According to Permian Basin Oil & Gas Magazine, Oklahoma City-based Riley Exploration Permian is planning a major activity ramp-up in 2026 that could create substantial opportunities for field service contractors. The company forecasts capital expenditures of $190 million to $210 million this year, representing a 58-75% increase from 2025’s $120 million spending program.
Background
Riley Permian expects to produce 35,000 to 37,000 barrels of oil equivalent per day (boed) in 2026, including 21,000 to 22,000 barrels of oil daily. This marks a significant jump from 2025’s full-year average of 29,200 boed and 17,300 barrels of oil per day, though it’s roughly in line with fourth quarter 2025 production levels of 35,500 boed.
The company’s 2025 activity included drilling 18 wells, completing 18.3 wells, and bringing 16.3 wells to sales across its Texas and New Mexico acreage. Chairman and CEO Bobby Riley described 2025 as “transformational,” citing progress on inventory expansion, infrastructure buildout, and balance sheet improvements that position the company for “a more active and value-enhancing development program in 2026 and beyond.”
Analysis
Riley Permian’s dramatic capex increase signals a broader trend among mid-tier Permian operators who spent 2025 optimizing their positions and are now ready to accelerate development. The company’s production guidance suggests they’re targeting sustained output rather than explosive growth, indicating a disciplined approach that prioritizes capital efficiency over rapid expansion.
The timing is strategic. After a year of infrastructure investment and inventory building, Riley appears positioned to execute a higher-activity program without the growing pains that often accompany rapid scaling. Their balanced approach to oil versus total production also suggests they’re targeting their highest-return drilling locations.
For the broader Permian market, Riley’s activity increase represents the type of measured growth that contractors have been hoping to see. Unlike the boom-bust cycles of previous years, this appears to be sustainable, well-funded development backed by improved operational infrastructure.
The company’s emphasis on “value-enhancing development” suggests they’ll be selective about service providers, likely favoring contractors who can demonstrate efficiency gains and cost savings rather than simply the lowest bid.
What It Means for Subcontractors
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Drilling contractors should prepare for sustained activity: With capex potentially doubling, Riley will need reliable drilling services. The company’s measured approach suggests longer-term contracts rather than spot work.
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Completion services face immediate opportunities: The gap between drilling and completion activity in 2025 indicates potential pent-up demand for frac crews and related services in 2026.
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Infrastructure contractors may see spillover work: Riley’s emphasis on infrastructure buildout suggests ongoing needs for pipeline, facility construction, and maintenance services beyond primary drilling and completion.
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Regional focus matters: Riley’s Texas and New Mexico acreage means contractors with established Permian Basin operations are best positioned to capitalize on this spending increase.
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Efficiency will be key to winning work: Riley’s “value-enhancing” language indicates they’ll reward contractors who can demonstrate cost savings or operational improvements, not just competitive pricing.
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Plan for sustained activity through 2027: Management’s comments about positioning for development “in 2026 and beyond” suggest this isn’t a one-year spending spike but part of a multi-year development plan.
The scale of Riley’s capex increase, combined with their operational improvements in 2025, positions them as a significant opportunity for field service companies looking for stable, well-funded work in the Permian Basin.
