Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the first
quarter 2021 and reaffirmed full year 2021 guidance.
Highlights and Recent Key
Items
-
Sold 7,960 barrels of oil equivalent per day (“Boe/d”), or 716,422
barrels of oil equivalent (“Boe”) (85% oil), in the first quarter
of 2021, with production significantly impacted by the severe
winter storm in February and temporary downtime associated with
well completions activity and the conversion of electrical
submersible pumps to rod pumps (“CTR”);
-
Reported a net loss of $19.1 million, or $0.19 per share, and
Adjusted Net Income1 of $7.0 million, or $0.07 per share, in the
first quarter of 2021;
-
Generated Adjusted EBITDA1 of $19.0 million for the first quarter
of 2021;
-
Produced Free Cash Flow1 of $2.9 million in the first quarter of
2021, marking the sixth consecutive quarter of Free Cash Flow
generation;
-
Further reduced debt on the Company’s revolving credit facility by
$7.5 million during the first quarter 2021 by utilizing a portion
of Free Cash Flow;
-
Performed nine CTRs in this year’s first quarter (seven in
Northwest Shelf (“NWS”) and two in Central Basin Platform (“CBP”))
reducing future overall operating costs and diminishing costly
workovers;
-
Completed and placed on production all four wells of the Company’s
NWS Phase I drilling program during the first quarter, with all
wells completed on schedule and budget, and collective production
results to date meeting or exceeding expectations;
-
Successfully finished drilling operations on the NWS Phase II
drilling program, releasing the rig April 29, 2021, with all three
wells expected to be completed on schedule and within budget, and
online by the end of May 2021;
-
During the first quarter, the Company closed on the sale and
exchange of certain oil and gas interests in Andrews County, Texas,
with Vin Fisher Operating, Inc. (“VFOC”). The effective date of the
transaction was January 1, 2021, with Ring receiving a net value
consideration in cash of $2.0 million; and
-
Reaffirmed full year 2021 guidance.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “Despite the significant impact
of the severe winter storm across Texas during February, we were
pleased with our overall results for the quarter. We were able to
generate free cash flow for the sixth consecutive quarter and
continued to pay down debt while pursuing our targeted development
program that is showing strong results. Our performance in the
period was a direct result of the continued dedication of Ring’s
employees, and I want to thank all of them for their hard work and
tireless efforts as they acted quickly and decisively to return our
operations back to substantially pre-storm production levels. This
was evidenced by our average net sales of 9,094 Boepd during March
2021, which does not include approximately 200 Boepd associated
with the full restoration of certain third-party gas processing
facilities damaged during the storm.
“Partially offsetting the impact of the winter
storm on our first quarter sales volumes was the completion of the
four wells included in our NWS Phase I drilling program. We are
also pleased with our NWS Phase II drilling program as our drilling
operations are finished and all wells are expected to be online by
the end of May, including the first well that was placed on
production on April 30, 2021.
“We believe our focus on operational excellence
to steady production levels and control costs, as well as ensuring
capital discipline through targeted investment in our highest
risk-adjusted return opportunities, will drive increased
profitability and sustainability for the remainder of 2021 and
beyond. We appreciate the ongoing support of our shareholders as we
continue to generate incremental free cash flow that we will use to
further enhance our financial position through additional pay down
of debt. We are encouraged by the M&A opportunities we are
seeing in the marketplace and are actively evaluating them to
potentially grow the business through targeted, accretive asset
acquisitions. We have engaged advisors to assist in evaluating and
financing these opportunities.”
For the first quarter of 2021, the Company
reported a net loss of $19.1 million, or $0.19 per share, which
included before tax adjustments of $25.7 million for a non-cash
unrealized commodity derivative loss and $0.4 million for
share-based compensation. Excluding the estimated after-tax impact
of these adjustments, the Company’s Adjusted Net Income was $7.0
million, or $0.07 per share. In the fourth quarter of 2020, the
Company reported a net loss of $160.3 million, or $1.83 per share,
which included before tax adjustments of $129.6 million for a
non-cash ceiling test impairment primarily due to lower oil
pricing, a $15.2 million non-cash unrealized commodity derivative
loss, and $2.8 million for share-based compensation. Excluding the
estimated after-tax impact of these adjustments and adding back the
full valuation against its deferred tax assets of $50.6 million,
the Company’s Adjusted Net Income was $6.5 million, or $0.07 per
share. In the first quarter of 2020, Ring reported net income of
$43.8 million, or $0.64 per share, which included a $47.1 million
non-cash unrealized commodity derivative gain and $0.7 million for
share-based compensation. Excluding the estimated after-tax impact
of these adjustments, Adjusted Net Income in the first quarter of
2020 was $7.7 million, or $0.11 per share.
Adjusted EBITDA declined to $19.0 million for
the first quarter of 2021 from $24.5 million in the fourth quarter
of 2020 and $28.2 million in the first quarter of 2020. The decline
in Adjusted EBITDA compared to both prior periods was primarily due
to lower sales volumes that were partially offset by higher
commodity prices.
Free Cash Flow for the first quarter of 2021
totaled $2.9 million compared with $12.7 million in the fourth
quarter of 2020 and $8.0 million for the first quarter of
2020.
Adjusted Net Income, Adjusted EBITDA and Free
Cash Flow are non-GAAP financial measures, which are described in
more detail and reconciled to the most comparable GAAP measures, in
the tables shown later in this release under “Non-GAAP
Information.”
Sales Volumes, Prices and
Revenues: Sales volumes for the first quarter of 2021 were
7,960 Boe/d (85% oil), or 716,422 Boe, compared to 9,307 Boe/d (86%
oil), or 856,271 Boe, for the fourth quarter of 2020 and 10,804
Boe/d (87% oil) in the first quarter of 2020. First quarter 2021
sales volumes were comprised of 610,121 barrels (“Bbls”) of oil and
637,808 thousand cubic feet (“Mcf”) of natural gas.
Sales volumes for the first quarter of 2021
declined from the fourth quarter of 2020 primarily due to the
negative impact of the severe winter storm in February that
resulted in the shut-in and deferral of more than 60% of Ring’s
production for the majority of the storm with restoration of most
of the production taking more than two weeks to complete. Temporary
downtime associated with production shut-in of offset wells during
the completion operations of the four NWS Phase I wells and the
nine CTRs also contributed to lower sequential quarterly sales
volumes. Average net sales of 9,094 Boepd (87% oil) during March
2021 does not include approximately 200 Boepd associated with the
full restoration of certain third-party gas processing facilities
damaged during the storm.
For the first quarter of 2021, the Company
realized an average sales price of $58.00 per barrel for crude oil
and $6.46 per Mcf for natural gas. Driving the significantly higher
natural gas price realization was a spike in natural gas prices
during the severe winter storm in February. The combined average
realized sales price for the period was $55.14 per Boe, up 54% from
$36.61 per Boe for the fourth quarter of 2020, and up 37% from
$40.25 per Boe in the first quarter of 2020. The average price
differential the Company experienced from WTI posting2 price in the
first quarter of 2021 was approximately ($0.37) per barrel of crude
oil.
Revenues were $39.5 million for the first
quarter of 2021 compared to $31.4 million for the fourth quarter of
2020 and $39.6 million for the first quarter of 2020. The 26%
increase in first quarter 2021 revenues from the fourth quarter
2020 was due to higher realized pricing partially offset by lower
sales volumes.
Lease Operating Expense
(“LOE”): LOE, which includes base lease operating
expenses, expense workovers, and facilities maintenance, was $8.2
million, or $11.48 per Boe, in the first quarter of 2021 versus
$7.9 million, or $9.19 per Boe, in the fourth quarter of 2020 and
$8.4 million, or $8.57 per Boe, for the first quarter of 2020. The
severe winter storm in February contributed to the unusual increase
in first quarter 2021 LOE per Boe as compared to the fourth quarter
of 2020 due to lower sales volumes coupled with the additional cost
of bringing wells back online.
Gathering, Transportation and Processing
(“GTP”) Costs: GTP costs were $1.31 per Boe in the first
quarter of 2021 versus $1.47 per Boe in the fourth quarter of 2020
and $1.17 per Boe in the first quarter of 2020.
Ad Valorem Taxes: Ad valorem
taxes were $1.03 per Boe for the first quarter of 2021 compared to
$0.84 per Boe in the fourth quarter of 2020 and $0.82 per Boe for
the first quarter of 2020.
Production Taxes: Production
taxes were $2.59 per Boe in the first quarter of 2021 compared to
$1.75 per Boe in the fourth quarter of 2020 and $1.90 per Boe in
first quarter of 2020. As a percent of revenues, production tax
remained steady at 5% for all three periods.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $11.32 per Boe in the first quarter of 2021 versus
$13.04 per Boe for the fourth quarter of 2020 and $13.92 in the
first quarter of 2020. Asset retirement obligation accretion was
$0.27 per Boe in the first quarter of 2021 compared to $0.25 per
Boe for the fourth quarter of 2020 and $0.24 per Boe in the first
quarter of 2020.
Operating Lease
Expense: Operating lease expense was $271,517
for the first quarter of 2021 versus $319,483 for the fourth
quarter of 2020 and $289,051 in the first quarter of 2020. These
expenses are primarily associated with the Company’s office
leases.
General and Administrative Expenses
(“G&A”): G&A, excluding share-based compensation,
was $2.6 million, or $3.57 per Boe, versus $4.4 million, or $5.09
per Boe, for the fourth quarter of 2020 and $2.4 million, or $2.40
per Boe, in the first quarter of 2020. The approximate 40%
sequential decrease in G&A, excluding share-based compensation,
for the first quarter 2021 was primarily associated with higher
costs during the fourth quarter for management and personnel
changes, severance and non-recurring legal and asset divestiture
fees.
Derivative (Loss) Gain: In the
first quarter of 2021, Ring recorded a loss of $31.6 million on its
commodity derivative contracts, including a realized $5.9 million
cash commodity derivative loss and an unrealized $25.7 million
non-cash commodity derivative loss, largely due to higher
quarter-end oil and natural gas prices compared to fourth quarter
of 2020. This compared to a net loss of $11.5 million in the fourth
quarter of 2020, of which $15.2 million was unrealized, and a gain
of $50.4 million in the first quarter of 2020, of which $47.1
million was unrealized.
In the first quarter of 2021, Ring added the
following derivative positions:
|
|
|
Average |
Weighted Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
Crude Oil - WTI |
|
|
(Bbls) |
(per Bbl) |
|
|
|
|
|
01/04/2021 |
Calendar year 2022 |
Swaps |
250 |
$47.00 |
02/04/2021 |
Calendar year 2022 |
Swaps |
250 |
$50.05 |
On March 30, 2021, the Company unwound its
remaining gas swaps for Calendar year 2021 and 2022, resulting in
the receipt of a cash payment of $581,424 that was recorded in the
first quarter of 2021. A full listing of the Company’s current
outstanding derivative positions is included in the tables shown
later in this release.
Interest Expense: Interest
expense, as reported in the income statement, in the first quarter
of 2021 was $3.7 million versus $4.7 million in the fourth quarter
of 2020 and $4.2 million for the first quarter of 2020.
Contributing to sequential quarterly decrease was a $35.7 million
lower daily average balance of borrowings for the first quarter
2021 compared to the fourth quarter.
Income Tax: There was no
non-cash income tax benefit or provision recorded in the first
quarter of 2021. The Company recorded a non-cash income tax
provision of $21.2 million in the fourth quarter of 2020 and $12.4
million for the first quarter of 2020.
Balance Sheet and Liquidity:
Total liquidity increased 14% from December 31, 2020 to March 31,
2021. Liquidity at the end of the first quarter of 2021 was $46.2
million, which consisted of cash and cash equivalents of $1.7
million and $44.5 million of availability under Ring’s revolving
bank credit facility. At March 31, 2021, the Company had $305.5
million in borrowings on its revolving credit facility, which has a
current borrowing base of $350 million. Ring paid down $7.5 million
of debt during the first quarter of 2021, and is targeting further
debt reduction in 2021 based on expected additional free cash flow
generation as well as potential asset sales during 2021.
The next regularly scheduled bank
redetermination is underway, and Ring is currently in compliance
with all applicable covenants of its revolving credit facility
agreement.
Capital Expenditures and Asset
Transfers: During the first quarter of 2021, the Company
finished drilling, completing and placing on production the four
wells of its NWS Phase I program. The Company also performed nine
CTR projects. Capital expenditures in the first quarter of 2021
were $14.5 million. In addition, during the first quarter of 2021,
Ring received net value consideration in cash of $2.0 million from
VFOC for the sale and exchange of certain oil and gas interests in
Andrews County, Texas.
2021 Capital Investment Program &
Sales Volumes Outlook
For full year 2021, the Company continues to
anticipate total capital spending of $44 million to $48 million,
which includes the estimated cost to drill up to six to eight
horizontal wells and complete eight to 10 horizontal wells
primarily in its NWS asset area. Its full year capital spending
outlook includes targeted well reactivations, workovers,
infrastructure upgrades, and continuing its successful CTR program
in its NWS and Central Basin Platform areas. Also included in the
full year estimate is anticipated spending for leasing, contractual
drilling obligations and non-operated drilling, completion and
capital workovers. Capital expenditures for 2021 will be fully
funded by cash on hand and cash from operations, with excess free
cash flow allocated to debt reduction.
As previously announced, Ring is planning to
launch a sales process during the second quarter of 2021 to divest
Delaware Basin assets. The Company anticipates using the net
proceeds from the potential sale to further reduce its debt
position.
Supported by its targeted development program
and continued execution of its successful CTR initiatives, and
despite the negative impact to production resulting from the severe
winter storm in February, Ring continues to forecast full year 2021
sales volumes to increase by 2% to 8% higher from full year 2020
average sales volumes of 8,790 Boe/d.
2021 Sales Volumes, Operating Expense
and Capital Spending Guidance
The guidance for the full year 2021 in the table
below represents the Company's current best estimate of the range
of likely future results. Guidance could be affected by the factors
described below in "Safe Harbor Statement".
|
|
|
Full Year |
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volumes: |
|
|
|
|
|
|
|
|
Total (Boe/d) |
|
9,000 - 9,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
Lifting cost(1) (per Boe) |
|
$10.00 - $10.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Program: |
|
|
|
|
|
|
|
|
Number of new wells drilled |
|
6 - 8 |
|
|
|
|
|
|
Number of new wells completed |
8 - 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital spending(2) (millions) |
|
$44 - $48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Lifting cost equals lease operating expenses excluding
severance and ad valorem tax divided by the total barrels of oil
equivalent sold during the same period. |
|
|
|
|
|
|
|
|
|
(2) In addition to Company-directed drilling and completion
activities, the capital spending outlook includes funds for
targeted well reactivations, workovers, infrastructure upgrades,
and continuing the Company's successful CTR program in its
Northwest Shelf and Central Basin Platform areas. Also included is
anticipated spending for leasing, contractural drilling obligations
and non-operated drilling, completion and capital workovers. |
Conference Call Information
Ring will hold a conference call on Tuesday, May
11, 2021 at 11:00 a.m. ET to discuss its first quarter 2021
operational and financial results. To participate, interested
parties should dial 877-270-2148 at least five minutes before the
call is to begin. Please reference the “Ring Energy First Quarter
2021 Earnings Conference Call.” International callers may
participate by dialing 412-902-6510. The call will also be webcast
and available on Ring’s website at www.ringenergy.com under
“Investors” on the “Events” page. An audio replay will also be
available on the Company’s website following the call.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration,
development, and production company with current operations focused
on the conventional development of its Permian Basin assets in West
Texas and New Mexico. For additional information, please visit
www.ringenergy.com.
Safe Harbor Statement
This release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements involve a wide variety of risks and uncertainties, and
include, without limitations, statements with respect to the
Company’s strategy and prospects. Such statements are subject to
certain risks and uncertainties which are disclosed in the
Company’s reports filed with the SEC, including its Form 10-K for
the fiscal year ended December 31, 2020, and its other filings with
the SEC. Readers and investors are cautioned that the Company’s
actual results may differ materially from those described in the
forward-looking statements due to a number of factors, including,
but not limited to, the Company’s ability to acquire productive oil
and/or gas properties or to successfully drill and complete oil
and/or gas wells on such properties, general economic conditions
both domestically and abroad, and the conduct of business by the
Company, and other factors that may be more fully described in
additional documents set forth by the Company.
Contact Information
David A. Fowler, Investor RelationsRing Energy, Inc.Phone:
432-682-7464dfowler@ringenergy.com
Al Petrie, Senior PartnerAl Petrie AdvisorsPhone:
504-258-9548al@alpetrie.com
RING ENERGY, INC. |
|
Statements of Operations |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2020 |
|
|
|
|
|
Oil and Natural Gas Revenues |
|
$ |
39,502,532 |
|
|
$ |
31,351,673 |
|
|
$ |
39,570,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses |
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
|
8,226,575 |
|
|
|
7,866,059 |
|
|
|
8,421,388 |
|
|
Gathering, transportation and processing costs |
|
|
935,019 |
|
|
|
1,256,282 |
|
|
|
1,149,618 |
|
|
Advalorem taxes |
|
|
737,251 |
|
|
|
717,766 |
|
|
|
807,455 |
|
|
Oil and natural gas production taxes |
|
|
1,852,762 |
|
|
|
1,497,044 |
|
|
|
1,870,245 |
|
|
Depreciation, depletion and amortization |
|
|
8,108,158 |
|
|
|
11,162,567 |
|
|
|
13,682,996 |
|
|
Ceiling test impairment |
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
Asset retirement obligation accretion |
|
|
193,744 |
|
|
|
212,503 |
|
|
|
231,962 |
|
|
Operating lease expense |
|
|
271,517 |
|
|
|
319,483 |
|
|
|
289,051 |
|
|
General and administrative expense (including
share-basedcompensation) |
|
|
2,912,991 |
|
|
|
7,164,619 |
|
|
|
3,035,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses |
|
|
23,238,017 |
|
|
|
159,760,323 |
|
|
|
29,488,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Income from Operations |
|
|
16,264,515 |
|
|
|
(128,408,650 |
) |
|
|
10,081,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
- |
|
|
|
1 |
|
|
|
5 |
|
|
Interest expense |
|
|
(3,741,969 |
) |
|
|
(4,658,826 |
) |
|
|
(4,248,498 |
) |
|
(Loss) gain on derivative contracts |
|
|
(31,588,639 |
) |
|
|
(11,534,699 |
) |
|
|
50,420,809 |
|
|
Deposit forfeiture income |
|
|
- |
|
|
|
5,500,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Other Income (Expense) |
|
|
(35,330,608 |
) |
|
|
(10,693,524 |
) |
|
|
46,172,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income Before Tax Provision |
|
|
(19,066,093 |
) |
|
|
(139,102,174 |
) |
|
|
56,254,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision for) Benefit from Income Taxes |
|
|
- |
|
|
|
(21,152,105 |
) |
|
|
(12,449,916 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(19,066,093 |
) |
|
$ |
(160,254,279 |
) |
|
$ |
43,804,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (Loss) Earnings per Share |
|
$ |
(0.19 |
) |
|
$ |
(1.83 |
) |
|
$ |
0.64 |
|
|
Diluted (Loss) Earnings per Share |
|
$ |
(0.19 |
) |
|
$ |
(1.83 |
) |
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Shares Outstanding |
|
|
99,092,715 |
|
|
|
87,503,079 |
|
|
|
67,993,797 |
|
|
Diluted Weighted-Average Shares Outstanding |
|
|
99,092,715 |
|
|
|
87,503,079 |
|
|
|
67,997,092 |
|
|
RING ENERGY, INC. |
|
Condensed Operating Data |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
Oil (Bbls) |
|
|
610,121 |
|
|
|
734,548 |
|
|
|
855,603 |
|
|
Natural gas (Mcf) |
|
|
637,808 |
|
|
|
730,337 |
|
|
|
765,551 |
|
|
Total oil and natural gas (Boe) (1) |
|
|
716,422 |
|
|
|
856,271 |
|
|
|
983,195 |
|
|
% Oil |
|
|
85 |
% |
|
|
86 |
% |
|
|
87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Average daily equivalent sales (Boe/d) |
|
|
7,960 |
|
|
|
9,307 |
|
|
|
10,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
$ |
58.00 |
|
|
$ |
40.48 |
|
|
$ |
45.16 |
|
|
Natural gas ($/Mcf) |
|
|
6.46 |
|
|
|
2.21 |
|
|
|
1.22 |
|
|
Barrel of oil equivalent ($/Boe) |
|
$ |
55.14 |
|
|
$ |
36.61 |
|
|
$ |
40.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
11.48 |
|
|
$ |
9.19 |
|
|
$ |
8.57 |
|
|
Gathering, transportation and processing costs |
|
|
1.31 |
|
|
|
1.47 |
|
|
|
1.17 |
|
|
Ad valorem taxes |
|
|
1.03 |
|
|
|
0.84 |
|
|
|
0.82 |
|
|
Oil and natural gas production taxes |
|
|
2.59 |
|
|
|
1.75 |
|
|
|
1.90 |
|
|
Depreciation, depletion and amortization |
|
|
11.32 |
|
|
|
13.04 |
|
|
|
13.92 |
|
|
Asset retirement obligation accretion |
|
|
0.27 |
|
|
|
0.25 |
|
|
|
0.24 |
|
|
Operating lease expense |
|
|
0.38 |
|
|
|
0.37 |
|
|
|
0.29 |
|
|
General and administrative expense (including share-based
compensation) |
|
|
4.07 |
|
|
|
8.37 |
|
|
|
3.09 |
|
|
General and administrative expense (excluding share-based
compensation) |
|
|
3.57 |
|
|
|
5.09 |
|
|
|
2.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Boe is determined using the ratio of six Mcf of natural gas to
one Bbl of oil (totals may not compute due to rounding). The
conversion ratio does not assume price equivalency and the price on
an equivalent basis for oil and natural gas may differ
significantly. |
|
RING ENERGY, INC. |
|
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,700,510 |
|
|
$ |
3,578,634 |
|
|
Accounts receivable |
|
|
20,898,591 |
|
|
|
14,997,979 |
|
|
Joint interest billing receivable |
|
|
1,358,129 |
|
|
|
1,327,262 |
|
|
Derivative receivable |
|
|
581,424 |
|
|
|
499,906 |
|
|
Prepaid expenses and other assets |
|
|
230,909 |
|
|
|
396,109 |
|
|
Total Current Assets |
|
|
24,769,563 |
|
|
|
20,799,890 |
|
|
|
|
|
|
|
|
|
|
Properties and Equipment |
|
|
|
|
|
|
|
Oil and natural gas properties subject to amortization |
|
|
846,954,510 |
|
|
|
836,514,815 |
|
|
Financing lease asset subject to depreciation |
|
|
819,789 |
|
|
|
858,513 |
|
|
Fixed assets subject to depreciation |
|
|
1,700,460 |
|
|
|
1,520,890 |
|
|
Total Properties and Equipment |
|
|
849,474,759 |
|
|
|
838,894,218 |
|
|
Accumulated depreciation, depletion and amortization |
|
|
(208,174,599 |
) |
|
|
(200,111,658 |
) |
|
Net Properties and Equipment |
|
|
641,300,160 |
|
|
|
638,782,560 |
|
|
|
|
|
|
|
|
|
|
Operating Lease Asset |
|
|
2,079,443 |
|
|
|
1,494,399 |
|
|
Properties and Equipment |
|
|
2,196,321 |
|
|
|
2,379,348 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
670,345,487 |
|
|
$ |
663,456,197 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
41,386,222 |
|
|
$ |
32,500,081 |
|
|
Financing lease liability |
|
|
283,305 |
|
|
|
295,311 |
|
|
Operating lease liability |
|
|
719,825 |
|
|
|
859,017 |
|
|
Derivative liabilities |
|
|
24,546,980 |
|
|
|
3,287,328 |
|
|
Total Current Liabilities |
|
|
66,936,332 |
|
|
|
36,941,737 |
|
|
|
|
|
|
|
|
|
|
Revolving line of credit |
|
|
305,500,000 |
|
|
|
313,000,000 |
|
|
Financing lease liability, less current portion |
|
|
50,432 |
|
|
|
126,857 |
|
|
Operating lease liability, less current portion |
|
|
1,403,876 |
|
|
|
635,382 |
|
|
Derivative liabilities |
|
|
5,277,469 |
|
|
|
869,273 |
|
|
Asset retirement obligations |
|
|
15,025,895 |
|
|
|
17,117,135 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
394,194,004 |
|
|
|
368,690,384 |
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
Preferred stock - $0.001 par value; 50,000,000 shares authorized;
no shares issued or outstanding |
- |
|
|
|
- |
|
|
Common stock - $0.001 par value; 150,000,000 shares authorized;
99,275,937 shares and 85,568,287shares issued and outstanding,
respectively |
|
|
99,276 |
|
|
|
85,568 |
|
|
Additional paid-in capital |
|
|
551,389,470 |
|
|
|
550,951,415 |
|
|
Accumulated deficit |
|
|
(275,337,263 |
) |
|
|
(256,271,170 |
) |
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
|
|
276,151,483 |
|
|
|
294,765,813 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
670,345,487 |
|
|
$ |
663,456,197 |
|
|
RING ENERGY, INC. |
|
Statements of Cash Flows |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
|
|
2021 |
|
|
2020 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(19,066,093 |
) |
|
$ |
(160,254,277 |
) |
|
$ |
43,804,118 |
|
|
|
Adjustments to reconcile net (loss) income to net cashprovided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
8,108,158 |
|
|
|
11,162,567 |
|
|
|
13,682,996 |
|
|
|
Ceiling test impairment |
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
Accretion expense |
|
|
193,744 |
|
|
|
212,503 |
|
|
|
231,962 |
|
|
|
Amortization of deferred financing costs |
|
|
183,027 |
|
|
|
622,861 |
|
|
|
189,082 |
|
|
|
Share-based compensation |
|
|
355,494 |
|
|
|
2,807,006 |
|
|
|
673,795 |
|
|
|
Shares issued for services |
|
|
- |
|
|
|
23,800 |
|
|
|
- |
|
|
|
Deferred income tax expense (benefit) |
|
|
(1,792,142 |
) |
|
|
21,598,750 |
|
|
|
12,028,380 |
|
|
|
Excess tax expense (benefit) related to share-based
compensation |
|
|
1,792,142 |
|
|
|
(446,645 |
) |
|
|
421,536 |
|
|
|
Change in fair value of derivative instruments |
|
|
31,588,639 |
|
|
|
11,534,699 |
|
|
|
(50,420,809 |
) |
|
|
Cash (paid) received for derivative settlements, net |
(5,920,791 |
) |
|
|
3,708,523 |
|
|
|
3,334,128 |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(5,968,739 |
) |
|
|
(1,970,509 |
) |
|
|
6,915,357 |
|
|
|
Prepaid expenses and retainers |
|
|
165,200 |
|
|
|
102,501 |
|
|
|
3,584,453 |
|
|
|
Accounts payable |
|
|
6,293,506 |
|
|
|
8,845,188 |
|
|
|
(6,614,029 |
) |
|
|
Settlement of asset retirement obligation |
|
|
(244,461 |
) |
|
|
(255,018 |
) |
|
|
(293,212 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
|
15,687,684 |
|
|
|
27,255,949 |
|
|
|
27,537,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
Payments to purchase oil and natural gas properties |
|
|
(258,970 |
) |
|
|
(127,880 |
) |
|
|
(480,048 |
) |
|
|
Payments to develop oil and natural gas properties |
|
|
(11,898,939 |
) |
|
|
(8,871,408 |
) |
|
|
(24,463,138 |
) |
|
|
Payments to acquire or improve fixed assets |
|
|
(19,461 |
) |
|
|
- |
|
|
|
- |
|
|
|
Proceeds from divestiture of oil and natural gas properties |
|
|
2,000,000 |
|
|
|
(4,500,000 |
) |
|
|
- |
|
|
|
Purchase of fixed assets subject to depreciation |
|
|
- |
|
|
|
(55,339 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities |
|
|
(10,177,370 |
) |
|
|
(13,554,627 |
) |
|
|
(24,943,186 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from revolving line of credit |
|
|
13,000,000 |
|
|
|
- |
|
|
|
- |
|
|
|
Payments on revolving line of credit |
|
|
(20,500,000 |
) |
|
|
(47,000,000 |
) |
|
|
- |
|
|
|
Proceeds form issuance of common stock and warrants |
|
|
161,269 |
|
|
|
19,383,131 |
|
|
|
- |
|
|
|
Payment of deferred financing costs |
|
|
- |
|
|
|
(355,049 |
) |
|
|
- |
|
|
|
Reduction of financing lease liabilities |
|
|
(49,707 |
) |
|
|
(71,587 |
) |
|
|
(67,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in (Provided by) Investing
Activities |
|
|
(7,388,438 |
) |
|
|
(28,043,505 |
) |
|
|
(67,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash |
|
|
(1,878,124 |
) |
|
|
(14,342,183 |
) |
|
|
2,526,765 |
|
|
Cash at Beginning of Period |
|
|
3,578,634 |
|
|
|
17,920,817 |
|
|
|
10,004,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period |
|
$ |
1,700,510 |
|
|
$ |
3,578,634 |
|
|
$ |
12,531,387 |
|
|
RING ENERGY, INC. |
Financial Commodity Derivative Positions |
As of May 10, 2021 |
|
|
|
|
|
|
|
|
|
|
Average |
Weighted Avg. |
Weighted Avg. |
Weighted Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Put Price |
Call Price |
Swap Price |
Crude Oil - WTI |
|
|
(Bbls) |
(per Bbl) |
(per Bbl) |
(per Bbl) |
|
|
|
|
|
|
|
02/25/2020 |
Calendar year 2021 |
Costless Collars |
1,000 |
$45.00 |
$54.75 |
|
02/25/2020 |
Calendar year 2021 |
Costless Collars |
1,000 |
$45.00 |
$52.71 |
|
02/27/2020 |
Calendar year 2021 |
Costless Collars |
1,000 |
$40.00 |
$55.08 |
|
03/02/2020 |
Calendar year 2021 |
Costless Collars |
1,500 |
$40.00 |
$55.35 |
|
11/25/2020 |
Calendar year 2021 |
Swaps |
2,000 |
|
|
$45.37 |
12/02/2020 |
Calendar year 2021 |
Swaps |
500 |
|
|
$45.38 |
12/03/2020 |
Calendar year 2021 |
Swaps |
500 |
|
|
$45.00 |
12/04/2020 |
Calendar year 2021 |
Swaps |
500 |
|
|
$45.40 |
12/04/2020 |
Calendar year 2021 |
Swaps |
500 |
|
|
$45.60 |
12/07/2020 |
Calendar year 2021 |
Swaps |
500 |
|
|
$45.96 |
|
|
|
|
|
|
|
12/04/2020 |
Calendar year 2022 |
Swaps |
500 |
|
|
$44.22 |
12/07/2020 |
Calendar year 2022 |
Swaps |
500 |
|
|
$44.75 |
12/10/2020 |
Calendar year 2022 |
Swaps |
500 |
|
|
$44.97 |
12/17/2020 |
Calendar year 2022 |
Swaps |
250 |
|
|
$45.98 |
01/04/2021 |
Calendar year 2022 |
Swaps |
250 |
|
|
$47.00 |
02/04/2021 |
Calendar year 2022 |
Swaps |
250 |
|
|
$50.05 |
|
|
|
|
|
|
|
|
|
|
Average |
Weighted Avg. |
Weighted Avg. |
Weighted Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Put Price |
Call Price |
Swap Price |
Natural Gas - Henry Hub |
|
(MMBTU) |
(per MMBTU) |
(per MMBTU) |
(per MMBTU) |
|
|
|
|
|
|
|
11/04/2020 |
Calendar year 2021(1) |
Swaps |
6,000 |
|
|
$2.99 |
|
|
|
|
|
|
|
11/04/2020 |
Calendar year 2022(1) |
Swaps |
5,000 |
|
|
$2.7255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) On March 30, 2021, the Company unwound its remaining gas swaps
for Calendar year 2021 and 2022, resulting in the receipt of a cash
payment of $581,424. |
RING ENERGY, INC.
Non-GAAP Information
Certain financial information included in Ring’s
financial results are not measures of financial performance
recognized by accounting principles generally accepted in the
United States, or GAAP. These non-GAAP financial measures are
“Adjusted Net Income”, “Adjusted EBITDA”, “Free Cash Flow” and
“Cash Flow from Operations”. Management uses these non-GAAP
financial measures in its analysis of performance. In addition,
Adjusted EBITDA is a key metric used to determine the Company’s
incentive compensation awards. These disclosures may not be viewed
as a substitute for results determined in accordance with GAAP and
are not necessarily comparable to non-GAAP performance measures
which may be reported by other companies.
Reconciliation of Net (Loss) Income to
Adjusted Net Income
Adjusted Net Income does not include the
estimated after-tax impact of share-based compensation, ceiling
test impairment, and unrealized loss (gain) on change in fair value
of derivatives, as well an add back of the full valuation against
the Company’s deferred tax assets during the fourth quarter of
2020. Adjusted Net Income is presented because the timing and
amount of these items cannot be reasonably estimated and affect the
comparability of operating results from period to period, and
current periods to prior periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2021 |
|
2020 |
|
2020 |
|
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(19,066,093 |
) |
|
$ |
(160,254,279 |
) |
|
$ |
43,804,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
355,494 |
|
|
|
2,807,006 |
|
|
|
673,795 |
|
|
|
Ceiling test write
impairment |
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
Unrealized loss
(gain) on change in fair value of derivatives |
25,667,848 |
|
|
|
15,243,222 |
|
|
|
(47,086,681 |
) |
|
|
Tax impact of adjusted
items(1) |
|
|
- |
|
|
|
19,126,056 |
|
|
|
10,271,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
6,957,249 |
|
|
$ |
6,486,005 |
|
|
$ |
7,662,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares Outstanding |
|
|
99,092,715 |
|
|
|
87,503,079 |
|
|
|
67,997,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Share |
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three months ended December 31, 2020, includes adding
back the full valuation against the Company's deferred tax assets
of $50,553,125. |
|
RING ENERGY, INC.
Non-GAAP Information
Reconciliations of Adjusted EBITDA, Free
Cash Flow and Cash Flow from Operations
The Company also presents the non-GAAP financial
measures Adjusted EBITDA and Free Cash Flow. The Company defines
Adjusted EBITDA as net (loss) income plus net interest expense,
unrealized loss on change in fair value of derivatives, ceiling
test impairment, income tax (benefit) expense, depreciation,
depletion and amortization and accretion, asset retirement
obligation accretion and share-based compensation. Company
management believes this presentation is relevant and useful
because it helps investors understand Ring’s operating performance
and makes it easier to compare its results with those of other
companies that have different financing, capital and tax
structures. Adjusted EBITDA should not be considered in isolation
from or as a substitute for net income, as an indication of
operating performance or cash flows from operating activities or as
a measure of liquidity. Adjusted EBITDA, as Ring calculates it, may
not be comparable to Adjusted EBITDA measures reported by other
companies. In addition, Adjusted EBITDA does not represent funds
available for discretionary use.
The Company defines Free Cash Flow as Adjusted
EBITDA (defined above) less net interest expense (excluding
amortization of deferred financing cost) and capital expenditures.
For this purpose, the Company’s definition of capital expenditures
includes costs incurred related to oil and natural gas properties
(such as drilling and infrastructure costs and the lease
maintenance costs) and equipment, furniture and fixtures, but
excludes acquisition costs of oil and gas properties from third
parties that are not included in the Company’s capital expenditures
guidance provided to investors. Company management believes that
Free Cash Flow is an important financial performance measure for
use in evaluating the performance and efficiency of its current
operating activities after the impact of accrued capital
expenditures and net interest expense and without being impacted by
items such as changes associated with working capital, which can
vary substantially from one period to another. There is no commonly
accepted definition Free Cash Flow within the industry.
Accordingly, Free Cash Flow, as defined and calculated by the
Company, may not be comparable to Free Cash Flow or other similarly
named non-GAAP measures reported by other companies. While the
Company includes net interest expense in the calculation of Free
Cash Flow, other mandatory debt service requirements of future
payments of principal at maturity (if such debt is not refinanced)
are excluded from the calculation of Free Cash Flow. These and
other non-discretionary expenditures that are not deducted from
Free Cash Flow would reduce cash available for other uses.
The following tables present (i) a
reconciliation of the Company’s net (loss) income, a GAAP measure,
to Adjusted EBITDA and (ii) a reconciliation of Adjusted EBITDA, a
non-GAAP measure, to Free Cash Flow, as both Adjusted EBITDA and
Free Cash Flow are defined by the Company. In addition, a
reconciliation of cash flow from operations is presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2021 |
|
2020 |
|
2020 |
|
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(19,066,093 |
) |
|
$ |
(160,254,279 |
) |
|
$ |
43,804,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
3,741,969 |
|
|
|
4,658,825 |
|
|
|
4,437,575 |
|
|
|
Unrealized loss (gain) on change in fair value of derivatives |
25,667,848 |
|
|
|
15,243,222 |
|
|
|
(47,086,681 |
) |
|
|
Ceiling test impairment |
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
Income tax expense (benefit) |
|
|
- |
|
|
|
21,152,105 |
|
|
|
12,449,916 |
|
|
|
Depreciation, depletion and amortization |
|
|
8,108,158 |
|
|
|
11,162,567 |
|
|
|
13,682,996 |
|
|
|
Asset retirement obligation accretion |
|
|
193,744 |
|
|
|
212,503 |
|
|
|
231,962 |
|
|
|
Share-based compensation |
|
|
355,494 |
|
|
|
2,807,006 |
|
|
|
673,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
19,001,120 |
|
|
$ |
24,545,949 |
|
|
$ |
28,193,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
48 |
% |
|
|
78 |
% |
|
|
71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares Outstanding |
|
|
99,092,715 |
|
|
|
87,503,079 |
|
|
|
67,997,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per Share |
|
$ |
0.19 |
|
|
$ |
0.28 |
|
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2021 |
|
2020 |
|
2020 |
|
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
19,001,120 |
|
|
$ |
24,545,949 |
|
|
$ |
28,193,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense (excluding amortization of deferred financing
costs) |
|
|
(3,558,942 |
) |
|
|
(4,035,964 |
) |
|
|
(4,248,493 |
) |
|
|
Capital expenditures |
|
|
(14,525,436 |
) |
|
|
(7,814,361 |
) |
|
|
(15,973,186 |
) |
|
|
Proceeds from divestiture of oil and natural gas properties |
2,000,000 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
2,916,742 |
|
|
$ |
12,695,624 |
|
|
$ |
7,972,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2021 |
|
2020 |
|
2020 |
|
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
15,687,684 |
|
|
$ |
27,255,949 |
|
|
$ |
27,537,757 |
|
|
Changes in operating assets and liabilities |
|
|
(245,506 |
) |
|
|
(6,722,162 |
) |
|
|
(3,592,569 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
$ |
15,442,178 |
|
|
$ |
20,533,787 |
|
|
$ |
23,945,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 A non-GAAP financial measure; see “Non-GAAP
Information” later in this release for more information including
reconciliations to the most comparable GAAP measures.
2 WTI posting price per Bbl of oil is based on NYMEX.
Ring Energy (AMEX:REI)
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From Mar 2023 to Mar 2024