REPX

Riley Exploration Permian ($REPX) Major Shareholder Buys $790K in July... Stark Contrast to Management Sales

07/17/2025 20:58

Riley Exploration Permian ($REPX) is an independent oil and natural gas exploration and production company focused on the Permian Basin. With core assets in Yoakum County, Texas, and Eddy County, New Mexico, and headquarters in Oklahoma City, this $561 million market cap small-cap energy firm is generating compelling insider trading signals. The most striking development is major shareholder Alvin Libin's aggressive buying spree. On July 14th, he purchased 15,000 shares at $27.27 per share ($409,050), followed by another 15,000 shares at $25.39 on July 16th ($380,850). This follows his March 31st acquisition of 12,000 shares at $29.32. In total, Libin has invested $1.17 million across 42,000 shares, with his recent purchases strategically timed during a price decline from $28 to $25 - classic value buying behavior. Conversely, management has been consistently selling. CEO Bobby Riley disposed of 15,000 shares in May ($419,000) and 10,000 shares in June ($284,000). CIO Corey Riley and CFO Philip Riley followed similar patterns. Notably, CFO Philip Riley did make a contrarian purchase of 1,000 shares at $23.26 during April's sharp decline. This divergent trading pattern offers crucial insights for investors. Management sales appear largely driven by pre-planned 10b5-1 arrangements and restricted stock vesting, while the major shareholder's aggressive buying suggests strong conviction in the company's intrinsic value. Indeed, $REPX's fundamentals appear solid. Operating margin of 42.61% and net profit margin of 23.92% exceed industry averages, while ROA of 10.6% and ROE of 20.43% demonstrate efficient capital allocation. The forward dividend yield of 5.79% provides attractive income potential. Q1 2025 production guidance of 24.5-24.9 MBOE/d represents substantial growth from the prior year's 21.0-22.5 MBOE/d target. The July 2nd announcement of completing its New Mexico acquisition further enhances the production base and growth prospects. This strategic expansion should contribute to increased output and improved profitability metrics. However, certain risks warrant attention. Cash holdings of just $8.86 million against $249 million in total debt result in a current ratio of 0.44, indicating tight liquidity. Energy sector volatility and commodity price sensitivity remain inherent risks. The stock's modest 8% gain over the past year also lags the S&P 500's performance. Despite these concerns, valuation metrics suggest significant undervaluation. Trading at 5.40x earnings and 3.42x EV/EBITDA, $REPX trades well below industry averages. With $240 million in annual operating cash flow and $131 million in free cash flow, dividend sustainability appears secure. For investors, several scenarios merit consideration. In the optimistic case, the major shareholder's buying could signal a price floor, with New Mexico acquisition benefits and production growth driving earnings improvement and valuation re-rating. Rising oil prices would provide additional upside momentum. The base case scenario suggests range-bound trading around current levels while generating steady 5.79% dividend income. Given robust cash flows and manageable debt levels, dividend cut risk appears minimal. Downside risks include oil price crashes or rising interest rates pressuring the sector. The company's liquidity constraints could become problematic in a credit crunch scenario. In conclusion, $REPX presents an attractive value opportunity combining dividend income with long-term appreciation potential. The major shareholder's aggressive buying provides an encouraging signal, particularly for income-focused investors. However, energy sector volatility and liquidity concerns require ongoing monitoring.