations, which will fluctuate from quarter to quarter based on, among other things: • the volumes of crude oil, natural gas and NGLs that we produce; • market prices of crude oil, natural gas and NGLs and their effect on our drilling and development plan; • the levels of our operating expenses, maintenance expenses and general and administrative expenses; • regulatory action affecting; • the supply of, or demand for, crude oil, natural gas and NGLs; • our operating costs or our operating flexibility; • prevailing economic conditions; and • adverse weather conditions.
Our operations are subject to electrical power outages, regional competition for available power, and increased energy costs. Power outages, which may last beyond our backup and alternative power arrangements, would harm our operations and our business. 45 Table of Contents We also may be subject to risks and unanticipated costs associated with obtaining power from various utility companies.
Our operations are subject to electrical power outages, regional competition for available power, and increased energy costs. Power outages, which may last beyond our backup and alternative power arrangements, would harm our operations and our business. We also may be subject to risks and unanticipated costs associated with obtaining power from various utility companies.
The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced. A t December 31, 2024, approximately 38% of our total estimated proved reserves were classified as proved undeveloped.
The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced. A t December 31, 2025, approximately 41% of our total estimated proved reserves were classified as proved undeveloped.
Negative public perception could cause the permits the Company requires to conduct our operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct our business. We may be unable to quickly adapt to changes in market/investor priorities.
Negative public perception could cause the permits the Company requires to conduct our operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct our business. 29 Table of Contents We may be unable to quickly adapt to changes in market/investor priorities.
For example, we cannot control the success of drilling and development activities on properties operated by third parties, which depend on a number of factors under the control of a third-party operator, including such operator’s determinations with respect to, among other things, the nature and timing of drilling and operational activities, the timing and amount of capital expenditures and the selection of suitable technology.
For example, we cannot control the success of drilling and development activities on properties operated by third parties, which depend on a number of factors under the control of a third-party operator, including such operator’s determinations with respect to, among other things, the nature and timing of drilling and operational activities, the timing and amount of capital expenditures and the selection of suitable technology or appropriately engineered facility design.
For example, it is uncertain how conflicts in the Middle East, including the war in Gaza, and the war in Ukraine and resulting sanctions against Russia will affect oil and natural gas prices in the coming months.
For example, it is uncertain how conflicts in the Middle East, conflicts in Venezuela, and the war in Ukraine and resulting sanctions against Russia will affect oil and natural gas prices in the coming months.
The amount of cash we have available for dividends depends primarily upon our cash flow and not solely on our profitability, which will be affected by non-cash items.
The amount of cash we have available for dividends or stock buybacks depends primarily upon our cash flow and not solely on our profitability, which will be affected by non-cash items.
If these facilities are unavailable to us on commercially reasonable terms or otherwise (either temporarily or long-term), we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons, as was the case in July and August 2023 and in July 2024 when our producing wells in the Red Lake field in New Mexico were shut in due to unexpected maintenance issues with our third party processor.
If these facilities are unavailable to us on commercially reasonable terms or otherwise (either temporarily or long-term), we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons, as was the case in certain months of 2025, 2024 and 2023 when our producing wells in the Red Lake field in New Mexico were shut in due to unexpected maintenance issues with our third party processors.
The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices, actual drilling results, the availability of drilling rigs and other services and equipment, construction delays in our midstream project, cost of materials, regulatory, technological and competitive developments, and worldwide and regional economic conditions.
The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices, actual drilling results, the availability of drilling rigs and other services and equipment, cost of materials, regulatory, technological and competitive developments, and worldwide and regional economic conditions.
The curtailments arising from these and similar circumstances may last from a few days to several months, and in many cases, we may be provided only limited, if any, notice as to when these circumstances will arise and their duration.
The curtailments arising from these and similar circumstances may last from a 34 Table of Contents few days to several months, and in many cases, we may be provided only limited, if any, notice as to when these circumstances will arise and their duration.
If any of these risks actually occurs, it could materially harm our business, financial condition or results of operations and the trading price of our shares could decline. Investors should carefully consider each of the following risk factors and all of the other information set forth in this Annual Report.
If any of these risks actually occurs, it could materially harm our business, financial condition or results of operations and the trading price of 28 Table of Contents our stock could decline. Investors should carefully consider each of the following risk factors and all of the other information set forth in this Annual Report.
In addition, other oil and natural gas companies may have greater financial, technical and personnel resources that allow them to enjoy technological advantages and that may in the future allow them to implement new technologies before we can.
In addition, other oil and natural gas companies may have greater financial, technical and personnel resources that allow them 45 Table of Contents to enjoy technological advantages and that may in the future allow them to implement new technologies before we can.
Matters subject to regulation include: • permits for drilling operations; • drilling bonds; • reports concerning operations; • the spacing of wells; • the rates of production; • the plugging and abandoning of wells and decommissioning and removal of equipment; • unitization and pooling of properties; and • taxation.
Matters subject to regulation include: • permits for drilling operations; • drilling bonds; • reports concerning operations; • the spacing of wells; • the rates of production; • the plugging and abandoning of wells, decommissioning and removal of equipment and surface and subsurface restoration and remediation; • unitization and pooling of properties; and • taxation.
The amount of dividends we make, if any, and the decision to make any dividend at all will be determined by our Board, whose interests may differ from those of our common stockholders.
The amount of dividends or stock repurchases we make, if any, and the decision to make any dividend or repurchase stock at all will be determined by our Board, whose interests may differ from those of our common stockholders.
Although inflation moderated somewhat in 2024, inflationary pressures have resulted in and may in the future result in additional increases to the costs of goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise. During inflationary periods, interest rates have historically increased.
Inflationary pressures have resulted in and may in the future result in additional increases to the costs of goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise. During inflationary periods, interest rates have historically increased.
The amount of cash we have available for dividends to our common stockholders depends primarily on our cash flow and not solely on our profitability, which may prevent us from paying dividends, even during periods in which we record net income.
The amount of cash we have available for dividends or stock buybacks of our common stockholders depends primarily on our cash flow and not solely on our profitability, which may prevent us from paying dividends or executing stock buybacks, even during periods in which we record net income.
The stocks of small cap companies tend to be highly volatile. We expect that the price of our common stock will be highly volatile for the next several years. As a result, we may be unable to access funding through sales of our common stock or other equity-linked securities.
We expect that the price of our common stock will be highly volatile for the next several years. As a result, we may be unable to access funding through sales of our common stock or other equity-linked securities.
Our operations involve utilizing the latest drilling and completion techniques as developed by us and our service providers. As of December 31, 2024, the Company produced from 782 gross wells on our West Texas an d New Mexico acreage, of which 228 are horizontal wells, and therefore are subject to increased risks associated with horizontal drilling.
Our operations involve utilizing the latest drilling and completion techniques as developed by us and our service providers. As of December 31, 2025, the Company produced from 1,231 gross wells on our West Texas an d New Mexico acreage, of which 374 are horizontal wells, and therefore are subject to increased risks associated with horizontal drilling.
In addition, treatment and disposal of flowback and produced water is becoming more highly regulated and restricted, including, in some areas, due to seismic activity associated with saltwater disposal wells. Thus, our costs for obtaining and disposing of water could increase significantly.
In addition, recycling or treatment and disposal of flowback and produced water is becoming more highly regulated and restricted, including, in some areas, due to seismic activity associated with saltwater disposal wells. Thus, our costs for obtaining water for drilling and hydraulic fracturing and for recycling or treating and disposing of water could increase significantly.
If FERC were to consider the status of an individual facility, including the new midstream project we plan to construct, and determine that the facility or services provided by it are not exempt from FERC regulation under the NGA and that the facility provides interstate service, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by FERC under the NGA or the NGPA and/or state regulations.
If FERC were to consider the status of an individual facility and determine that the facility or services provided by it are not exempt from FERC regulation under the NGA and that the facility provides interstate service, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by FERC under the NGA or the NGPA and/or state regulations.
Increased interest rates could have the effects of raising the cost of capital and depressing economic growth, either of which (or the combination thereof) could hurt the financial and operating results of our business. In 2024, while rates were slightly decreased, they remained elevated as the U.S. Federal Reserve and other central banks continued to navigate inflationary concerns.
Increased interest rates could have the effects of raising the cost of capital and depressing economic growth, either of which (or the combination thereof) could hurt the financial and operating results of our business. In 2025, inflation remained elevated as the U.S. Federal Reserve and other central banks continued to navigate inflationary concerns.
The operating and financial restrictions and covenants in our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage, expand or pursue our 38 Table of Contents business activities or pay dividends.
The operating and financial restrictions and covenants in our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage, expand or pursue our business activities or pay dividends or execute stock buybacks.
For example, during the period from January 1, 2016 to December 31, 2024, NYMEX WTI oil prices ranged from a high of $123.64 per Bbl on March 8, 2022 to a low of negative $36.98 per Bbl on April 20, 2020. During 2024, WTI prices ranged from a high of $87.69 per Bbl to a low of $66.73 per Bbl.
For example, during the period from January 1, 2016 to December 31, 2025, NYMEX WTI oil prices ranged from a high of $123.64 per Bbl on March 8, 2022 to a low of negative $36.98 per Bbl on April 20, 2020. During 2025, WTI prices ranged from a high of $80.73 per Bbl to a low of $55.44 per Bbl.
Our approximate 46,956 MBoe of estimated proved undeveloped reserves are estimated to require approximately $279 million of development capital. Our development of these reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
Our approximate 60,705 MBoe of estimated proved undeveloped reserves are estimated to require approximately $285 million of development capital. Our development of these reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
Average daily prices for NYMEX Henry Hub gas ranged from a high of $13.20 per MMBtu to a low of $1.21 per MMBtu during 2024. If the prices of oil and natural gas continue to be volatile, reverse their recent increases, or decline, our operations, financial condition, cash flows and level of expenditures may be materially and adversely affected.
Average daily prices for NYMEX Henry Hub gas ranged from a high of $9.86 per MMBtu to a low of $2.65 per MMBtu during 2025. If the prices of oil and natural gas continue to be volatile, reverse their recent increases, or decline, our operations, financial condition, cash flows and level of expenditures may be materially and adversely affected.
Inspections are often not performed on properties being acquired, and environmental matters, such as subsurface and groundwater contamination, are not necessarily observable even when an inspection is undertaken. 37 Table of Contents Any acquisition involves other potential risks, including, among other things: • the validity of our assumptions about reserves, future production, revenues and costs; • a decrease in our liquidity by using a significant portion of our cash from operations or borrowing capacity to finance acquisitions; • a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions; • the ultimate value of any contingent consideration agreed to be paid in an acquisition; • dilution to stockholders if we use equity as consideration for, or to finance, acquisitions; • the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; • an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and • an increase in our costs or a decrease in our revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.
Any acquisition involves other potential risks, including, among other things: • the validity of our assumptions about reserves, future production, revenues and costs; • a decrease in our liquidity by using a significant portion of our cash from operations or borrowing capacity to finance acquisitions; • a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions; • the ultimate value of any contingent consideration agreed to be paid in an acquisition; • dilution to stockholders if we use equity as consideration for, or to finance, acquisitions; • the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; • an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and • an increase in our costs or a decrease in our revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.
Cybersecurity attacks in particular are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data.
Cybersecurity attacks, particularly amidst the increased adoption of artificial intelligence technologies, are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data.
In addition, the use of 3-D seismic and other advanced technologies requires greater predrilling expenditures than traditional drilling strategies, and we could incur losses as a result of such expenditures. As a result, our drilling activities may not be successful or economical.
In addition, the use of 3-D seismic and other advanced technologies requires greater predrilling expenditures than traditional drilling strategies, and we could incur losses as a result of such expenditures.
As a result, we may pay cash dividends during periods when we record a net loss for financial accounting purposes and, conversely, we might fail to pay cash dividends on our common stock during periods when we record net income for financial accounting purposes. Delaware law imposes restrictions on our ability to pay cash dividends on our common stock.
As a result, we may pay cash dividends or execute stock buybacks during periods when we record a net loss for financial accounting purposes and, conversely, we might fail to pay cash dividends or execute stock buybacks on our common stock during periods when we record net income for financial accounting purposes.
If any such climatic events were to occur, they could have an adverse effect on our financial condition and results of operations and the financial condition and operations of our customers. Increases in interest rates could adversely affect our business.
If any such climatic events were to occur, they could have an adverse effect on our financial condition and results of operations and the financial condition and operations of our customers.
See “Items 1 and 2 Business and Properties – Regulation of the Oil and Natural Gas Industry”. Increased regulation and attention given to the hydraulic fracturing process and associated processes could lead to greater opposition to, and litigation concerning, oil and natural gas production activities using hydraulic fracturing techniques.
Increased regulation and attention given to the hydraulic fracturing process and associated processes could lead to greater opposition to, and litigation concerning, oil and natural gas production activities using hydraulic fracturing techniques.
We may incur losses as a result of title defects in the properties in which we invest. It is our practice in acquiring oil and natural gas leases or interests not to incur the expense of retaining lawyers to examine the title to the mineral interest at the time of acquisition.
It is our practice in acquiring oil and natural gas leases or interests not to incur the expense of retaining lawyers to examine the title to the mineral interest at the time of acquisition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, our management team's internal cybersecurity risk management and strategy processes are supported with third party consultants with extensive work experience in various roles involving information technology, including security, auditing, compliance, systems and programming.
Biggest changeAdditionally, our Vice President of Technology has 12 years of professional experience in the information security area. 58 Table of Contents Additionally, our management team's internal cybersecurity risk management and strategy processes are supported with third party consultants with extensive work experience in various roles involving information technology, including security, auditing, compliance, systems and programming.
Our cybersecurity program is built upon internationally recognized frameworks and maps to standards published by The National Institute of Standards and Technology ("NIST CSF"), which develops cybersecurity standards, guidelines, best practices and other resources to meet the needs of U.S. industry, federal agencies and the broader public.
Our cybersecurity program is built upon internationally recognized frameworks and maps to standards published by The National Institute of Standards and Technology ("NIST CSF 2.0"), which develops cybersecurity standards, guidelines, best practices and other resources to meet the needs of U.S. industry, federal agencies and the broader public.
From time to time, we engage third-party service providers to enhance our risk mitigation efforts. For example, we have engaged a multifaceted cybersecurity advisory firm specializing in risk management and compliance, to perform annual cybersecurity risk assessments utilizing industry standard cybersecurity frameworks. We also purchase insurance to protect us against the risk of cybersecurity breaches.
From time to time, we engage third-party service providers to enhance our risk mitigation efforts. For example, we have engaged a multifaceted cybersecurity advisory firm specializing in risk management and compliance, to perform annual cybersecurity risk assessments utilizing industry standard cybersecurity frameworks. 57 Table of Contents We also purchase insurance to protect us against the risk of cybersecurity breaches.
The Chair of the Nominating and Corporate Governance Committee regularly reports to the Board of Director on cybersecurity risks and other matters reviewed by the 57 Table of Contents Nominating and Corporate Governance Committee in conjunction with the management team. All materials or presentations on cybersecurity provided to the Nominating and Corporate Governance Committee are provided to all Board members.
The Chair of the Nominating and Corporate Governance Committee regularly reports to the Board of Director on cybersecurity risks and other matters reviewed by the Nominating and Corporate Governance Committee in conjunction with the management team. All materials or presentations on cybersecurity provided to the Nominating and Corporate Governance Committee are provided to all Board members.
These risks include, among other things: operational risks, harm to our employees, suppliers or industry partners, intellectual property theft, fraud, extortion, and violation of data 56 Table of Contents privacy or security laws.
These risks include, among other things: operational risks, harm to our employees, suppliers or industry partners, intellectual property theft, fraud, extortion, and violation of data privacy or security laws.
The Chief Information and Compliance Officer has over 11 years of experience in the information technology area and holds a Master of Business Administration with a focus in Technology from Oklahoma Christian University. Additionally, our Vice President of Technology and Analytics has 11 years of professional experience in the information security area.
The Chief Information and Compliance Officer has over 12 years of experience in the information technology area and holds a Master of Business Administration with a focus in Technology from Oklahoma Christian University.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 15 - Commitments and Contingencies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a discussion of our commitments and contingencies. Item 4. Mine Safety Disclosures Not applicable. 58 Table of Contents PART II
Biggest changeSee Note 15 - Commitments and Contingencies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a discussion of our commitments and contingencies. Item 4. Mine Safety Disclosures Not applicable. 59 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe acquisition of the surrendered shares was not part of a publicly announced program to repurchase shares of our common stock. Any shares repurchased by the Company for personal tax withholdings are immediately retired upon repurchase. 59 Table of Contents Item 6. Selected Financial Data [Reserved]
Biggest changeWe also receive shares from employees for the payment of personal income tax withholding upon vesting of stock-based compensation transactions. The acquisition of the surrendered shares is not part of our Public Repurchase Program to repurchase shares of our common stock. Any shares repurchased by the Company for personal tax withholdings are immediately retired upon repurchase.
Dividends The Company declared quarterly dividends totaling approximately $31.0 million and $27.9 million for the years ended December 31, 2024, and 2023, respectively. The cash dividends were declared for all issued and outstanding common shares including unvested restricted stock issued under the Company's Amended and Restated 2021 Long-Term Incentive Plan.
Dividends The Company declared quarterly dividends totaling approximately $33.6 million and $31.0 million for the years ended December 31, 2025, and 2024, respectively. The cash dividends were declared for all issued and outstanding common shares including unvested restricted stock issued under the Company's Amended and Restated 2021 Long-Term Incentive Plan.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock are listed on the NYSE American under the symbol "REPX". There were approximately 234 holders of record of our common stock as of February 28, 2025.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock are listed on the NYSE American under the symbol "REPX". There were approximately 231 holders of record of our common stock as of March 2, 2026.
The Company's Credit Facility and Senior Notes can limit the dividends the Company is able to pay unless the Company meets certain covenants in accordance with our credit agreement and the terms of the Senior Notes.
The Company's Credit Facility and Senior Notes can limit the dividends the Company is able to pay unless the Company meets certain covenants in accordance with our credit agreement and the terms of the Senior Notes. See Note 11 - Shareholders' Equity in the Company's consolidated financial statements in "Item 15.
Issuer Repurchases of Equity Securities Our common stock repurchase activity during the fourth quarter of 2024 was as follows: Month Ended Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs October 31 51,434 $ 26.32 — — November 30 151 $ 29.61 — — December 31 — $ — — — _____________________ (1) These amounts reflect the shares received by us from employees for the payment of personal income tax withholding on vesting transactions.
Our common stock repurchase activity during the fourth quarter of 2025 was as follows: Month Ended Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs October 31 38,910 $ 26.97 — — November 30 250,106 $ 26.41 — — December 31 — $ — — $ 100,000,000 _____________________ (1) On November 21, 2025, the Company retired 250,000 shares of our common stock received as consideration in connection with the Viking Sale.
Removed
Outstanding Equity Awards Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities in Column (a)) (a) (b) (c) Equity Compensation Plans Approved by Security Holders — — 920,951 Equity Compensation Plans Not Approved by Security Holders — — — Total — — 920,951 Unregistered Sales of Equity Securities None.
Added
Exhibits and Financial Statement Schedules" for additional information on our dividends. Unregistered Sales of Equity Securities None.
Added
Issuer Repurchases of Equity Securities In December 2025, our Board of Directors approved a stock repurchase program (the “Public Repurchase Program”) authorizing the repurchase of up to $100 million of our common stock from time to time over a period of 24 months, including through open market purchases, through block trades, in privately negotiated transactions, or by other means, including through the use of trading plans, each in accordance with applicable securities laws and other restrictions.
Added
The Public Repurchase Program does not obligate us to purchase any common stock and may be suspended, modified, extended or discontinued by the Board at any time. During the fourth quarter of 2025, no shares were purchased under the Public Repurchase Program. The remaining repurchase authority under the Public Repurchase Program at December 31, 2025, was $100 million.
Added
All other shares purchased during the fourth quarter reflect shares received from employees for personal income tax withholding upon vesting of stock-based compensation awards. These shares were not part of our Public Repurchase Program. See Note 4 - Acquisitions and Divestitures in the Company's consolidated financial statements in "Item 15.
Added
Exhibits and Financial Statement Schedules" for a full discussion of the Viking Sale.
Added
Stock Performance Graph The following graph compares the cumulative total shareholder return on Riley Permian's common stock over a five fiscal-year period plus the three months ending December 31, 2021, with the cumulative total returns of the Russell 2000 Index and 60 Table of Contents the SPDR Oil and Gas Exploration & Production ETF (“XOP”).
Added
The graph was prepared assuming $100 was invested on September 30, 2020, our fiscal year-end in effect prior to the 2021 fiscal year-end change, in Riley Permian’s common stock, the Russell 2000 Index and the XOP and dividends reinvested subsequent to the initial investment. The closing price of our common stock on December 31, 2025, was $26.40.
Added
The graph and related information should not be deemed “soliciting material” or to be “filed” with the SEC, nor should such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference into such a filing.
Added
The graph and information are included for historical comparative purposes only and should not be considered indicative of future stock performance. Item 6. Selected Financial Data [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+31 added−38 removed37 unchanged
Biggest changeThe Company also began construction of midstream infrastructure in New Mexico to increase our oil and natural gas volume capacity, and we currently anticipate the in-service date will be before the end of 2026. 69 Table of Contents Financing Activities Net cash flows used in financing activities were $100.6 million for the year ended December 31, 2024, compared to net cash flows provided by financing activities of $264.4 million for the year ended December 31, 2023, and primarily consisted of the following: Year Ended December 31, 2024 2023 (In thousands) Proceeds (repayments) under Credit Facility, net $ (70,000) $ 129,000 Proceeds (repayments) under Senior Notes, net of issuance costs $ (20,000) $ 173,000 Payment of common share dividends $ (30,831) $ (27,706) Proceeds from issuance of common shares, net $ 25,415 $ 2 Deferred financing costs $ (2,783) $ (7,406) During 2024, the Company repaid $90 million of debt, net of proceeds compared to net borrowings of $302 million in 2023 and cash dividends increased $3 million, partially offset by our 2024 Equity Offering of $25.4 million.
Biggest changeAcquisitions of oil and natural gas properties decreased due to the 2024 New Mexico Acquisition with no comparable activity in 2025. 71 Table of Contents Financing Activities Net cash flows used in financing activities were $62.0 million for the year ended December 31, 2025, compared to $100.6 million for the year ended December 31, 2024, and primarily consisted of the following: Year Ended December 31, 2025 2024 (In thousands) Repayments to Credit Facility, net $ (5,000) $ (70,000) Repayments to Senior Notes, net of issuance costs $ (20,000) $ (20,000) Payment of cash dividends $ (33,325) $ (30,831) Proceeds from issuance of common shares, net $ — $ 25,415 Net repayments under our Credit Facility decreased year over year.
Gain/Loss on Derivatives The Company recognizes settlements and changes in the fair value of our derivative contracts as a single component within other income (expense) in our consolidated statements of operations. We have oil and natural gas derivative contracts, including fixed price swaps, basis swaps and collars, that settle against various indices.
Gain (Loss) on Derivatives, net The Company recognizes settlements and changes in the fair value of our derivative contracts as a single component within other income (expense) in our consolidated statements of operations. We have oil and natural gas derivative contracts, including fixed price swaps, basis swaps and collars, that settle against various indices.
Impairment of Oil and Natural Gas Properties The cost of proved oil and natural gas properties are assessed on a field-by-field basis for impairment at least annually or whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred.
Impairments Impairment of Oil and Natural Gas Properties The cost of proved oil and natural gas properties are assessed on a field-by-field basis for impairment at least annually or whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred.
(3) During the periods presented, the Company did not have any NGL derivative contracts in place. 62 Table of Contents Oil and Natural Gas Revenues Our revenues are derived from the sale of our oil and natural gas production, including the sale of NGLs that are extracted from our natural gas during processing.
(3) During the periods presented, the Company did not have any NGL derivative contracts in place. 63 Table of Contents Oil and Natural Gas Revenues Our revenues are derived from the sale of our oil and natural gas production, including the sale of NGLs that are extracted from our natural gas during processing.
Estimates of reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. The process 71 Table of Contents of estimating oil, natural gas and NGL reserves requires substantial judgment, resulting in imprecise determinations, particularly for new discoveries. Different reserve engineers may make different estimates of reserve quantities based on the same data.
Estimates of reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. The process of estimating oil, natural gas and NGL reserves requires substantial judgment, resulting in imprecise determinations, particularly for new discoveries. Different reserve engineers may make different estimates of reserve quantities based on the same data.
Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted 67 Table of Contents tax rates. See Note 12 - Income Taxes in the Company's consolidated financial statements in "Item 15.
Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. See Note 12 - Income Taxes in the Company's consolidated financial statements in "Item 15.
Exhibits and Financial Statement Schedules" for a full discussion of our impairment analysis. Oil and Natural Gas Reserves Our estimates of proved and proved developed reserves are a major component of our depletion calculation. Additionally, our proved reserves represent the element of these calculations that require the most subjective judgments.
Exhibits and Financial Statement Schedules" for a full discussion of our impairment analysis. 73 Table of Contents Oil and Natural Gas Reserves Our estimates of proved and proved developed reserves are a major component of our depletion calculation. Additionally, our proved reserves represent the element of these calculations that require the most subjective judgments.
At the end of each quarter, unproved leasehold costs are assessed for impairment by considering future drilling plans, drilling activity results, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. At December 31, 2024, the Company had approximately $101.0 million of unproved leasehold.
At the end of each quarter, unproved leasehold costs are assessed for impairment by considering future drilling plans, drilling activity results, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. At December 31, 2025, the Company had approximately $156.0 million of unproved leasehold.
The Company also had natural gas delivery commitments under the A&R Tolling Agreement and a remaining equity commitment under the Second amendment to the A&R LLC Agreement of $27.7 million to fund our portion of the 2025 capital budget for the RPC Power joint venture.
The Company also had natural gas delivery commitments under the A&R Tolling Agreement and a remaining equity commitment under the Second Amendment to the A&R LLC Agreement to fund our portion of the capital budget for the RPC Power joint venture.
Realized prices and revenues from product sales are a function of the volumes produced, product quality, market prices, gas Btu content, as well as gathering, processing and transportation costs. Gathering, processing and transportation costs are allocated across natural gas and NGLs based on revenue, which leads to heightened fluctuations in such cost allocations across periods.
Realized prices and revenues from product sales are a function of the volumes produced, product quality, market prices, gas Btu content, as well as GP&T costs. GP&T costs are allocated across natural gas and NGLs based on revenue, which leads to heightened fluctuations in such cost allocations across periods.
Of the remaining unproved leasehold costs at December 31, 2024, approximately $2.2 million is scheduled to expire in 2025. The Company expects to renew or extend these leases in 2025. If our drilling is not successful, this leasehold could become partially or entirely impaired.
Of the remaining unproved leasehold costs at December 31, 2025, approximately $3.4 million is scheduled to expire in 2026. The Company expects to renew or extend these leases in 2026. If our drilling is not successful, this leasehold could become partially or entirely impaired.
Significant inputs and judgements are used in determining the fair value of the assets.
Significant inputs and judgments are used in determining the fair value of the assets.
The principal balance of the Senior Notes as of December 31, 2024, was $165 million. See Note 10 - Long-Term Debt in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our long-term debt.
The Senior Notes had a principal balance of $145 million as of December 31, 2025. See Note 10 - Long-Term Debt in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our long-term debt.
For further discussion of risks related to our liquidity and capital resources, see "Item 1A. Risk Factors." Working Capital Working capital is the difference in our current assets and our current liabilities. Working capital is an indication of liquidity and potential need for short-term funding.
For further discussion of risks related to our liquidity and capital resources, see "Item 1A. Risk Factors." Working Capital Working capital represents the funds available to meet day-to-day operational needs and is the difference in our current assets and our current liabilities. Working capital is an indication of liquidity and potential need for short-term funding.
We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the 2023 New Mexico Acquisition. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties.
We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in these acquisitions. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties.
The transaction costs of $1.6 million for the year ended December 31, 2024, primarily relate to the RPC Power Joint Venture, costs associated with the negotiation and closing of our new gas purchase agreement in addition to potential transactions that the Company evaluated but decided not to pursue further.
During the year ended December 31, 2024, the transaction costs of $1.6 million primarily related to the RPC Power joint venture and costs associated with the negotiation and closing of a long-term gas purchase agreement in addition to potential transactions that the Company evaluated but decided not to pursue further.
The following table presents the components of the Company's gain (loss) on derivatives, net for the years ended December 31, 2024, and 2023: Year Ended December 31, 2024 2023 (In thousands) Settlements on derivative contracts $ 1,849 $ (17,221) Non-cash gain (loss) on derivatives (3,514) 23,414 Gain (loss) on derivatives, net $ (1,665) $ 6,193 Cash gains or losses on settled derivative contracts relate to contracts that settle during the period and are a function of the difference in settled versus contractual prices and the associated hedged volumes for each underlying commodity.
The following table presents the components of the Company's gain (loss) on derivatives, net: Year Ended December 31, 2025 2024 (In thousands) Settlements on derivative contracts $ 16,615 $ 1,849 Non-cash gain (loss) on derivatives 19,644 (3,514) Gain (loss) on derivatives, net $ 36,259 $ (1,665) 68 Table of Contents Cash gains or losses on settled derivative contracts relate to contracts that settle during the period and are a function of the difference in settled versus contractual prices and the associated hedged volumes for each underlying commodity.
On December 13, 2024, the Company entered into the sixteenth amendment to the Credit Facility to, among other things, extend the stated maturity date from April 2026 to December 2028 (or if any Senior Notes are then outstanding, the date that is 181 days prior to the earliest stated maturity date of such Senior Notes, in this case October 2027) and increase the borrowing base from $375 million to $400 million, resulting in the addition of one new lender to the lending group.
On December 13, 2024, the Company entered into the sixteenth amendment to the Credit Facility to, among other things, extend the stated maturity date from April 2026 to December 2028 (or if any Senior Notes are then outstanding, the date that is 181 days prior to the earliest stated maturity date of such Senior Notes, in this case October 2027) and increase the borrowing base from $375 million to $400 million, which was reaffirmed in December 2025 with the removal of the natural gas hedging requirement.
During the year ended December 31, 2024, the Company recognized a non-cash impairment loss on proved properties of $11.3 million relating to certain properties in Texas outside of the Company's acreage in the Champions field, in addition to historical properties in New Mexico outside of Red Lake.
During the year ended December 31, 2025, and 2024, the Company recognized a non-cash impairment loss on proved properties of $1.2 million and $1.8 million, respectively, relating to certain properties in New Mexico outside of the Company's acreage in the Red Lake field.
Business Combinations The Company periodically acquires assets and assumes liabilities in transactions accounted for as business combinations, such as the 2023 New Mexico Acquisition. In connection with the 2023 New Mexico Acquisition, we allocated the purchase price consideration of $324.7 million to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition.
Business Combinations The 2023 New Mexico Acquisition and the Silverback Acquisition resulted in the Company acquiring assets and assuming liabilities in transactions accounted for as business combinations. In connection with these acquisitions, we allocated the purchase price consideration to the assets acquired and liabilities assumed based on estimated fair values as of the acquisition date.
Risk Factors." Overview Riley Permian is a growth-oriented, independent oil and natural gas company focused on horizontal drilling of conventional oil-saturated and liquids-rich formations that produce long-term stable cash flows in the Permian Basin. The majority of our acreage is located in Yoakum County, Texas and Eddy County, New Mexico.
Overview Riley Permian is a growth-oriented, independent oil and natural gas company focused on horizontal drilling of conventional oil-saturated and liquids-rich formations in the Permian Basin that produce long-term cash flows.
Exhibits and Financial Statement Schedules" for a full discussion of our acquisitions. See Note 3 - Summary of Significant Accounting Policies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our significant accounting policies. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable. Item 8.
See Note 4 - Acquisitions and Divestitures in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our acquisitions. See Note 3 - Summary of Significant Accounting Policies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our significant accounting policies.
Our strategic business objectives include enhancing the rate of return on our invested capital, generating sustainable free cash flow, maintaining a strong and flexible balance sheet while maximizing our returns to shareholders.
The majority of our acreage is located in Yoakum County, Texas and Eddy County, New Mexico. 61 Table of Contents Our strategic business objectives include enhancing the rate of return on our invested capital, generating sustainable free cash flow, maintaining a strong and flexible balance sheet and maximizing our returns to shareholders.
The Company’s principal liquidity requirements are to finance our operations, fund capital expenditures and acquisitions, pay dividends and satisfy any indebtedness obligations. Cash flows are subject to a number of variables, including the level of oil and natural gas production and prices, and the significant capital expenditures required to more fully develop the Company’s oil and natural gas properties.
Cash flows are subject to a number of variables, including the level of oil and natural gas production and prices, and the significant capital expenditures required to more fully develop the Company’s oil and natural gas properties.
During the year ended December 31, 2024, the Company recognized a proved property impairment of $11.3 million relating to certain properties in Texas outside of the Company's acreage in the Champions field and certain historical properties in New Mexico outside of the Company's acreage in the Red Lake field.
During the year ended December 31, 2025, and 2024, the Company recognized a non-cash impairment loss on proved properties of $1.2 million and $1.8 million, respectively, relating to certain properties in New Mexico outside of the Company's acreage in the Red Lake field.
Investing Activities Net cash flows used in investing activities were $147.8 million for the year ended December 31, 2024, compared to $469.6 million for the year ended December 31, 2023, and primarily consisted of the following: Year Ended December 31, 2024 2023 (In thousands) Additions to oil and natural gas properties $ (98,490) $ (134,796) Net assets acquired in business combination $ — $ (324,686) Acquisitions of oil and natural gas properties $ (19,597) $ (5,443) Contributions to equity method investment $ (17,912) $ (3,566) Additions to midstream property and equipment $ (10,964) $ — Capital expenditures for oil and natural gas properties decreased $36.3 million due primarily to lower average well cost.
Investing Activities Net cash flows used in investing activities were $145.8 million for the year ended December 31, 2025, compared to $147.8 million for the year ended December 31, 2024, and primarily consisted of the following: Year Ended December 31, 2025 2024 (In thousands) Additions to oil and natural gas properties $ (89,624) $ (98,490) Additions to midstream property and equipment $ (36,667) $ (10,964) Net assets acquired in business combination $ (117,702) $ — Acquisitions of oil and natural gas properties $ (2,161) $ (19,597) Disposition of midstream property and equipment $ 120,204 $ — Contributions to equity method investment $ (15,750) $ (17,912) Capital expenditures for oil and natural gas properties decreased due to fewer wells drilled and lower facility costs.
General and Administrative ("G&A") Expense G&A expenses consist of administrative costs and share-based compensation expense. Administrative costs include corporate overhead such as payroll and benefits for our staff, office costs, fees for professional services such as audit and legal services, technology costs, insurance and other.
Administrative costs include corporate overhead such as payroll and benefits for our staff, office costs, fees for professional services such as audit and legal services, technology costs, insurance and other. Stock-based compensation expense reflects costs associated with our stock granted to employees and members of our board of directors. G&A expenses are reported net of overhead recoveries.
Further, the Company entered into a 15-year gas purchase agreement that required an acreage dedication to a midstream counterparty for a significant portion of our oil and gas assets in New Mexico. This agreement is expected to begin before the end of 2026.
Further, the Company entered into the A&R Gas Purchase Agreement that required an acreage dedication and a 72 Table of Contents minimum volume commitment to Targa for a significant portion of our natural gas production in New Mexico. This agreement is expected to commence before the end of 2026.
The Company recognized a non-cash impairment loss on proved properties of $9.8 million for the year ended December 31, 2023, which related to a decrease in fair value of certain properties in Texas outside of the Company's acreage in the Champions field.
Additionally, the Company recognized a non-cash impairment loss on proved properties of $9.5 million for the year ended December 31, 2024, relating to certain properties in Texas outside of the Company's acreage in the Champions field that were sold as part of the Viking Sale.
Dividends For the year ended December 31, 2024, the Company authorized and declared quarterly dividends totaling approximately $31.0 million, with $30.8 million paid in cash and $0.2 million accrued for the holders of restricted stock upon vesting.
Dividends For the year ended December 31, 2025, the Company recognized quarterly dividends totaling approximately $33.6 million, with $33.3 million paid in cash and $0.3 million accrued for the holders of unvested restricted stock awards.
Capitalized costs are depleted using the units-of-production method. Accretion expense relates to ARO. We record the fair value of the liability for ARO in the period in which the liability is incurred (at the time the wells are drilled or acquired) with the offset to property cost.
We record the fair value of the liability for ARO in the period in which the liability is incurred (at the time the wells are drilled or acquired) with the offset to property cost. The liability accretes each period until it is settled or the well is sold, at which time the liability is removed.
Credit Facility and Senior Notes The Company's borrowing base on our Credit Facility was $400 million with outstanding borrowings of $115 million at December 31, 2024, representing available borrowing capacity of $285 million. On February 22, 2023, the Company amended our Credit Facility to, among other things, allow for the issuance of unsecured Senior Notes of up to $200 million.
On February 22, 2023, the Company amended our Credit Facility to, among other things, allow for the issuance of unsecured Senior Notes of up to $200 million.
General domestic and international political and economic conditions, including the military conflict between Russia and Ukraine, conflicts in the Middle East, and the U.S. and global response to such conflicts, global economic growth, actions of OPEC+ countries, and implementation of tariffs could prolong market volatility or cause a decline in commodity prices. Inflation continues to be an ongoing concern.
General domestic and international economic, market and political conditions, including military conflicts, global economic growth, unpredictability of tariffs, actions of OPEC+ countries and changes to the current political environment could prolong market volatility and cause a decline in commodity prices.
In the event that future commodity prices or reserve quantities are lower than those used as inputs to determine estimates of acquisition date fair values, the likelihood increases that certain costs may be determined to not be recoverable. See Note 4 - Acquisitions of Oil and Natural Gas Properties in the Company's consolidated financial statements in "Item 15.
A higher fair value assigned to a property results in higher DD&A expense, which results in lower net income. In the event that future commodity prices or reserve quantities are lower than those used as inputs to determine estimates of acquisition date fair values, the likelihood increases that certain costs may be determined to not be recoverable.
At December 31, 2024, we had cash on hand of $13.1 million and $285 million of undrawn capacity under our Credit Facility. 68 Table of Contents Cash Flows The following table summarizes the Company’s cash flows for the years ended December 31, 2024, and 2023: Year Ended December 31, 2024 2023 (In thousands) Net cash provided by operating activities $ 246,274 $ 207,195 Net cash used in investing activities $ (147,838) $ (469,556) Net cash provided by (used in) financing activities $ (100,631) $ 264,379 Operating Activities Net cash provided by operating activities were $246.3 million for the year ended December 31, 2024, compared to $207.2 million for the year ended December 31, 2023, and primarily consisted of the following: Year Ended December 31, 2024 2023 (In thousands) Total revenues $ 410,181 $ 375,047 Operating expenses (1) $ (128,653) $ (117,363) Prepayments from partners $ 11,020 68 Settlements on derivative contracts $ 1,849 $ (17,221) Interest paid, net of capitalized interest $ (31,582) $ (27,140) Tax liabilities paid, net of refunds $ (18,084) $ (9,949) _____________________ (1) Operating expenses include LOE, production and ad valorem taxes, administrative costs, transaction costs and other minor operating expenses.
Cash Flows The following table summarizes the Company’s cash flows: Year Ended December 31, 2025 2024 (In thousands) Net cash provided by operating activities $ 212,539 $ 246,274 Net cash used in investing activities $ (145,769) $ (147,838) Net cash used in financing activities $ (62,005) $ (100,631) 70 Table of Contents Operating Activities Net cash provided by operating activities were $212.5 million for the year ended December 31, 2025, compared to $246.3 million for the year ended December 31, 2024, and primarily consisted of the following: Year Ended December 31, 2025 2024 (In thousands) Total revenues, net $ 391,980 $ 410,181 Operating expenses (1) $ (153,252) $ (128,653) Advances from joint interest owners $ (6,828) $ 11,020 Settlements on derivative contracts $ 16,615 $ 1,849 Interest paid, net of capitalized interest $ (28,214) $ (31,582) Tax liabilities paid, net of refunds $ (20,565) $ (18,084) _____________________ (1) Operating expenses include LOE, production and ad valorem taxes, administrative costs, transaction costs and other minor operating expenses.
The following table sets forth selected operating data for the years ended December 31, 2024, and 2023: Years Ended December 31, 2024 2023 Revenues (in thousands): (1) Oil sales $ 408,935 $ 363,125 Natural gas sales (1,412) 2,612 NGLs sales 2,278 6,910 Oil and natural gas sales, net $ 409,801 $ 372,647 Production Data, net: Oil (MBbls) 5,519 4,802 Natural gas (MMcf) 7,484 5,865 NGLs (MBbls) 1,486 1,006 Total (MBoe) 8,252 6,786 Daily combined volumes (Boe/d) 22,546 18,590 Daily oil volumes (Bbls/d) 15,079 13,156 Average Realized Prices: (1) Oil ($ per Bbl) $ 74.10 $ 75.62 Natural gas ($ per Mcf) $ (0.19) $ 0.45 NGLs ($ per Bbl) $ 1.53 $ 6.87 Average Realized Prices, including derivative settlements: (1)(2) Oil ($ per Bbl) $ 73.67 $ 71.93 Natural gas ($ per Mcf) $ 0.37 $ 0.53 NGLs ($ per Bbl) (3) $ 1.53 $ 6.87 _____________________ (1) The Company's oil, natural gas and NGL sales are presented net of gathering, processing and transportation costs.
Year Ended December 31, 2025 2024 Revenues (in thousands): (1) Oil sales, net $ 398,341 $ 408,935 Natural gas sales, net (3,322) (1,412) NGLs sales, net (3,039) 2,278 Oil and natural gas sales, net $ 391,980 $ 409,801 Production Data, net: Oil (MBbls) 6,328 5,519 Natural gas (MMcf) 11,669 7,484 NGLs (MBbls) 2,387 1,486 Total (MBoe) 10,660 8,252 Daily combined volumes (Boe/d) 29,205 22,546 Daily oil volumes (Bbls/d) 17,337 15,079 Average Realized Prices: (1) Oil ($ per Bbl) $ 62.95 $ 74.10 Natural gas ($ per Mcf) $ (0.28) $ (0.19) NGLs ($ per Bbl) $ (1.27) $ 1.53 Average Realized Prices, including derivative settlements: (1)(2) Oil ($ per Bbl) $ 65.46 $ 73.67 Natural gas ($ per Mcf) $ (0.22) $ 0.37 NGLs ($ per Bbl) (3) $ (1.27) $ 1.53 _____________________ (1) The Company's oil, natural gas and NGL sales are presented net of GP&T costs.
Depletion, Depreciation, Amortization and Accretion Expense DD&A expense is the systematic expensing of the capitalized costs incurred to acquire, explore and develop oil, natural gas and NGLs. All costs incurred in the acquisition, exploration and development of properties (excluding costs of surrendered and abandoned leaseholds, delay lease rentals, dry holes and overhead related to exploration activities) are capitalized.
All costs incurred in the acquisition, exploration and development of properties (excluding costs of surrendered and abandoned leaseholds, delay lease rentals, dry holes and overhead related to exploration activities) are capitalized. Capitalized costs are depleted using the units-of-production method. Accretion expense relates to ARO.
Daily oil volumes increased by 15% due to increased production from new wells turned to sales in our Champions field as well as the 2023 and 2024 New Mexico Acquisitions. 63 Table of Contents Natural gas revenues For the year ended December 31, 2024, natural gas revenues decreased by $4.0 million compared to the year ended December 31, 2023.
Daily oil volumes increased by 15% due to increased production from new wells turned to sales in our Red Lake field as well as the partial year contribution from the Silverback Acquisition. 64 Table of Contents Natural gas revenues Natural gas revenues decreased by $1.9 million.
Certain operating cost components, such as direct labor and materials and supplies, generally remain relatively fixed across broad production volume ranges, but can fluctuate depending on activities performed during a specific period. For instance, repairs to our pumping equipment or surface facilities or subsurface maintenance result in increased production expenses in periods during which they are performed.
Expenses for electricity, compression, direct labor, saltwater disposal and materials and supplies comprise the most significant portion of our lease operating expenses. Certain operating cost components, such as direct labor and materials and supplies, generally remain relatively fixed across broad production volume ranges, but can fluctuate depending on activities performed during a specific period.
Impairment of EOR Project At September 30, 2024, the Company recorded a $30.2 million impairment related to the discontinuation of our EOR Project, including a $28.9 million non-cash impairment and a $1.3 million cash impairment related to the termination of the Kinder Morgan CO 2 contract.
The Company also recognized an impairment loss of $30.2 million for the year ended December 31, 2024, which consisted of a non-cash impairment loss of $28.9 million related to the discontinuation of the EOR project, and a cash impairment loss of $1.3 million related a contract termination payment.
The increase in share-based compensation expense was primarily due to a higher employee count and an increase in outstanding equity awards. Transaction Costs Transaction costs represent costs incurred on successful or unsuccessful commercial transactions, business combinations or unsuccessful acquisitions.
Additional drivers of increased administrative costs included technology costs, professional services, office costs and insurance costs. Stock-based compensation expense increased by $1.0 million primarily due to an increase in outstanding equity awards. Transaction Costs Transaction costs represent costs incurred on successful or unsuccessful commercial transactions, business combinations or unsuccessful acquisitions.
Exhibits and Financial Statement Schedules for more information. 64 Table of Contents Costs and Expenses The following table presents the Company's operating costs and expenses and other (income) expenses: Year Ended December 31, 2024 2023 Costs and Expenses: (In thousands) Lease operating expenses $ 71,463 $ 58,817 Production and ad valorem taxes $ 29,428 $ 25,559 Exploration costs $ 2,595 $ 4,165 Depletion, depreciation, amortization and accretion $ 74,900 $ 65,055 Impairment of oil and natural gas properties $ 11,317 $ 9,760 Other impairments $ 30,158 $ — Administrative costs $ 26,551 $ 26,569 Share-based compensation 8,138 6,833 General and administrative expense $ 34,689 $ 33,402 Transaction costs $ 1,573 $ 5,817 Interest expense, net $ 34,338 $ 31,816 (Gain) loss on derivatives, net $ 1,665 $ (6,193) Loss from equity method investment $ 721 $ 218 Income tax expense $ 28,074 $ 34,461 Lease Operating Expenses ("LOE") LOE are the costs incurred in the operation and maintenance of producing properties.
GP&T costs increased due to increased volumes in our Champions field resulting from a full year contribution of additional third party processing capacity that came online in mid-2024, higher volumes in our Red Lake field from new wells turned to sales as well as the partial year contribution from the Silverback Acquisition. 65 Table of Contents Costs and Expenses The following table presents the Company's operating costs and expenses and other (income) expenses: Year Ended December 31, 2025 2024 Costs and Expenses: (In thousands) Lease operating expenses $ 87,506 $ 71,463 Production and ad valorem taxes $ 29,052 $ 29,428 Exploration costs $ 361 $ 2,595 Depletion, depreciation, amortization and accretion $ 93,183 $ 74,900 Impairment of oil and natural gas properties $ 1,214 $ 11,317 Other impairments $ 1,607 $ 30,158 Administrative costs $ 31,472 $ 26,551 Stock-based compensation 9,130 8,138 General and administrative expense $ 40,602 $ 34,689 Transaction costs $ 5,176 $ 1,573 Interest expense, net $ 31,364 $ 34,338 (Gain) loss on derivatives, net $ (36,259) $ 1,665 Loss from equity method investment $ 886 $ 721 Gain on midstream sale $ (71,675) $ — Income tax expense $ 48,123 $ 28,074 Lease Operating Expenses ("LOE") LOE are the costs incurred in the operation and maintenance of producing properties.
Production and ad valorem taxes increased by $3.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to increases in our oil and natural gas sales, net and $0.8 million from the new waste emissions charge. 65 Table of Contents Exploration Costs Exploration costs consist of exploratory well expense, expiration of unproved leasehold, and geological and geophysical costs which include seismic survey costs.
Production and ad valorem taxes decreased by $0.4 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to lower realized prices of $6.8 million and $1.5 million related to the Environment Protection Agency's WEC that was nullified in the first quarter of 2025, partially offset by $5.5 million due to increased production and $2.4 million due to the Silverback Acquisition. 66 Table of Contents Exploration Costs Exploration costs consist of exploratory well expense, expiration of unproved leasehold, and geological and geophysical costs which include seismic survey costs.
Certain operating cost components, such as saltwater disposal associated with produced water, are variable and increase or decrease as hydrocarbon production levels and the volume of water disposal increases or decreases. The Company’s LOE increased by $12.6 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
For instance, repairs to our pumping equipment or surface facilities or subsurface maintenance result in increased production expenses in periods during which they are performed. Certain operating cost components, such as saltwater disposal associated with produced water, are variable and increase or decrease as hydrocarbon production levels and the volume of water disposal increases or decreases.
Liquidity and Capital Resources The business of exploring for, developing and producing oil and natural gas is capital intensive. Because oil, natural gas and NGL reserves are a depleting resource, like all upstream operators, we must make capital investments to grow and even sustain production.
Because oil, natural gas and NGL reserves are a depleting resource, we must make capital investments, like all upstream operators, to sustain and grow production. The Company’s principal liquidity requirements are to finance our operations, fund capital expenditures, fund acquisitions and joint venture commitments, pay dividends and satisfy any indebtedness obligations.
The impairment loss relates to the discontinuation of the Company's EOR project, in favor of redeploying the required future capital and salvaging certain assets for use in the Company's conventional vertical and horizontal development programs. There was no other impairment loss for the year ended December 31, 2023.
The discontinuation of the Company's EOR project was in favor of redeploying the required future capital and repurposing certain assets for use in the Company's conventional vertical and horizontal development programs. General and Administrative ("G&A") Expense G&A expenses consist of administrative costs and stock-based compensation expense.
The Company recognized an impairment loss on proved properties of $9.8 million for the year ended December 31, 2023, relating to certain properties in Texas outside of the Company's acreage in the Champions field. See Note 7 - Fair Value Measurements in the Company's consolidated financial statements in "Item 15.
Additionally, the Company recognized a non-cash impairment loss on proved properties of $9.5 million for the year ended December 31, 2024, relating to certain properties in Texas outside of the Company's acreage in the 67 Table of Contents Champions field that were sold as part of the Viking Sale.
During the year ended December 31, 2023, the transaction costs of $5.8 million related to the 2023 New Mexico Acquisition. Interest Expense, net Interest expense, net increased by $2.5 million during the year ended December 31, 2024, when compared to the year ended December 31, 2023.
The transaction costs of $5.2 million for the year ended December 31, 2025, primarily related to the Silverback Acquisition.
The following table presents the Company's oil and natural gas sales prior to and net of gathering, processing and transportation costs: Years Ended December 31, 2024 2023 Revenues: (In thousands) Oil sales, gross $ 408,983 $ 363,151 Less: Gathering, processing and transportation costs 48 26 Oil sales, net $ 408,935 $ 363,125 Gas sales, gross $ 2,480 $ 9,569 Less: Gathering, processing and transportation costs 3,892 6,957 Gas sales. net $ (1,412) $ 2,612 NGL sales, gross $ 31,591 $ 22,455 Less: Gathering, processing and transportation costs 29,313 15,545 NGL sales, net $ 2,278 $ 6,910 Oil and natural gas sales, gross $ 443,054 $ 395,175 Less: Gathering, processing and transportation costs 33,253 22,528 Oil and natural gas sales, net $ 409,801 $ 372,647 Oil revenues For the year ended December 31, 2024, oil revenues increased by $45.8 million, or 13%, compared to the year ended December 31, 2023.
The following table presents the Company's oil and natural gas sales prior to and net of GP&T costs: Year Ended December 31, 2025 2024 Revenues: (In thousands) Oil sales, net $ 398,341 $ 408,935 Gas sales, gross $ 7,272 $ 2,480 Less: GP&T costs (10,594) (3,892) Gas sales, net $ (3,322) $ (1,412) NGL sales, gross $ 44,159 $ 31,591 Less: GP&T costs (47,198) (29,313) NGL sales, net $ (3,039) $ 2,278 Oil and natural gas sales, gross $ 449,772 $ 443,006 Less: GP&T costs (57,792) (33,205) Oil and natural gas sales, net $ 391,980 $ 409,801 The Company’s total oil and natural gas sales, net decreased $17.8 million, or 4%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Administrative costs remained flat for the year ended December 31, 2024, compared to the year ended December 31, 2023. Share-based compensation expense increased by $1.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The Company’s LOE increased by $16.0 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Estimated fair values assigned to assets acquired can have a significant impact on future results of operations presented in the Company's financial statements. A higher fair value assigned to a property results in higher DD&A expense, which results in lower net earnings.
In addition, the earnout payments in connection with the Silverback Acquisition were valued using a Monte Carlo simulation model which involved modeling the potential earnout payments over numerous scenarios based on WTI futures prices. Estimated fair values assigned to assets acquired can have a significant impact on future results of operations presented in the Company's financial statements.
The Company cannot estimate the length or gravity of the future impact these conditions will have on the Company's results of operations, financial position, liquidity and the value of the oil and natural gas reserves. 2024 New Mexico Asset Acquisition On May 7, 2024, the Company completed the acquisition of oil and natural gas properties in Eddy County, New Mexico ("2024 New Mexico Asset Acquisition"), which included 13,900 contiguous net acres adjacent to the Company's existing acreage in Eddy County, for a cash purchase price of approximately $19.1 million plus $0.5 million in transaction costs.
The Company cannot estimate the length or gravity of the future impact these conditions will have on the Company's results of operations, financial position, liquidity and the value of the oil and natural gas reserves.
For the years ended December 31, 2024, and 2023, the Company paid cash dividends of approximately $0.7 million and $0.5 million, respectively, to holders of restricted stock upon vesting. Contractual Obligations As of December 31, 2024, the Company had a remaining volume commitment of less than seven years with our primary midstream counterparty in Texas.
For the years ended December 31, 2025, and 2024, the Company paid cash dividends of approximately $0.8 million and $0.7 million, respectively, to holders of restricted stock upon vesting. See Note 11 - Shareholders' Equity in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for further discussion.
The current portion of our Senior Notes, which includes our regularly scheduled principal payments of $5 million per quarter, accounts for $20 million of our working capital deficit at December 31, 2024, and December 31, 2023. We utilize our Credit Facility and cash on hand to manage the timing of cash flows and fund short-term working capital deficits.
Our working capital fluctuates as our drilling and completion activity changes with periods of higher and lower activity. We utilize our Credit Facility and cash on hand to manage the timing of cash 69 Table of Contents flows and fund short-term working capital deficits. At December 31, 2025, we had $290 million of undrawn capacity under our Credit Facility.
Year Ended December 31, 2024 2023 (In thousands) Current income tax expense $ 24,872 $ 6,872 Deferred income tax expense 3,202 27,589 Total income tax expense $ 28,074 $ 34,461 Effective income tax rate 24.0 % 23.6 % The decrease in deferred income tax expense from 2023 to 2024 is primarily due to the 2023 New Mexico Acquisition, which allowed for more accelerated tax depreciation in 2023.
Total income tax expense is summarized below: Year Ended December 31, 2025 2024 (In thousands) Current income tax expense $ 36,771 $ 24,872 Deferred income tax expense 11,352 3,202 Total income tax expense $ 48,123 $ 28,074 Effective income tax rate 23.0% 24.0% The increase in our current income tax expense was due to the Midstream Sale, which increased our current tax liability by $16.5 million, partially offset by an increase in tax depreciation and depletion due to higher production and capital spending.
This increase was driven by a $5.5 million increase due to more workovers primarily in our Red Lake field, a $4.5 million increase in our Champions field due to higher production volumes and a $3.4 million increase due to the inclusion of LOE expenses associated with our 2024 New Mexico Asset Acquisition, partially offset by a decrease in certain expenses, primarily chemical, fuel and repair costs.
This was driven primarily by higher production volumes, including an $8.3 million increase due to higher production in our Red Lake field, a $7.2 million increase due to Silverback production added to our Red Lake field, and a $0.9 million increase in workovers.
Net cash provided by operating activities increased $39.1 million, or 19%, compared to year ended December 31, 2023. Oil and natural gas revenues increased $58.2 million due to an increase in our oil and natural gas production partially offset by a $21.1 million decrease due to lower realized pricing.
The decrease in net cash provided by operating activities was due primarily to lower revenues from a decrease in realized prices and higher operating expenses due to higher production volumes. Increased settlements on derivatives partially offset the decrease in revenues.
The following table presents exploration costs for the years ended December 31, 2024, and 2023: Year Ended December 31, 2024 2023 (In thousands) Exploratory well expense (1) $ — $ 3,447 Expiration of unproved leasehold 2,560 696 Geological and geophysical costs 35 22 Total exploration costs $ 2,595 $ 4,165 _____________________ (1) The Company determined that an exploratory well was not capable of producing commercial quantities and expensed the associated drilling costs during the year ended December 31, 2023 .
The following table presents the components of exploration costs: Year Ended December 31, 2025 2024 (In thousands) Exploratory well expense $ — $ — Expiration of unproved leasehold 315 2,560 Geological and geophysical costs 46 35 Total exploration costs $ 361 $ 2,595 Depletion, Depreciation, Amortization and Accretion Expense DD&A expense is the systematic expensing of the capitalized costs incurred to acquire, explore and develop oil, natural gas and NGLs.
The following table summarizes the effect of price and volume changes on oil revenues: Oil sales, net for the year ended December 31, 2023 $ 363,125 Price (8,409) Volume 54,219 Oil sales, net for the year ended December 31, 2024 $ 408,935 Our realized oil prices decreased by $1.52 during the year ended December 31, 2024, when compared to the year ended December 31, 2023, which corresponded with a $0.95 decrease in the average WTI price during the same period.
(In thousands) Oil sales, net for the year ended December 31, 2024 $ 408,935 Price (70,538) Volume 59,944 Oil sales, net for the year ended December 31, 2025 $ 398,341 Our realized oil prices decreased by $11.15 per Bbl, which was the result of an $11.24 per Bbl decrease in the average WTI price.
Removed
Although inflation moderated somewhat, inflationary pressures remain elevated, which in turn may cause our capital expenditures and operating costs to increase. During inflationary periods, interest rates have historically increased.
Added
Risk Factors." The following discussion and analysis focuses primarily on our results for 2025 and 2024 and comparisons between those periods.
Removed
The 2024 New Mexico Asset Acquisition was accounted for as an asset acquisition, with the final purchase price and transaction costs being capitalized to oil and natural gas properties.
Added
Discussion of 2023 results and comparisons between 2024 and 2023 are not included herein and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2024 Annual Report on Form 10-K.
Removed
The acquisition was funded through a combination of proceeds from the 2024 Equity Offering and cash on hand. 60 Table of Contents RPC Power Joint Venture In January 2023, the Company formed a joint venture, RPC Power, for the purpose of constructing, owning and operating power generation assets which became fully operational in September of 2024.
Added
Although the broader rate of inflation has moderated, we continue to monitor the risk of persistent cost pressures in specific areas of our operating expenses and capital expenditures. Our margins may be compressed if costs increase more than commodity prices. Additionally, the current interest rate environment remains sensitive to shifts in macroeconomic factors and central bank policies.
Removed
These assets use the Company’s produced natural gas to power a portion of our oilfield operations in Yoakum County, Texas.
Added
Midstream Sale On December 3, 2025, the Company sold all of our membership interests in Dovetail Midstream, LLC, a wholly owned subsidiary of the Company that holds certain midstream infrastructure projects in Eddy County, New Mexico, to Targa for an aggregate cash purchase price of approximately $111 million, subject to customary purchase price adjustments.
Removed
In May 2024, the Company entered into the Second Amended and Restated Limited Liability Company Agreement ("A&R LLC Agreement") to expand the scope of our joint venture to include the constructing, owning, and operating of additional new power generation and storage assets, which are expected to be operational beginning in late 2025 through 2026, for the sale of energy and ancillary services to ERCOT.
Added
The Midstream Sale also provided for the subsequent sale by the Company of certain compressor station assets for an aggregate cash purchase price of approximately $10 million plus reimbursement of $1.4 million of capital improvements; this second transaction closed on December 24, 2025.
Removed
In November 2024, the Company signed the Second Amendment to the A&R LLC Agreement, which increased the capital commitment for each owner from $42.5 million to $51.5 million. As of December 31, 2024, the Company owned 50% of the joint venture.
Added
In connection with the Midstream Sale, the Company recognized a pre-tax gain of $71.7 million, net of $2.6 million of transaction costs, which was recorded in our consolidated statement of operations. The Company also has the right to earn up to an additional $60 million in cash payments contingent upon achieving certain volumetric performance thresholds over a five-year period.
Removed
On February 28, 2025, the Company contributed an additional $6.3 million to the joint venture which increased our total capital contributions to $30 million. 2024 Equity Offering On April 8, 2024, the Company issued and sold 1,015,000 shares of common stock at a price of $27.00 per share.
Added
Viking Sale On November 21, 2025, the Company sold its interest in oil and natural gas properties in Texas outside of the Company's acreage in the Champions field, which had a net carrying value of $10.4 million to an affiliate of Combo.
Removed
Net proceeds from the issuance were approximately $25.4 million, after deducting underwriting discounts and commissions and expenses.
Added
The properties consisted of six established units in Lee and Fayette Counties, Texas, which were jointly developed by the Company and Combo. In exchange for the Company's interest in these assets, we received and subsequently retired 250,000 shares of the Company's common stock.
Removed
Gas Purchase Agreement We believe the successful execution of the Company's New Mexico development plan is dependent upon maintaining operational control and securing reliable processing and downstream markets for our natural gas.
Added
The net carrying value of the assets plus cash paid of $0.8 million less the tax impact of the sale resulted in a reduction to additional paid-in capital of $10.2 million.
Removed
As part of this plan, the Company signed a long-term gas purchase agreement for our New Mexico field with a new midstream counterparty, which includes dedicated acreage for a significant portion of the Company’s oil and gas assets in New Mexico, reimbursement by the Company of construction costs incurred by the midstream counterparty to connect to the Company’s pipeline (subject to a monetary cap of $18.7 million) and an initial 15-year term from the in-service date.
Added
Silverback Acquisition On July 1, 2025, the Company closed on the acquisition of 100% of the ownership interests of Silverback for approximately $123 million, which included approximately $120 million paid in cash and approximately $3 million of estimated fair value related to potential earnout payments.
Removed
In conjunction with the agreement, the Company intends to construct, own and operate low and high-pressure gathering lines and compression facilities that will connect to our new high capacity 20-inch natural gas pipeline to be constructed by the Company and designed to handle gas volumes of up to 150 MMcf per day.

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