What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-05 compared with 2024-03-06 · 443 added, 300 removed, 1080 unchanged (41% of the section changed)

4 unchanged sentences

We evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024, with the participation of our CEO and CFO, as well as other key members of our management.

Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2023.

this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2024.

Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013).

Our management assessed the effectiveness of the Company’s internal control over financial reporting, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013).

We have evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this report, with the participation of our CEO and CFO, as well as other key members of our management.

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Other Information

During the quarter ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

On November 13, 2024 , Corey Riley , our Chief Information Officer and Chief Compliance Officer , adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) providing for the sale of up to 14,000 shares of Common Stock.

The expiration date for Mr.

Riley's plan is November 12, 2025 .

Except as disclosed above, during the quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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Exhibit Number Description

Underwriting Agreement, dated April 3, 2024, by and among Riley Exploration Permian, Inc., Bluescape Riley Exploration Holdings LLC, Yorktown Energy Partners VIII, L.P.

and Riley Exploration Group, LLC, and Truist Securities, Inc.

and Roth Capital Partners, LLC, as representatives of the several underwriters listed in Schedule A thereto.

(incorporated by reference from Exhibit 1.1 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 8, 2024).

Agreement and Plan of Merger, by and among Tengasco, Inc., Antman Sub, LLC, and Riley Exploration - Permian, LLC, dated as of October 21, 2020 (incorporated by reference from Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 22, 2020).

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Bank Trust Company, National Association, as agent for the holders (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2023).

First Amendment to Note Purchase Agreement dated as of December 13, 2024 by and among Riley Exploration - Permian, LLC, as Issuer, Riley Exploration Permian, Inc., as Parent, each of the subsidiaries of the Issuer party thereto as guarantors, each of the holders from time to time party thereto, and U.S.

Bank Trust Company, National Association, as agent for the holders (incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on December 18, 2024).

Credit Agreement dated as of September 28, 2017, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.1 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No.

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Riley (incorporated by reference from Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).

Employment Agreement dated April 1, 2019 by and between Riley Exploration – Permian, LLC and Kevin Riley and assigned by Riley Exploration – Permian, LLC to Riley Permian Operating Company, LLC on June 8, 2019 (incorporated by reference from Exhibit 10.11 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No.

Amendment No.

1 to Employment Agreement dated March 15, 2021 by and between Riley Permian Operating Company, LLC and Kevin Riley (incorporated by reference from Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 15, 2021).

Employment Agreement, dated as of June 1, 2024, by and between Riley Exploration Permian, Inc.

and Jeffrey M.

(incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 3, 2024).

Employment Agreement, dated as of June 20, 2024, by and between Riley Exploration Permian, Inc.

and John Suter.

(incorporated by reference from Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on August 7, 2024).

Second Amended and Restated Registration Rights Agreement dated October 7, 2020 by and among Riley Exploration – Permian, LLC, Riley Exploration Group, Inc., Yorktown Energy Partners XI, L.P., Boomer Petroleum, LLC, Bluescape Riley Exploration Holdings LLC, Bluescape Riley Acquisition Company LLC, Bobby D.

Riley, Kevin Riley and Corey Riley (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-4/A, as filed with the Securities and Exchange Commission on December 31, 2020, Registration No.

Employment Agreement dated effective as of January 25, 2022 by and between Riley Exploration Permian, Inc.

and Amber Bonney (incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 27, 2022).

Eleventh Amendment to the Credit Agreement dated as of April 29, 2022, by and among Riley Exploration Permian, Inc., Riley Exploration - Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto (incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 2, 2022).

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Form of Common Stock Award Agreement, as amended and restated as of April 21, 2023 (Incorporated by reference from Exhibit 10.4 to the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 24, 2023).

Separation and Release Agreement dated December 21, 2023, by and among Riley Exploration

Permian, Inc., Riley Permian Operating Company, LLC, and Kevin Riley (Incorporated by reference

from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and

Exchange Commission on December 26, 2023).

Fifteenth Amendment to the Credit Agreement dated as of December 13, 2024, by and among Riley Exploration Permian, Inc., Riley Exploration - Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.

Sixteenth Amendment to the Credit Agreement dated as of December 13, 2024, by and among Riley Exploration Permian, Inc., Riley Exploration - Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.

(Incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on December 18, 2024).

Insider Trading Policy

Subsidiaries of the Registrant

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March 5, 2025

Chief Executive Officer and President

Chairman of the Board and Chief Executive Officer

/s/ Philip Riley

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Signature Title Date

Riley Chairman of the Board, Chief Executive Officer and President

Riley Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

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March 5, 2025

/s/ Amber Bonney Chief Accounting Officer

/s/ Jeffrey Gutman

Chief Accounting Officer

(Principal Accounting Officer) March 5, 2025

Jeffrey Gutman

/s/ Brent Arriaga Director March 5, 2025

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations for the Year s Ended December 31, 202 3 and 2022

Consolidated Statements of Changes in Shareholders' Equity for the Year s Ended December 31, 202 3 and 2022

Consolidated Statements of Cash Flows for the Year s Ended December 31, 202 3 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

Notes to the Consolidated Financial Statements

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimation of Future Production Volumes Used to Estimate Proved Oil and Natural Gas Reserves and the Associated Effect on Depreciation, Depletion and Amortization (“DD&A”) Expense Related to Proved Oil and Natural Gas Properties

As described in Note 3 to the consolidated financial statements, the Company uses the successful efforts method of accounting for its oil and natural gas producing activities which involves management making significant estimates including forecasting of future production volumes of proved oil and natural gas reserves.

As disclosed in Note 5, the Company’s oil and natural gas properties, net balance as of December 31, 2023 was $846.9 million, which includes proved oil and natural gas properties of $895.7 million and accumulated depletion, amortization and impairment of $206.1 million.

As disclosed by management and described in Notes 3 and 5 to the consolidated financial statements, the Company uses the successful efforts method of accounting for its oil and natural gas producing activities.

Management uses internal and independent petroleum engineers to make significant estimates, including estimating the future production volumes of proved oil and natural gas reserves.

The Company’s oil and natural gas properties, net balance as of December 31, 2024 was $860.8 million, which includes proved oil and natural gas properties of $1,027.2 million and accumulated depletion, amortization and impairment of $288.7 million.

DD&A expense was $71.3 million for the year ended December 31, 2024.

We have identified the estimation of future production volumes used to estimate proved oil and natural gas reserves and the associated effect on DD&A expense related to proved oil and natural gas properties as a critical audit matter.

Estimating future production volumes involves a high degree of subjectivity from management and their internal and independent petroleum

Estimating future

production volumes involves a high degree of subjectivity from management and their internal and independent petroleum engineers.

Changes in this estimate could have a significant effect on the measurement of DD&A expense.

Auditing this estimate required subjective and complex auditor judgement.

Auditing the estimation of future production volumes required subjective and complex auditor judgement.

The primary procedures we performed to address this critical audit matter included:

• Evaluating the professional qualifications and objectivity of the internal and independent petroleum engineers, including their relationship to the Company.

• Comparing estimates of future production volumes against historical results of production volumes on a summary basis for all wells and on a detailed basis for certain wells.

• Assessing the reasonableness of the future production volumes by comparing estimates of future production volumes against historical results of production volumes on a summary basis for all wells and on a detailed basis for certain wells.

• Performing a retrospective review over management estimates of future production volumes made in prior periods as compared to actual results.

Estimation of Future Production Volumes Used to Estimate Fair Value of The Acquired Oil & Natural Gas Properties in the New Mexico Acquisition

As described in Note 4 to the consolidated financial statements, the Company completed the New Mexico Acquisition from Pecos for approximately $330 million, before customary purchase price adjustments.

The transaction qualified as a business combination under ASC 805, Business Combinations, and as such, all assets and liabilities associated with the New Mexico Acquisition were recognized at fair value as of the acquisition date.

As a result of the New Mexico Acquisition, the Company recognized oil and natural gas properties of $342.3 million, which are included in oil and natural gas properties, net within the Company’s consolidated balance sheet.

To determine the acquisition date fair value of the oil and natural gas properties, management made significant estimates including forecasting of future production volumes of the acquired oil and natural gas properties.

We have identified the estimation of future production volumes used to estimate the acquisition date fair value of the acquired oil and natural gas properties in the New Mexico Acquisition as a critical audit matter.

Estimating future production volumes involves a high degree of subjectivity from management and their internal and independent petroleum engineers.

Changes in this estimate could have a significant effect on the acquisition date fair value of the acquired oil and natural gas properties.

Auditing this estimate required subjective and complex auditor judgement.

The primary procedures we performed to address this critical audit matter included:

• Evaluating the professional qualifications and objectivity of the internal and independent petroleum engineers, including their relationship to the Company.

• Comparing estimates of future production volumes against historical results of production volumes on a summary basis for all acquired wells and on a detailed basis for certain wells.

• Performing a retrospective review over management estimates of future production volumes made in the acquisition date fair value forecast as compared to actual results.

/s/ BDO USA, P.C.

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Current Assets:

Cash and cash equivalents $ 15,319 $ 13,301

Accounts receivable 35,126 25,551

Cash $ 13,124 $ 15,319

Accounts receivable, net 44,411 35,126

Prepaid expenses 1,592 1,631

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Non-current derivative assets 585 2,296

Equity method investment 22,811 5,620

Other non-current assets, net 10,706 6,975

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Impairment of oil and natural gas properties 11,317 9,760

Other impairments 30,158 —

General and administrative:

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Shareholders' Equity

Shares Amount Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Total Shareholders' Equity

Shares Amount Additional Paid-in Capital Retained Earnings

Total Shareholders' Equity

Balance, December 31, 2022 20,161 $ 20 $ 274,643 $ 58,783 $ 333,446

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Repurchased shares for tax withholding ( 80 ) — ( 2,511 ) — ( 2,511 )

Issuance of common shares under ATM 9 — 2 — 2

Dividends declared — — — ( 27,911 ) ( 27,911 )

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Repurchased shares for tax withholding ( 92 ) — ( 2,432 ) — ( 2,432 )

Issuance of common shares under ATM 9 — 2 — 2

Issuance of common shares, net

1,015 1 25,414 — 25,415

Dividends declared — — — ( 30,998 ) ( 30,998 )

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Depletion, depreciation, amortization and accretion 74,900 65,055

Impairment of proved properties 9,760 7,325

Impairment of oil and natural gas properties 11,317 9,760

Other impairments 28,850 —

(Gain) loss on derivatives, net 1,665 ( 6,193 )

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Deferred income tax expense 3,202 27,589

Loss from equity method investment

Other — ( 25 )

Changes in operating assets and liabilities

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Additions to oil and natural gas properties ( 98,490 ) ( 134,796 )

Net assets acquired in business combination ( 324,686 ) —

Additions to midstream property and equipment ( 10,964 ) —

Additions to other property and equipment ( 875 ) ( 1,065 )

Acquisitions of oil and natural gas properties ( 19,597 ) ( 5,443 )

Acquisitions of land — ( 15,342 )

Net assets acquired in business combination — ( 324,686 )

Contributions to equity method investment ( 17,912 ) ( 3,566 )

Additions to other property and equipment ( 1,065 ) ( 1,252 )

Net Cash Used in Investing Activities ( 147,838 ) ( 469,556 )

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Payment of common share dividends ( 30,831 ) ( 27,706 )

Proceeds from issuance of common shares, net 25,415 2

Common stock repurchased for tax withholding ( 2,432 ) ( 2,511 )

Net Cash Provided by (Used in) Financing Activities ( 100,631 ) 264,379

Net Increase in Cash and Cash Equivalents 2,018 4,984

Cash and Cash Equivalents, Beginning of Year

Cash and Cash Equivalents, End of Year

Net Increase (Decrease) in Cash ( 2,195 ) 2,018

Cash, Beginning of Year

15,319 13,301

Cash, End of Year

$ 13,124 $ 15,319

The accompanying notes are an integral part of these consolidated financial statements.

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Interest, net of capitalized interest $ 31,582 $ 27,140

Income taxes $ 9,949 $ 3,611

Income taxes, net of refunds $ 18,084 $ 9,949

Non-cash Investing and Financing Activities:

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Asset retirement obligations assumed in acquisitions $ 9,727 $ 19,359

Revisions in asset retirement obligations $ 1,856 $ —

The accompanying notes are an integral part of these consolidated financial statements.

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The Company is a growth-oriented, independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and NGLs in Texas and New Mexico.

On April 3, 2023 (the “Closing Date”), the Company completed the acquisition of oil and natural gas assets (the “New Mexico Acquisition”) from Pecos Oil & Gas, LLC (“Pecos”), a Delaware limited liability company and an affiliate of Cibolo Energy Partners LLC.

For further information regarding the New Mexico Acquisition, see Note 4 - Acquisitions of Oil and Natural Gas Properties.

Our Properties

Our acreage is primarily located on large contiguous blocks in Yoakum County, Texas, which represents our Champions Field and Eddy County, New Mexico, which represents our Redlake Field acquired in the New Mexico Acquisition.

Our activities primarily include the horizontal development of conventional reservoirs on the Northwest Shelf of the Permian Basin.

Our acreage is primarily located on large, contiguous blocks in Yoakum County, Texas and Eddy County, New Mexico.

Our acreage is primarily located on large contiguous blocks in Yoakum County, Texas, which represents our Champions field and in Eddy County, New Mexico, which represents our Red Lake field.

We are focused on horizontal drilling of conventional oil-saturated and liquids-rich formations that produce long-term stable cash flows in the Permian Basin.

On April 3, 2023, the Company completed an acquisition of oil and natural gas properties in the Yeso trend of the Permian Basin in Eddy County, New Mexico ("2023 New Mexico Acquisition") from Pecos Oil & Gas, LLC.

This acquisition included approximately 10,600 total contiguous net acres of leasehold, 18 net horizontal wells and 250 net vertical wells, which established our initial position in New Mexico.

On May 7, 2024, the Company completed the acquisition of oil and natural gas properties in the Yeso trend of the Permian Basin in Eddy County, New Mexico ("2024 New Mexico Asset Acquisition"), which added 13,900 contiguous net acres to the Company's existing acreage in Eddy County.

For further information regarding the 2023 New Mexico Acquisition and the 2024 New Mexico Asset Acquisition (the "2023 and 2024 New Mexico Acquisitions"), see Note 4 - Acquisitions of Oil and Natural Gas Properties.

Current Commodity Environment

and global economies and markets have experienced heightened volatility following impactful geopolitical events, the effects of widespread inflation and the impact of significantly higher interest rates.

Prices for oil and natural gas are determined primarily by prevailing market conditions, which have been and could continue to be volatile.

The combination of geopolitical events, inflation and the rising interest rate environment has led to increasing forecasts of a U.S.

Prices for crude oil and condensate ("oil") and natural gas are determined primarily by prevailing market conditions, which have been and could continue to be volatile.

The combination of geopolitical events, inflation and a volatile interest rate environment has led to increasing forecasts of a U.S.

or global recession.

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(2) Basis of Presentation

Effective by the Company's Board of Directors written consent on September 23, 2022, the Company's fiscal year is now the period from January 1 to December 31, beginning with the year ended December 31, 2022.

The Company's accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S.

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S.

All intercompany balances and transactions have been eliminated upon consolidation.

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The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

These estimates

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The Company maintains cash at financial institutions which may at times exceed federally insured amounts.

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash and cash equivalents.

Accounts Receivable

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on our cash and cash equivalents.

The Company did no t have cash equivalents as of December 31, 2024, and 2023.

Accounts Receivable, net

Our receivables arise primarily from the sale of oil, natural gas and natural gas liquids ("NGLs") and joint interest owner receivables for properties in which we serve as the operator.

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Payments made on all accounts receivable are applied to the earliest unpaid items.

To the extent actual volumes and prices of oil, natural gas and NGLs are unavailable for a given reporting period because of timing or information not received from third parties, the expected sales volume and prices for these properties are estimated and recorded within accounts receivable in the accompanying consolidated balance sheets.

Oil is priced based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location.

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The Company estimates uncollectible amounts based on the length of time that the accounts receivable has been outstanding, historical collection experience and current and future economic and market conditions, if failure to collect is expected to occur.

Allowances for credit losses are recorded as reductions to the carrying values of the accounts receivables included in the Company’s consolidated balance sheets and are recorded in Administrative costs in the consolidated statements of operations if failure to collect an estimable portion is determined to be probable.

The Company had no allowance for credit losses at December 31, 2023 and 2022.

Accounts receivable is summarized below:

Allowances for credit losses are recorded as reductions to the carrying values of the accounts receivable included in the Company’s consolidated balance sheets and are recorded in administrative costs in our consolidated statements of operations if failure to collect an estimable portion is determined to be probable.

Accounts receivable, net is summarized below:

(In thousands)

1 unchanged sentence

Joint interest accounts receivable 4,884 1,630

Allowance for credit losses

Other accounts receivable 1,215 2,361

Total accounts receivable $ 35,126 $ 25,551

As of December 31, 2021, the Company had accounts receivables from oil, natural gas and NGL sales of $ 17.6 million.

Total accounts receivable, net

$ 44,411 $ 35,126

As of December 31, 2022, the Company had accounts receivables, net from oil, natural gas and NGL sales of $ 24.1 million.

RILEY EXPLORATION PERMIAN, INC.

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The Company's inventory represents tangible assets such as drilling pipe, tubing, casing and operating supplies used in the Company's future drilling or repair operations.

The Company accounts for its inventory using the first-in, first-out method and valued at the lower of cost or net realizable value.

The Company accounts for our inventory using the first-in, first-out method and valued at the lower of cost or net realizable value.

Proved Oil and Natural Gas Properties

The Company uses the successful efforts method of accounting for its oil and natural gas producing activities.

The Company uses the successful efforts method of accounting for our oil and natural gas producing activities.

Under this method, all property acquisition costs and costs of development wells are capitalized as incurred.

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Geological and geophysical costs, including seismic studies, are charged to exploration costs as incurred.

Expenditures incurred to operate and for maintenance, repairs and minor renewals necessary to maintain the oil and natural gas properties in operating condition are charged to lease operating expenses as incurred.

Capitalized costs of proved oil and natural gas properties are amortized using the units-of-production method based on production and estimates of proved reserve quantities.

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The Company accounts for business combinations in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 805, Business Combinations.

The Company accounts for its acquisitions that qualify as a business using the acquisition method in which the Company recognizes and measures identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquired entity at their fair values as of the acquisition date.

If the set of assets and activities acquired is not considered a business, it is accounted for as an asset acquisition using a cost

The Company accounts for our acquisitions

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

accumulation model.

that qualify as a business using the acquisition method in which the Company recognizes and measures identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquired entity at their fair values as of the acquisition date.

If the set of assets and activities acquired is not considered a business, it is accounted for as an asset acquisition using a cost accumulation model.

In the cost accumulation model, the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values.

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Property and equipment are capitalized and recorded at cost, while maintenance and repairs are expensed.

Depreciation of such property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from 5 to 39 years.

Depreciation of in use property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from 5 to 39 years.

Capitalized costs related to leasehold improvements are depreciated over the life of the lease.

As of December 31, 2023 and 2022, the Company had capitalized property and equipment costs of $ 6.6 million and $ 5.3 million, respectively, with $ 2.6 million and $ 2.0 million, respectively, of accumulated depreciation on the consolidated balance sheets.

Components of other property and equipment consists of computer equipment, office furniture, tools and equipment, buildings and improvements, and vehicles.

Land purchases are accounted for at cost and are not depreciated.

As of both December 31, 2023 and 2022, the Company had capitalized land costs of $ 16.7 million on the consolidated balance sheets.

Land costs are accounted for at cost and are not depreciated.

Components of other property and equipment consists of midstream property and equipment, computer equipment, computer software, office furniture, tools and equipment, buildings and improvements, and vehicles.

Midstream property and equipment was not in service as of December 31, 2024.

Other property and equipment, net is summarized below:

(In thousands)

Midstream property and equipment

Furniture, fixtures and other

16,673 16,673

$ 33,852 $ 23,278

Accumulated depreciation and amortization

( 3,375 ) ( 2,625 )

Total other property and equipment, net

$ 30,477 $ 20,653

Deferred Financing Costs

Deferred financing costs include origination, arrangement, legal and other fees to issue or amend the terms of the revolving credit facility ("Credit Facility") and unsecured senior notes ("Senior Notes").

In the consolidated balance sheets, unamortized deferred financing costs related to the Credit Facility are reported as other non-current assets.

In our consolidated balance sheets, unamortized deferred financing costs related to the Credit Facility are reported as other non-current assets.

For the Senior Notes, such costs are netted against the carrying value of the Senior Notes.

Deferred financing costs are recognized on the consolidated statement of operations as interest expense by amortizing the costs over the related financing using the straight-line method, which approximates the effective interest method.

Deferred financing costs are recognized in our consolidated statements of operations as interest expense by amortizing the costs over the related financing using the straight-line method, which approximates the effective interest method.

Equity Issuance Costs

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These issuance costs are netted against offering proceeds at the time of issuance and are reported as additional paid in capital when related to the issuance of common equity securities.

The issuance costs are expensed to the consolidated statement of operations if the issuance is unsuccessful.

The issuance costs are expensed in our consolidated statements of operations if the issuance is unsuccessful.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Other Non-Current Assets, net

Other non-current assets consisted of the following:

Other non-current assets, net consisted of the following:

(In thousands)

1 unchanged sentence

Right-of-use assets

Equity method investment

Total other non-current assets, net $ 10,706 $ 6,975

The Company incurred $ 2.8 million in financing costs related to the amendments of the Credit Facility in 2023.

The Company extended certain existing office leases and entered into new vehicle leases during the year ended December 31, 2023, which resulted in additions to the right of use assets.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Equity method investment.

In January 2023, the Company entered into an agreement to form a joint venture created for the purpose of constructing a new power infrastructure for onsite power generation in Yoakum County, Texas using produced natural gas.

RPC Power Holdco LLC, a wholly-owned subsidiary of REPX, has a 30 % investment in the joint venture, RPC Power LLC ("RPC Power").

The Company contributed its portion of capital for construction of the onsite power generation.

As of December 31, 2023, the Company had invested $ 5.8 million to date in the joint venture, comprised of $ 3.6 million in cash and $ 2.3 million of contributed assets, which was reduced by the Company's share of the joint venture's loss during the year ended December 31, 2023.

The Company accounts for its corporate joint ventures under the equity method of accounting in accordance with FASB ASC Topic 323 “Investments — Equity Method and Joint Ventures.” The Company applies the equity method of accounting to investments of less than 50% in an investee over which the Company exercises significant influence but does not have control.

Under the equity method of accounting, the Company’s share of the investee’s earnings or loss is recognized in the consolidated statements of operations.

Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions, material intercompany transactions and extent of ownership by an investor in relation to the concentration of other shareholdings.

The Company incurred $ 2.7 million and $ 2.8 million in financing costs related to the amendments of the Credit Facility during the year ended December 31, 2024, and 2023, respectively.

Accrued Liabilities

8 unchanged sentences

Total accrued liabilities $ 33,918 $ 33,159

Other Current Liabilities

Other current liabilities consisted of the following:

(In thousands)

Advances from joint interest owners $ 11,278 $ 259

Income taxes payable 5,233 561

Current ARO liabilities 2,562 3,789

Other 1,050 1,667

Total other current liabilities

$ 20,123 $ 6,276

Asset Retirement Obligations

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_____________________

(1) Primarily relates to ARO assumed in the New Mexico Acquisition.

(2) Current ARO is included within other current liabilities on the accompanying consolidated balance sheets.

(1) Current ARO is included within other current liabilities in our consolidated balance sheets.

Revenue Recognition

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Accordingly, the Company’s product sales contracts do not give rise to contract assets or liabilities under ASC 606.

Prior-Period Performance Obligations

Revenue is recorded in the month in which production is delivered to the purchaser.

However, certain settlement statements for oil, natural gas and NGLs may not be received for thirty to ninety days after the date production is delivered and, as a result,

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the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product.

Prior-Period Performance Obligations

Revenue is recorded in the month in which production is delivered to the purchaser.

However, certain settlement statements for oil, natural gas and NGLs may not be received for thirty to ninety days after the date production is delivered and, as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product.

Differences identified between the Company’s revenue estimates and actual revenue received historically have not been significant.

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Total oil and natural gas sales, net (1)

$ 409,801 $ 372,647

_____________________

(1) The Company's oil, natural gas and NGL sales are presented net of gathering, processing and transportation costs.

These costs, related to natural gas and NGLs, at times exceeded the price we received and resulted in negative average realized prices.

Contract Services with Related Parties

The Company has contracts with related parties to provide certain contract operating, accounting and back-office support services.

Revenue related to these contract services is recognized over time as the services are rendered, and the fee is stated within the contract at a fixed monthly rate.

Costs directly attributable to performing these services are also recognized as the services are rendered.

The Company had contracts with related parties to provide certain contract operating, accounting and back-office support services.

Revenue related to these contract services was recognized over time as the services were rendered, and the fee was stated within the contract at a fixed monthly rate.

Costs directly attributable to performing these services were also recognized as the services were rendered.

Refer to Note 9 - Transactions with Related Parties for a more detailed discussion regarding these contracts.

Revenue Payable

For certain oil and natural gas properties, where the Company serves as operator, the Company receives production proceeds from the purchaser and further distributes such amounts to other revenue and royalty owners.

Production proceeds that the Company has not yet distributed to other revenue and royalty owners are reflected as revenue payable in the consolidated balance sheets.

Production proceeds that the Company has not yet distributed to other working interest and royalty owners are reflected as revenue payable in our consolidated balance sheets.

Lease Operating Expenses

Lease operating costs, including payroll for field personnel, saltwater disposal, electricity, generator rentals, diesel fuel and other operating expenses, are expensed as incurred and included in lease operating expenses in our consolidated statements of operations.

Lease operating costs, including payroll for field personnel, saltwater disposal, electricity, generator rentals, diesel fuel, workovers and other operating expenses are expensed as incurred and included in lease operating expenses in our consolidated statements of operations.

The Company uses the asset and liability method of accounting for income taxes, which requires the establishment of deferred tax accounts for all temporary differences between:

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As a result, management considers whether it is more likely than not that all or a portion of such assets will be realized during periods when they are available, and if not, management provides a valuation allowance for amounts not likely to be recognized.

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Management periodically evaluates tax reporting methods to determine if any uncertain tax positions exist that would require the establishment of a loss contingency.

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See further discussion in Note 12- Income Taxes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Interest Expense

Interest Expense, net

We have financed a portion of our working capital requirements, capital expenditures and certain acquisitions with borrowings under our Credit Facility as well as the issuance of Senior Notes.

We incur interest expense that is affected by both fluctuations in interest rates and our financing decisions.

Interest expense in the consolidated statements of operations reflects interest, unused commitment fees paid to our lender, interest rate swap settlements and the amortization of deferred financing costs (including origination and amendment fees) less amounts allocated to capital expenditures.

Interest expense was $ 31.8 million and $ 1.1 million for the years ended December 31, 2023 and 2022, respectively.

Capitalized interest represents interest expense related to wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose.

We incur interest expense that is affected by both fluctuations in interest rates, our debt balances and our financing decisions.

Interest expense in our consolidated statements of operations reflects interest, unused commitment fees paid to our lender, interest rate swap settlements, interest income and the amortization of deferred financing costs (including origination and amendment fees) less amounts allocated to capital expenditures, which are capitalized.

Interest expense, net was $ 34.3 million and $ 31.8 million for the years ended December 31, 2024, and 2023, respectively.

Capitalized interest represents interest expense related to capital projects during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose.

Capitalized interest is added to the cost of the underlying asset and is amortized over the useful life of the asset in the same manner as the underlying asset.

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Our purchaser contracts include marketing provisions with our purchasers to market our production.

For the years ended December 31, 2023 and 2022, one purchaser accounted for 70 % and 89 %, respectively, of our revenue purchased.

For the year ended December 31, 2023, one other purchaser accounted for 10% or more of our revenues.

During the year ended December 31, 2022, no other purchaser accounted for 10% or more of our revenues.

For the years ended December 31, 2024, and 2023, one purchaser accounted for 70 % of our revenue purchased.

For the year ended December 31, 2024, and 2023, an additional purchaser accounted for 10% or more of our revenues.

The loss of either of these purchasers could materially and adversely affect our revenues in the short-term.

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Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.

Expenditures that relate to an existing condition caused by past operations, which do not contribute to current or future revenue generation, are expensed.

Expenditures that relate to an existing condition caused by past operations, which do not contribute to current or future revenue

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generation, are expensed.

Liabilities are recorded when environmental assessments and/or clean-ups are probable, and the costs can be reasonably estimated.

Fair Value Measurements

Certain financial instruments are reported at fair value on our consolidated balance sheets.

Certain financial instruments are reported at fair value in our consolidated balance sheets.

Under fair value measurement accounting guidance, fair value is defined as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants (i.e., an exit price).

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Level 1 inputs are unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority.

Level 2 inputs are inputs other than quoted prices within Level 1 that are

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observable for the asset or liability, either directly or indirectly.

Level 2 inputs are inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability and have the lowest priority.

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The carrying value reported for the Credit Facility approximates fair value because the underlying instruments are at interest rates which approximate current market rates and is considered Level 2 in the fair value hierarchy.

Assets and liabilities accounted for at fair value on a non-recurring basis in accordance with the fair value hierarchy include the initial recognition of asset retirement obligations and the fair value of oil and natural gas properties when acquired in a business combination or assessed for impairment and are considered Level 3 in the fair value hierarchy.

Assets and liabilities accounted for at fair value on a non-recurring basis in accordance with the fair value hierarchy include the initial recognition of ARO and the fair value of oil and natural gas properties when acquired in a business combination or assessed for impairment and are considered Level 3 in the fair value hierarchy.

Derivative Contracts

We report the fair value of derivatives on the consolidated balance sheets in derivative assets and derivative liabilities as either current or non-current based on the timing of the settlement of individual trades.

We report the fair value of derivatives in our consolidated balance sheets in derivative assets and derivative liabilities as either current or non-current based on the timing of the settlement of individual trades.

Trades that are scheduled to settle in the next twelve months are reported as current.

The Company nets derivative assets and liabilities in the consolidated balance sheet whenever it has a legally enforceable master netting agreement with the counterparty to a derivative contract.

The Company nets derivative assets and liabilities in our consolidated balance sheets whenever it has a legally enforceable master netting agreement with the counterparty to a derivative contract.

For the years ended December 31, 2024, and 2023, we have not designated our derivative contracts as hedges for accounting purposes and therefore changes in the fair value of derivatives are recognized in earnings.

Cash settlements of contracts are included in cash flows from operating activities in the consolidated statement of cash flows.

Cash settlements of contracts are included in cash flows from operating activities in our consolidated statements of cash flows.

Derivative contracts are settled on a monthly basis.

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See further discussion in Note 6 – Derivative Instruments.

The Company's current leases include office space, office equipment, and field vehicles.

The Company's current leases include office space, limited office equipment and field vehicles.

The Company reviews all contracts to determine if a lease exists at contract inception.

A lease exists when the Company has the right to obtain substantially all of the economic benefit of a specific asset and to control the use of that asset over the term of the agreement.

A lease exists when the Company has the right to obtain

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substantially all of the economic benefit of a specific asset and to control the use of that asset over the term of the agreement.

Identified leases are classified as an operating or finance lease, which determines the recognition, measurement and presentation of expenses.

As of December 31, 2024, and 2023, the Company did not have any finance leases.

Operating leases are capitalized on the consolidated balance sheets at commencement through a lease right-of-use ("ROU") asset and lease liability representing the present value of lease payments over the lease term.

Operating leases are capitalized in our consolidated balance sheets at commencement through a lease right-of-use ("ROU") asset and lease liability representing the present value of lease payments over the lease term.

In addition to the present value of lease payments, the operating lease ROU asset includes any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred.

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however, some of the Company’s leases do not provide a readily determinable implicit rate.

In such cases, the Company is required to use its incremental borrowing rate ("IBR").

The Company’s IBR reflects the estimated rate of interest that the Company would pay to borrow on a collateralized

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basis over a similar term and amount equal to the lease payments in a similar economic environment.

In such cases, the Company is required to use our incremental borrowing rate ("IBR").

The Company’s IBR reflects the estimated rate of interest that the Company would pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

The Company is required to reassess the discount rate for any new and modified lease contracts as of the lease effective date.

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Long-term lease liability $ 673 $ 938

The ROU asset and current lease liability are included in other non-current assets and other current liabilities and non-current lease liabilities , respectively, on the consolidated balance sheets.

Lease expense for the Company is included in general and administrative costs on the consolidated statements of operations.

The ROU asset, current lease liability and non-current lease liability are included in other non-current assets, net, other current liabilities and other non-current liabilities , respectively, in our consolidated balance sheets.

Lease expense for the Company is included in general and administrative costs in our consolidated statements of operations.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements.

This ASU is effective retrospectively for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this update effective January 1, 2024, see Note 14 - Segments.

The adoption and implementation of this standard did not have a material impact on the Company's disclosures.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures which requires disaggregated information about the Company's effective tax rate reconciliation and income taxes paid.

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Early adoption is permitted.

The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

The Company does not expect this standard to have a material impact on our disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40) Reporting Comprehensive Income-Expense Disaggregation Disclosures, which broadens the disclosures required for certain costs and expenses in the Company’s annual and interim consolidated financial statements.

This ASU is effective prospectively for fiscal years beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027.

The Company is currently evaluating disclosures related to our annual report for fiscal year 2027.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(4) Acquisitions of Oil and Natural Gas Properties

2023 New Mexico Acquisition

On April 3, 2023, the Company completed the New Mexico Acquisition from Pecos for approximately $ 330 million, before customary purchase price adjustments.

The assets acquired are located in Eddy County, New Mexico, and include approximately 10,600 total contiguous net acres of leasehold.

The acquisition included 18 net horizontal wells and 250 net vertical wells.

Additionally, the assets added significant drilling locations to the Company's inventory.

The Company funded the New Mexico Acquisition through a combination of borrowings under the Credit Facility and proceeds from the issuance of $ 200 million of Senior Notes, including application of a $ 33 million escrow deposit paid during the three months ended March 31, 2023 with borrowings under the Credit Facility.

For further information regarding the financing for the New Mexico Acquisition, see Note 9 - Long-Term Debt.

On April 3, 2023, the Company completed an acquisition of oil and natural gas properties (the "2023 New Mexico Acquisition") from Pecos Oil & Gas, LLC, a Delaware limited liability company and an affiliate of Cibolo Energy Partners LLC, for $ 324.7 million, funded through a combination of proceeds from the issuance of $ 200 million of Senior Notes and borrowings under the Company's Credit Facility.

The assets acquired are located in Eddy County, New Mexico, and included approximately 10,600 total contiguous net acres of leasehold.

The acquisition also included 18 net horizontal wells and 250 net vertical wells.

The 2023 New Mexico Acquisition qualified as a business combination using the acquisition method of accounting.

The assets acquired and liabilities assumed were recognized at fair value as of the acquisition date.

The fair value measurements of the oil and natural gas properties acquired and asset retirement obligations assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market.

The fair value measurements of the oil and natural gas properties acquired and ARO assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market.

These inputs represent Level 3 measurements in the fair value hierarchy and include, but are not limited to, estimates of future production volumes, future development, future operating costs, future cash flows and the use of weighted average cost of capital.

These inputs required the use of significant judgments and estimates at the date of valuation, and use of different estimates and judgments could yield different results.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following presents the allocation of the total purchase price of the 2023 New Mexico Acquisition to the identified assets acquired and liabilities assumed based on estimated fair value as of the Closing Date:

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Net assets acquired $ 324,686

The transaction costs of $ 5.8 million for the year ended December 31, 2023 relate to the New Mexico Acquisition.

During the year ended December 31, 2022, the transaction costs of $ 2.6 million relate to a potential business combination and related financing that the Company pursued but ultimately chose not to consummate.

These costs are included in the consolidated statements of operations.

Post-Acquisition Operating Results

The results of operations attributable to the New Mexico Acquisition since the Closing Date have been included in the consolidated statements of operations and include $ 79.3 million of total revenue, net and $ 51.8 million of earnings for the year ended December 31, 2023.

Transaction costs associated with the 2023 New Mexico Acquisition were approximately $ 5.8 million for the year ended December 31, 2023.

Pro Forma Operating Results (Unaudited)

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The unaudited pro forma information includes adjustments for (i) transaction costs being reclassified to 2022 instead of being recorded during the year ended December 31, 2023, (ii) amortization for the discount and deferred financing costs related to the Senior Notes and Credit Facility, (iii) depletion, depreciation and amortization expense, and (iv) interest expense related to the financing for the 2023 New Mexico Acquisition.

These adjustments remove such costs, as described above, that would not have been recognized had the Company not acquired the assets.

In addition, the pro forma information has been effected for taxes with a 23 % tax rate.

These adjustments reflect such costs, as described above, that would have been recognized had the Company acquired the assets on January 1, 2022.

In addition, the pro forma information has been effected for taxes with a 23 % tax rate for the years ended December 31, 2023, and 2022.

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Year Ended December 31,

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$ 6.07 $ 6.59

The unaudited pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the New Mexico Acquisition been completed as of January 1, 2022 and should not be taken as indicative of the Company's future combined

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results of operations.

The unaudited pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the 2023 New Mexico Acquisition been completed as of January 1, 2022, and should not be taken as indicative of the Company's future combined results of operations.

The actual results may differ significantly from that reflected in the unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma combined financial information and actual results.

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 added 13,900 contiguous net acres 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 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.

This acquisition was funded through a combination of proceeds from the 2024 equity issuance ("2024 Equity Offering") discussed in Note 11 - Shareholders' Equity and cash on hand.

(5) Oil and Natural Gas Properties

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Total oil and natural gas properties, net $ 860,797 $ 846,901

As of December 31, 2023, the Company had no exploratory wells included in work-in-progress.

In 2022, the Company had one exploratory well drilled but uncompleted that was included in work-in-progress with associated well costs of $ 3.8 million.

During the year ended December 31, 2023, the Company determined this exploratory well was not capable of producing commercial quantities and, as such, expensed the associated drilling costs.

As of December 31, 2024, and 2023, the Company had no exploratory wells included in work-in-progress.

Depletion and amortization expense for proved oil and natural gas properties was $ 71.3 million and $ 62.5 million for the years ended December 31, 2024, and 2023, respectively.

Exploration costs were $ 4.2 million and $ 2.0 million for the years ended December 31, 2023 and 2022, respectively, and were primarily attributable to exploratory well expense and the expiration of oil and natural gas leases in 2023 and the expiration of oil and natural gas leases in 2022.

Exploration costs were $ 2.6 million and $ 4.2 million for the years ended December 31, 2024, and 2023, respectively, and were primarily attributable to expiration of oil and natural gas leases in 2024 and exploratory well expense and the expiration of oil and natural gas leases in 2023.

Impairment of Proved Properties

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We calculated the expected undiscounted future net cash flows of our long-lived assets using management’s assumptions and expectations.

Certain oil and natural gas properties in Texas outside of the Company's acreage in the Champions Field failed the initial step assessment, which looks at the carrying value compared to undiscounted cash flows for these properties.

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Certain oil and natural gas properties in Texas and New Mexico outside of the Company's acreage in the Champions and Red Lake fields failed the initial step assessment, which looks at the carrying value compared to undiscounted cash flows for these properties.

For these assets, we used a discounted cash flow analysis to estimate fair value.

The expected future net cash flows were discounted using a rate of 10.0 %, which we believe represents the estimated weighted average cost of capital of a market participant.

Based on this assessment of our long-lived assets impairment test, we recognized a $ 9.8 million impairment because the carrying value exceeded the estimated fair market value as of the year ended December 31, 2023.

The Company recognized an impairment of $ 7.3 million on proved properties in New Mexico, outside of the Redlake field, for the year ended December 31, 2022.

Based on this assessment of our long-lived assets impairment test, the carrying value exceeded the estimated fair market value, and we recognized an $ 11.3 million non-cash impairment of proved properties comprised of a $ 9.5 million impairment in Texas, outside of the Champions field, and $ 1.8 million impairment in New Mexico, outside of the Red Lake field related to historical properties, for the year ended December 31, 2024.

The impairments were primarily driven by a reduction in reserve volume due to lower well performance assessments based on historical trends.

The affected areas included nine operated producing wells.

The Company recognized an impairment of $ 9.8 million on proved properties in Texas, outside of the Champions field, for the year ended December 31, 2023.

These impairments are included in our consolidated statements of operations as impairments of oil and natural gas properties.

See further discussion of our fair value assumptions in Note 7 - Fair Value Measurements.

Impairment of Enhanced Oil Recovery (EOR) Project

The cost of proved and unproved oil and natural gas properties are assessed for impairment at least annually or whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred.

We compare the undiscounted future cash flows of the oil, natural gas and NGL properties to the carrying amount of the oil, natural gas and NGL properties to determine if the carrying amount is recoverable.

If the carrying amount exceeds the estimated undiscounted future cash flows, we adjust the carrying amount of the oil, natural gas and NGL properties to their estimated fair value which is considered a Level 3 measurement.

As part of the impairment review during the third quarter 2024, the Company made the decision to discontinue our EOR Project, which was in work-in-process, in favor of redeploying the required future capital and salvaging the assets for use in our conventional vertical and horizontal development programs.

As a result of this decision, the remaining fair value for the EOR Project was determined to be zero and the Company recorded a non-cash impairment loss of $ 28.9 million and a cash impairment loss of $ 1.3 million related to the termination of the Kinder Morgan CO 2 contract.

The total $ 30.2 million impairment is included in other impairments in our consolidated statements of operations.

(6) Derivative Instruments

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The Company uses commodity based derivative contracts to reduce exposure to fluctuations in oil and natural gas prices.

While the use of these contracts limits the downside risk for adverse price changes, their use also limits future revenues from favorable price changes.

We have not designated our derivative contracts as hedges for accounting purposes, and therefore changes in the fair value of derivatives are included and recognized in other income (expense) in the consolidated statements of operations.

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While the use of these contracts partially limits the downside risk for adverse price changes, their use also partially limits future revenues from favorable price changes.

We have not designated our derivative contracts as hedges for accounting purposes and therefore changes in the fair value of derivatives are included and recognized in other income (expense) in our consolidated statements of operations.

As of December 31, 2024, the Company's oil and natural gas derivative instruments consisted of the following types:

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If the market price is between the put and the call strike price, no payments are due from either party.

• Basis Protection Swaps – basis swaps are settled based on differences between a fixed price differential and the differential between the settlement prices of two referenced indexes.

We receive the fixed price differential and pay the differential between the referenced indexes.

RILEY EXPLORATION PERMIAN, INC.

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Q4 2025 120,000 $ 66.99

2025 330,000 $ 71.86

Natural Gas Swaps (Mcf)

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2026 2,555,000 $ 3.92

2027 600,000 $ 4.19

Oil Collars (Bbl)

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2026 2,675,000 $ 3.15 $ 3.82

Oil Basis Swaps (Bbl)

Q1 2024 330,000 $ 0.97

Q2 2024 330,000 $ 0.97

Q3 2024 330,000 $ 0.97

Q4 2024 330,000 $ 0.97

Interest Rate Contracts

The Company entered into floating-to-fixed interest rate swaps, in which it will receive a floating market rate equal to one-month Chicago Mercantile Exchange Term Secured Overnight Financing Rate ("SOFR") Rate and will pay a fixed interest rate to manage future interest rate exposure related to the Company’s Credit Facility.

In March 2024, the Company entered into a fixed-to-floating interest rate swap for the period from May 2024 to December 2024, to reduce our interest rate exposure, which resulted in a gain of approximately $ 1 million for the year ended December 31, 2024, on a notional amount of $ 80 million, and is included in our consolidated statements of operations.

RILEY EXPLORATION PERMIAN, INC.

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The following table summarizes the open interest rate derivative positions as of December 31, 2024:

Open Coverage Period Notional Amount Fixed Rate

Open Coverage Period Position

Notional Amount Fixed Rate

(In thousands)

April 2024 - April 2026 $ 30,000 3.18 %

January 2025 - April 2026

$ 30,000 3.18 %

January 2025 - April 2026

$ 50,000 3.04 %

April 2026 - April 2027

$ 45,000 3.90 %

Balance Sheet Presentation of Derivatives

The following tables present the location and fair value of the Company’s derivative contracts included in the consolidated balance sheets as of December 31, 2023 and 2022:

The following tables present the location and fair value of the Company’s derivative contracts included in our consolidated balance sheets as of December 31, 2024, and 2023:

December 31, 2024

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$ 1,849 $ ( 17,221 )

Non-cash gain on derivatives

23,414 23,683

Non-cash gain (loss) on derivatives ( 3,514 ) 23,414

Gain (loss) on derivatives, net $ ( 1,665 ) $ 6,193

$ 6,193 $ ( 51,574 )

(7) Fair Value Measurements

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Level 3 are unobservable inputs for an asset or liability.

The carrying values of financial instruments comprising cash and cash equivalents, payables, receivables, and advances from joint interest owners approximate fair values due to the short-term maturities of these instruments and are classified as Level 1 in the fair value hierarchy.

The carrying value reported for the revolving line of credit approximates fair value because the underlying instruments are at interest rates which approximate current market rates.

The fair value of the Senior Notes is based on estimates of current rates available for similar issues with similar maturities and is classified as Level 2 in the fair

The carrying values of financial instruments comprising cash, payables, receivables, and advances from joint interest owners approximate fair values due to the short-term maturities of these instruments and are classified as Level 1 in the fair value hierarchy.

The carrying value reported for the Credit Facility approximates fair value because the underlying instruments are at interest rates which approximate current market rates.

The fair value of the Senior Notes is based on estimates of current rates

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value hierarchy.

The oil and natural gas properties acquired and asset retirement obligations assumed in the New Mexico Acquisition are considered Level 3 measurements.

available for similar issuances with similar maturities and is classified as Level 2 in the fair value hierarchy.

The oil and natural gas properties acquired and ARO assumed in both the 2023 New Mexico Acquisition and the 2024 New Mexico Asset Acquisition are considered Level 3 measurements.

Assets and Liabilities Measured on a Recurring Basis

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Commodity derivative assets $ — $ 14,766 $ — $ 14,766

Interest rate assets $ — $ 869 $ — $ 869

Financial liabilities:

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Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The fair value measurements of assets acquired and liabilities assumed are measured on a nonrecurring basis on the acquisition date using an income valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs.

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and (iv) a market-based weighted average cost of capital rate.

The underlying commodity prices embedded in the Company's estimated cash flows are the product of a process that begins with NYMEX forward curve pricing, adjusted for estimated location and quality differentials, as well as other factors that the

The underlying commodity prices embedded in the Company's estimated cash flows are the product of a process that begins with

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Company’s management believes will impact realizable prices.

New York Mercantile Exchange ("NYMEX") forward curve pricing, adjusted for estimated location and quality differentials, as well as other factors that the Company’s management believes will impact realizable prices.

These inputs require significant judgments and estimates by the Company’s management at the time of the valuation.

The fair value of asset retirement obligations incurred and acquired during the years ended December 31, 2023 and 2022, totaled approximately $ 19.4 million and $ 0.4 million, respectively.

The fair value of additions to the asset retirement obligation liabilities is measured using valuation techniques consistent with the income approach, which converts future cash flows to a single discounted amount.

The fair value of ARO incurred and acquired during the years ended December 31, 2024, and 2023, totaled approximately $ 9.8 million and $ 19.4 million, respectively.

The fair value of additions and revisions to the asset retirement obligation liabilities is measured using valuation techniques consistent with the income approach, which converts future cash flows to a single discounted amount.

Significant inputs to the valuation include:

(i) estimated plug and abandonment cost per well for all oil and natural gas wells and for all disposal wells;

(i) estimated plugging and abandonment costs per well for all oil and natural gas wells and for all disposal wells;

(ii) estimated remaining life per well;

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The factors used to determine fair value are subject to management’s judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated operating and development costs using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk and current market conditions associated with the expected cash flow projected.

For the year ended December 31, 2023, the Company recognized an impairment charge to its oil and natural gas properties of $ 9.8 million related to acreage in Texas outside of its Champions Field.

In preparing this assessment, the Company utilized a discounted cash flow approach to estimate fair value.

For the year ended December 31, 2024, the Company recognized non-cash impairment losses to our oil and natural gas properties of $ 11.3 million related to acreage in Texas and New Mexico outside of our Champions and Red Lake fields as well as a non-cash impairment loss of $ 28.9 million related to the discontinuation of the EOR project.

As of December 31, 2024, the oil and natural gas properties in Texas outside of the Champions field had a net book value of $ 21.1 million and a fair value of $ 11.6 million resulting in an impairment loss of $ 9.5 million and the oil and natural gas properties in New Mexico outside of the Red Lake field had a net book value of $ 3.1 million and a fair value of $ 1.3 million resulting in an impairment loss of $ 1.8 million.

The EOR project had a net book value of $ 41.7 million and a fair value of $ 12.8 million for salvageable assets with alternative uses, resulting in an impairment loss of $ 28.9 million.

For the year ended December 31, 2023, the Company recognized non-cash impairment losses to our oil and natural gas properties of $ 9.8 million related to acreage in Texas outside of our Champions field.

As of December 31, 2023, the oil and natural gas properties in Texas outside of the Champions field had a net book value of $ 33.7 million and a fair value of $ 23.9 million.

In preparing these assessments, the Company utilized a discounted cash flow approach to estimate fair value.

The assumptions utilized in the discounted cash flow are considered Level 3, consistent with the discussion above.

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See further discussion of our impairment in Note 5 - Oil and Natural Gas Properties.

(8) Equity Method Investment

In January 2023, the Company formed a joint venture, RPC Power LLC, a Delaware limited liability company ("RPC Power"), with Conduit Power LLC for the purpose of constructing, owning and operating power generation assets.

RPC Power's initial scope and assets use the Company’s produced natural gas to power a portion of our operations in Yoakum County, Texas which became fully operational in September 2024.

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, for the sale of energy and ancillary services to the Electric Reliability Council of Texas ("Merchant Deal").

Upon signing the A&R LLC Agreement, the Company invested an additional $ 9.5 million and also increased our equity ownership in RPC Power from 35 % to 50 %.

As the Company has significant influence due to our ownership percentage, but lacks control, RPC Power is accounted for as an equity method investment.

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 had invested $ 23.8 million in the joint venture, comprised of $ 21.5 million in cash and $ 2.3 million of contributed assets, which was reduced by the Company's share of losses and increased by our share of income in the joint

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company also had a remaining commitment to invest up to an additional $ 27.7 million to fund our portion of the remaining 2025 capital budget for the RPC Power joint venture.

On February 28, 2025, the Company contributed an additional $ 6.3 million to RPC Power, which increased our total capital contributions to $ 30 million.

See Note 9 - Transactions with Related Parties for further discussion of the contractual agreements between the Company and RPC Power and its affiliates and Note 15 - Commitments and Contingencies for additional information on future commitments.

The following table presents the Company's equity method investment activity:

Year Ended December 31,

(In thousands)

Equity method investment, beginning balance $ 5,620 $ —

Contributions 17,912 5,838

Loss from equity method investment ( 721 ) ( 218 )

Equity method investment, ending balance

$ 22,811 $ 5,620

(9) Transactions with Related Parties

In January 2023, the Company entered into a 10-year agreement with RPC Power, which provides for the conversion of specified quantities of the Company’s produced natural gas to electricity to power a portion of our oilfield operations in Yoakum County, Texas ("Tolling Agreement").

The Tolling Agreement was amended and restated in June 2024 ("A&R Tolling Agreement") primarily to reflect the new in-service date of September 2024.

The Company also entered into a 10-year agreement (“Asset Optimization Agreement”) in January 2023 that requires RPC Power to provide operational expertise on the implementation and management of the power generating assets subject to the A&R Tolling Agreement for a monthly fee of $ 20 thousand.

In May 2024, the Company entered into a 10-year natural gas supply agreement ("Supply Agreement") with RPC Merchant LLC, a wholly owned subsidiary of RPC Power ("RPC Merchant"), to supply natural gas to fuel the natural gas generators under the Merchant Deal.

The Company's commitment under the Supply Agreement is contingent upon project start-up which is expected to occur beginning in late 2025 through 2026.

The Company incurred LOE from RPC Power of approximately $ 4.3 million and $ 0.2 million for the year ended December 31, 2024, and 2023, respectively.

As of December 31, 2024, and December 31, 2023, the Company had approximately $ 1.2 million and zero accrued for RPC Power, which was included in accrued liabilities in our consolidated balance sheets.

See additional information related to RPC Power in Note 8 - Equity Method Investment and Note 15 - Commitments and Contingencies for additional information on future commitments.

Contract Services

RPOC provides certain administrative services to Combo Resources, LLC ("Combo") and is also the contract operator on behalf of Combo in exchange for a monthly fee of $ 100 thousand and reimbursement of all third party expenses pursuant to a contract services agreement.

Additionally, RPOC provides certain administrative and operational services to Riley Exploration Group, LLC ("REG") in exchange for a monthly fee of $ 100 thousand pursuant to a contract services agreement.

Combo and REG are portfolio companies of Yorktown Energy Partners XI, L.P.

("Yorktown XI"), certain managed funds of which have investments in the Company (all deemed to be related parties).

As of December 31, 2023, our Executive Vice President - Business Intelligence was the President of both REG and Combo, as well as a board member of Combo.

The Company and Combo Resources, LLC (“Combo”) own interests in six established units in Lee and Fayette Counties, Texas, which were jointly developed by the parties pursuant to participation agreements (collectively, the "Combo PA") and are currently operated by Riley Permian Operating Company, LLC ("RPOC").

RPOC also provided certain administrative and operational services to Combo pursuant to a management services agreement (the "Combo MSA") for a monthly fee of $ 100 thousand and reimbursement of all third party expenses until the Combo MSA was terminated on January 31, 2024.

Separately, the Combo PA was also terminated as of December 31, 2023, and pursuant to a letter agreement effective as of December 31, 2023, the Company agreed to relinquish our right to acquire additional working interests within a specified area.

The rights of the Company in the six jointly owned units are not affected by this letter agreement and remain subject to the existing joint operating agreements between the parties.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company also provided certain administrative services pursuant to a services agreement (the "REG MSA") with Riley Exploration Group, LLC (“REG”) for a monthly fee of $ 100 thousand through January 2024 and $ 60 thousand through April 2024, and reimbursement of all third party expenses until the REG MSA was terminated effective May 31, 2024.

The $ 60 thousand fee was waived for the month of May 2024.

The following table presents revenues from and related cost for contract services for related parties:

5 unchanged sentences

Cost of contract services $ 363 $ 579

The Company had amounts payable to Combo of $ 0.7 million and $ 0.4 million at December 31, 2023 and 2022, respectively, which are reflected in other current liabilities in the accompanying consolidated balance sheets.

Amounts due to Combo reflect the revenue, net of any expenditures for wells and fees due under the contract services agreement, for Combo's

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

net working interest in wells that the Company operates on Combo's behalf.

See Note 14 - Subsequent Events for additional information regarding arrangements with Combo occurring after December 31, 2023.

The Company had no amounts payable to Combo at December 31, 2024, and $ 0.7 million payable at December 31, 2023, which is reflected in other current liabilities in our consolidated balance sheets.

Amounts due to Combo reflect the revenue, net of any expenditures, for Combo's net working interest in wells that RPOC operates on Combo's behalf.

The Company had no amounts receivable from Combo at December 31, 2024, and December 31, 2023.

The Company also had no amounts receivable from REG at December 31, 2024, and December 31, 2023.

Consulting and Legal Fees

The Company has an engagement agreement with di Santo Law PLLC ("di Santo Law"), a law firm owned by Beth di Santo, a member of our Board of Directors, pursuant to which di Santo Law's attorneys provide legal services to the Company.

For the years ended December 31, 2023 and 2022, the Company incurred legal fees from di Santo Law of approximately $ 1.2 million, and $ 0.7 million, respectively.

As of December 31, 2023, the Company had approximately $ 0.6 million in amounts accrued for di Santo Law, which was included in accrued liabilities in the accompanying consolidated balance sheets.

The Company incurred legal fees from di Santo Law of approximately $ 1.4 million, and $ 1.2 million, for the years ended December 31, 2024, and 2023, respectively.

As of December 31, 2024, and 2023, the Company had approximately $ 0.3 million and $ 0.6 million in amounts accrued for di Santo Law, which were included in other current liabilities in our consolidated balance sheets.

Other Related Party Transactions

In certain instances, business requires our employees to charter privately owned aircraft in furtherance of our business, including accessing remote areas of our field operation.

The Company arranges travel through a charter company, which also manages an aircraft in which our Chief Executive Officer holds a time-sharing agreement for a private aircraft.

The Company from time to time will use the aircraft in which our Chief Executive Officer has the time-sharing agreement in place as the fees for this aircraft are less than others offered by the charter company.

We pay fees incurred for flights directly to the charter company that manages the planes.

During the year ended December 31, 2024, we paid the charter company $ 0.1 million for flights chartered by our employees.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(10) Long-Term Debt

8 unchanged sentences

Current portion of long-term debt (2)

20,000 20,000

Total long-term debt $ 249,494 $ 335,959

_____________________

(1) Unamortized discount on long-term debt is amortized over the life of the respective debt.

(2) As of December 31, 2023, unamortized deferred financing costs are attributable to and amortized over the life of the Senior Notes.

(3) As of December 31, 2023, the current portion of long-term debt reflects $ 20 million due on the Senior Notes over the next twelve months.

(1) Unamortized discount and unamortized deferred financing costs are attributable to and amortized over the term of the Senior Notes.

(2) As of December 31, 2024, and 2023, the current portion of long-term debt reflects $ 20 million due on the Senior Notes over the next twelve months .

Debt maturities as of December 31, 2024, excluding unamortized deferred financing costs, are as follows:

2 unchanged sentences

2025 $ 20,000

_____________________

(1) The credit facility amount outstanding of $ 115 million as of December 31, 2024, has a stated maturity date of December 2028 which is subject to an earlier maturity date of October 2027 if any Senior Notes are still outstanding as of October 2027.

For purposes of this table, the Company used the earlier date of October 2027;

however, if the Senior Notes are no longer outstanding before this date, the stated maturity would become December 2028.

Credit Facility

On September 28, 2017, REP LLC entered into a credit agreement (the "Credit Agreement") to establish a senior secured Credit Facility with a syndicate of banks including SunTrust Bank, now Truist Bank as successor by merger, as administrative

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On September 28, 2017, REP LLC entered into a credit agreement (the "Credit Agreement") to establish a senior secured Credit Facility with a syndicate of banks including Truist Bank, as administrative agent.

The Credit Facility had an initial borrowing base of $ 25 million with a maximum facility amount of $ 500 million.

On February 22, 2023, the Company amended its Credit Facility to, among other things, allow for the issuance of unsecured senior notes of up to $ 200 million.

On April 3, 2023, and concurrent with the closing of the New Mexico Acquisition, the Company entered into the fourteenth amendment (the "Fourteenth Amendment") to the Credit Facility to, among other things, increase the maximum facility amount to $ 1.0 billion and the borrowing base from $ 225 million to $ 325 million, resulting in the addition of new lenders to the lending group.

On November 14, 2023, through the semi-annual redetermination process, the Credit Facility was amended to increase the borrowing base from $ 325 million to $ 375 million.

The Credit Agreement is set to mature in April 2026.

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 April 3, 2023, and concurrent with the closing of the 2023 New Mexico Acquisition, the Company entered into the fourteenth amendment to the Credit Facility to, among other things, increase the maximum facility amount to $ 1.0 billion and the borrowing base from $ 225 million to $ 325 million, resulting in the addition of new lenders to the lending group.

On November 14, 2023, through the semi-annual redetermination process and fifteenth amendment, the Credit Facility was amended to increase the borrowing base from $ 325 million to $ 375 million, resulting in the addition of two new lenders and the exit of one lender.

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.

Substantially all of the Company’s assets are pledged to secure the Credit Facility.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The borrowing base is subject to periodic redeterminations, mandatory reductions and further adjustments from time to time.

7 unchanged sentences

If the Company's leverage ratio, after giving pro forma effect to such Restricted Payments (as defined in the Credit Agreement), is above 2.0 to 1.0, then an additional test of free cash flow is applied, and the Company will only be permitted to make such Restricted Payments if such payment does not exceed the Company's free cash flow.

The Company is also required to limit its cash balance to less than $ 15 million or 10 % of the borrowing base, whichever is greater.

If the Company's cash balance exceeds this limit on the last business day of the month, the Company will be required to apply the excess to reduce its Credit Facility borrowings.

The Company is also required to limit our cash balance to less than $ 15 million or 10 % of the borrowing base, whichever is greater.

If the Company's cash balance exceeds this limit on the last business day of the month, the Company will be required to apply the excess to reduce our Credit Facility borrowings.

The Credit Agreement also contains other customary affirmative and negative covenants and events of default.

The Company must maintain a minimum hedging requirement included in the Credit Agreement for oil and natural gas based on its proved developed producing projected volumes on a rolling 24-month basis.

The Company must maintain a minimum hedging requirement included in the Credit Agreement for oil and natural gas based on our proved developed producing projected volumes on a rolling 24-month basis.

The following table summarizes the Credit Facility balances:

2 unchanged sentences

Available under the borrowing base $ 285,000 $ 190,000

On April 3, 2023, and concurrent with the closing of the New Mexico Acquisition, the Company (as “Issuer”) completed its issuance of $ 200 million aggregate principal amount of 10.50 % senior unsecured notes with final maturity April 2028 pursuant to a note purchase agreement (the “Note Purchase Agreement”), with the Senior Notes issued at a 6 % discount.

On April 3, 2023, and concurrent with the closing of the 2023 New Mexico Acquisition, the Company (as “Issuer”) completed our issuance of $ 200 million aggregate principal amount of 10.50 % senior unsecured notes with final maturity April 2028 pursuant to a note purchase agreement (the “Note Purchase Agreement”), with the Senior Notes issued at a 6 % discount.

The net proceeds from the Senior Notes were used to fund a portion of the purchase price and related fees, costs and expenses for the 2023 New Mexico Acquisition.

1 unchanged sentence

In addition to interest, the Issuer will repay 2.50 % of the original principal amount each quarter resulting in $ 5 million quarterly principal payments until the maturity of the Senior Notes.

As of December 31, 2023, the Company had $ 20 million in current liabilities on the consolidated balance sheet related to the quarterly principal payments due within the next 12 months.

As of December 31, 2024, the Company had $ 20 million in current liabilities in our consolidated balance sheets related to the quarterly principal payments due within the next 12 months.

The Issuer may, at its option, redeem, at any time and from time to time on or prior to April 3, 2026, some or all of the Senior Notes at 100 % of the principal amount thereof plus the make-whole amount plus a premium of 5.25 % as set forth in the Note Purchase Agreement plus accrued and unpaid interest, if any.

1 unchanged sentence

After October 3, 2026, the Issuer may redeem some or all of the Senior Notes at 100 % of the principal amount thereof plus accrued and unpaid interest, if any.

The principal remaining outstanding at the time of maturity is required to be paid in full by

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The principal remaining outstanding at the time of maturity is required to be paid in full by the Issuer.

Certain note features, including those discussed above, were evaluated and deemed to be remote.

2 unchanged sentences

The Senior Notes also contain a total leverage ratio and an asset coverage ratio for Restricted Payments, as defined in the Senior Notes.

The leverage ratio, after giving pro forma effect to such Restricted Payments, cannot exceed 2.0 to 1.0, and the asset coverage ratio, after giving effect to such Restricted Payments, must be greater than or equal to 1.50 to 1.0.

The leverage ratio, after giving pro forma effect to such Restricted Payments, cannot exceed 2.0 to 1.0, and the asset coverage ratio, after giving effect to such

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Restricted Payments, must be greater than or equal to 1.50 to 1.0.

In addition to and after giving effect to such Restricted Payments, the outstanding balance on the Company's Credit Facility must be greater than or equal to 15 % of the lesser of the then effective Borrowing Base and the Aggregate Elected Commitment Amount.

Upon issuance of the Senior Notes, the Company must maintain a minimum hedging requirement included within the Senior Notes for oil and natural gas based on its proved developed producing projected volumes for each commodity on a rolling 18-month basis.

Upon issuance of the Senior Notes, the Company must maintain a minimum hedging requirement included within the Senior Notes for oil and natural gas based on our proved developed producing projected volumes for each commodity on a rolling 18-month basis.

The Senior Notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company.

5 unchanged sentences

$ 31,411 $ 30,464

Interest income

( 866 ) ( 233 )

Capitalized interest ( 2,350 ) ( 3,187 )

7 unchanged sentences

(11) Shareholders' Equity

Cash dividends for the periods presented were declared for all issued and outstanding common shares, including vested and unvested under the respective Long-Term Incentive Plan in effect during the period of dividend declaration.

The portion of the cash attributable to the unvested restricted shares issued under the Amended and Restated 2021 Long-Term Incentive Plan (the "A&R LTIP") is included in accrued liabilities on the consolidated balance sheets and will be paid in cash once the unvested restricted shares fully vest.

Cash dividends for the periods presented were declared for all issued and outstanding common shares, including vested and unvested shares under the long-term incentive plan in effect during the period of dividend declaration.

The portion of the cash attributable to the unvested restricted shares issued under the Amended and Restated 2021 Long-Term Incentive Plan (the "A&R LTIP") is included in accrued liabilities and other non-current liabilities in our consolidated balance sheets and will be paid in cash once the unvested restricted shares fully vest.

See Note 10 - Long-Term Debt for discussion over the Company's restrictions on certain payments, including dividends.

33 unchanged sentences

The holders of these restricted shares receive dividends, in arrears, once the shares vest.

The Company has accrued for these dividends which are reported in accrued liabilities and other non-current liabilities.

All restricted shares granted have a service period between 3 and 36 months.

The Company estimates the fair values of the restricted shares as the closing price of the Company's common stock on the grant date of the award, with the expense amortized on a straight-line basis and recognized over the vesting period.

The Company has accrued for these dividends which are recorded in accrued liabilities and other non-current liabilities.

All current restricted shares granted have a service period between 3 and 36 months.

The Company estimates the fair values of the restricted shares as of the closing price of the Company's common stock on the grant date of the award, with the expense amortized on a straight-line basis and recognized over the vesting period.

RILEY EXPLORATION PERMIAN, INC.

13 unchanged sentences

(2) For the years ended December 31, 2024, and 2023 , the total fair value of restricted shares vested during the year was $ 7.1 million and $ 6.4 million , respectively.

For the years ended December 31, 2023 and 2022, the total share-based compensation expense is $ 7.0 million and $ 3.9 million, respectively.

For the year ended December 31, 2023, share based compensation expense also includes expense associated with equity awards attributable to a separation agreement with a former Company executive.

Share-based compensation expense is included in general and administrative costs on the Company's consolidated statement of operations for the restricted share awards granted under the A&R LTIP.

At the time of the forfeiture, the Company will recognize any forfeited shares as a reduction to share-based compensation expense on the consolidated statement of operations and a decrease to shareholders' equity on the consolidated balance sheet.

Any unpaid dividends on forfeited shares will be recognized as a decrease to accrued liabilities and an increase to shareholders' equity on the consolidated balance sheet.

For the years ended December 31, 2024, and 2023, the total share-based compensation expense was $ 8.1 million and $ 7.0 million, respectively.

For the years ended December 31, 2024, and 2023, share based compensation expense also included expense associated with equity awards attributable to separation agreements with former Company executives.

Share-based compensation expense is included in general and administrative costs in the Company's consolidated statements of operations for the restricted share awards granted under the A&R LTIP.

If shares are subject to forfeiture, the Company will recognize any forfeited shares as a reduction to share-based compensation expense in our consolidated statements of operations and a decrease to shareholders' equity in our consolidated balance sheets.

Any unpaid dividends on forfeited shares will be recognized as a decrease to accrued liabilities and other non-current liabilities and an increase to shareholders' equity in our consolidated balance sheets.

Approximately $ 7.8 million of additional share-based compensation expense will be recognized over the weighted average life of 22 months for the unvested restricted share awards as of December 31, 2024, granted under the A&R LTIP.

On September 1, 2023, the Company entered into an Equity Distribution Agreement in connection with an at-the-market equity sales program ("ATM") pursuant to which the Company may offer and sell from time to time up to an aggregate $ 50 million in shares of the Company's common stock through its agents.

The offer and sale of the shares has been registered under the Securities Act of 1933, as amended ("Securities Act"), pursuant to the Company’s registration statement on Form S-3, as amended.

A prospectus supplement related to the offering of the shares, as defined in Rule 415(a)(4) promulgated under the Securities Act was filed September 1, 2023.

The Company intends to use the net proceeds from any offering for working capital purposes and other general corporate purposes, including, but not limited to, financing of capital expenditures, repayment or refinancing of outstanding debt, financing acquisitions or investments, financing other business opportunities, and general working capital purposes.

During the year ended December 31, 2023, the Company executed sales under the ATM program of 8,939 shares which generated proceeds of approximately $ 280 thousand, net of approximately $ 278 thousand of fees including expenses associated with establishing the ATM program and filing of the related prospectus supplement.

At-The-Market Equity Sales Program ("ATM")

On September 1, 2023, the Company entered into an Equity Distribution Agreement in connection with an ATM pursuant to which the Company may offer and sell from time to time up to an aggregate $ 50 million in shares of the Company's common stock through our agents.

During the year ended December 31, 2024, the Company did not execute any sales under the ATM program.

As of December 31, 2024, the Company had remaining capacity to sell up to an additional $ 49.7 million of common stock under the ATM program.

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.

Net proceeds from the 2024 Equity Offering were approximately $ 25.4 million, after deducting underwriting discounts and commissions and expenses.

The proceeds were used for financing an acquisition, repayment of outstanding debt and general corporate purposes.

RILEY EXPLORATION PERMIAN, INC.

1 unchanged sentence

(12) Income Taxes

The components of the Company's consolidated provision for income taxes from continuing operations are as follows:

The components of the Company's consolidated provision for income taxes are as follows:

Year Ended December 31,

11 unchanged sentences

$ 28,074 $ 34,461

Deferred tax assets and liabilities are the result of temporary differences between the financial statement carrying values and the tax bases of assets and liabilities.

Deferred tax assets and liabilities are the result of temporary differences between the financial statement carrying values and the tax basis of our assets and liabilities.

The Company's net deferred tax position is as follows:

1 unchanged sentence

(In thousands)

Deferred tax assets

Non-cash gain on derivatives $ — $ 3,563

Intangibles $ 146 $ 163

9 unchanged sentences

Net deferred tax liabilities $ ( 76,547 ) $ ( 73,345 )

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate is as follows:

4 unchanged sentences

State income taxes, net of federal benefit 2.4 % 2.4 %

Other — % ( 0.2 ) %

Effective income tax rate 24.0 % 23.6 %

1 unchanged sentence

The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2019.

The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements.

The Company currently believes that all other significant filing positions are highly certain and that all of our other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on our consolidated financial statements.

Therefore, the Company has not established any significant reserves for uncertain tax positions.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Section 382 of the Internal Revenue Code limits the utilization of U.S.

1 unchanged sentence

The Merger caused a stock ownership change for purposes of Section 382 which is subject to an approximate annual limit.

The Company has federal NOLs subject to the annual Section 382 limit of $ 12.9 million of which $ 4.1 million will expire beginning in 2024 with the remaining $ 8.8 million of the NOLs not expiring.

The Company has federal NOLs subject to the annual Section 382 limit of $ 12.6 million of which $ 3.8 million will expire beginning in 2025 through 2037 with the remaining $ 8.8 million of the NOLs not expiring.

Additionally, the Company has no federal NOLs generated after the Merger that are not limited by Section 382 and are not subject to expiration.

We believe it is more likely than not the tax benefit of these net operating losses will be fully realized, as such no valuation allowance has been recorded.

The deferred tax assets for the net operating losses, along with the other deferred tax assets as shown in the table above, are presented net with deferred tax liabilities, which primarily consist of book and tax depreciation differences.

We believe it is more likely than not the tax benefit of these NOLs will be fully realized, as such no valuation allowance has been recorded.

(13) Net Income Per Share

13 unchanged sentences

$ 4.26 $ 5.58

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following shares were excluded from the calculation of diluted net income per share due to their anti-dilutive effect for the periods presented:

2 unchanged sentences

226,742 294,817

(14) Segments

The Company’s oil and gas exploration and production activities are solely focused in the U.S.

For financial reporting purposes, the Company aggregates our operating segments into one reporting segment due to the similar nature of these operations.

The Chief Operating Decision Maker ("CODM") function is a critical aspect of segment reporting, as defined by the FASB under the Accounting Standards Codification (ASC) 280.

The CODM is responsible for making key operating decisions and assessing the performance of the Company.

The CODM function at the Company is collectively performed by a committee consisting of the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Chief Operating Officer ("COO"), and Chief Accounting Officer ("CAO").

The CEO is the highest-ranking executive in the Company and is primarily responsible for the overall strategic direction and operational performance.

The CEO's role in the CODM function includes setting long-term goals, making high-level decisions about policy and strategy, and ensuring that the Company's activities align with the overall corporate objectives.

The CFO oversees all of the financial activities of the Company, including financial planning, risk management, record-keeping, and financial reporting.

In the CODM function, the CFO plays a crucial role in analyzing financial data, assessing financial performance, and making recommendations for resource allocation and investment decisions.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The COO is responsible for the day-to-day operations of the Company.

This includes managing the operational aspects of the business, ensuring efficiency, and implementing the strategies set by the CEO.

The COO's involvement in the CODM function includes monitoring performance, optimizing operational processes, and addressing any operational challenges that may arise.

The CAO oversees the accounting functions of the Company, ensuring compliance with accounting standards and regulations.

In the CODM function, the CAO is responsible for providing accurate and timely financial information for the business, ensuring that the financial data is reliable and consistent and providing insight into the potential accounting complications of transactions.

The CAO also plays a key role in internal controls and financial reporting.

Together, the CEO, CFO, COO, and CAO form a collaborative team that functions as the CODM.

They meet regularly to review performance, discuss strategic and operational issues, and make informed decisions that drive the Company's success.

This collective approach ensures that all aspects of the business are considered, from strategic direction and financial health to operational efficiency and regulatory compliance.

The CODM uses consolidated net income as a key metric to guide decisions regarding capital allocation.

By assessing consolidated net income, the CODM gains insight into the overall financial health of the organization, allowing for more informed decisions on where to direct capital expenditures.

Additionally, consolidated net income is used to monitor financial performance by comparing budgeted projections to actual results, helping the CODM identify variances, adjust strategies and ensure that resources are being effectively deployed across various operational areas.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents consolidated net income, the significant measure of profit and loss used by the CODM, as well as total assets, capital expenditures, and our equity method investment for the Company's single reportable segment:

Year Ended December 31,

(In thousands)

Total Revenues

$ 410,181 $ 375,047

Lease operating expenses

71,463 58,817

Production and ad valorem taxes

29,428 25,559

Exploration costs

Depletion, depreciation, amortization and accretion

74,900 65,055

Impairment of oil and natural gas properties

Other impairments

Administrative Costs

26,551 26,569

Share-based compensation expense

Other segment items (1)

Interest expense, net of capitalized interest (2)

35,204 32,049

Interest income

( 866 ) ( 233 )

(Gain) loss on derivatives, net 1,665 ( 6,193 )

Loss from equity method investment 721 218

Income tax expense

28,074 34,461

Segment net income (3)

$ 88,897 $ 111,591

Total assets $ 993,501 $ 945,711

Capital expenditures $ 108,320 $ 135,804

Equity method investment $ 22,811 $ 5,620

_____________________

(1) Other segment items include transaction costs and cost of contract services - related parties.

(2) Interest expense is shown gross of, or prior to the effect of interest income.

(3) There are no reconciling items between net income presented in our consolidated statements of operations and segment net income.

(15) Commitments and Contingencies

9 unchanged sentences

The Company had no material environmental liabilities as of December 31, 2024, or December 31, 2023.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Contractual Commitments

In October 2021, the Company executed an agreement related to its EOR project.

This agreement is a CO2 purchase agreement that has a daily contract quantity with Kinder Morgan CO2 Company, LLC that has a primary term extending through the earlier of the total contract quantity delivered or December 31, 2025.

In August 2022, the Company entered into a second amendment on its gas gathering and processing agreement with its primary midstream counterparty, Stakeholder Midstream LLC (“Stakeholder”).

Stakeholder committed to expand their gathering and processing system with a commitment from the Company to deliver an annual minimum volume to Stakeholder’s gathering system for a minimum of seven years beginning on the in-service date of the expanded plant.

In January 2023, the Company entered into an agreement to form a joint venture with Conduit Power LLC.

The Company is committed to contributing its portion of capital expenditures into the joint venture company, RPC Power.

In conjunction with the formation of the joint venture, the Company entered into additional agreements with RPC Power or one of its subsidiaries.

These agreements include RPC Power providing operational expertise on the implementation and management of the power generation for a monthly fee of $ 20 thousand.

In addition, the Company entered into a tolling agreement and committed to provide the natural gas needed to fuel onsite power generators for 10 years following the in-service date, with an automatic yearly extension until terminated by either party, for a fee based on a per MMBtu basis adjusted for contractual usage factors.

In October 2023, the Company entered into a purchase agreement for pipe related to its 2024 drilling program.

Under the agreement, the Company has commitments to purchase approximately $ 13.1 million of pipe by December 2024.

In August 2022, the Company entered into a second amendment on our gas gathering, treating and processing agreement with our primary midstream counterparty, Stakeholder Midstream, LLC (“Stakeholder”).

Stakeholder committed to expand their gathering and processing system with a commitment from the Company to deliver an annual minimum volume to Stakeholder’s gathering system with less than seven years remaining as of December 31, 2024.

In January 2023, the Company entered into the Tolling Agreement which uses the Company's produced natural gas to power a portion of our oilfield operations in Yoakum County, Texas.

Under the Tolling Agreement, the Company has committed to provide specified quantities of our natural gas for 10 years following the in-service date of September 2024, for a fee based on a per MMBtu basis adjusted for contractual usage factors.

In June 2024, the Company entered into the A&R Tolling Agreement which superseded the Tolling Agreement to change the new in-service date to September 2024.

The Company also entered into the Asset Optimization Agreement in January 2023 that requires RPC Power to provide operational expertise on the implementation and management of the power generating assets subject to the A&R Tolling Agreement for a monthly fee of $ 20 thousand.

In May 2024, the Company entered into a 10-year natural gas supply agreement (“Supply Agreement”) with RPC Merchant LLC to supply natural gas to fuel the natural gas generators under the Merchant Deal.

The Company's commitment under the Supply Agreement is contingent upon project start-up which is expected to occur beginning in late 2025 through 2026.

In May 2024, the Company increased our ownership interest in RPC Power from 35 % to 50 %.

The Company also has a remaining commitment to invest up to an additional $ 27.7 million to fund our portion of the 2025 capital budget for the RPC Power joint venture.

See Note 8 - Equity Method Investment and Note 9 - Transactions with Related Parties for additional information related to RPC Power.

Gas Purchase Agreement

On December 31, 2024, 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 followed by a year-to-year continuation until terminated by either party upon 180 days written notice.

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.

We currently anticipate the in-service date will be before the end of 2026.

(16) Subsequent Events

Dividend Declaration

On January 11, 2024, the Board of Directors of the Company declared a cash dividend of $ 0.36 per share of common stock payable on February 8, 2024 to its shareholders of record at the close of business on January 25, 2024.

RILEY EXPLORATION PERMIAN, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Termination of Agreements between Riley and Combo

As discussed in Note 8 - Transactions with Related Parties, the Company has an MSA with Combo to provide certain services, including management of its assets, and overall company accounting, tax filings, and back-office functions.

Each of Combo and Riley desired to terminate such MSA and transitioned the services under the MSA to Combo and its service providers effective as of January 31, 2024.

In addition, certain oil and natural gas properties were developed by Riley and Combo who currently jointly own interests in 6 established units in Lee and Fayette Counties, Texas.

Going forward, Riley will no longer have the right to acquire interest in Combo’s leases or earn an interest in the future units formed within defined areas.

Riley may participate in any wells or units to the extent Riley owns an interest in oil, gas or minerals attributable to such new well or unit.

Further, Riley can continue to participate in wells drilled within each of the established units.

Power Joint Venture

On March 4, 2024, the Company made a capital contribution of $ 5.6 million to its joint venture RPC Power, which increased the total contribution to $ 11.5 million and the total ownership from 30 % to 35 %.

On January 9, 2025, the Board of Directors of the Company declared a cash dividend of $ 0.38 per share of common stock paid on February 6, 2025, to our shareholders of record at the close of business on January 23, 2025.

Equity Contribution to RPC Power

On February 28, 2025, the Company contributed an additional $ 6.3 million to RPC Power, which increased our total capital contributions to $ 30 million.

SUPPLEMENTAL OIL AND GAS INFORMATION

33 unchanged sentences

Impairment of oil and natural gas properties 11,317 9,760

Other impairments 30,158 —

Results of operations $ 190,815 $ 209,875

5 unchanged sentences

Oil, Natural Gas and NGL Quantities

Our reserve report for the year ended December 31, 2023 was prepared by Ryder Scott Company, L.P.

For the year ended December 31, 2022, our reserve report was prepared by Netherland, Sewell & Associates, Inc.

Our reserve report for the year ended December 31, 2024, and 2023 , was prepared by Ryder Scott Company, L.P.

All reserves are located within the continental United States.

11 unchanged sentences

December 31, 2022 48,882 86,018 14,454 77,673

12,810 39,261 6,711 26,064

Extensions and discoveries 14,822 22,945 4,224 22,870

15 unchanged sentences

December 31, 2024 26,424 58,902 10,715 46,956

As of December 31, 2023, reserves were comprised of 61.5 % oil, 19.2 % natural gas and 19.3 % NGL.

As of December 31, 2024, proved reserves were comprised of 53.8 % oil, 21.9 % natural gas and 24.3 % NGL.

2024 proved reserves were estimated based on average realized prices of $ 74.27 per Bbl of oil, $( 0.43 ) per Mcf of natural gas and $( 3.56 ) per Bbl of NGL.

Prices used in the 2024 reserve report are based on the twelve month unweighted arithmetic average of the first-day-of-the-month price for each month in the period ("SEC price") January 2024 through December 2024.

For oil and NGL volumes, the average West Texas Intermediate ("WTI") SEC price of $ 78.22 per Bbl is adjusted for quality, transportation fees, and market differentials.

The fees associated with the transportation contract are included as a deduction to oil revenue.

For gas volumes, the average Henry Hub SEC price of $ 2.64 per MMBtu is adjusted for energy content, transportation fees and market differentials.

As of December 31, 2022, reserves were comprised of 62.9 % oil, 18.5 % natural gas and 18.6 % NGL.

2022 proved reserves were estimated based on prices of $ 91.96 per Bbl of oil, $ 3.16 per Mcf of natural gas and $ 25.55 per Bbl of NGL.

For oil and NGL volumes, the average WTI SEC price of $ 76.32 per Bbl was adjusted for quality, transportation fees, and market differentials which were included as a deduction to oil revenue.

For gas volumes, the average Henry Hub SEC price of $ 2.13 per MMBtu is adjusted for energy content, transportation fees and market differentials which were included as a deduction to natural gas revenue.

As of December 31, 2023, proved reserves were comprised of 61.5 % oil, 19.2 % natural gas and 19.3 % NGL.

2023 proved reserves were estimated based on average realized prices of $ 76.02 per Bbl of oil, $ 0.46 per Mcf of natural gas and $ 7.11 per Bbl of NGL.

Prices used in the 2023 reserve report are based on the twelve month unweighted arithmetic average of the first-day-of-the-month price for each month in the period January 2023 through December 2023.

2 unchanged sentences

For gas volumes, the average Henry Hub SEC price of $ 2.64 per MMBtu is adjusted for energy content, transportation fees and market differentials.

For the year ended December 31, 2023, the Company added 30.0 MMBoe of proved reserves, with such additions due to acquisitions and extensions and discoveries, partially offset by negative revisions and production.

The Company had acquisitions of 26.1 MMBoe primarily as a result of the New Mexico Acquisition and extensions and discoveries to proved reserves of 22.9 MMBoe, which consisted of 8.3 MMBoe added to PDP as a result of drilling successful wells that were previously classified as unproved locations, and 14.6 MMBoe added to PUDs as a result of drilling successful wells offsetting locations that were previously unproven locations.

The Company had downward revisions of previous estimates of 12.1 MMBoe, which are primarily attributable to the removal of PUDs due to changes in the Company's development schedule.

Consistent with SEC guidelines, PUDs are limited to those locations that are reasonably certain to be developed within five years.

For the year ended December 31, 2024, the Company added 15.9 MMBoe of proved reserves, with such additions due to extensions and discoveries, positive revisions and acquisitions, partially offset by production.

The Company had acquisitions of 4.3 MMBoe primarily as a result of acquired reserves in an acreage swap and the 2024 New Mexico Asset Acquisition and extensions and discoveries of proved reserves of 15.6 MMBoe, which consisted of 7.7 MMBoe added to PDPs as a result of drilling successful wells that were previously classified as unproved locations and 7.9 MMoe added to PUDs as a result of drilling activity during the year, which allowed for the booking of adjacent PUDs for locations that were previously booked as unproved reserves or not at all.

The Company had upward revisions of previous estimates of 4.3 MMBoe, including 15.3 MMBoe of positive revisions which were partially offset by 11.0 MMBoe of negative revisions.

Our positive revisions were primarily due to increased forecasted natural gas sales volumes of 9.2 MMBoe based on improved gas processing capacity in

SUPPLEMENTAL OIL AND GAS INFORMATION - (continued)

For the year ended December 31, 2022, the Company had downward revisions of previous estimates of 6.3 MMBoe.

These revisions are primarily the result of changes in certain well level projections and higher projected operating costs.

The Company had extensions and discoveries to proved reserves of 14.8 MMBoe, which consisted of 7.8 MMBoe added to PDP as a result of drilling successful wells that were previously classified as unproved locations, and 7.0 MMBoe added to PUDs as a result of drilling successful wells offsetting locations that were previously unproven locations.

During the year ended December 31, 2022, the Company did not acquire any reserves.

addition to a decrease in operating expenses and midstream fees that caused positive revisions of 6.1 MMBoe.

These positive revisions were partially offset by negative revisions which included development plan changes driven by shifting focus to more profitable areas of our assets, which resulted in the removal of PUD locations representing 4.2 MMBoe of PUD reserves from our 5-year forecast, 2.6 MMBoe due to type curve updates, 2.0 MMBoe due to interest changes, 1.5 MMBoe due to lower commodity prices and 0.7 MMBoe due to reserve category changes.

Consistent with Securities and Exchange Commission ("SEC") guidelines, PUDs are limited to those locations that are reasonably certain to be developed within five years.

For the year ended December 31, 2023, the Company had added 30.0 MMBoe of proved reserves, with such additions due to acquisitions and extensions and discoveries, partially offset by negative revisions and production.

The Company had acquisitions of 26.1 MMBoe primarily as a result of the 2023 New Mexico Acquisition and extensions and discoveries to proved reserves of 22.9 MMBoe, which consisted of 8.3 MMBoe added to PDP as a result of drilling successful wells that were previously classified as unproved locations, and 14.6 MMBoe added to PUDs as a result of drilling successful wells offsetting locations that were previously unproven locations.

The Company had downward revisions of previous estimates of 12.1 MMBoe, including 19.3 MMBoe of negative revisions which were partially offset by 7.2 MMBoe of positive revisions.

Our negative revisions included development plan changes, driven by the 2023 New Mexico acquisition, which resulted in the removal of PUD locations representing 6.7 MMBoe of PUD reserves from our 5-year forecast, 6.3 MMBoe from lower forecasted natural gas sales volumes due to estimated limitations on processing capacity, 2.9 MMBoe due to lower commodity prices, 2.4 MMBoe due to increased operating expenses, 0.7 MMBoe due to the removal of uneconomic locations and 0.3 MMBoe from other minor revisions.

Positive revisions included 7.2 MMBoe due to changes in well forecasts based on improved well performance from producing wells.

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil, Natural Gas and NGL Reserves

13 unchanged sentences

An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs and a discount factor more representative of the time value of money and the risks inherent in reserve estimates.

SUPPLEMENTAL OIL AND GAS INFORMATION - (continued)

The following summary sets forth the Company’s future net cash flows relating to proved oil, natural gas and NGL reserves based on the standardized measure prescribed in ASC Topic 932:

12 unchanged sentences

(2) December 31, 2023, proved reserves were derived based on average realized prices of $ 76.02 per barrel of oil, $ 0.46 per Mcf of natural gas and $ 7.11 per barrel of NGL.

SUPPLEMENTAL OIL AND GAS INFORMATION - (continued)

Principal sources of change in the Standardized Measure are shown below:

14 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures