Riley Exploration Permian Q3 2026: Revenue Surges 88% with a Derivative Catch

Riley Exploration Permian posted Q3 2026 revenue of $201.2 million, blowing past the $160 million consensus estimate by nearly 26% and more than doubling the $106.9 million it reported in Q3 2025. The 88% year-over-year surge was driven by a sharp jump in oil volumes, with production climbing to 25.4 thousand barrels per day, up 38% from a year earlier, alongside a meaningful recovery in natural gas and NGL realizations after midstream disruptions had weighed on the prior quarter.

On the earnings side, adjusted EPS came in at $2.66 against an estimate of $2.42, a beat of roughly 10%. The GAAP result was a net loss of $0.11 per diluted share, entirely the product of a $100 million net derivative loss that combined a $28 million realized settlement loss with a $72 million non-cash unrealized mark. Investors focused on operating performance will note that operating income rose 270% year over year to $106.7 million, and operating cash flow reached $111.3 million.

Free cash flow came in at $42.4 million, up 22% from a year ago, giving management room to act on capital returns. After the quarter closed, Riley raised its quarterly dividend 5% to $0.42 per share from $0.40, and the company prepaid all $130 million of its 10.5% Senior Notes on October 5, 2026. The credit facility borrowing base was simultaneously raised to $450 million and its maturity extended to October 2030, strengthening the balance sheet heading into a period of continued development spending.

For Q4 2026, management guided oil production to 25.5 to 26.5 thousand barrels per day and total equivalent production of 42.5 to 43.5 thousand barrels of oil equivalent per day, a step up from Q3. Total capital expenditures are guided at $74 to $86 million. The Targa gathering and high-pressure trunkline system in Eddy County, New Mexico came online October 1, 2026, which should ease the third-party midstream constraints that caused New Mexico shut-ins earlier in the year.

Looking further out, Riley is planning initial development capital for the San Andres formation across its Red Lake asset beginning in Q2 2027. CEO Bobby Riley described the rationale as being supported by "large and growing base of undeveloped inventory, improving third-party infrastructure conditions, and the currently supportive commodity price environment." That geological work represents an incremental growth lever beyond the company's current Permian development cadence. Key risks to watch include commodity price volatility, Waha basis differentials, produced water disposal permit restrictions, and the derivative hedge portfolio's sensitivity to future price moves.