Ring Energy, Inc. (NYSE American: REI) (“Ring”)(“Company”)
announced today financial results for the three months and twelve
months ended December 31, 2017. For the three month period ended
December 31, 2017, Ring reported oil and gas revenues of
$23,308,668, compared to revenues of $9,830,708 for the quarter
ended December 31, 2016. For the twelve months ended December 31,
2017, the Company reported oil and gas revenues of $66,699,700,
compared to $30,850,248 for the twelve months ended December 31,
2016.
For the three months ended December 31, 2017, Ring reported a
net loss of $4,509,935, or $0.08 per diluted share. For the twelve
months ended December 31, 2017, the Company reported net income of
$1,753,869, or $0.03 per diluted share. This information compares
to a net loss of $477,006, or $0.01 per fully diluted share for the
three months ended December 31, 2016. For the twelve month period
ended December 31, 2016, the Company reported a net loss of
$37,637,687, or $0.97 per fully diluted share, which included a
pre-tax non-cash impairment of $56,513,016. Excluding the
impairment, the net loss per diluted share would have been
$0.02.
For the three months ended December 31, 2017, the net loss
included a pre-tax “Unrealized Loss on Derivatives” of $4,034,115
and an additional income tax provision of $6,953,299 as a result of
revaluing the Company’s deferred tax assets to account for a
reduction in its future income tax rate under the Tax Cuts and Jobs
Act of 2017. Excluding these two items, the net income per diluted
share would have been $0.09. For the twelve months ended December
31, 2017, the net income included a pre-tax “Unrealized Loss on
Derivatives” of $3,968,287 and an additional income tax provision
of $6,953,299 as a result of revaluing the Company’s deferred tax
assets to account for a reduction in its future income tax rate
under the Tax Cuts and Jobs Act of 2017. Excluding these two items,
the net income per diluted share would have been $0.21.
For the three months ended December 31, 2017, oil sales volume
increased to 418,165 barrels, compared to 201,041 barrels for the
same period in 2016, an 108% increase, and gas sales volume
decreased to 201,966 MCF (thousand cubic feet), compared to 211,893
MCF for the same period in 2016, a 5% decrease. On a barrel of oil
equivalent (“BOE”) basis for the three months ended December 31,
2017, production sales increased to 451,826 BOEs, compared to
236,357 BOEs for the same period in 2016, a 91% increase, and
380,426 BOEs for the third quarter of 2017, a 19% increase. For the
twelve months ended December 31, 2017, oil sales volume increased
to 1,311,727 barrels, compared to 728,051 barrels for the same
period in 2016, an 80% increase, and gas sales volume decreased to
761,517 MCF, compared to 900,089 MCF for the same period in 2016, a
15% decrease. On a BOE basis for the twelve months ended December
31, 2017, production sales increased to 1,438,647 BOEs, compared to
878,066 BOEs for the same period in 2016, a 64% increase.
The average commodity prices received by the Company were $53.16
per barrel of oil and $3.35 per MCF of natural gas for the quarter
ended December 31, 2017, compared to $45.99 per barrel of oil and
$2.76 per MCF of natural gas for the quarter ended December 31,
2016. The average prices received for the twelve months ended
December 31, 2017 were $48.97 per barrel of oil and $3.23 per MCF
of natural gas, compared to $39.28 per barrel of oil and $2.50 per
MCF of natural gas for the twelve month period ended December 31,
2016.
Lease operating expenses, including production taxes, for the
three months ended December 31, 2017 were $14.58 per BOE, a 4%
increase from the prior year. Depreciation, depletion and
amortization costs, including accretion, increased 23% to $16.01
per BOE. General and administrative costs, which included a
$922,072 charge for stock based compensation, were $6.51 per BOE, a
23% decrease. For the twelve months ended December 30, 2017, lease
operating expenses, including production taxes, were $13.30 per
BOE, a 3% increase. Depreciation, depletion and amortization costs,
including accretion, were $14.65 per BOE, a 7% increase, and
general and administrative costs, which included a $3,685,079
charge for stock based compensation, were $7.31 per BOE, a 20%
decrease.
Cash provided by operating activities, before changes in working
capital, for the three and twelve months ended December 31, 2017
was $14,625,846, or $0.26 per fully diluted share, and $40,909,153,
or $0.77 per fully diluted share, compared to $5,047,782 and
$13,125,293, or $0.12 and $0.34 per fully diluted share for the
same periods in 2016. Earnings before interest, taxes, depletion
and other non-cash items (“Adjusted EBITDA”) for the three and
twelve months ended December 31, 2017 was $14,584,307, or $0.26 per
fully diluted share, and $40,618,071, or $0.77 per fully diluted
share, compared to $5,125,854 and $13,717,804, or $0.12 and $0.35
in 2016. (See accompanying table for a reconciliation of net income
to adjusted EBITDA).
There was no outstanding debt on the Company’s $500 million
senior secured credit facility at December 31, 2017.
Proved reserves, as determined by Cawley, Gillespie and
Associates, Inc., and Williamson Petroleum Consultants, Inc.,
totaled 31,949,990 barrel of oil equivalents (BOE), a 15% increase
over the 27,741,575 BOE for the previous year. Future net revenues
before income taxes, discounted at 10% (“PV-10”), based on $47.93
per barrel of oil and $3.61 per MCF of gas, were $382.1 million at
year-end 2017. This compared to $217.3 million, using average
prices of $39.17 per barrel of oil and $2.43 per MCF of gas, for
year-end 2016. Approximately 45% of the proved reserves are
classified as proved developed producing (“PDP”), 10% proved
developed non-producing (“PDNP”), and 45% proved undeveloped
(“PUD”). The proved reserves consist of approximately 91% oil and
9% natural gas. Internal engineering has estimated an additional
15.95 million BOE of probable reserves with a PV-10 of $126.06
million using average prices of $47.93 per barrel of oil and $3.61
per MCF of natural gas. The estimated combined totals for proved
and probable reserves (2P) are 47.899 million BOE and $508.16
million PV-10.
Mr. Kelly Hoffman, the Company’s Chief Executive Officer,
commented, “2017 was a year of transition and growth for our
Company. Based on the results of our pilot three well horizontal
drilling program in late 2016, we began 2017 with great
anticipation and excitement. In the first quarter of 2017 we
drilled seven new horizontal wells on our Central Basin Platform
(“CBP”) property. The results far exceeded our initial
expectations. In the second quarter of 2017 we drilled eight more
new horizontal wells on our CBP. Again, the results were
exceptional. We extended the contract on the first rig through the
end of the year, completed a public stock offering in July, and
added a second horizontal drilling rig on our CBP in mid-August. As
a result, we drilled 47 new horizontal wells on our CBP in 2017.
Our net production grew quarter over quarter resulting in an
aggregate increase of 59% for the year. Our quarterly revenues,
thanks to the increased production and much improved commodity
prices, grew over 90% for the year, and our quarterly cash flow
grew over 100% for the year. In 2017, our land staff did a
fantastic job of increasing our Company’s total acreage, and more
importantly, adding to our “horizontal” footprint on our CBP
property. We began 2017 with over 53,000 gross acres (32,600 net)
and finished the year with approximately 102,000 gross acres
(70,600 net) on our CBP. Our staff has continued to not only add,
but fill in areas where we have identified horizontal potential.
They continue to work extremely hard to increase both the working
and net revenue interests on our existing properties, while at the
same time continuing to look for and evaluate new leasing and
acquisition opportunities that complement our existing assets. We
estimate over 70,000 net acres represents our “horizontal”
footprint on our CBP asset, with over 800 potential horizontal
drilling locations. We continued to upgrade and improve our
infrastructures on both our CBP and Delaware Basin assets in
preparation for the ongoing and future development. We have a
strong foundation with a proven management team, clean balance
sheet and excellent properties. We look forward to the challenges
2018 may bring and are committed to continuing the growth we
experienced in 2017.”
Non-GAAP Financial Measures:
Net loss for the three months ended December 31, 2017 includes a
non-cash charge for stock based compensation of $922,072. Net
income for the twelve months ended December 31, 2017 includes a
non-cash charge for stock based compensation of $3,685,079.
Excluding such items, the Company’s net loss would have been $0.07
per diluted share for the three months ended December 31, 2017, and
net earnings of $0.08 for the twelve months ended December 31,
2017. The Company believes results excluding these items are more
comparable to estimates provided by security analysts and,
therefore, are useful in evaluating operational trends of the
Company and its performance, compared to other similarly situated
oil and gas producing companies.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and
production company with current operations in
Texas.www.ringenergy.com
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of the “safe-harbor” provisions of the Private Securities
Litigation Reform Act of 1995 that involve a wide variety of risks
and uncertainties, including, 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, 2017. 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.
RING ENERGY, INC. STATEMENTS
OF OPERATIONS Three Months Ended Twelve Months Ended
December
31,
December
31,
2017
2016
2017
2016
Oil and Gas Revenues $ 23,308,668 $
9,830,708 $ 66,699,700 $ 30,850,248
Costs and Operating Expenses . Oil and gas production
costs 5,496,693 2,848,029 15,978,362 9,867,800 Oil and gas
production taxes 1,090,347 472,285 3,152,562 1,504,620
Depreciation, depletion and amortization 7,084,291 2,941,333
20,517,780 11,483,314 Ceiling test impairment - - - 56,513,016
Accretion expense 147,245 127,015 567,968 487,182 General and
administrative expense 2,939,496
2,004,039 10,515,887 8,027,077
Total Costs and Operating Expenses
16,758,072 8,392,701 50,732,559
87,883,009
Income (Loss) from
Operations 6,550,596 1,438,007
15,967,141 (57,032,761 )
Other Income (Expense) Interest Income 41,540 -
291,083 56,498 Interest Expense - (78,071 ) - (649,009 ) Realized
loss on derivatives (119,897 ) - (119,897 ) - Unrealized loss on
change in fair value of derivatives (4,034,115 )
- (3,968,287 ) -
Net Other Income (Expense) (4,112,472 )
(78,071 ) (3,797,101 ) (592,511
)
Income (Loss) Before Provision for Income Taxes
2,438,124 1,359,936 12,170,040 (57,625,272 )
(Provision
for) Benefit From Income Taxes (6,948,059 )
(1,836,942 ) (10,416,171 ) 19,987,585
Net Income (Loss) ($4,509,935 )
($477,006 ) $ 1,753,869 ($37,637,687 )
Basic Earnings (Loss) Per Common Share ($0.08 )
($0.01 ) $ 0.03 ($0.97 )
Diluted Earnings (Loss) Per Common
Share ($0.08 ) ($0.01 ) $ 0.03 ($0.97 )
Basic
Weighted-Average Common Shares Outstanding 54,177,202
43,814,351 51,383,008 38,710,626
Diluted Weighted-Average Common
Shares Outstanding 55,647,451 43,814,351 52,806,712 38,710,626
COMPARATIVE OPERATING
STATISTICS Three Months Ended December 31, 2017 2016
Change Net Sales - BOE per day 4,911 2,569 91 % Per BOE:
Average Sales Price $ 51.59 $ 41.59 24 % Lease Operating
Expenses 12.17 12.05 1 % Production Taxes 2.41 2.00 21 % DD&A
15.68 12.44 26 % Accretion 0.33 0.54 -39 % General &
Administrative Expenses 6.51 8.48 -23 % Twelve Months Ended
December 31, 2017 2016 Change Net Sales - BOE per day 3,941
2,399 64 % Per BOE: Average Sales price $ 46.36 $ 35.13 32 %
Lease Operating Expenses 11.11 11.24 -1 % Production Taxes 2.19
1.71 28 % DD&A 14.26 13.08 9 % Accretion 0.39 0.55 -29 %
General & Administrative Expenses 7.31 9.14 -20 %
RING ENERGY, INC. BALANCE SHEET
December 31,
December 31,
2017
2016
ASSETS Current Assets Cash $ 15,006,581 $
71,086,381 Accounts receivable 12,833,883 3,453,238 Joint interest
billing receivable 1,054,022 454,461 Prepaid expenses and retainers
229,438 226,835
Total Current
Assets 29,123,924 75,220,915
Property and Equipment Oil and natural gas properties
subject to amortization 433,591,134 250,133,965 Inventory for
property development - 1,582,427 Fixed assets subject to
depreciation 1,884,818 1,549,311
Total Property and Equipment 435,475,952 253,265,703
Accumulated depreciation, depletion and amortization
(61,864,932 ) (41,347,152 )
Net Property and
Equipment 373,611,020 211,918,551
Deferred Income Taxes 11,232,200 20,051,908
Deferred
Financing Costs 135,342 406,025
Total Assets $ 414,102,486 $ 307,597,399
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Accounts payable $ 44,475,163 $ 9,099,391
Derivative liabilities 3,968,286 -
Total Current Liabilities 48,443,449
9,099,391 Asset retirement obligations
9,055,697 7,957,035
Total Liabilities
57,499,146 17,056,426
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; 54,224,029 shares and 49,113,063
shares issued and outstanding, respectively
54,224 49,113 Additional paid-in capital 397,904,769 335,197,845
Retained earnings (accumulated deficit) (41,355,653 )
(44,705,985 )
Total Stockholders' Equity 356,603,340
290,540,973
Total Liabilities and
Stockholders' Equity $ 414,102,486 $ 307,597,399
RING ENERGY, INC. STATEMENTS OF CASH
FLOW
December 31,
December 31,
2017
2016
Cash Flows From Operating Activities Net income
(loss) $ 1,753,869 ($37,637,687 ) Adjustments to reconcile net
income (loss) to net cash Provided by operating activities:
Depreciation, depletion and amortization 20,517,780 11,483,314
Ceiling test impairment - 56,513,016 Accretion expense 567,968
487,182 Share-based compensation 3,685,079 2,267,053 Deferred
income tax expense (benefit) 3,862,827 (19,987,585 ) Excess tax
benefit related to share-based compensation (49,896 ) - Adjustment
to deferred tax asset for change in effective tax rate 6,603,240 -
Change in fair value of derivative instruments 3,968,286 - Changes
in assets and liabilities: Accounts receivable (9,980,206 ) 229,324
Prepaid expenses 268,080 334,162 Accounts payable 12,375,772
(2,233,776 ) Settlement of asset retirement obligation
(766,595 ) (240,606 )
Net Cash Provided by Operating
Activities 42,806,204 11,214,397
Cash Flows from Investing Activities Payments to purchase
oil and natural gas properties (28,682,298 ) (10,193,927 ) Payments
to develop oil and natural gas properties (124,680,469 )
(26,554,171 ) Purchase of inventory for development (4,214,686 )
(1,582,427 ) Purchase of equipment, vehicles and leasehold
improvements (335,507 ) (9,320 )
Net Cash Used in
Investing Activities (157,912,960 )
(38,339,845 )
Cash Flows From Financing Activities Proceeds
from issuance of notes payable - 7,000,000 Proceeds from issuance
of common stock 59,026,956 139,567,980 Principal payments on
revolving line of credit - (52,900,000 ) Proceeds from option
exercise - 112,500
Net Cash
Provided by Financing Activities 59,026,956
93,780,480
Net Increase (Decrease) in Cash
(56,079,800 ) 66,655,031
Cash at Beginning of Period
71,086,381 4,431,350
Cash at
End of Period $ 15,006,581 $ 71,086,381
Supplemental Cash flow Information Cash paid
for interest - $ 649,010
Noncash Investing and Financing Activities Asset retirement
obligation incurred during development 1,297,289 308,509 Use of
inventory in property development 5,797,113 -
Capitalized expenditures attributable to
drilling projects financed through current liabilities
23,000,000 -
RECONCILIATION OF CASH FLOW FROM
OPERATIONS Net cash provided by operating activities $
42,806,204 $ 11,214,397 Change in operating assets and liabilities
1,897,051 (1,910,896 ) Cash flow from
operations $ 40,909,153 $ 13,125,293
Management believes that the non-GAAP measure of cash flow from
operations is useful information for investors because it is used
internally and is accepted by the investment community as a means
of measuring the Company's ability to fund its capital program. It
is also used by professional research analysts in providing
investment recommendations pertaining to companies in the oil and
gas exploration and production industry.
RING ENERGY, INC. NON-GAAP DISCLOSURE
RECONCILIATION ADJUSTED EBITDA December
31, December 31,
2017
2016
NET INCOME $ 1,753,869 ($37,637,687 ) Net
other income expense 3,677,204 592,511 Income tax expense (benefit)
10,416,171 (19,987,585 ) Depreciation, depletion and amortization
20,517,780 11,483,314 Accretion of discounted liabilities 567,968
487,182 Ceiling test impairment - 56,513,016 Stock based
compensation 3,685,079 2,267,053
ADJUSTED EBITDA $
40,618,071 $ 13,717,804
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K M Financial, Inc.Bill Parsons, 702-489-4447
Ring Energy (AMEX:REI)
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