What Riley Exploration Permian, Inc. told the SEC could break it.

A significant portion of Riley's operations are in Eddy County, New Mexico, which has imposed stringent methane/GHG rules: the New Mexico Oil Conservation Division (NMOCD) finalized rules to eliminate venting and flaring at new and existing wells and to require operators to capture at least 98% of natural gas produced by 2026, and proposed 'Clean Future Act'/Senate Bill 18 mandates would require steep economy-wide GHG reductions; compliance may require significant investment in gas-capture/pollution-control equipment and strain equipment supply and engineering personnel, increasing its capital and compliance costs.

“in March 2021, the NMOCD finalized rules to eliminate venting and flaring at new and existing wells and requiring operators to capture at least 98% of natural gas produced from their wells by 2026.”

Riley faces air-quality permitting risk: the EPA lowered the ozone NAAQS from 75 to 70 ppb and is reviewing it further, and has considered designating the Permian Basin as an Ozone Nonattainment Area; implementation of revised NAAQS by Texas and New Mexico, or an EPA nonattainment designation, could impose stricter permitting requirements that delay or prohibit REPX's ability to obtain required permits and require significant additional expenditures for pollution-control equipment.

“Implementation of revised NAAQS by Texas and New Mexico or designation by the EPA of the Permian Basin as a Nonattainment Area could result in stricter permitting requirements, delay or prohibit REPX's ability to ob”

Riley Exploration Permian sells its production to very few purchasers: one purchaser accounted for 60% and another for 30% of 2025 revenue (the largest purchaser was 70% in 2024 and 2023), and following Targa's acquisition of Stakeholder and commencement of the A&R Gas Purchase Agreement substantially all of its natural gas and NGLs will be sold to a single purchaser; it does not require purchasers to post collateral, so the insolvency, default or loss of a significant purchaser — or correlated stress across these similarly-exposed purchasers — could materially and adversely affect its revenue and financial condition.

“One purchaser accounted for 60% of our revenues and another purchaser accounted for 30% of our revenues for the year ended December 31, 2025.”

Riley's assets are concentrated in the Permian Basin, with the majority of acreage in Yoakum County, Texas and Eddy County, New Mexico, and two fields representing 15% or more of production; this single-basin concentration means adverse developments specific to the Permian — gathering/takeaway-capacity constraints, basin-specific regulation, ozone nonattainment designation, or localized economic/operational disruptions — would disproportionately affect its production, realized prices and results.

“The majority of our acreage is located in Yoakum County, Texas and Eddy County, New Mexico.”