On Thursday, Truist Securities adjusted its stock price target for Riley Exploration Permian Inc. (NYSE:REPX), a company specializing in oil and natural gas exploration, to $51.00, a slight decrease from the previous target of $53.00. Despite this change, the firm maintains a Buy rating on the stock.
Riley Exploration Permian is recognized for operating a consistent drilling and completion (D&C) program. Truist Securities projects that the company will achieve a 16% increase in production this year, while also marginally lowering capital expenditures for 2024.
The firm anticipates a significant free cash flow (FCF) increase of approximately 70% for Riley in 2024, which is expected to exceed capital expenditures, a scenario considered rare among exploration and production (E&P) companies this year.
The analyst from Truist Securities highlighted the company's operational efficiency and capital expenditure management as key factors for the positive outlook. The forecasted growth in free cash flow is particularly noteworthy, as it underscores the company's financial health and potential for reinvestment or return to shareholders.
Riley Exploration Permian also has potential acquisition opportunities in the New Mexico Shelf and Central Basin Platform (CBP) regions that could further enhance production and inventory. These strategic moves could serve as catalysts for the company's growth.
The adjustment of the stock price target to $51 from $53 was attributed to the recent sale of incremental shares by the company. Nonetheless, Truist Securities still predicts that the stock could offer more than 50% upside potential in an environment where oil prices are around $80 per barrel.
The firm's maintained Buy rating reflects confidence in Riley Exploration Permian's prospects and financial strategy.
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