Riley Permian Announces Sale of New Mexico Midstream Project

Rhea-AI Summary

Riley Permian (NYSE American: REPX) sold all membership interests in its midstream subsidiary Dovetail Midstream to Targa Northern Delaware LLC for approximately $111 million in cash, subject to customary adjustments, with closing occurring simultaneously with the purchase agreement on December 4, 2025.

The company may earn up to an additional $60 million tied to volume-based performance over five years. Closing proceeds will be used to reduce borrowings on the credit facility and to pay income taxes and transaction costs. Riley Permian also agreed to sell certain compressor station assets for about $10 million at a subsequent closing anticipated no later than Q1 2026, subject to closing conditions.

Positive

• $111 million cash proceeds at closing
• Right to $60 million additional contingent payments over five years
• Proceeds earmarked to reduce credit facility borrowings
• Removes future midstream capital spending obligations

Negative

• Loss of ownership of midstream assets serving Eddy County, New Mexico
• Contingent $60 million dependent on future volume thresholds
• Compressor asset sale $10 million subject to closing conditions and timing risk

Argus Dec 4 session

+1.02% close to close Open Argus

Details

News Market Reaction – REPX

On Dec 4, the day this news came out, REPX closed 1.02% above the previous close.

Data tracked by StockTitan Argus for the Dec 4 session.

Key Figures

Initial cash consideration: $111 million Earnout potential: $60 million Compressor assets sale: $10 million +3 more

Initial cash consideration

$111 million

Cash purchase price for Dovetail Midstream membership interests

Earnout potential

$60 million

Contingent cash payments over five years based on volume thresholds

Compressor assets sale

$10 million

Expected cash proceeds at subsequent compressor station asset closing

Earnout period

5 years

Volume-based performance measurement window for contingent payments

Share price

$27.18

Price prior to/around the midstream sale announcement

Market capitalization

$607,440,251

Equity value around time of midstream transaction announcement

Historical Context

5 past events · Latest: Dec 04

5 events

1. Dec 04

   Midstream asset sale

   24h Move

   +1.0%

   Sold Dovetail Midstream and related assets, earmarking proceeds for debt reduction.

2. Nov 05

   Q3 2025 earnings

   24h Move

   +0.6%

   Reported Q3 results, raised dividend, closed Silverback deal, lifted guidance.

3. Oct 07

   Dividend increase, call

   24h Move

   +2.6%

   Announced 5% dividend hike and scheduled Q3 earnings release and call.

4. Aug 06

   Q2 2025 earnings

   24h Move

   +1.6%

   Posted Q2 results and detailed Silverback acquisition and midstream spending.

5. Jul 09

   Dividend declaration

   24h Move

   -2.4%

   Declared quarterly dividend and scheduled Q2 earnings release and call.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

midstream, natural gas gathering infrastructure, credit facility, compressor station assets, +1 more

5 terms

midstream technical

"Dovetail's assets primarily consist of natural gas gathering infrastructure..."

Midstream refers to the phase in the energy supply chain that involves the transportation, storage, and processing of oil and natural gas after extraction from the ground, but before they are refined into usable products. For investors, midstream companies are important because they often generate steady income through fees for moving and storing energy resources, making them a key link between resource producers and consumers.

natural gas gathering infrastructure technical

"Dovetail's assets primarily consist of natural gas gathering infrastructure..."

Natural gas gathering infrastructure consists of the network of pipes and facilities that collect and transport natural gas from production sites to processing plants or main pipelines. It is essential because it connects the raw gas extracted from underground reservoirs to the wider energy system, ensuring efficient delivery. For investors, maintaining and expanding this infrastructure supports reliable energy supplies and can influence the profitability of natural gas companies.

credit facility financial

"proceeds from the transaction will be used to reduce borrowings on the Company's credit facility"

A credit facility is a flexible loan arrangement that allows a borrower to access funds up to a set limit whenever needed, similar to a company having an overdraft option on a bank account. It matters to investors because it indicates how easily a business can secure cash when required, affecting its ability to manage expenses, invest, or respond to financial challenges.

compressor station assets technical

"provides for the sale by the Company to Buyer of certain compressor station assets"

Compressor station assets are the equipment, facilities, and infrastructure used to drive and manage the flow of natural gas through pipelines. These assets are essential for maintaining pressure and ensuring steady delivery of gas over long distances. For investors, compressor station assets are important because they represent key components that support the reliable operation and profitability of natural gas transportation networks.

upstream assets technical

"allows us to focus our expertise and capital on the development of our upstream assets"

Upstream assets are resources involved in the initial stages of producing natural resources, such as oil, gas, or minerals, before they are refined or used. They include exploration, drilling, and extraction activities, which are essential for supplying raw materials to later stages of production. For investors, these assets matter because their performance can significantly influence the supply, costs, and profitability of resource-based companies.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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OKLAHOMA CITY, Dec. 4, 2025 /PRNewswire/ -- Riley Exploration Permian, Inc. (NYSE American: REPX) ("Riley Permian") today announced that its wholly-owned subsidiary, Riley Exploration - Permian, LLC, ("REP LLC", together with Riley Permian, hereinafter referred to as the "Company"), entered into a purchase and sale agreement (the "Purchase Agreement") with Targa Northern Delaware LLC ("Buyer" or "Targa"), pursuant to which the Company sold to Buyer all of the membership interests in Dovetail Midstream, LLC ("Dovetail"), a wholly-owned subsidiary of the Company for an aggregate cash purchase price of approximately $111 million, subject to customary purchase price adjustments. Dovetail's assets primarily consist of natural gas gathering infrastructure serving production in Eddy County, New Mexico. Closing proceeds from the transaction will be used to reduce borrowings on the Company's credit facility and to pay income taxes and transaction costs associated with the transaction. The Company also has the right to earn up to an additional $60 million in cash payments contingent on achieving certain volume-based performance thresholds over a five-year period. The closing of the transaction took place simultaneously with execution of the Purchase Agreement. The Purchase Agreement also provides for the sale by the Company to Buyer of certain compressor station assets at a subsequent closing date anticipated to occur no later than the first quarter of 2026 for an aggregate cash purchase price of approximately $10 million, subject to the satisfaction of certain closing conditions.

Bobby Riley, Chairman and CEO for Riley Permian, commented, "We're excited to further our partnership with a best-in-class operator in Targa. This transaction fulfills the Company's goal of achieving flow assurance for its natural gas production, allowing for wider development of our New Mexico assets. By removing future capital spending obligations associated with expanding the midstream system, this transaction allows us to focus our expertise and capital on the development of our upstream assets including our recent acquisition of Silverback Exploration II, LLC and its subsidiaries."

About Riley Exploration Permian, Inc.
Riley Permian is a growth-oriented upstream oil and gas company operating in Texas and New Mexico with infrastructure projects that complement our operations. For more information, please visit www.rileypermian.com.

Forward-Looking Statements
This press release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law, including the possibility that the anticipated benefits of the transactions cannot be fully realized. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. An extensive list of factors that can affect future results are discussed in Riley Permian's Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. Riley Permian undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

Investor Contact:
405-438-0126
IR@rileypermian.com

View original content:https://www.prnewswire.com/news-releases/riley-permian-announces-sale-of-new-mexico-midstream-project-302632672.html

SOURCE Riley Exploration Permian, Inc.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What did Riley Permian (REPX) announce on December 4, 2025?

Riley Permian announced the sale of all membership interests in Dovetail Midstream to Targa for about $111 million, with closing occurring the same day.

How much additional cash can Riley Permian (REPX) earn from the Dovetail sale?

The company can earn up to an additional $60 million in cash contingent on meeting volume-based performance thresholds over five years.

How will Riley Permian (REPX) use the Dovetail sale proceeds?

Closing proceeds will be used to reduce borrowings on the company credit facility and to pay income taxes and transaction costs.

What is the timeline and price for the compressor station assets sale by Riley Permian (REPX)?

The company agreed to sell certain compressor station assets for approximately $10 million at a subsequent closing expected no later than Q1 2026, subject to closing conditions.

Does the Dovetail sale immediately remove Riley Permian's midstream capital obligations?

Yes; the transaction removes future capital spending obligations associated with expanding the midstream system, per the company statement.