Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the fourth
quarter and full year 2021, including Ring’s year-end 2021 proved
reserves. In addition, the Company provided first quarter and full
year 2022 guidance and an update on its 2022 drilling program.
Highlights and Recent Key
Items
-
Grew fourth quarter 2021 sales volumes 11% to 9,153 barrels of oil
equivalent per day (“Boe/d”) (85% oil) compared to the third
quarter of 2021, with full year 2021 sales volumes of 8,519 Boe/d
(86% oil);
-
Reported net income of $24.1 million, or $0.20 per diluted share,
in the fourth quarter of 2021, up 70% compared with net income of
$14.2 million, or $0.12 per share in the third quarter of 2021;
-
Net income for full year 2021 was $3.3 million, or $0.03 per
diluted share, compared with a loss of $253.4 million or $3.48 per
share, in full year 2020;
-
Posted Adjusted Net Income1 of $9.9 million, or $0.10 per share,
for the fourth quarter of 2021, up 46% compared with $6.8 million,
or $0.07 per share, in the third quarter of 2021;
-
Adjusted Net Income for the full year 2021 was $30.6 million, or
$0.31 per share, up 48% from $20.7 million, or $0.28 per share, in
full year 2020;
-
Increased Adjusted EBITDA1 by 21% fourth quarter over fourth
quarter to $24.0 million and generated $83.3 million in Adjusted
EBITDA for full year 2021;
-
Delivered Net Cash Provided by Operating Activities of $23.2
million and Free Cash Flow1 of $9.3 million in the fourth quarter
of 2021.
-
Net Cash Provided by Operating Activities and Free Cash Flow were
$72.7 million and $20.5 million, respectively, for full year
2021;
-
Remained cash flow positive for the ninth consecutive quarter;
-
Paid down $23.0 million of debt on the Company’s revolving credit
facility during full year 2021, including $5.0 million in the
fourth quarter;
-
Resulted in lower interest expense of $3.1 million in full year
2021 – an 18% decrease from 2020;
-
Successfully reaffirmed the Company’s borrowing base of $350
million under its revolving credit facility in December 2021;
-
Grew proved reserves 2% to 77.8 million barrels of oil equivalent
(“MMBoe”) at year-end 2021, more than replacing its full year 2021
production;
-
Successfully drilled and completed, on time and within budget,
Ring’s Phase IV program of two wells (one in the Northwest Shelf
(“NWS”) and one in the Central Basin Platform (“CBP”)), with both
wells placed on production in the fourth quarter of 2021;
-
Completion of the Phase IV program marks the culmination of a
successful 2021 development campaign;
-
Drilled 11 wells, including eight in the NWS and three in the CBP,
and participated in the drilling of two non-operated wells in the
NWS;
-
Completed 13 wells, including 10 in the NWS and three in the CBP,
and participated in the completion of two non-operated wells in the
NWS;
-
Reduced future costly workovers and long-term operating costs by
converting 25 wells from downhole electrical submersible pumps
(“ESPs”) to rod pumps (“CTRs”) during full year 2021, including 19
in the NWS and six in the CBP;
-
Commenced Ring’s 2022 continuous drilling program in late January
with four CBP wells drilled, with two wells placed on production in
March and two wells that are expected to be online in April;
-
Currently drilling the first of 16 targeted wells in the NWS before
moving back to the CBP;
-
Announced 2022 capital program of $120 million to $140 million, an
increase of over 130% compared to prior year;
-
Reaffirmed commitment to remain cash flow positive on an annual
basis; and
-
Provided guidance for first quarter and full year 2022 sales
volumes, capital spending and operating expenses.
________________________1 A non-GAAP financial measure; see
“Non-GAAP Information” section in this release for more information
including reconciliations to the most comparable GAAP measures.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “We are pleased to report our
strong fourth quarter operating and financial results. Contributing
to our performance during the period were sales volumes of 9,153
Boe per day, which was 11% higher than the third quarter of 2021.
The combination of increased production, improved commodity prices,
and our continued focus on driving cost efficiencies drove more
than a 20% increase in adjusted EBITDA during the quarter and
approximately $83 million for the full year 2021. The fourth
quarter marks the ninth consecutive quarter of generating free cash
flow. We also saw our year-end reserves increase by 2%, more than
offsetting our 2021 production.”
Mr. McKinney continued, “On January 1, 2022,
nearly 60% of our low-priced hedges rolled off allowing for
substantially higher revenue and operating cash flow in 2022
assuming commodity prices remain strong. We intend to invest our
higher cash flow to organically grow production and continue paying
down debt. We believe we can increase our capital spending over
130%, meaningfully grow our sales volumes, and continue paying down
debt – all while staying within cash flow from operations.”
Mr. McKinney concluded, “As previously
announced, we initiated our 2022 drilling program in January and
have since drilled four wells in the CBP, moved the rig to the NWS
asset area and spud our fifth well this week. We have completed two
of our CBP wells and plan to complete the third and fourth wells in
April. We intend to drill and complete between 25 and 33 wells in
2022, install related facilities and infrastructure, continue our
successful CTR and other capital workover programs, and acquire
additional leases. Our capital spending program will be flexible
and adjusted to remain in-line with commodity prices and within
cash flow from operations. In short, we believe 2022 will be a
transformational year for Ring and our shareholders through the
continued pursuit of our value focused proven strategy.”
Financial Overview: For the
fourth quarter of 2021, the Company reported net income of $24.1
million, or $0.20 per diluted share, which included a $15.2 million
before tax non-cash unrealized commodity derivative gain and $0.9
million in before tax share-based compensation. Excluding the
estimated after-tax impact of the adjustments, the Company’s
Adjusted Net Income was $9.9 million, or $0.10 per share. In the
third quarter of 2021, the Company reported net income of $14.2
million, or $0.12 per share, which included an $8.2 million before
tax non-cash unrealized commodity derivative gain and $0.8 million
for before tax share-based compensation. Excluding the estimated
after-tax impact of these adjustments, the Company’s Adjusted Net
Income was $6.8 million, or $0.07 per share. In the fourth quarter
of 2020, Ring reported a net loss of $160.3 million, or $1.83 per
share, which included a $129.6 million before tax non-cash ceiling
test impairment primarily due to lower pricing, a $15.2 million
before tax non-cash unrealized commodity derivative loss, and $2.8
million in before tax share-based compensation. Excluding the
estimated after-tax impact of these adjustments, and adding back
the full valuation against deferred tax assets, Adjusted Net Income
in the fourth quarter of 2020 was $6.5 million, or $0.07 per
share.
Adjusted EBITDA grew by 21% to $24.0 million for
the fourth quarter of 2021 versus $19.7 million in the third
quarter of 2021, with the increase primarily driven by higher sales
volumes and realized pricing. Fourth quarter of 2020 Adjusted
EBITDA was $24.5 million.
Free Cash Flow for the fourth quarter of 2021
was $9.3 million compared to $2.6 million in the third quarter of
2021 primarily due to higher sales volumes and realized pricing and
lower capital spending. Fourth quarter 2021 Free Cash Flow
decreased from $12.7 million for the fourth quarter of 2020
primarily due to lower sales volumes and higher capital spending,
partially offset by higher realized pricing.
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 fourth quarter of 2021
were 9,153 Boe/d (85% oil), or 842,110 Boe, compared to 8,243 Boe/d
(87% oil), or 758,387 Boe, for the third quarter of 2021, and 9,307
Boe/d (86% oil), or 856,271 Boe, in the fourth quarter of 2020.
Fourth quarter 2021 sales volumes were comprised of 715,163 barrels
(“Bbls”) of oil and 761,682 thousand cubic feet (“Mcf”) of natural
gas.
For the fourth quarter of 2021, the Company
realized an average sales price of $76.35 per barrel of crude oil
and $6.65 per Mcf for natural gas. The combined average realized
sales price for the period was $70.85 per Boe, up 9% versus $65.11
per Boe for the third quarter of 2021, and up 94% from $36.61 per
Boe in the fourth quarter of 2020. The average oil price
differential the Company experienced from WTI NYMEX spot pricing in
the fourth quarter of 2021 was a negative $1.12 per barrel of crude
oil, while the average natural gas price differential from Henry
Hub pricing was a positive $1.85 per Mcf.
Revenues were $59.7 million for the fourth
quarter of 2021 compared to $49.4 million for the third quarter of
2021 and $31.4 million for the fourth quarter of 2020. The 21%
increase in fourth quarter 2021 revenues from the third quarter
were driven by higher sales volumes and increased realized pricing
for both oil and natural gas.
Lease Operating Expense
(“LOE”): LOE, which includes expensed workovers and
facilities maintenance, was $7.7 million, or $9.12 per Boe, in the
fourth quarter of 2021 versus $7.0 million, or $9.21 per Boe, in
the third quarter of 2021 and $7.9 million, or $9.19 per Boe, for
the fourth quarter of 2020. Contributing to lower LOE per Boe for
both comparative periods was the purchase of leased ESPs throughout
2021.
Gathering, Transportation and Processing
(“GTP”) Costs: GTP costs, which are associated with
natural gas sales, were $1.72 per Boe in the fourth quarter of 2021
versus $1.39 per Boe in the third quarter of 2021 and $1.47 per Boe
in the fourth quarter of 2020. The increase in GTP costs was due to
processing higher natural gas sales volumes for the Company’s NWS
assets.
Ad Valorem Taxes: Ad valorem
taxes were $0.16 per Boe for the fourth quarter of 2021 compared to
$0.93 per Boe in the third quarter of 2021 and $0.84 per Boe for
the fourth quarter of 2020. The decrease was due to lower assessed
property values compared to estimates.
Production Taxes: Production
taxes were $3.36 per Boe in the fourth quarter of 2021 compared to
$2.95 per Boe in the third quarter of 2021 and $1.75 per Boe in
fourth quarter of 2020. Production taxes remained steady at 4-5% of
revenue for all three periods.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $12.44 per Boe in the fourth quarter of 2021 versus
$12.28 per Boe for the third quarter of 2021 and $13.04 per Boe in
the fourth quarter of 2020. Asset retirement obligation accretion
was $0.22 per Boe in the fourth quarter of 2021 compared to $0.24
per Boe for the third quarter of 2021 and $0.25 per Boe in the
fourth quarter of 2020.
Operating Lease Expense:
Operating lease expense was $83,591 for the fourth quarter of 2021
versus $83,589 for the third quarter of 2021 and $319,483 in the
fourth 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 $4.0 million, or $4.79 per Boe, for the fourth quarter 2021
versus $3.7 million, or $4.82 per Boe, for the third quarter of
2021 and $4.4 million, or $5.09 per Boe, in the fourth quarter of
2020.
Interest Expense: Interest
expense was $3.5 million in the fourth quarter of 2021 versus $3.6
million for the third quarter 2021 and $4.7 million for the fourth
quarter of 2020. Interest expense declined year-over-year due to a
lower average daily balance of long-term debt and a lower margin
rate for the three months ended December 31, 2021. The lower margin
rate was associated with a reduced percentage utilization of the
Company’s borrowing base on its revolving credit facility.
Derivative (Loss) Gain: In the
fourth quarter of 2021, Ring recorded a loss of $4.3 million on its
commodity derivative contracts, including a realized $19.5 million
cash commodity derivative loss and an unrealized $15.2 million
non-cash commodity derivative gain. This compared to a net loss of
$6.7 million in the third quarter of 2021, including a realized
$14.9 million cash commodity derivative loss and an unrealized $8.2
million non-cash commodity derivative gain, and a net loss of $11.5
million in the fourth quarter of 2020, including a realized $3.7
million cash commodity derivative gain and an unrealized $15.2
million non-cash commodity derivative loss.
The Company did not add any new commodity derivative contracts
in the fourth quarter of 2021, but on February 1, 2022 added the
following new crude oil derivative position:
|
|
|
Average |
Weighted Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
Crude Oil - WTI |
|
|
(Bbls) |
(per Bbl) |
|
|
|
|
|
02/01/2022 |
Balance of calendar year 2022 |
Swaps |
1,000 |
$84.61 |
|
|
|
|
|
On January 1, 2022, nearly 60% of Ring’s legacy
low-priced hedges expired allowing for substantially higher revenue
and cash flow in 2022, assuming the current oil price environment
continues. A full listing of the Company’s current outstanding
derivative positions is included in the tables shown later in this
release.
Income Tax: The Company
recorded a non-cash income tax benefit of $51,601 in the fourth
quarter 2021 and $48,701 in the third quarter of 2021, compared to
a non-cash income tax provision of $21.2 million for the fourth
quarter of 2020.
Balance Sheet and Liquidity:
Total liquidity at the end of the fourth quarter of 2021 was $61.6
million, a 10% increase from September 30, 2021 and up 52% from
December 31, 2020. Liquidity at December 31, 2021 consisted of cash
and cash equivalents of $2.4 million and $59.2 million of
availability under Ring’s revolving bank credit facility, which
includes a reduction of $0.8 million for letters of credit. On
December 31, 2021, the Company had $290.0 million in borrowings
outstanding on its revolving credit facility that has a current
borrowing base of $350.0 million. Ring paid down $5.0 million of
debt during the fourth quarter of 2021, and $23.0 million for full
year 2021. The Company is targeting further debt reduction during
2022.
During the fourth quarter of 2021, Ring
successfully reaffirmed the Company’s borrowing base of $350
million under its revolving credit facility. The next regularly
scheduled bank redetermination is scheduled to occur during May
2022. Ring is currently in compliance with all applicable covenants
under its revolving credit facility agreement.
Capital Expenditures: During
the fourth quarter of 2021, capital expenditures on an accrual
basis were $11.3 million as the Company drilled, completed and
placed on production the two wells of its Phase IV program (one
well in the NWS with 75% working interest and one well in the CBP
with 100% working interest) and also performed one CTR project (in
the NWS).
The Phase IV program utilized one rig and both
wells were drilled and completed on schedule and within budget. The
well in the NWS was a 1.0-mile lateral and the well in the CBP was
a 1.5-mile lateral, with both wells placed on production in the
fourth quarter.
In the third quarter of 2021, capital
expenditures were $13.7 million, which included costs to drill,
complete and place on production four wells of Ring’s Phase III
program (two 1.0-mile lateral wells in the NWS and two 1.5-mile
lateral wells in the CBP, with all wells at 100% working interest)
and the Company also performed 10 CTR projects.
For the twelve months ended December 31, 2021,
capital expenditures were $51.0 million, which included costs to
drill 11 horizontal wells (eight in the NWS and three in the CBP)
and complete and place on production 13 horizontal wells (10 in the
NWS and three in the CBP). Two of the NWS wells completed in 2021
were drilled in 2020. Included in full year 2021 capital spending
were costs for 25 CTRs (19 in the NWS and 6 in the CBP), as well as
costs for capital workovers, infrastructure upgrades, land and
other capital expenditures. Ring also participated in the drilling
and completion of two non-operated wells in the NWS.
Full Year 2021 Financial
Review
The Company reported net income for full year
2021 of $3.3 million, or $0.03 per diluted share, and Adjusted Net
Income of $30.6 million, or $0.31 per share. For full year 2020,
Ring reported a net loss of $253.4 million, or $3.48 per share, and
Adjusted Net Income of $20.7 million, or $0.28 per share. The
Company generated Adjusted EBITDA of $83.3 million, or $26.80 per
Boe and $0.84 per diluted share, for the full year 2021 compared to
$86.1 million, or $26.78 per Boe and $1.18 per diluted share, in
2020.
Revenues totaled $196.3 million for 2021
compared to $113.0 million in 2020, with the increase driven by
higher commodity prices. Net cash provided by operating activities
for 2021 was $72.7 million compared with $72.2 million in 2020.
Free Cash Flow totaled $20.5 million in 2021 compared with $39.8
million in 2020.
Net sales for full year 2021 were 8,519 Boe/d,
or 3,109,470 Boe, comprised of 2,686,939 Bbls of oil and 2,535,188
Mcf of natural gas. Full year 2020 net sales averaged 8,790 Boe/d,
or 3,217,278 Boe, which included 2,801,528 Bbls of oil and
2,494,502 Mcf of natural gas.
For the full year 2021, the Company’s realized
crude oil sales price was $67.56 per barrel and the natural gas
sales price was $5.83 per Mcf. The combined average sales price was
$63.13 per Boe compared to $35.13 per Boe for full year 2020.
For the full year 2021, LOE was $30.3 million,
or $9.75 per Boe, versus $29.8 million, or $9.25 per Boe, for full
year 2020. LOE increased due to higher activity levels in 2021 due
to the COVID-19 pandemic in 2020 causing deferral of expensed
workovers and other lease operating projects.
GTP costs were $4.3 million, or $1.39 per Boe,
for full year 2021 compared to $4.1 million, or $1.27 per Boe in
2020, with the increase year-over-year due to significantly higher
product pricing. Ad valorem taxes decreased to $2.3 million, or
$0.73 per Boe, in 2021 from $3.1 million, or $0.97 per Boe, for
full year 2020. Driving the decrease was lower assessed property
values. Production taxes for 2021 were $9.1 million, or $2.93 per
Boe, versus $5.2 million, or $1.63 per Boe, in 2020. As a
percentage of oil and natural gas sales, 2021 production taxes
increased slightly to 4.65% from 4.63% for 2020 due to higher Texas
gas revenue in 2021, which is taxed at 7.5%.
For the full year 2021, G&A, including
share-based compensation, was $16.1 million, down 5% compared with
full year 2020 G&A of $16.9 million. For full year 2021,
G&A, excluding share-based compensation, was $13.6 million
compared to $11.5 million for full year 2020. The increase
year-over-year was primarily due to increased employee count and
salaries, accounting expenses, and non-recurring consulting costs.
G&A, excluding share-based compensation, per Boe was $4.39 in
2021, up 23% from $3.58 in 2020.
For the full year 2021, the Company recorded a
non-cash income tax provision of $0.1 million compared to a
non-cash income tax benefit of $6.0 million in full year 2020. The
change was primarily the result of losses due to the ceiling test
write-down in 2020 offset by the Company’s full valuation allowance
against its deferred tax assets. The Company was in a deferred tax
asset position as a result of the ceiling test write downs recorded
during 2020. In 2021, only state tax activity was recognized for
SEC-reporting purposes.
2022 Capital Investment, Sales Volumes,
and Operating Expense Guidance
In response to a continued improvement in crude
oil prices and following the success of its 2021 drilling program,
in late January Ring commenced a 2022 continuous one-rig drilling
program that is focused on the Company’s highest rate-of-return
inventory in its NWS and CBP acreage positions. To date, four wells
in the CBP have been drilled and completed, including two wells
that were placed on production in March and two wells that are
expected to be online in April. The rig was moved from the CBP and
is currently drilling the first of 16 targeted wells in the NWS,
before moving back to the CBP.
For full year 2022, Ring expects total capital
spending of $120 million to $140 million, which includes the
estimated cost to drill 25 to 33 horizontal wells and complete 25
to 30 horizontal wells, primarily in the Company’s NWS assets.
Ring’s full year capital spending outlook includes targeted well
reactivations, workovers, infrastructure upgrades, and continuing
its successful CTR program in the NWS and the CBP. Also included in
the full year estimate is anticipated spending for leasing,
contractual drilling obligations and non-operated drilling,
completion and capital workovers. Based on the $130 million
mid-point of spending guidance, the Company expects the following
estimated allocation of capital investment, including:
-
82% for drilling, completion, and related equipment and
facilities;
-
12% for CTRs, recompletions and capital workovers; and
-
6% for land, non-operated capital and other investments.
The Company remains focused on generating free
cash flow in 2022, after all expenses, costs and capital
expenditures. The increased level of capital investment in 2022 is
expected to generate almost 10% sales growth at the midpoint of
full year 2022 guidance. All 2022 planned capital expenditures will
be fully funded by cash on hand and cash from operations, and
excess free cash flow is currently targeted for further debt
reduction. The combination of anticipated growth in Adjusted EBITDA
resulting from higher prices and growth in sales volumes, along
with planned further debt reduction, is expected to significantly
reduce Ring’s leverage ratio by year-end
2022.
Supported by its targeted development program
and continued focus on operational excellence, the Company
currently forecasts full year 2022 sales volumes of 9,000 to 9,600
Boe/d (87% oil), compared with full year 2021 average sales volumes
of 8,519 Boe/d (86% oil).
Drilling under Ring’s new continuous drilling
program began in late January 2022; as a result, there is minimal
additional production impact expected from the new wells in the
first quarter. Including the expected normal decline in production
during the first quarter and some short-term weather-related sales
disruptions, first quarter 2022 sales are expected to be in the
range of 8,500 to 8,700 Boe/d (85% oil). Second quarter 2022 sales
are expected to reflect the benefit of the new continuous drilling
program.
The guidance in the table below represents the
Company's current good faith estimate of the range of likely future
results for the full year and first quarter of 2022. Guidance could
be affected by the factors discussed below in the "Safe Harbor
Statement" section.
|
|
|
Q1 |
FY |
|
|
|
2022 |
2022 |
|
|
|
|
|
Sales Volumes: |
|
|
|
|
Total (Boe/d) |
|
8,500 - 8,700 |
9,000 - 9,600 |
|
Oil (Bo/d) |
|
7,200 - 7,400 |
7,800 - 8,350 |
|
|
|
|
|
Capital Program: |
|
|
|
|
Capital spending(1) (millions) |
|
$19.5 - $21.5 |
$120 - $140 |
|
|
|
|
|
|
Number of new wells drilled |
|
6 |
25 - 33 |
|
Number of new wells completed and online |
2 |
25 - 30 |
|
|
|
|
|
Operating Expenses: |
|
|
|
|
LOE (per Boe) |
|
$10.90 - $11.25 |
$10.90 - $12.00 |
|
GPT (per Boe) |
|
$1.60 - $1.75 |
$1.60 - $2.00 |
|
|
|
|
|
(1) 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 NWS and
CBP areas. Also included is anticipated spending for lease costs,
contractual drilling obligations and non-operated drilling,
completion and capital workovers. |
|
|
|
|
|
First quarter and full year 2022 LOE is expected
to be higher than 2021 primarily due to inflationary-related
increases partially offset by the ongoing CTR program, lower costs
due to the purchase of leased ESPs, and other cost reduction
initiatives.
Year-End 2021 Proved
Reserves
The Company's year-end 2021 SEC proved reserves
were 77.8 MMBoe compared to 76.5 MMBoe at year-end 2020. Ring
recorded reserve additions of 2.3 MMBoe for acquisitions and 4.9
MMBoe for extensions, discoveries and improved recovery. Partially
offsetting the overall increase was 0.6 MMBoe for property
dispositions, 2.2 MMBoe for revisions of previous quantity
estimates and 3.1 MMBoe of production.
The SEC twelve-month first day of the month
average prices used for year-end 2021 were $63.04 per barrel of
crude oil (WTI) and $3.598 per MMBtu of natural gas (Henry Hub),
both before adjustment for quality, transportation, fees, energy
content, and regional price differentials, while for year-end 2020
they were $36.04 per barrel of crude oil and $1.99 per MMBtu of
natural gas.
Year-end 2021 SEC proved reserves were comprised
of approximately 85% crude oil and 15% natural gas. At year end,
approximately 56% of 2021 proved reserves were classified as proved
developed and 44% as proved undeveloped.
Ring’s reserve life ratio at year-end 2021,
based on year-end 2021 SEC proved reserves and 2021 production was
25.0 years.
The present value of the Company’s reported SEC
proved reserves, discounted at 10% ("PV-10"), at year-end 2021 was
$1,332.1 million, up 109% from $638.1 million at the end of
2020.
|
|
Oil |
|
Gas |
|
Net |
|
|
|
|
|
|
(Bbl) |
|
(Mcf) |
|
(Boe) |
|
PV-10(1) |
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
66,264,286 |
|
|
61,305,027 |
|
|
76,481,791 |
|
|
$ |
638,107,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of minerals in place |
2,180,497 |
|
|
824,512 |
|
|
2,317,916 |
|
|
|
|
|
|
Extensions, discoveries and improved recovery |
3,975,675 |
|
|
5,172,392 |
|
|
4,837,740 |
|
|
|
|
|
|
Sales of minerals in place |
(462,970 |
) |
|
(555,879 |
) |
|
(555,617 |
) |
|
|
|
|
|
Production |
(2,686,577 |
) |
|
(2,535,188 |
) |
|
(3,109,108 |
) |
|
|
|
|
|
Revisions of previous quantity estimates |
(3,432,302 |
) |
|
7,562,925 |
|
|
(2,171,815 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
65,838,609 |
|
|
71,773,789 |
|
|
77,800,907 |
|
|
$ |
1,332,097,625 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) PV-10 for this presentation excludes any
provision for asset retirement obligations or income taxes and it
may be considered a non-GAAP financial measure as defined by the
SEC, and is derived from the standardized measure of Discounted
Futures Net Cash Flows, which is the most directly comparable GAAP
measure.
In accordance with guidelines established by the
SEC, estimated proved reserves as of December 31, 2021 were
determined to be economically producible under existing economic
conditions, which requires the use of the 12-month average
commodity price for each product, calculated as the unweighted
arithmetic average of the first-day-of-the-month price for the year
end December 31, 2021. The SEC average prices used for year-end
2021 were $63.04 per barrel of crude oil (WTI) and $3.598 per MMBtu
of natural gas (Henry Hub), both before adjustment for quality,
transportation, fees, energy content, and regional price
differentials. Such prices were held constant throughout the
estimated lives of the reserves. Future production and development
costs are based on year-end costs with no escalations.
Standardized Measure of Discounted
Future Net Cash Flows
Ring’s standardized measure of discounted future
net cash flows relating to proved oil and natural gas reserves and
changes in the standardized measure as described below were
prepared in accordance with generally accepted accounting
principles.
December 31, |
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
Future cash inflows |
|
$ |
4,853,709,000 |
|
|
$ |
2,682,488,655 |
|
Future production costs |
|
|
(1,395,437,250 |
) |
|
|
(821,515,126 |
) |
Future development costs |
|
|
(347,757,000 |
) |
|
|
(244,323,270 |
) |
Future income taxes |
|
|
(501,586,949 |
) |
|
|
(208,645,934 |
) |
Future net cash flows |
|
|
2,608,927,801 |
|
|
|
1,408,004,325 |
|
10% annual discount for estimated timing of cash flows |
|
|
(1,471,562,953 |
) |
|
|
(852,133,072 |
) |
|
|
|
|
|
|
|
Standardized Measure of Discounted Future Net Cash
Flows |
|
$ |
1,137,364,848 |
|
|
$ |
555,871,253 |
|
|
|
|
|
|
|
|
Reconciliation of PV-10 to Standardized
Measure
PV-10 is derived from the Standardized Measure
of Discounted Future Net Cash Flows (“Standardized Measure”), which
is the most directly comparable GAAP financial measure for proved
reserves calculated using SEC pricing. PV-10 is a computation
of the Standardized Measure on a pre-tax basis. PV-10 is equal to
the Standardized Measure at the applicable date, before deducting
future income taxes, discounted at 10 percent. We believe
that the presentation of PV-10 is relevant and useful to investors
because it presents the discounted future net cash flows
attributable to our estimated net proved reserves prior to taking
into account future corporate income taxes, and it is a useful
measure for evaluating the relative monetary significance of our
oil and natural gas properties. Further, investors may utilize the
measure as a basis for comparison of the relative size and value of
our reserves to other companies. Moreover, GAAP does not provide a
measure of estimated future net cash flows for reserves other than
proved reserves or for reserves calculated using prices other than
SEC prices. We use this measure when assessing the potential return
on investment related to our oil and natural gas properties. PV-10,
however, is not a substitute for the Standardized Measure.
Our PV-10 measure and the Standardized Measure do not purport to
represent the fair value of our oil and natural gas reserves.
The following table reconciles the pre-tax PV-10 value of our
SEC Pricing proved reserves as of December 31, 2021 to the
Standardized Measure.
SEC Pricing Proved Reserves |
Standardized Measure
Reconciliation |
|
|
Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax
PV-10) |
|
$ |
1,332,097,625 |
|
Future Income Taxes,
Discounted at 10% |
|
(194,732,777 |
) |
Standardized Measure of
Discounted Future Net Cash Flows |
|
$ |
1,137,364,848 |
|
|
|
|
|
|
Update on Sales Process for Delaware
Basin Assets
As previously announced, Ring launched a sales
process during 2021 to divest of its Delaware Basin assets. The
Company will provide further updates as definitive information is
known. Ring anticipates using the net proceeds from the potential
sale of its Delaware Basin assets to further reduce its debt.
Conference Call Information
Ring will hold a conference call on Thursday,
March 17, 2022 at 11:00 a.m. ET to discuss its fourth quarter and
full year 2021 operational and financial results. An updated
investor presentation will be posted to the Company’s website prior
to the conference call.
To participate in the conference call,
interested parties should dial 833-953-2433 at least five minutes
before the call is to begin. Please reference the “Ring Energy Year
End 2021 Earnings Conference Call”. International callers may
participate by dialing 412-317-5762. The call will also be webcast
and available on Ring’s website at www.ringenergy.com under
“Investors” on the “News & 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, 2021, 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
Al Petrie AdvisorsAl Petrie, Senior PartnerPhone:
281-975-2146Email: apetrie@ringenergy.com
RING ENERGY, INC. |
Condensed Statements of Operations |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and Natural Gas Revenues |
|
$ |
59,667,156 |
|
|
$ |
49,376,176 |
|
|
$ |
31,351,673 |
|
|
$ |
196,305,966 |
|
|
$ |
113,025,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
|
7,678,140 |
|
|
|
6,983,196 |
|
|
|
7,866,057 |
|
|
|
30,312,399 |
|
|
|
29,753,414 |
|
Gathering, transportation and processing costs |
|
|
1,449,884 |
|
|
|
1,051,163 |
|
|
|
1,256,282 |
|
|
|
4,333,232 |
|
|
|
4,090,238 |
|
Ad valorem taxes |
|
|
131,663 |
|
|
|
703,774 |
|
|
|
717,766 |
|
|
|
2,276,463 |
|
|
|
3,125,221 |
|
Oil and natural gas production taxes |
|
|
2,831,560 |
|
|
|
2,240,759 |
|
|
|
1,497,044 |
|
|
|
9,123,420 |
|
|
|
5,228,090 |
|
Depreciation, depletion and amortization |
|
|
10,474,159 |
|
|
|
9,310,524 |
|
|
|
11,162,567 |
|
|
|
37,167,967 |
|
|
|
43,010,660 |
|
Ceiling test impairment |
|
|
- |
|
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
277,501,943 |
|
Asset retirement obligation accretion |
|
|
183,383 |
|
|
|
182,905 |
|
|
|
212,503 |
|
|
|
744,045 |
|
|
|
906,616 |
|
Operating lease expense |
|
|
83,591 |
|
|
|
83,589 |
|
|
|
319,483 |
|
|
|
523,487 |
|
|
|
1,196,372 |
|
General and administrative expense (including share-based
compensation) |
|
|
4,964,711 |
|
|
|
4,433,251 |
|
|
|
7,164,619 |
|
|
|
16,068,105 |
|
|
|
16,874,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses |
|
|
27,797,091 |
|
|
|
24,989,161 |
|
|
|
159,760,321 |
|
|
|
100,549,118 |
|
|
|
381,686,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations |
|
|
31,870,065 |
|
|
|
24,387,015 |
|
|
|
(128,408,648 |
) |
|
|
95,756,848 |
|
|
|
(268,661,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
8 |
|
Interest (expense) |
|
|
(3,542,514 |
) |
|
|
(3,551,462 |
) |
|
|
(4,658,826 |
) |
|
|
(14,490,474 |
) |
|
|
(17,617,614 |
) |
(Loss) gain on derivative contracts |
|
|
(4,266,942 |
) |
|
|
(6,720,320 |
) |
|
|
(11,534,699 |
) |
|
|
(77,853,141 |
) |
|
|
21,366,068 |
|
Deposit forfeiture income |
|
|
- |
|
|
|
- |
|
|
|
5,500,000 |
|
|
|
- |
|
|
|
5,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Other (Expense) Income |
|
|
(7,809,456 |
) |
|
|
(10,271,782 |
) |
|
|
(10,693,524 |
) |
|
|
(92,343,614 |
) |
|
|
9,248,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Tax Provision |
|
|
24,060,609 |
|
|
|
14,115,233 |
|
|
|
(139,102,172 |
) |
|
|
3,413,234 |
|
|
|
(259,413,004 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision for) Benefit From Income Taxes |
|
|
51,601 |
|
|
|
48,701 |
|
|
|
(21,152,105 |
) |
|
|
(90,342 |
) |
|
|
6,001,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
24,112,210 |
|
|
$ |
14,163,934 |
|
|
$ |
(160,254,277 |
) |
|
$ |
3,322,892 |
|
|
$ |
(253,411,828 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (Loss) Earnings per Share |
|
$ |
0.24 |
|
|
$ |
0.14 |
|
|
$ |
(1.83 |
) |
|
$ |
0.03 |
|
|
$ |
(3.48 |
) |
Diluted (Loss) Earnings per Share |
|
$ |
0.20 |
|
|
$ |
0.12 |
|
|
$ |
(1.83 |
) |
|
$ |
0.03 |
|
|
$ |
(3.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Shares Outstanding |
|
|
99,789,095 |
|
|
|
99,358,504 |
|
|
|
87,503,079 |
|
|
|
99,387,028 |
|
|
|
72,891,310 |
|
Diluted Weighted-Average Shares Outstanding |
|
|
123,297,240 |
|
|
|
121,220,748 |
|
|
|
87,503,079 |
|
|
|
121,193,175 |
|
|
|
72,891,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
Condensed Operating Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (Bbls) |
|
|
715,163 |
|
|
|
659,247 |
|
|
|
734,548 |
|
|
|
2,686,939 |
|
|
|
2,801,528 |
|
Natural gas (Mcf) |
|
|
761,682 |
|
|
|
594,841 |
|
|
|
730,337 |
|
|
|
2,535,188 |
|
|
|
2,494,502 |
|
Total oil and natural gas (Boe) (1) |
|
|
842,110 |
|
|
|
758,387 |
|
|
|
856,271 |
|
|
|
3,109,470 |
|
|
|
3,217,278 |
|
% Oil |
|
|
85 |
% |
|
|
87 |
% |
|
|
86 |
% |
|
|
86 |
% |
|
|
87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily equivalent sales (Boe/d) |
|
|
9,153 |
|
|
|
8,243 |
|
|
|
9,307 |
|
|
|
8,519 |
|
|
|
8,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
$ |
76.35 |
|
|
$ |
69.61 |
|
|
$ |
40.48 |
|
|
$ |
67.56 |
|
|
$ |
38.95 |
|
Natural gas ($/Mcf) |
|
|
6.65 |
|
|
|
5.86 |
|
|
|
2.21 |
|
|
|
5.83 |
|
|
|
1.57 |
|
Barrel of oil equivalent ($/Boe) |
|
$ |
70.85 |
|
|
$ |
65.11 |
|
|
$ |
36.61 |
|
|
$ |
63.13 |
|
|
$ |
35.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
9.12 |
|
|
$ |
9.21 |
|
|
$ |
9.19 |
|
|
$ |
9.75 |
|
|
$ |
9.25 |
|
Gathering, transportation and processing costs |
|
|
1.72 |
|
|
|
1.39 |
|
|
|
1.47 |
|
|
|
1.39 |
|
|
|
1.27 |
|
Ad valorem taxes |
|
|
0.16 |
|
|
|
0.93 |
|
|
|
0.84 |
|
|
|
0.73 |
|
|
|
0.97 |
|
Oil and natural gas production taxes |
|
|
3.36 |
|
|
|
2.95 |
|
|
|
1.75 |
|
|
|
2.93 |
|
|
|
1.63 |
|
Depreciation, depletion and amortization |
|
|
12.44 |
|
|
|
12.28 |
|
|
|
13.04 |
|
|
|
11.95 |
|
|
|
13.37 |
|
Asset retirement obligation accretion |
|
|
0.22 |
|
|
|
0.24 |
|
|
|
0.25 |
|
|
|
0.24 |
|
|
|
0.28 |
|
Operating lease expense |
|
|
0.10 |
|
|
|
0.11 |
|
|
|
0.37 |
|
|
|
0.17 |
|
|
|
0.37 |
|
General and administrative expense (including share-based
compensation) |
|
|
5.90 |
|
|
|
5.85 |
|
|
|
8.37 |
|
|
|
5.17 |
|
|
|
5.24 |
|
General and administrative expense (excluding share-based
compensation) |
|
|
4.79 |
|
|
|
4.82 |
|
|
|
5.09 |
|
|
|
4.39 |
|
|
|
3.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
Condensed Balance Sheets |
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,408,316 |
|
|
$ |
3,578,634 |
|
Accounts receivable |
|
|
24,026,807 |
|
|
|
14,997,979 |
|
Joint interest billing receivable |
|
|
2,433,811 |
|
|
|
1,327,262 |
|
Derivative receivable |
|
|
- |
|
|
|
499,906 |
|
Prepaid expenses and retainers |
|
|
938,029 |
|
|
|
396,109 |
|
Total Current Assets |
|
|
29,806,963 |
|
|
|
20,799,890 |
|
|
|
|
|
|
|
|
Properties and Equipment |
|
|
|
|
|
|
Oil and natural gas properties, full cost method |
|
|
883,844,745 |
|
|
|
836,514,815 |
|
Financing lease asset subject to depreciation |
|
|
1,422,487 |
|
|
|
858,513 |
|
Fixed assets subject to depreciation |
|
|
2,089,722 |
|
|
|
1,520,890 |
|
Total Properties and Equipment |
|
|
887,356,954 |
|
|
|
838,894,218 |
|
Accumulated depreciation, depletion and amortization |
|
|
(235,997,307 |
) |
|
|
(200,111,658 |
) |
Net Properties and Equipment |
|
|
651,359,647 |
|
|
|
638,782,560 |
|
|
|
|
|
|
|
|
Operating lease asset |
|
|
1,277,253 |
|
|
|
1,494,399 |
|
Deferred financing costs |
|
|
1,713,466 |
|
|
|
2,379,348 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
684,157,329 |
|
|
$ |
663,456,197 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
46,233,452 |
|
|
$ |
32,500,081 |
|
Financing lease liability |
|
|
316,514 |
|
|
|
295,311 |
|
Operating lease liability |
|
|
290,766 |
|
|
|
859,017 |
|
Derivative liabilities |
|
|
29,241,588 |
|
|
|
3,287,328 |
|
Notes payable |
|
|
586,410 |
|
|
|
- |
|
Total Current Liabilities |
|
|
76,668,730 |
|
|
|
36,941,737 |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
90,292 |
|
|
|
- |
|
Revolving line of credit |
|
|
290,000,000 |
|
|
|
313,000,000 |
|
Financing lease liability, less current portion |
|
|
343,727 |
|
|
|
126,857 |
|
Operating lease liability, less current portion |
|
|
1,138,319 |
|
|
|
635,382 |
|
Derivative liabilities |
|
|
- |
|
|
|
869,273 |
|
Asset retirement obligations |
|
|
15,292,054 |
|
|
|
17,117,135 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
383,533,122 |
|
|
|
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; 225,000,000 shares authorized;
100,192,562 shares and 85,568,287 shares issued and outstanding,
respectively |
|
|
100,193 |
|
|
|
85,568 |
|
Additional paid-in capital |
|
|
553,472,292 |
|
|
|
550,951,415 |
|
Accumulated deficit |
|
|
(252,948,278 |
) |
|
|
(256,271,170 |
) |
|
|
|
|
|
|
|
Total Stockholders' Equity |
|
|
300,624,207 |
|
|
|
294,765,813 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
684,157,329 |
|
|
$ |
663,456,197 |
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Condensed
Statements of Cash Flows |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
24,112,210 |
|
|
$ |
14,163,934 |
|
|
$ |
(160,254,277 |
) |
|
$ |
3,322,892 |
|
|
$ |
(253,411,828 |
) |
|
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
10,474,159 |
|
|
|
9,310,524 |
|
|
|
11,162,567 |
|
|
|
37,167,967 |
|
|
|
43,010,660 |
|
|
Ceiling test impairment |
|
|
- |
|
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
277,501,943 |
|
|
Asset retirement obligation accretion |
|
|
183,383 |
|
|
|
182,905 |
|
|
|
212,503 |
|
|
|
744,045 |
|
|
|
906,616 |
|
|
Amortization of deferred financing costs |
|
|
169,349 |
|
|
|
166,282 |
|
|
|
622,861 |
|
|
|
665,882 |
|
|
|
1,190,109 |
|
|
Share-based compensation |
|
|
933,593 |
|
|
|
777,461 |
|
|
|
2,807,006 |
|
|
|
2,418,323 |
|
|
|
5,364,162 |
|
|
Shares issued for services |
|
|
- |
|
|
|
- |
|
|
|
23,800 |
|
|
|
- |
|
|
|
23,800 |
|
|
Deferred income tax (benefit) expense |
|
|
123,536 |
|
|
|
1,886,118 |
|
|
|
21,598,750 |
|
|
|
265,479 |
|
|
|
(3,975,170 |
) |
|
Excess tax expense (benefit) related to share-based
compensation |
|
|
(175,187 |
) |
|
|
(1,934,819 |
) |
|
|
(446,645 |
) |
|
|
(175,187 |
) |
|
|
(2,026,006 |
) |
|
(Gain) loss on derivative contracts |
|
|
4,266,942 |
|
|
|
6,720,320 |
|
|
|
11,534,699 |
|
|
|
77,853,141 |
|
|
|
(21,366,068 |
) |
|
Cash (paid) received for derivative settlements, net |
(19,490,022 |
) |
|
|
(14,921,008 |
) |
|
|
3,708,523 |
|
|
|
(52,768,154 |
) |
|
|
22,522,591 |
|
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(4,466,561 |
) |
|
|
1,656,229 |
|
|
|
(1,970,509 |
) |
|
|
(9,483,639 |
) |
|
|
7,896,517 |
|
|
Prepaid expenses and retainers |
|
|
360,772 |
|
|
|
278,870 |
|
|
|
102,501 |
|
|
|
(541,920 |
) |
|
|
3,586,146 |
|
|
Accounts payable |
|
|
7,119,652 |
|
|
|
(329,555 |
) |
|
|
8,845,188 |
|
|
|
15,449,215 |
|
|
|
(8,380,594 |
) |
|
Settlement of asset retirement obligation |
|
|
(404,053 |
) |
|
|
(444,502 |
) |
|
|
(255,018 |
) |
|
|
(2,186,832 |
) |
|
|
(683,623 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Operating Activities |
|
|
23,207,773 |
|
|
|
17,512,759 |
|
|
|
27,255,949 |
|
|
|
72,731,212 |
|
|
|
72,159,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to
purchase oil and natural gas properties |
|
|
(789,281 |
) |
|
|
(141,468 |
) |
|
|
(127,880 |
) |
|
|
(1,368,437 |
) |
|
|
(1,317,313 |
) |
|
Payments to
develop oil and natural gas properties |
|
|
(16,621,196 |
) |
|
|
(11,957,917 |
) |
|
|
(8,871,408 |
) |
|
|
(51,302,131 |
) |
|
|
(42,457,745 |
) |
|
Payments to
acquire or improve fixed assets |
|
|
40,801 |
|
|
|
(548,730 |
) |
|
|
(55,339 |
) |
|
|
(568,832 |
) |
|
|
(55,339 |
) |
|
Proceeds
from divestiture of oil and natural gas properties |
|
|
- |
|
|
|
- |
|
|
|
(4,500,000 |
) |
|
|
2,000,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Investing Activities |
|
|
(17,369,676 |
) |
|
|
(12,648,115 |
) |
|
|
(13,554,627 |
) |
|
|
(51,239,400 |
) |
|
|
(43,830,397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from revolving line of credit |
|
|
25,750,000 |
|
|
|
14,500,000 |
|
|
|
5,000,000 |
|
|
|
60,150,000 |
|
|
|
26,500,000 |
|
|
Payments on
revolving line of credit |
|
|
(30,750,000 |
) |
|
|
(20,000,000 |
) |
|
|
(52,000,000 |
) |
|
|
(83,150,000 |
) |
|
|
(80,000,000 |
) |
|
Proceeds
from issuance of common stock and warrants |
|
|
126,240 |
|
|
|
- |
|
|
|
19,383,131 |
|
|
|
367,509 |
|
|
|
19,383,131 |
|
|
Proceeds
from option exercise |
|
|
200,000 |
|
|
|
- |
|
|
|
- |
|
|
|
200,000 |
|
|
|
- |
|
|
Payments for
taxes wihheld on vested restricted shares |
|
|
(385,330 |
) |
|
|
- |
|
|
|
- |
|
|
|
(385,330 |
) |
|
|
- |
|
|
Proceeds
from notes payable |
|
|
64,580 |
|
|
|
323,671 |
|
|
|
- |
|
|
|
1,297,718 |
|
|
|
- |
|
|
Payments on
notes payable |
|
|
(335,321 |
) |
|
|
(224,670 |
) |
|
|
- |
|
|
|
(711,308 |
) |
|
|
- |
|
|
Payment of
deferred financing costs |
|
|
(27,931 |
) |
|
|
- |
|
|
|
(355,049 |
) |
|
|
(104,818 |
) |
|
|
(355,049 |
) |
|
Reduction of
financing lease liabilities |
|
|
(118,965 |
) |
|
|
(86,941 |
) |
|
|
(71,587 |
) |
|
|
(325,901 |
) |
|
|
(282,928 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Financing Activities |
|
|
(5,476,727 |
) |
|
|
(5,487,940 |
) |
|
|
(28,043,505 |
) |
|
|
(22,662,130 |
) |
|
|
(34,754,846 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
|
361,370 |
|
|
|
(623,296 |
) |
|
|
(14,342,183 |
) |
|
|
(1,170,318 |
) |
|
|
(6,425,988 |
) |
Cash at Beginning of Period |
|
|
2,046,946 |
|
|
|
2,670,242 |
|
|
|
17,920,817 |
|
|
|
3,578,634 |
|
|
|
10,004,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period |
|
$ |
2,408,316 |
|
|
$ |
2,046,946 |
|
|
$ |
3,578,634 |
|
|
$ |
2,408,316 |
|
|
$ |
3,578,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
Financial Commodity Derivative Positions |
As of March 16, 2022 |
|
|
|
|
|
|
|
|
Average |
Weighted Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
Crude Oil - WTI |
|
|
(Bbls) |
(per Bbl) |
|
|
|
|
|
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 |
05/11/2021 |
Calendar year 2022 |
Swaps |
879(1) |
$49.03 |
02/01/2022 |
Balance of calendar year 2022 |
Swaps |
1,000 |
$84.61 |
|
|
|
|
|
(1) The notional quantity per the swap contract entered into on May
11, 2021 is for 26,750 barrels of oil per month. The 879 represents
the daily amount on an annual basis. |
|
|
|
|
|
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 Income (Loss) 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. 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.
|
|
|
(Unaudited for All Periods) |
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
Net Income (Loss) |
$ |
24,112,210 |
|
|
$ |
14,163,934 |
|
|
$ |
(160,254,277 |
) |
|
$ |
3,322,892 |
|
|
$ |
(253,411,828 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
933,593 |
|
|
|
777,461 |
|
|
|
2,807,006 |
|
|
|
2,418,323 |
|
|
|
5,364,162 |
|
|
Ceiling test impairment |
|
|
- |
|
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
277,501,943 |
|
|
Unrealized loss (gain) on change in fair value of derivatives |
|
|
(15,223,080 |
) |
|
|
(8,200,688 |
) |
|
|
15,243,222 |
|
|
|
25,084,987 |
|
|
|
1,156,523 |
|
|
Tax impact of adjusted items |
|
|
30,646 |
|
|
|
25,612 |
|
|
|
19,126,056 |
|
|
|
(225,432 |
) |
|
|
(9,915,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
$ |
9,853,369 |
|
|
$ |
6,766,319 |
|
|
$ |
6,486,007 |
|
|
$ |
30,600,770 |
|
|
$ |
20,695,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares Outstanding |
|
99,789,095 |
|
|
|
99,358,504 |
|
|
|
87,503,079 |
|
|
|
99,387,028 |
|
|
|
72,891,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Share |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.31 |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 income (loss) plus net interest expense,
unrealized loss (gain) on change in fair value of derivatives,
ceiling test impairment, income tax (benefit) expense,
depreciation, depletion and amortization, 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), capital expenditures and
proceeds from divestiture of oil and natural gas properties. 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 income (loss), 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.
|
|
(Unaudited
for All Periods) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
Net Income (Loss) |
|
$ |
24,112,210 |
|
|
$ |
14,163,934 |
|
|
$ |
(160,254,277 |
) |
|
$ |
3,322,892 |
|
|
$ |
(253,411,828 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
3,542,514 |
|
|
|
3,551,462 |
|
|
|
4,658,825 |
|
|
|
14,490,473 |
|
|
|
17,617,606 |
|
Unrealized loss (gain) on change in fair value of derivatives |
|
|
(15,223,080 |
) |
|
|
(8,200,688 |
) |
|
|
15,243,222 |
|
|
|
25,084,987 |
|
|
|
1,156,523 |
|
Ceiling test impairment |
|
|
- |
|
|
|
- |
|
|
|
129,564,000 |
|
|
|
- |
|
|
|
277,501,943 |
|
Income tax (benefit) expense |
|
|
(51,601 |
) |
|
|
(48,701 |
) |
|
|
21,152,105 |
|
|
|
90,342 |
|
|
|
(6,001,176 |
) |
Depreciation, depletion and amortization |
|
|
10,474,159 |
|
|
|
9,310,524 |
|
|
|
11,162,567 |
|
|
|
37,167,967 |
|
|
|
43,010,660 |
|
Asset retirement obligation accretion |
|
|
183,383 |
|
|
|
182,905 |
|
|
|
212,503 |
|
|
|
744,045 |
|
|
|
906,616 |
|
Share-based compensation |
|
|
933,593 |
|
|
|
777,461 |
|
|
|
2,807,006 |
|
|
|
2,418,323 |
|
|
|
5,364,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
23,971,178 |
|
|
$ |
19,736,897 |
|
|
$ |
24,545,951 |
|
|
$ |
83,319,029 |
|
|
$ |
86,144,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
40 |
% |
|
|
40 |
% |
|
|
78 |
% |
|
|
42 |
% |
|
|
76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares Outstanding |
|
|
99,789,095 |
|
|
|
99,358,504 |
|
|
|
87,503,079 |
|
|
|
99,387,028 |
|
|
|
72,891,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per Boe |
|
$ |
28.47 |
|
|
$ |
26.02 |
|
|
$ |
28.67 |
|
|
$ |
26.80 |
|
|
$ |
26.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per Share |
|
$ |
0.24 |
|
|
$ |
0.20 |
|
|
$ |
0.28 |
|
|
$ |
0.84 |
|
|
$ |
1.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited for All Periods) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
23,971,178 |
|
|
$ |
19,736,897 |
|
|
$ |
24,545,951 |
|
|
$ |
83,319,029 |
|
|
$ |
86,144,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense (excluding amortization of deferred financing
costs) |
|
|
(3,373,165 |
) |
|
|
(3,385,180 |
) |
|
|
(4,035,964 |
) |
|
|
(13,824,591 |
) |
|
|
(16,427,497 |
) |
Capital expenditures |
|
|
(11,292,707 |
) |
|
|
(13,720,336 |
) |
|
|
(7,814,361 |
) |
|
|
(50,994,541 |
) |
|
|
(29,916,746 |
) |
Proceeds from divestiture of oil and natural gas properties |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,000,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
9,305,306 |
|
|
$ |
2,631,381 |
|
|
$ |
12,695,626 |
|
|
$ |
20,499,897 |
|
|
$ |
39,800,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited for All Periods) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
23,207,773 |
|
|
$ |
17,512,759 |
|
|
$ |
27,255,949 |
|
|
$ |
72,731,212 |
|
|
$ |
72,159,255 |
|
Changes in operating assets and liabilities |
|
|
(2,609,810 |
) |
|
|
(1,161,042 |
) |
|
|
(6,722,162 |
) |
|
|
(3,236,824 |
) |
|
|
(2,418,446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
$ |
20,597,963 |
|
|
$ |
16,351,717 |
|
|
$ |
20,533,787 |
|
|
$ |
69,494,388 |
|
|
$ |
69,740,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ring Energy (AMEX:REI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ring Energy (AMEX:REI)
Historical Stock Chart
From Apr 2023 to Apr 2024