REPX

Riley Permian screens as a deeply undervalued Permian operator. FY2025 produced $161M of net income (+80.9% YoY) and $7.59 diluted EPS on $392M of revenue, despite revenue actually declining 4.4% YoY — the earnings jump was meaningfully aided by the $71.7M pre-tax gain on the Dovetail Midstream Sale to Targa disclosed in the MD&A, so headline P/E of 4.3x flatters the underlying earnings power. Even normalizing that out, operating income of $133M on $392M of revenue (34% operating margin) and 25.4% ROE point to a high-quality, capital-efficient horizontal driller in Yoakum County, TX and Eddy County, NM. P/S of 1.8x and a modest 0.84x liabilities/equity make the setup attractive.

The filing narrative materially improves the picture. The Silverback Acquisition (closed July 1, 2025 for ~$123M) added ~40,000 net acres directly adjacent to existing core Eddy County acreage — a clear growth lever that the trailing financials don't yet fully reflect. Management explicitly states the strategy is 'generating sustainable free cash flow, maintaining a strong and flexible balance sheet and maximizing our returns to shareholders,' and the actions match: $33.3M in dividends paid, $20M of senior notes repaid, $5M net repaid on the Credit Facility, and an additional contingent $60M earn-out from Targa over five years that is pure optionality not on the balance sheet.