REPX - Riley Exploration: Sustainable Growth With Strong Free Cash Flow

2024-03-20 13:03:58 ET

Summary

• 5.22% dividend yield, maintained even at $40/bbl WTI.
• Strong free cash flow, at $75/bbl WTI REPX expects $100 million in FCF for 2024.
• Estimated 18.3% production growth for 2024 without a meaningful increase in costs. Strong geographic position, operating in a lower-cost and lower-decline rate location compared to the median Permian field.
• REPX is actively deleveraging its balance sheet, targeting 60% of free cash to debt reduction.

Investment Thesis

Riley Exploration Permian, Inc. (REPX) is an exploration and production company operating in the Permian basin, focusing on oil development. The company's below-average drilling costs and lower-than-average decline rates position it favorably in the competitive Permian basin. With a strategy centered on acquiring undeveloped assets with high reserves rather than pursuing short-term production increases, REPX is poised for sustainable growth over the long term....

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