Riley Exploration Permian

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 4 Mar 2026, plus the 10-Q filed 5 Aug 2026 and 3 later 8-Ks.

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Purchases of shares of our common stock pursuant to our stock repurchase plan may affect the value of our common stock, and there can be no assurance that our stock repurchase plan will enhance stockholder value.

  Could happen

  Pursuant to our publicly announced stock repurchase plan, we are authorized to repurchase up to $100 million of our common stock over a period of 24 months, including through open market purchases, through block trades, in privately negotiated transactions, or by other means, including through the use of trading plans, each in accordance with applicable securities laws and other restrictions. The timing, amount, and manner of any purchase will be determined at the Company’s discretion, subject to management’s assessment of the intrinsic value of the common stock, the market price of the common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations. This activity could impact the market price of our common stock at that time. Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which could impact our ability to pursue possible strategic opportunities and acquisitions. There can be no assurance that any share repurchases will enhance stockholder value because the market price of our common stock could decline. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term share price fluctuations could reduce the program’s effectiveness.

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• We are responsible for the decommissioning, removal, plugging, abandonment, and reclamation costs for our facilities.

  Could happen

  We are responsible for compliance with all applicable laws and regulations regarding the decommissioning, removal, plugging, abandonment, and reclamation of our facilities at the end of their economic life, the costs of which may be substantial. It is not possible to predict these costs with certainty since they will be a function of regulatory requirements at the time of decommissioning, removal, plugging, abandonment, and reclamation. Prior to such time, though, we are required by the states in which we operate to post financial assurance in order to provide for abandonment, restoration and remediation of wells, and the amount of that financial assurance varies in the states in which we operate. Further, public concern over potential environmental impacts, such as groundwater contamination, from “orphan wells”—wells abandoned by an operator presumably no longer in existence that were not properly decommissioned and plugged—has recently been expressed and, in some cases, spurred calls for increasing the required amounts of financial assurance to more accurately reflect the current, actual costs of plugging and abandonment. For example, in October 2025, the NMOCC conducted a hearing to consider proposed rules that, if adopted, would substantially increase bonding requirements and introduce higher, per well bonding requirements if a certain percentage of an operator's wells are considered marginal. Whereas a maximum of $250,000 in financial assurance could previously be posted to cover all of an operator's wells, additional finanical assurance in the amount of $150,000 per well would be required for wells considered to be "low producing" or "inactive," or, for example, if 20 percent of an operator’s wells are considered marginal or inactive, the $150,000 per well financial assurance requirement applies to all of the operators wells, not just the low producing and inactive well. In addition, New Mexico proposed adding change-in-operator requirements relating to the demonstration of financial wherewithal for taking on inactive well and plugging and abandonment obligations. In addition to required financial assurance, we may, in the future, determine it prudent or be required by applicable laws or regulations to establish and fund one or more decommissioning, removal, plugging, abandonment, and reclamation reserve funds to provide for payment of future decommissioning, removal, plugging, abandonment, and reclamation costs, which could decrease funds available for capital expenditures, debt repayment, dividends, stock buybacks, or other corporate purposes. In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, removal, plugging, abandonment, and reclamation costs and we will be responsible for the payment of the balance of such costs.

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• Recent regulatory restrictions on use of produced water and a moratorium on new produced water disposal wells in certain areas of the Permian Basin to stem rising seismic activity and earthquakes could increase our operating costs and adversely impact our business, results of operations and financial condition.

  Could happen

  We may be subject to regulation that restricts our ability to discharge water produced as part of our oil, natural gas and NGL production operations. Productive zones frequently contain water that must be removed for the oil, natural gas and NGLs to produce, and our ability to remove and dispose of sufficient quantities of water from the various zones will determine whether we can produce oil, natural gas and NGLs in commercial quantities. The produced water must be transported from the leasehold and/or injected into disposal wells. The availability of transportation and disposal wells with sufficient capacity to receive all of the water produced from our wells may affect our ability to produce our wells. Also, the cost to transport and dispose of that water, including the cost of complying with regulations concerning water disposal, may reduce our profitability. We have entered into a 15-year agreement with a third party to transport certain committed volumes of produced water from our operations in New Mexico beginning in the second half of 2026; however if this agreement were to be terminated, or our counterparty otherwise fails to transport the produced water, it could force us to shut in wells or reduce drilling activities. We may also have to shut in wells, reduce drilling activities, or upgrade facilities for water handling or treatment if any of the following occur: (i) water produced from our projects fails to meet the quality requirements set by relevant regulatory agencies, (ii) our wells produce water in excess of the allowed volumetric permit limits, (iii) the disposal wells fail to comply with applicable regulatory requirements, or (iv) we are unable to secure access to disposal wells with sufficient capacity to handle all of the produced water. The costs to dispose of this produced water may increase if any of the following occur:

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• Recent regulatory restrictions on use of produced water and a moratorium on new produced water disposal wells in certain areas of the Permian Basin to stem rising seismic activity and earthquakes could increase our operating costs and adversely impact our business, results of operations and financial condition.

  Could happen

  • we cannot obtain future permits from applicable regulatory agencies; • water of lesser quality or requiring additional treatment is produced; • our wells produce excess water; • the counterpart to our water agreement cannot transport our produced water;

• Our derivative activities could result in financial losses or could reduce our earnings.

  Could happen

  If interest rates decline below the fixed or floor rates established by our derivative instruments, we will be obligated to make cash payments to our derivative counterparties, which could increase our interest expense and reduce cash flows available for capital expenditures, debt repayment, dividends, stock buybacks or other corporate purposes. As a result, our derivative positions may cause us to incur higher interest costs than we would have otherwise incurred in a declining interest rate environment.

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