Riley Exploration Permian (REPX) risk factors, FY2025 10-K

Risks Related to our Business, Operations, and Strategy

1. 01Recent regulatory restrictions on use of produced water and a moratorium on new produced water disposal wells in certain areas of the Permian Basin to stem rising seismic activity and earthquakes could increase our operating costs and adversely impact our business, results of operations and financial condition62% rewritten
2. 02Enhanced scrutiny on ESG matters could have an adverse effect on the Company’s operations
3. 03We may be unable to quickly adapt to changes in market/investor priorities
4. 04If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value for a significant period of time, we will be required to take write-downs of the carrying values of our properties42% rewritten
5. 05Our exploration and development projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our reserves
6. 06Our development and exploratory drilling efforts and our well operations may not be profitable or achieve our targeted returns
7. 07Properties that we decide to drill may not yield oil, natural gas or NGLs in commercially viable quantities
8. 08Properties we acquire may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties that we acquire, or obtain protection from sellers against such liabilities
9. 09Reserve 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 reserves53% rewritten
10. 10Part of our strategy involves drilling using the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application
11. 11Additionally, certain of the new techniques we are adopting may cause irregularities or interruptions in production due to offset wells being shut in and the time required to drill and complete multiple wells before any such wells begin producing20% rewritten
12. 12In addition, the geographic concentration of our assets, including our total estimated proved reserves as of December 31, 2025, exposes us to additional risks, such as changes in field-wide rules and regulations that could cause us to permanently or temporarily shut-in all of our wells within a field27% rewritten
13. 13few 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 durationNew
14. 14The prices we receive for our production may be affected by local and regional factors
15. 15An increase in the differential between NYMEX WTI and the reference or regional index price used to price our oil and natural gas would reduce our cash flows from operations
16. 16The 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
17. 17We participate in oil and natural gas leases with third parties who may not be able to fulfill their commitments to our projects
18. 18We participate in the drilling and completion of wells with third-party operators that exercise exclusive control over such operations. As a participant, we rely on the third-party operators to successfully operate these properties pursuant to joint operating agreements and other similar contractual arrangements
19. 19Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations
20. 20We depend upon a few significant purchasers for the sale of most of our oil and natural gas production. The loss of one or more of these purchasers could, among other factors, limit our access to suitable markets for the oil, natural gas and NGLs we produce34% rewritten
21. 21We may incur substantial losses and be subject to substantial liability claims as a result of our operations. Additionally, we may not be insured for, or our insurance may be inadequate to protect us against, these risks
22. 22We 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
23. 23We may incur losses as a result of title defects in the properties in which we invest
24. 24Our operations could be impacted by burdens and encumbrances on title to our properties
25. 25Our use of 2-D and 3-D seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations
26. 26Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information
27. 27Our future results will suffer if we do not effectively manage our expanded operations
28. 28Acquisitions of assets or businesses may reduce, rather than increase, our distributable cash flow or may disrupt our business
29. 29We may need to access funding through capital market transactions. Due to our relative smaller public float and low market capitalization, it may be difficult and expensive for us to raise additional funds
30. 30Our Credit Facility and our Senior Notes have substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to declare dividends
31. 31Our indebtedness could reduce our financial flexibility
32. 32Any significant reduction in our borrowing base under our Credit Facility as a result of the periodic borrowing base redeterminations or otherwise may negatively impact our ability to fund our operations
33. 33We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our debt arrangements, which may not be successful
34. 34Increases in interest rates could adversely affect our business80% rewritten
35. 35Our use of interest rate derivative instruments may limit our ability to benefit from decreases in interest rates and could adversely affect our financial condition and results of operationsNew
36. 36Our joint ventures may not perform as expected, and conducting a portion of our operations through joint ventures in which we do not have 100% ownership interest exposes us to risks and uncertainties, many of which are outside of our control

Risks Related to the Oil and Natural Gas Industry

1. 37Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations
2. 38Our future financial condition and results of operations will depend on the success of our exploitation, development, and acquisition activities, which are subject to numerous risks beyond our control, including the risk that drilling will not result in commercially viable oil and natural gas production86% rewritten
3. 39underlying 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 commencesNew
4. 40Energy conservation measures and technological advances could reduce demand for oil, natural gas and NGLs
5. 41Limitation or restrictions on our ability to obtain water or dispose of flowback and produced water may have an adverse effect on our operating results
6. 42The unavailability or high cost of equipment, supplies, personnel and oilfield services used to drill and complete wells could adversely affect our ability to execute our development plans within our budget and on a timely basis
7. 43Competition in the oil and natural gas industry is intense, making it more difficult for us to acquire properties and market oil or natural gas
8. 44Declining general economic, business or industry conditions have, and will continue to have, a material adverse effect on our results of operations, liquidity and financial condition, and are expected to continue having a material adverse effect for the foreseeable future
9. 45Inflationary issues and associated changes in monetary policy have resulted in and may in the future result in increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise21% rewritten
10. 46We may not be able to keep pace with technological developments in our industry
11. 47Negative public perception regarding us and/or our industry could have an adverse effect on our operations

Risks Related to Acts of God and Cybersecurity

1. 48Power outages, limited availability of electrical resources, and increased energy costs could have a material adverse effect on us
2. 49Our 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
3. 50Extreme weather conditions could adversely affect our ability to conduct drilling and production activities in the areas where we operate
4. 51Our business could be negatively affected by security threats and disruptions, including electronic, cybersecurity or physical threats, and other disruptions31% rewritten
5. 52Loss of our information and computer systems could adversely affect our business
6. 53A terrorist attack or armed conflict could harm our business

Risks Related to Legal, Regulatory, and Tax Matters

1. 54We are subject to stringent federal, tribal, state and local laws and regulations related to environmental and occupational health and safety issues that could adversely affect the cost, manner or feasibility of conducting our operations or expose us to significant liabilities
2. 55We are subject to complex laws that can affect the cost, manner or feasibility of doing business20% rewritten
3. 56We are responsible for the decommissioning, removal, plugging, abandonment, and reclamation costs for our facilities69% rewritten
4. 57SEC rules could limit our ability to book additional proved undeveloped reserves in the future
5. 58Should we fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines67% rewritten
6. 59A 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 increaseNew
7. 60We may be involved in legal proceedings that could result in substantial liabilities
8. 61Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production87% rewritten
9. 62Restrictions on drilling or other operational activities intended to protect certain species of wildlife or to conserve natural resources may adversely affect our ability to conduct drilling activities in areas where we operate
10. 63The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business
11. 64Future federal, state or local legislation also may impose new or increased taxes or fees on oil and natural gas extraction or production
12. 65Anti-indemnity provisions enacted by many states may restrict or prohibit a party’s indemnification of us
13. 66Our effective tax rate may change in the future, which could adversely impact us45% rewritten

Risks Related to Our Common Stock

1. 67The market price of our common stock may be volatile, which could cause the value of your investment to decline
2. 68Future sales or repurchases of our common stock may depress the price of shares of our common stockNew
3. 69Purchases of shares of our common stock pursuant to our stock repurchase plan may affect the value of our common stock, and there can be no assurance that our stock repurchase plan will enhance stockholder valueNew
4. 70If we fail to continue to meet the requirements for continued listing on the NYSE American stock exchange, our common stock could be delisted from trading, which would decrease the liquidity of our common stock and ability to raise additional capital
5. 71If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline
6. 72We may not generate sufficient cash to support any dividend or stock buybacks for our common stockholders25% rewritten
7. 73Our quarterly cash dividends and stock buybacks, if any, may vary significantly both quarterly and annually42% rewritten
8. 74The Board may modify or revoke our dividend policy or stock buyback program at any time at its discretion64% rewritten
9. 75The 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 income36% rewritten
10. 76Delaware law and other laws impose restrictions on our ability to pay cash dividends on or execute buybacks of our common stock44% rewritten
11. 77We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock

Risks Related to the Company

1. 78Effective December 31, 2024, we no longer qualify as a “smaller reporting company” which will impose additional reporting requirements that may increase our costs and demands on management time
2. 79Our business and operations could be adversely affected if we lose key personnel
3. 80Our executive officers, directors and principal stockholders have the ability to control or significantly influence all matters submitted to the Company’s stockholders for approval
4. 81Provisions in our corporate charter documents and under Delaware law could make an acquisition of the Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove current management